THIS Class B WARRANT INDENTURE is made as of the 15th day of
October, 1996,
BETWEEN:
SEVEN SEAS PETROLEUM INC., of Suite 960 Three Post
Oak Central, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇
(hereafter called the "Corporation")
OF THE FIRST PART
AND:
MONTREAL TRUST COMPANY OF CANADA, of 4th Floor, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(hereinafter called the "Trustee")
OF THE SECOND PART
WHEREAS the Corporation is proposing to issue Class B Warrants in
the manner herein set forth;
AND WHEREAS one Class B Warrant shall entitle the holder thereof to
acquire one Common Share of the Corporation at the Exercise Price upon the terms
and conditions herein set forth;
AND WHEREAS all acts and deeds necessary have been done and
performed to make the Class B Warrants when issued, as in this Indenture
provided, legal, valid and binding upon the Corporation with the benefits and
subject to the terms of this Indenture;
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the
mutual covenants and agreements of the parties contained herein, the parties
hereto agree as follows:
- 2 -
ARTICLE I
INTERPRETATION
In this Indenture, including the recitals and schedules hereto and
in all indentures supplemental hereto:
(a) "ADJUSTMENT PERIOD" means the period from and including the date of
issuance of the Class B Warrants up to and including the Time of
Expiry;
(b) "APPLICABLE LEGISLATION" means the provisions of the BUSINESS
CORPORATION ACT (Yukon) as from time to time amended, and any
statute of Canada or a province thereof, and the regulations under
any such named or other statute, relating to trust indentures or to
the rights, duties and obligations of trustees and of corporations
under trust indentures, to the extent that such provisions are at
the time in force and applicable to this Indenture;
(c) "BUSINESS DAY" means a day which is not Saturday or Sunday or
a legal holiday in the City of Vancouver, British Columbia;
(d) CLASS B WARRANTS" means warrants issued by the Corporation in
registered form in accordance with the terms and conditions of this
Indenture;
(e) "CLASS B WARRANTHOLDER" means a holder of record of one or more
Class B Warrants;
(f) "COMMON SHARES" means fully paid and non-assessable common
shares of the Corporation as presently constituted;
(g) "CORPORATION'S AUDITORS" means a firm of chartered accountants
duly appointed as auditors of the Corporation;
(h) "COUNSEL" means a barrister or solicitor acceptable to the Trustee;
(i) "EFFECTIVE DATE" means October 15, 1996;
(j) "EQUITY SHARES" means the Common Shares and any shares of any other
class or series of the Corporation which may from time to time be
authorized for issue if by their terms such shares confer on the
holders thereof the right to participate in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or
- 3 -
winding-up of the Corporation beyond a fixed sum or a fixed sum
plus accrued dividends;
(k) "EXERCISE DATE" means, with respect to any Class B Warrant, the date
on which the Warrant Certificate representing such Class B Warrant
is surrendered for exercise in accordance with the provisions of
Article III hereof;
(l) "EXERCISE PRICE" means, in respect of Class B Warrants, $18.50 in
lawful money of the United States of America per Common Share,
unless such price shall have been adjusted in accordance with the
provisions of Article IV, in which case it shall mean the adjusted
price then in effect.
(m) "EXPIRY DATE" means October 15, 1997;
(n) "PERSON" means an individual, body corporate, partnership, trust,
trustee, executor, administrator, legal representative or any
unincorporated organization;
(o) "QUALIFICATION DATE" means the day on which a receipt is issued by
the British Columbia Securities Commission for a final prospectus
qualifying the exchange of certain special warrants issued by the
Issuer pursuant to a special warrant indenture dated as of October
15, 1996;
(p) "SHAREHOLDER" means a holder of record of one or more Common
Shares;
(q) "tHIS CLASS B WARRANT INDENTURE", "THIS INDENTURE", "HEREIN",
"HEREBY" and similar expressions mean and refer to this Indenture
and any indenture, deed or instrument supplemental hereto; and the
expressions "ARTICLE", "SECTION", "SUBSECTION" and "PARAGRAPH"
followed by a number mean and refer to the specified article,
section, subsection or paragraph of this Indenture;
(r) "TIME OF EXPIRY" means 5:00 o'clock in the afternoon, Vancouver
time, on the Expiry Date;
(s) "TRADING DAY" means, with respect to a stock exchange, a day on
which such exchange is open for the transaction of business;
(t) "TRANSFER AGENT" means the Transfer Agent for the time being of
the Common Shares;
- 4 -
(u) "WARRANT AGENCY" means the principal office of the Trustee in the
City of Vancouver, British Columbia;
(v) "WARRANT CERTIFICATE" means a certificate issued on or after the
Effective Date to evidence Class B Warrants;
(w) "WARRANTHOLDERS" or "holders" means the persons who, after the
Effective Date, are registered owners of Class B Warrants;
(x) "WARRANTHOLDERS' REQUEST" means an instrument signed in one or more
counterparts by Warrantholders entitled to acquire in the aggregate
not less than 10% of the aggregate number of Common Shares which
could be acquired pursuant to all Class B Warrants then unexercised
and outstanding, requesting the Trustee to take some action or
proceeding specified therein; and
(y) "WRITTEN ORDER OF THE CORPORATION", "WRITTEN REQUEST OF THE
CORPORATION", "WRITTEN CONSENT OF THE CORPORATION" and "CERTIFICATE
OF THE CORPORATION" mean, respectively, a written order, request,
consent and certificate signed in the name of the Corporation by its
Chairman, President, a Vice-President, or a director and, in
addition, by its Secretary, Treasurer, or a director, and may
consist of one or more instruments so executed.
1.02 GENDER AND NUMBER
Unless herein otherwise expressly provided or unless the context
otherwise requires, words importing the singular include the plural and vice
versa and words importing gender include all genders.
1.03 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Indenture into Articles and Sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture.
1.04 DAY NOT A BUSINESS DAY
In the event that any day on or before which any action is required
to be taken hereunder is not a Business Day, then such action shall be required
to be taken at or before the requisite time on the next succeeding day that is a
Business Day.
- 5 -
1.05 TIME OF THE ESSENCE
Time shall be of the essence of this Indenture.
1.06 APPLICABLE LAW
This Indenture and the Warrant Certificates shall be construed in
accordance with the laws of the Province of British Columbia and shall be
treated in all respects as British Columbia contracts.
ARTICLE II
ISSUE OF CLASS B WARRANTS
2.01 ISSUE OF CLASS B WARRANTS
(a) 275,000 Class B Warrants, entitling the holders to acquire up to an
aggregate of 275,000 Common Shares, subject to adjustment in
accordance with Article IV hereof, are hereby created and authorized
to be issued.
(b) The Warrant Certificates shall be substantially in the form set out
in Schedule "A" hereto, shall be dated in respect of any Warrant
Certificate as of the Effective Date in respect of those Class B
Warrants represented by the Warrant Certificate (including all
replacements issued in accordance with this Indenture), shall bear
such distinguishing letters and numbers as the Corporation may,
with the approval of the Trustee, prescribe, and shall be issuable
in any denomination excluding fractions.
2.02 FORM AND TERMS OF CLASS B WARRANTS
(a) One Class B Warrant authorized to be issued hereunder shall entitle
the holder thereof to acquire one Common Share, subject to
adjustment in accordance with Article IV hereof, at any time after
the Effective Date until the Time of Expiry upon payment of the
Exercise Price.
(b) No fractional Class B Warrants shall be issued or otherwise provided
for hereunder.
(c) The number of Common Shares which may be acquired pursuant to the
Class B Warrants shall be adjusted in the events and in the manner
specified in Article IV.
- 6 -
2.03 WARRANTHOLDER NOT A SHAREHOLDER
Except as provided for in subsection 5.02(g), nothing in this
Indenture or in the holding of a Class B Warrant itself evidenced by a Warrant
Certificate or otherwise, shall confer or be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder or as any other
shareholder of the Corporation, including, but not limited to, the right to vote
at, to receive notice of, or to attend, meetings of shareholders or any other
proceedings of the Corporation, or the right to receive dividends and other
distributions.
2.04 CLASS B WARRANTS TO RANK PARI PASSU
All Class B Warrants shall rank pari passu, whatever may be the
actual date of issue of the same.
2.05 SIGNING OF WARRANT CERTIFICATES
The Warrant Certificates shall be signed under seal by any two
directors or officers of the Corporation. The signatures of such directors or
officers may be mechanically reproduced in facsimile and Warrant Certificates
bearing such facsimile signatures shall be binding upon the Corporation as if
they had been manually signed by such directors or officers. Notwithstanding
that any of the persons whose manual or facsimile signature appears on any
Warrant Certificate as one of such directors or officers may no longer hold
office at the date of such Warrant Certificate or at the date of certification
or delivery thereof, any Warrant Certificate signed as aforesaid shall, subject
to Section 2.06, be valid and binding upon the Corporation and the holder
thereof shall be entitled to the benefits of this Indenture.
2.06 COUNTERSIGNATURE BY THE TRUSTEE
(a) No Warrant Certificate shall be issued or, if issued, shall be valid
for any purpose or entitle the holder to the benefit hereof until it
has been countersigned by manual signature by or on behalf of
the Trustee in the form set out in Schedule "A" hereto, and such
countersignature by the Trustee upon any Warrant Certificate shall
be conclusive evidence as against the Corporation that the
Warrant Certificate so certified has been duly issued hereunder
and that the holder is entitled to the benefits hereof.
(b) The countersignature of the Trustee on Warrant Certificates issued
hereunder shall not be construed as a representation or warranty by
the Trustee as to the validity of this Indenture or the Warrant
Certificates (except the due countersigning thereof) and the Trustee
shall in no respect be liable or answerable for the use
- 7 -
made of the Warrant Certificate or any of them or of the
consideration therefor except as otherwise specified herein.
2.07 ISSUE IN SUBSTITUTION FOR WARRANT CERTIFICATES LOST, ETC.
(a) In case any of the Warrant Certificates shall become mutilated or
be lost, destroyed or stolen, the Corporation, subject to applicable
law, shall issue and thereupon the Trustee shall certify and
deliver, a new Warrant Certificate of like tenor as the one
mutilated, lost, destroyed or stolen in exchange for and in place
of and upon cancellation of such mutilated Warrant Certificate, or
in lieu of and in substitution for such lost, destroyed or stolen
Warrant Certificate, and the substituted Warrant Certificate shall
be in a form approved by the Trustee and shall be entitled to the
benefits hereof and shall rank equally in accordance with its terms
and all other Warrant Certificates issued or to be issued
hereunder.
(b) The applicant for the issue of a new Warrant Certificate pursuant to
this Section 2.07 shall bear the cost of the issue thereof and in
case of loss, destruction or theft shall, as a condition precedent
to the issue thereof, furnish to the Corporation and to the Trustee
such evidence of ownership and of the loss, destruction or theft of
the Warrant Certificate so lost, destroyed or stolen as shall be
satisfactory to the Corporation and to the Trustee in their sole
discretion, and such applicant may also be required to furnish an
indemnity or security in amount and form satisfactory to the
Corporation and the Trustee in their discretion and shall pay the
reasonable charges of the Corporation and the Trustee in connection
therewith.
2.08 EXCHANGE OF WARRANT CERTIFICATES
(a) Warrant Certificates representing Class B Warrants to acquire any
specified number of Common Shares may, upon compliance with the
reasonable requirements of the Trustee, be exchanged for another
Warrant Certificate or Warrant Certificates entitling the holder
thereto to acquire in the aggregate the same number of Common Shares
as may be acquired under the Warrant Certificate or Warrant
Certificates so exchanged.
(b) Warrant Certificates may be exchanged only at the Warrant Agency
provided for in subsection 3.01(d) or at any other place that is
designated by the Corporation with the approval of the
- 8 -
Trustee. Any Warrant Certificate tendered for exchange shall be
cancelled and surrendered by the Warrant Agency to the Trustee.
2.09 CHARGES FOR EXCHANGE
Except as otherwise herein provided, the Warrant Agency shall charge
to the holder requesting an exchange fee of $3.00 for each new Warrant
Certificate issued in exchange for Warrant Certificate(s); and payment of such
charge and reimbursement of the Trustee or the Corporation for any and all stamp
taxes or governmental or other charges required to be paid shall be made by such
holder as a condition precedent to such exchange.
2.10 TRANSFERABILITY AND OWNERSHIP OF CLASS B WARRANTS
The Class B Warrants may be transferred or assigned.
The Corporation and the Trustee will deem and treat the registered
owner of any Class B Warrant as the beneficial owner thereof for all purposes
and neither the Corporation nor the Trustee shall be affected by any notice to
the contrary.
Subject to the provisions of this Indenture and applicable law, the
Warrantholder shall be entitled to the rights and privileges attaching to the
Class B Warrants and the issue of Common Shares by the Corporation upon the
exercise of Class B Warrants by any Warrantholder in accordance with the terms
and condition herein contained shall discharge all responsibilities of the
Corporation and the Trustee with respect to such Class B Warrants and neither
the Corporation nor the Trustee shall be bound to inquire into the title of any
such holder.
ARTICLE III
EXERCISE OF CLASS B WARRANTS
3.01 METHOD OF EXERCISE OF CLASS B WARRANTS
(a) The holder of any Class B Warrant may exercise the right thereby
conferred on such holder to acquire Common Shares by
surrendering, prior to the Time of Expiry, to the Warrant Agency
the Warrant Certificate with a duly completed and executed
exercise form as attached to the Warrant Certificate and cash or
a certified cheque, bank draft or money order in lawful money of
Canada payable to or to the order of the Corporation or the
Trustee in an amount equal to the Exercise Price multiplied by the
number of Common Shares to be acquired.
A Warrant Certificate with the duly completed and executed exercise
form referred to in this subsection 3.01(a) shall be
- 9 -
deemed to be surrendered only upon personal delivery thereof or, if
sent by mail or other means of transmission, upon actual receipt
thereof at, in each case, the Warrant Agency provided for in
subsection 3.01(d).
(b) Any exercise form referred to in subsection 3.01(a) shall be signed
by the Warrantholder and shall specify the number of Common
Shares which the holder desires to acquire (being not more than
those which the holder is entitled to acquire pursuant to the
Warrant Certificate(s) surrendered), the person or persons in
whose name or names such Common Shares are to be issued, the
address or addresses of such persons and the number of Common
Shares to be issued to each such person if more than one is so
specified. If any of the Common Shares subscribed for are to be
issued to a person or persons other than the Warrantholder:
(i) the Warrantholder shall pay to the Corporation or the
Warrant Agency on behalf of the Corporation, all applicable
transfer or similar taxes and the Corporation shall not be
required to issue or deliver certificates evidencing Common
Shares unless or until such Warrantholder shall have paid to
the Corporation, or the Warrant Agency on behalf of the
Corporation, the amount of such tax or shall have
established to the satisfaction of the Corporation that such
tax has been paid or that no tax is due;
(ii) the signature of the Warrantholder on the exercise form will
be guaranteed by a Canadian chartered bank or trust company or
by a member of the Vancouver, Toronto, Montreal or New York
Stock Exchanges; and
(iii) the Warrantholder shall comply with all other reasonable
requests of the Trustee.
(c) Notwithstanding any provision to the contrary herein or contained
in the Warrant Certificates, on the exercise of Class B Warrants,
Common Shares will not be issued to a person whose address is
in, or whom the Corporation or the Trustee has reason to believe
is a citizen or national or resident of, the United States of
America, its territories and possessions except pursuant to a
registration statement under the UNITED STATES SECURITIES ACT OF
1933 and in compliance with applicable securities laws of various
States or pursuant to an exemption available from registration and
such Common Shares may not be offered or sold directly or
indirectly in the United States of America or its territories or
- 10 -
possession or to a national or resident thereof, or any partnership,
corporation or other entity organized or incorporated under the laws
of the United States during the 40 day period commencing on the
exercise of such Class B Warrants except pursuant to a registration
statement under the UNITED STATES SECURITIES ACT OF 1933 and in
compliance with applicable securities laws of various States or
pursuant to an exemption available from such registration.
(d) In connection with the exchange of Warrant Certificates and exercise
of Class B Warrants and compliance with such other terms and
conditions hereof as may be required, the Corporation shall
establish the Warrant Agency at which Warrant Certificates may be
surrendered for exchange or at which Class B Warrants may be
exercised. The Corporation shall give notice to the Trustee of any
change of the Warrant Agency.
3.02 EFFECT OF EXERCISE OF CLASS B WARRANTS
(a) Upon compliance by the holder of any Warrant Certificate with the
provisions of Section 3.01, and subject to Section 3.03, the Common
Shares subscribed for shall be deemed to have been issued and the
person or persons to whom such Common Shares are to be issued shall
be deemed to have become the holder or holders of record of such
Common Shares on the Exercise Date unless the transfer registers of
the Corporation shall be closed on such date, in which case the
Common Shares subscribed for shall be deemed to have been issued,
and such person or persons deemed to have become the holder or
holders of record of such Common Shares, on the date on which such
transfer registers are reopened.
(b) Within five Business Days after the Exercise Date of a Class B
Warrant as aforesaid, the Corporation shall cause to be mailed to
the person or persons in whose name or names the Common Shares so
subscribed for have been issued, as specified in the subscription,
at the address specified in such subscription or, if so specified in
such subscription, cause to be delivered to such person or persons
at the Warrant Agency where such Warrant Certificate was
surrendered, a certificate or certificates for the appropriate
number of Common Shares so subscribed for.
- 11 -
3.03 PARTIAL EXERCISE OF CLASS B WARRANTS; FRACTIONS
(a) The holder of any Warrant Certificate(s) may acquire a number of
Common Shares less than the number which the holder is entitled to
acquire pursuant to the surrendered Warrant Certificate(s) provided
that, in no event shall fractional Common Shares be issued with
regard to Class B Warrants exercised. In the event of any
acquisition of a number of Common Shares less than the number which
the holder is entitled to acquire, the holder of the Warrant
Certificate(s) upon exercise thereof shall, in addition, be entitled
to receive, without charge therefor, a new Warrant Certificate(s) in
respect of the balance of the Common Shares which such holder was
entitled to acquire pursuant to the surrendered Warrant
Certificate(s) and which were not then acquired.
(b) Notwithstanding anything herein contained including any
adjustment provided for in Article IV, the Corporation shall not be
required, upon the exercise of any Class B Warrants, to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common
Shares, there shall be paid to the holder upon surrender of
Warrant Certificate(s) for exercise of Class B Warrants pursuant
to Section 3.01, within ten Business Days after surrender, an
amount in lawful money of Canada equal to the then current
market value of such fractional interest calculated on the basis of
the closing price of the Common Shares on The Toronto Stock
Exchange (or such other stock exchange or electronic trading
facility upon which the Common Shares are then listed) on the
Trading Day immediately prior to the Exercise Date.
3.04 EXPIRATION OF CLASS B WARRANTS
After the Time of Expiry, all rights under any Class B Warrant in
respect of which the right of subscription and acquisition herein and therein
provided for shall not theretofore have been exercised in accordance herewith
and therewith shall wholly cease and terminate and such Class B Warrant shall be
void and of no effect.
3.05 CANCELLATION OF SURRENDERED CLASS B WARRANTS
All Warrant Certificates surrendered to the Warrant Agency pursuant
to Sections 2.07, 2.08, 3.01 and 5.01 shall be returned to the Trustee for
cancellation and, after the expiry of any period of retention prescribed by law,
destroyed by the Trustee and the Trustee shall furnish the Corporation with a
destruction certificate identifying the Warrant Certificates so destroyed and
the number of Class B Warrants
- 12 -
evidenced thereby and the number of Common Shares which could have been acquired
pursuant to each destroyed Warrant Certificate.
3.06 ACCOUNTING AND RECORDING
(a) The Trustee shall promptly account to the Corporation with respect
to Class B Warrants exercised. Any securities or other instruments,
from time to time received by the Trustee shall be received in trust
for, and shall be segregated and kept apart by the Trustee in trust
for, the Corporation.
(b) The Trustee shall record the particulars of Class B Warrants
exercised which shall include the names and addresses of the persons
who become holders of Common Shares on exercise and the Exercise
Date. Within five Business Days of each Exercise Date, the Trustee
shall provide such particulars in writing to the Corporation.
ARTICLE IV
ADJUSTMENT OF NUMBER OF COMMON SHARES
4.01 ADJUSTMENT OF NUMBER OF COMMON SHARES
The acquisition rights in effect at any date attaching to the Class
B Warrants shall be subject to adjustment from time to time as follows:
(a) if and whenever at any time from the date hereof and prior to the
Time of Expiry, the Corporation shall:
(i) subdivide, redivide or change its outstanding Common
Shares into a greater number of shares; or
(ii) reduce, combine or consolidate its outstanding Common
Shares into a smaller number of shares,
the number of Common Shares obtainable under each Class B Warrant
shall each be adjusted immediately after the effective date of the
events referred to in (i) and (ii) above by multiplying the number
of Common Shares theretofore obtainable on the exercise of the Class
B Warrants by a fraction of which the numerator shall be the total
number of Common Shares outstanding immediately after such date and
the denominator shall be the total number of Common Shares
outstanding immediately
- 13 -
prior to such date. Such adjustment shall be made successively
whenever any event referred to in this subsection shall occur;
(b) if and whenever at any time from the date hereof and prior to the
Time of Expiry, there is a reclassification or redesignation of the
Common Shares or a capital reorganization of the Corporation other
than as described in subsection 4.01(a) or a consolidation,
arrangement, amalgamation or merger of the Corporation with or into
any other body corporate, trust, partnership or other entity, or a
sale or conveyance of the property and assets of the Corporation as
an entirety or substantially as an entirety to any other body
corporate, trust, partnership or other entity, any Warrantholder who
has not exercised his right of acquisition prior to the effective
date of such reclassification, redesignation, capital
reorganization, consolidation, arrangement, amalgamation, merger,
sale or conveyance, upon the exercise of such right thereafter,
shall be entitled to receive and shall accept, in lieu of the number
of Common Shares then sought to be acquired by him, the number of
shares or other securities or property of the Corporation or of the
body corporate, trust, partnership or other entity resulting from
such merger, amalgamation, arrangement, or consolidation, or to
which such sale or conveyance may be made, as the case may be, that
such Warrantholder would have been entitled to receive on such
reclassification, redesignation, capital reorganization,
consolidation, arrangement, amalgamation, merger, sale or
conveyance, if, on the record date or the effective date thereof, as
the case may be, the Warrantholder had been the registered holder of
the number of Common Shares receivable upon the exercise of Class B
Warrants then held. If determined appropriate by the Trustee to give
effect to or to evidence the provisions of this subsection 4.01(b),
the Corporation, its successor, or such purchasing body corporate,
partnership, trust or other entity, as the case may be, shall, prior
to or contemporaneously with any such reclassification,
redesignation, capital reorganization, consolidation, amalgamation,
arrangement, merger, sale or conveyance, enter into an indenture
which shall provide, to the extent possible, for the application of
the provisions set forth in this Indenture with respect to the
rights and interests thereafter of the Warrantholders to the end
that the provisions set forth in this Indenture shall thereafter
correspondingly be made applicable, as nearly as may reasonably be,
with respect to any shares, other securities or property to which a
Warrantholder is entitled on the exercise of his acquisition rights
thereafter. Any indenture entered into between the Corporation and
the Trustee pursuant to the provision of this
- 14 -
subsection 4.01(b) shall be a supplemental indenture entered into
pursuant to the provisions of Article VIII hereof. Any indenture
entered into between the Corporation, any successor to the
Corporation or such purchasing body corporate, partnership, trust or
other entity and the Trustee shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided in this Section 4.01 and which shall apply to
successive reclassifications, redesignations, capital
reorganizations, consolidations, arrangements, amalgamations,
mergers, sales or conveyances;
(c) if and whenever at any time prior to the Time of Expiry, the
Corporation shall:
(i) subdivide the outstanding Common Shares into a greater
number of Common Shares,
(ii) consolidate the outstanding Common Shares into a lesser
number of Common Shares, or
(iii) issue Common Shares by way of a stock dividend (other than the
issue of Common Shares to holders of Common Shares as a stock
dividend in lieu of a cash dividend paid in the ordinary
course),
the Exercise Price shall, on the effective date of such subdivision
or consolidation or on the record date of such subdivision or stock
dividend, as the case may be, be adjusted to that amount which is in
the same proportion to the Exercise Price in effect immediately
prior to such subdivision, consolidation or stock dividend, as the
number of outstanding Common Shares after giving effect to such
subdivision, consolidation or stock dividend bears to the number of
outstanding Common Shares after giving effect such subdivision,
consolidation or stock dividend. Such adjustment shall be made
successively whenever any event referred to in this subsection (1)
shall occur; and any such issue of Common Shares by way of a stock
dividend shall be deemed to have been made on the record date for
the stock dividend for the purpose of calculating the number of
outstanding Common Shares under subsections (d) and (e) of this
Section 4.01;
(d) if and whenever at any time prior to the Time of Expiry, the
Corporation shall fix a record date for the issuance of rights,
options or warrants to all or substantially all the holders of the
outstanding Common Shares entitling them to subscribe for or
- 15 -
purchase Common Shares, or securities convertible into Common Shares
at a price per share or having a conversion or exchange price per
share less than 95% of the Current Market Price (as defined in
subsection (f) of this Section 4.01), on such record date, the
Exercise Price shall be adjusted immediately after such record date
so that it shall equal the price determined by multiplying the
Exercise Price in effect on such record date by a fraction of which
the numerator shall be the total number of Common Shares outstanding
at such record date plus a number of Common Shares equal to the
number arrived at by dividing the aggregate price of the total
number of additional Common Shares offered for subscription or
purchase, or into which the convertible securities so offered are
convertible, or the aggregate conversion or exchange price of the
convertible securities so offered, by such Current Market Price, and
of which the denominator shall be the total number of Common Shares
outstanding on such record date plus the total number of additional
Common Shares offered for subscription or purchase or into which the
convertible Securities so offered are convertible; Common Shares
owned by or held for the account of the Corporation or any
subsidiary of the Corporation shall be deemed not to be outstanding
for the purpose of any such computation; such adjustment shall be
made successively whenever such a record date is fixed; to the
extent that any rights, options or warrants are not so issued or any
such rights, options or warrants are not exercised prior to the
expiration thereof, the Exercise Price shall then be readjusted to
the Exercise Price which would then be in effect if such record data
had not been fixed or to the Exercise Price which would then be in
effect based upon the number of Common Shares, or securities
convertible into Common Shares, actually issued upon the exercise of
such rights, options or warrants, as the case may be;
(e) if and whenever at any time prior to the Time of Expiry, the
Corporation shall fix a record date for the making of a distribution
to all or substantially all the holders of its outstanding Common
Shares of:
(i) shares of any class other than Common Shares whether of the
Corporation or any other corporation (other than shares
distributed to holders of Common Shares as a stock dividend in
lieu of a cash dividend paid in the ordinary course), or
(ii) rights, options or warrants (other than those referred to in
subsection (d) of this Section 4.01), or
- 16 -
(iii) evidences of its indebtedness, or
(iv) assets (other than cash dividends paid in the ordinary
course)
then, in each such case, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the price
determined by multiplying the Exercise Price in effect on such
record date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date multiplied
by the Current Market Price on such record date, less the aggregate
fair market value (as determined by the directors and approved by
the Trustee) of such shares or rights, options or warrants or
evidences of indebtedness or assets so distributed, and of which the
denominator shall be the total number of Common Shares outstanding
on such record date multiplied by such Current Market Price; Common
Shares owned by or held for the account of the Corporation or any
subsidiary of the Corporation shall be deemed not to be outstanding
for the purpose of any such computation; such adjustment shall be
made successively whenever such a record date is fixed; and to the
extent that such distribution is not so made, the Exercise Price
shall then be readjusted to the Exercise Price which would then be
in effect if such record date had not been fixed or to the Exercise
Price which would then be in effect based upon such shares or
rights, options or warrants or evidences of indebtedness or assets
actually distributed, as the case may be;
(f) for the purpose of any computation under subsections (d) or (e)
of this Section 4.01, the "Current Market Price" at any date shall
be the weighted average of the closing prices per share for
Common Shares for any 30 consecutive trading days selected by
the Corporation commencing not more than 45 trading days
before such date on The Toronto Stock Exchange (or such other
stock exchange or electronic trading facility on which the
Common Shares shall then trade). The weighted average price
shall be determined by dividing the aggregate sale price or the
average closing bid and ask prices of all such shares sold on the
said exchange or facility during the said 30 consecutive trading
days by the total number of such shares so sold;
(g) in any case in which this Article IV shall require that an
adjustment shall become effective immediately after a record date
for an event referred to herein, the Corporation may defer, until
the occurrence of such event, issuing to the holder of any Class
- 17 -
B Warrant exercised after such record date and before the occurrence
of such event the additional Common Shares issuable upon such
exercise by reason of the adjustment required by such event before
giving effect to such adjustment; provided, however, that the
Corporation shall deliver to such holder an appropriate instrument
evidencing such holder's right to receive such additional Common
Shares upon the occurrence of the event requiring such adjustment
and the right to receive any distributions made on such additional
Common Shares which may be acquired upon the exercise of Class B
Warrants declared in favour of holders of record of Common Shares on
and after the Exercise Date or such later date as such holder would,
but for the provisions of this subsection (g), have become the
holder of record of such additional Common Shares pursuant to
Section 4.01; and
(h) the adjustments provided for in this Article IV in the number of
Common Shares, Exercise Price and classes of securities which
are to be received on the exercise of Class B Warrants, are
cumulative. After any adjustment pursuant to this Section 4.01,
the terms "Common Shares" where used in this Indenture shall be
interpreted to mean securities of any class or classes which, as a
result of such adjustment and all prior adjustments pursuant to
this Section 4.01, the Warrantholder is entitled to receive upon
the exercise of his Class B Warrant, and the number of Common
Shares indicated by any exercise made pursuant to a Class B
Warrant shall be interpreted to mean the number of Common
Shares or other property or securities a Warrantholder is entitled
to receive, as a result of such adjustment and all prior adjustments
pursuant to this Section 4.01, upon the full exercise of a Class B
Warrant.
4.02 ENTITLEMENT TO COMMON SHARES ON EXERCISE OF CLASS B 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 his Class B
Warrant, whether or not as a result of adjustments made pursuant to this Section
shall, for the purposes of the interpretation of this Indenture, be deemed to be
shares and other securities which such Warrantholder is entitled to acquire
pursuant to such Class B Warrant.
- 18 -
4.03 DETERMINATION BY CORPORATION'S AUDITORS
In the event of any question arising with respect to the adjustments
provided for in this Article IV such question shall be conclusively determined
by the Corporation's auditors who shall have access to all necessary records of
the Corporation, and such determination shall be binding upon the Corporation,
the Trustee, all Warrantholders and all other persons interested therein.
4.04 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
Class B Warrants, including the number of Common Shares which are to be received
upon the exercise thereof, the Corporation shall take any corporate action which
may, in the opinion of counsel, be necessary in order that the Corporation has
unissued and reserved in its authorized capital and may validly and legally
issue as fully paid and non-assessable all the shares which the holders of such
Class B Warrants are entitled to receive on the full exercise thereof in
accordance with the provisions hereof.
4.05 CERTIFICATE OF ADJUSTMENT
The Corporation shall from time to time immediately after the
occurrence of any event which requires an adjustment or readjustment as provided
in Article IV, deliver a certificate of the Corporation to the Trustee
specifying the nature of the event requiring the same and the amount of the
adjustment necessitated thereby and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based, which
certificate and the amount of the adjustment specified therein shall be verified
by the Trustee.
4.06 PROTECTION OF TRUSTEE
The Trustee:
(a) shall not at any time be under any duty or responsibility to any
Warrantholder to determine whether any facts exist which may require
any adjustment contemplated by Section 4.01 or with respect to the
nature or extent of any such adjustment when made, or with respect
to the method employed in making the same;
(b) shall not be accountable with respect to the validity or value (or
the kind or amount) of any Common Shares or of any shares or other
securities or property which may at any time be issued or delivered
upon the exercise of the rights attaching to any Class B Warrant;
- 19 -
(c) shall not be responsible for any failure of the Corporation to
issue, transfer or deliver Common Shares or certificates for the
same upon the surrender of any Class B Warrants for the purpose of
the exercise of such rights or to comply with any of the covenants
contained in this Article IV; and
(d) shall not incur any liability or responsibility whatever or be in
any way responsible for the consequences of any breach on the part
of the Corporation of any of the representations, warranties or
covenants herein contained or of any acts of the agents or servants
of the Corporation.
ARTICLE V
RIGHTS OF THE CORPORATION AND COVENANTS
5.01 OPTIONAL PURCHASES BY THE CORPORATION
The Corporation may from time to time purchase by private contract
or otherwise any of the Class B Warrants. Any such purchase shall be made at the
lowest price or prices at which, in the opinion of the directors, such Class B
Warrants are then obtainable, plus reasonable costs of purchase, and may be made
in such manner, from such persons and on such other terms as the Corporation, in
its sole discretion, may determine. The Warrant Certificate representing the
Class B Warrants purchased pursuant to this Section 5.01 shall forthwith be
delivered to and cancelled by the Trustee.
5.02 GENERAL COVENANTS
The Corporation covenants with the Trustee that so long as any Class
B Warrants remain outstanding:
(a) it will reserve and keep available a sufficient number of Common
Shares for the purpose of enabling it to satisfy its obligations to
issue Common Shares upon the exercise of the Class B Warrants in the
event that the Corporation does not have an unlimited number of
Common Shares authorized;
(b) it will cause the Common Shares and the certificates representing
the Common Shares from time to time acquired pursuant to the
exercise of the Class B Warrants to be duly issued and delivered in
accordance with the Warrant Certificates and the terms hereof;
- 20 -
(c) all Common Shares which shall be issued upon exercise of the right
to acquire provided for herein and in the Warrant Certificates shall
be fully paid and non-assessable;
(d) it will use its best efforts to maintain its corporate existence;
(e) it will use its best efforts to ensure that all Common Shares of the
Corporation outstanding or issuable from time to time continue to be
traded on the Canadian Dealing Network and/or such other exchange or
electronic trading facility as satisfactory to the directors of the
Corporation;
(f) it will make all requisite filings under applicable Canadian
securities legislation including those necessary to remain a
reporting issuer not in default in the province of British Columbia;
(g) if the Corporation pays a dividend or makes any other distribution
in cash or property or securities of the Corporation (including
rights, options or warrants to acquire Common Shares or
securities convertible into or exchangeable for Common Shares
and including evidences of its indebtedness) to Shareholders prior
to the Expiry Date, the Corporation agrees that it will pay the
same amount of such dividend or make the same distribution to
the Warrantholders, as if they were holders of such number of
Common Shares which such Warrantholders are entitled to
acquire upon the exercise of the Class B Warrants. The
Corporation will mail a notice to each holder of Class B Warrants
specifying the particulars of such payment or distribution within
two (2) Business Days of such payment or distribution;
(h) generally, it will well and truly perform and carry out all of the
acts or things to be done by it as provided in this Indenture.
5.03 TRUSTEE'S REMUNERATION AND EXPENSES
The Corporation covenants that it will pay to the Trustee from time
to time reasonable remuneration for its services hereunder and will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in the administration
or execution of the trusts hereby created (including the reasonable compensation
and the disbursements of its counsel and all other advisers and assistants not
regularly in its employ) both before any default hereunder and thereafter until
all duties of the Trustee hereunder shall be finally and fully performed, except
any such expense, disbursement or advance as may arise out of or result from the
Trustee's negligence, wilful misconduct or bad faith.
- 21 -
5.04 PERFORMANCE OF COVENANTS BY TRUSTEE
If the Corporation shall fail to perform any of its covenants
contained in this Warrant Indenture, the Trustee may notify the Warrantholders
of such failure on the part of the Corporation or may itself perform any of the
said covenants capable of being performed by it, but, subject to Section 9.02,
shall be under no obligation to perform said covenants or to notify the
Warrantholders of such performance by it. All sums expended or advanced by the
Trustee in so doing shall be repayable as provided in Section 5.03. No such
performance, expenditure or advance by the Trustee shall relieve the Corporation
of any default hereunder or of its continuing obligations under the covenants
herein contained.
ARTICLE VI
ENFORCEMENT
6.01 SUITS BY WARRANTHOLDERS
All or any of the rights conferred upon any Warrantholder by any of
the terms of the Warrant Certificates or of the Indenture, or of both, may be
enforced by the Warrantholder by appropriate proceedings but without prejudice
to the right which is hereby conferred upon the Trustee to proceed in its own
name to enforce each and all of the provisions herein contained for the benefit
of the Warrantholders.
6.02 IMMUNITY OF SHAREHOLDERS, ETC.
The Trustee and, by the acceptance of the Warrant Certificates and
as part of the consideration for the issue of the Class B Warrants, the
Warrantholders hereby waive and release any right, cause of action or remedy now
or hereafter existing in any jurisdiction against any incorporator or any past,
present or future shareholder, director, officer, employee or agent of the
Corporation or any successor corporation for the issue of the Common Shares
pursuant to any Class B Warrants or on any covenant, agreement, representation
or warranty by the Corporation herein or contained in the Warrant Certificates.
6.03 LIMITATION OF LIABILITY
The obligations hereunder are not personally binding upon, nor shall
resort hereunder be had to, the private property of any of the past, present or
future directors or shareholders of the Corporation or any successor corporation
or any of the past, present or future officers, employees or agents of the
Corporation or any successor corporation, but only the property of the
Corporation or any successor corporation shall be bound in respect hereof.
- 22 -
6.04 WAIVER OF DEFAULT
Upon the happening of any default hereunder:
(a) the holders of not less than 51% of the Class B Warrants then
outstanding shall have power (in addition to the powers exercisable
by extraordinary resolution as provided in Section 7.10) 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 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 shall extend to or be taken in any manner
whatsoever to affect any subsequent default hereunder or the rights resulting
therefrom.
ARTICLE VII
MEETINGS OF WARRANTHOLDERS
7.01 RIGHT TO CONVENE MEETINGS
The Trustee may at any time and from time to time, and shall on
receipt of a written request of the Corporation or of a Warrantholders' Request
and upon being indemnified to its reasonable satisfaction by the Corporation or
by the Warrantholders signing such Warrantholders' Request against the costs
which may be incurred in connection with the calling, and holding of such
meeting, convene a meeting of the Warrantholders. In the event of the Trustee
failing to convene a meeting within seven days after receipt of such written
request of the Corporation or such Warrantholders' Request and indemnity given
as aforesaid, the Corporation or such Warrantholders, as the case may be, may
convene such meeting. Every such meeting shall be held in the City of Vancouver
or at such other place as may be approved or determined by the Trustee.
- 23 -
7.02 NOTICE
At least ten (10) days' prior notice of any meeting of
Warrantholders shall be given to the Warrantholders in the manner provided for
in Section 10.02 and a copy of such notice shall be sent by mail to the Trustee
(unless the meeting has been called by the Trustee) and to the Corporation
(unless the meeting has been called by the Corporation). Such notice shall state
the time when and the place where the meeting is to be held, shall state briefly
the general nature of the business to be transacted thereat and shall contain
such information as is reasonably necessary to enable the Warrantholders to make
a reasoned decision on the matter, but it shall not be necessary for any such
notice to set out the terms of any resolution to be proposed or any of the
provisions of this Article VII.
7.03 CHAIRMAN
An individual (who need not be a Warrantholder) designated in
writing by the Trustee shall be chairman of the meeting and if no individual is
so designated, or if the individual so designated is not present within 15
minutes from the time fixed for the holding of the meeting, the Warrantholders
present in person or by proxy shall choose some individual present to be
chairman.
7.04 QUORUM
Subject to the provisions of Section 7.11, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or by
proxy and entitled to acquire at least 25% of the aggregate number of Common
Shares which could be acquired pursuant to all the then outstanding Class B
Warrants, provided that at least two persons entitled to vote thereat are
personally present. If a quorum of the Warrantholders shall not be present
within 30 minutes from the time fixed for holding any meeting, the meeting, if
summoned by the Warrantholders or on a Warrantholders' Request, shall be
dissolved; but in any other case the meeting shall be adjourned to the same day
in the next week (unless such day is not a Business Day, in which case it shall
be adjourned to the next following Business Day) at the same time and place and
no notice of the adjournment need be given. Any business may be brought before
or dealt with at an adjourned meeting which might have been dealt with at the
original meeting in accordance with the notice calling the same. No business
shall be transacted at any meeting unless a quorum be present at the
commencement of business. At the adjourned meeting the Warrantholders present in
person or by proxy shall form a quorum and may transact the business for which
the meeting was originally convened, notwithstanding that they may not be
entitled to acquire at least 25% of the aggregate number of Common Shares which
may be acquired pursuant to all then outstanding Class B Warrants.
- 24 -
7.05 POWER TO ADJOURN
The chairman of any meeting at which a quorum of the Warrantholders
is present may, with the consent of the meeting, adjourn any such meeting, and
no notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.
7.06 SHOW OF HANDS
Every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on
an extraordinary resolution shall be given in the manner hereinafter provided.
At any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
7.07 POLL AND VOTING
On every extraordinary resolution, and on any other question
submitted to a meeting and after a vote by show of hands when demanded by the
chairman or by one or more of the Warrantholders acting in person or by proxy
and entitled to acquire in the aggregate at least 5% of the aggregate number of
Common Shares which could be acquired pursuant to all the Class B Warrants then
outstanding, a poll shall be taken in such manner as the chairman shall direct.
Questions other than those required to be determined by extraordinary resolution
shall be decided by a majority of the votes cast on the poll.
On a show of hands, every person who is present and entitled to
vote, whether as a Warrantholder or as proxy for one or more absent
Warrantholders, or both, shall have one vote. On a poll, each Warrantholder
present in person or represented by a proxy duly appointed by instrument in
writing shall be entitled to one vote in respect of each Common Share which he
is entitled to acquire pursuant to the Class B Warrant or Class B Warrants then
held or represented by him. A proxy need not be a Warrantholder. The chairman of
any meeting shall be entitled, both on a show of hands and on a poll, to vote in
respect of the Class B Warrants, if any, held or represented by him.
7.08 REGULATIONS
The Trustee, or the Corporation with the approval of the Trustee,
may from time to time make and from time to time vary such regulations as it
shall think fit for:
- 25 -
(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 a meeting;
(b) the issue of voting certificates by any bank, trust company or
other depository satisfactory to the Trustee stating that the
Warrant Certificates specified therein have been deposited with it
by a named person and will remain on deposit until after the
meeting, which voting certificates shall entitle the persons named
therein to be present and vote at any such meeting and at any
adjournment thereof or to appoint a proxy or proxies to represent
them and vote for them at any such meeting and at any
adjournment thereof in the same manner and with the same effect
as though the persons so named in such voting certificates were
the actual bearers of the Warrant Certificates specified therein;
(c) the deposit of voting certificates and instruments appointing
proxies at such place and time as the Trustee, the Corporation or
the Warrantholders convening the meeting, as the case may be, may in
the notice convening the meeting direct;
(d) the deposit of voting certificates and instruments appointing
proxies at some approved place or places other than the place at
which the meeting is to be held and enabling particulars of such
instruments appointing proxies to be mailed, cabled, telegraphed
or sent by other means of electronic transmission before the
meeting to the Corporation or to the Trustee at the place where
the same is to be held and for the voting of proxies so deposited
as though the instruments themselves were produced at the
meeting;
(e) the form of the instrument of proxy; and
(f) generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Warrantholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 7.09), shall be Warrantholders or their
counsel, or proxies of Warrantholders.
- 26 -
7.09 CORPORATION AND TRUSTEE MAY BE REPRESENTED
The Corporation and the Trustee, by their respective directors and
officers, and the counsel for the Corporation and for the Trustee may attend any
meeting of the Warrantholders, but shall have no vote as such unless in their
capacity as a Warrantholder.
7.10 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION
In addition to all other powers conferred upon them by any other
provisions of this Indenture or by law, the Warrantholders at a meeting shall,
subject to the provisions of Section 7.11, have the power, exercisable from time
to time by extraordinary resolution:
(a) to agree to any modification, abrogation, alteration, compromise or
arrangement of the rights of Warrantholders or the Trustee in its
capacity as trustee hereunder or on behalf of the Warrantholders
against the Corporation whether such rights arise under this
Indenture or the Warrant Certificates or otherwise;
(b) to amend, alter or repeal any extraordinary resolution previously
passed or sanctioned by the Warrantholders;
(c) to direct or to authorize the Trustee to enforce any of the
covenants on the part of the Corporation contained in this Indenture
or the Warrant Certificates or to enforce any of the rights of the
Warrantholders in any manner specified in such extraordinary
resolution or to refrain from enforcing any such covenant or right;
(d) to waive, and to direct the Trustee to waive, any default on the
part of the Corporation in complying with any provisions of this
Indenture or the Warrant Certificates either unconditionally or upon
any conditions specified in such extraordinary resolution;
(e) to restrain any Warrantholder from taking or instituting any suit,
action or proceeding against the Corporation for the enforcement of
any of the covenants on the part of the Corporation in this
Indenture or the Warrant Certificates or to enforce any of the
rights of the Warrantholders;
(f) to direct any Warrantholder who, as such, has brought any suit,
action or proceeding to stay or to discontinue or otherwise to deal
with the same upon payment of the costs, charges and expenses
- 27 -
reasonably and properly incurred by such Warrantholder in
connection therewith;
(g) to assent to any change in or omission from the provisions contained
in the Warrant Certificates and this Indenture or any ancillary or
supplemental instrument which may be agreed to by the Corporation,
and to authorize the Trustee to concur in and execute any ancillary
or supplemental indenture embodying the change or omission;
(h) with the consent of the Corporation, to remove the Trustee or its
successor in office and to appoint a new trustee or trustees to take
the place of the Trustee so removed; and
(i) to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of the
Corporation.
7.11 MEANING OF EXTRAORDINARY RESOLUTION
(a) The expression "extraordinary resolution" when used in this
Indenture means, subject as hereinafter provided in this
Section 7.11 and in Section 7.14, a resolution proposed at a
meeting of Warrantholders duly convened for that purpose and
held in accordance with the provisions of this Article VII at which
there are present in person or by proxy Warrantholders entitled to
acquire at least 25% of the aggregate number of Common Shares
which may be acquired pursuant to all the then outstanding Class
B Warrants and passed by the affirmative votes of Warrantholders
entitled to acquire not less than 75% of the aggregate number of
Common Shares which may be acquired pursuant to all the then
outstanding Class B Warrants represented at the meeting and
voted on the poll upon such resolution.
(b) If, at any meeting called for the purpose of passing an
extraordinary resolution, Warrantholders entitled to acquire at
least 25% of the aggregate number of Common Shares which
may be acquired pursuant to all the then outstanding Class B
Warrants 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,
shall be dissolved; but in any other case it shall stand adjourned
to such day, being not less than 15 or more than 60 days later,
and to such place and time as may be appointed by the chairman.
- 28 -
Not less than ten days' prior notice shall be given of the time and
place of such adjourned meeting in the manner provided for in
Section 10.02. Such notice shall state that at the adjourned meeting
the Warrantholders present in person or by proxy did not form a
quorum but it shall not be necessary to set forth the purposes for
which the meeting was originally called or any other particulars. At
the adjourned meeting the Warrantholders present in person or by
proxy shall form a quorum and may transact the business for which
the meeting was originally convened and a resolution proposed at
such adjourned meeting and passed by the requisite vote as provided
in subsection 7.11(a) shall be an extraordinary resolution within
the meaning of this Indenture notwithstanding that Warrantholders
entitled to acquire at least 25% of the aggregate number of Common
Shares which may be acquired pursuant to all the then outstanding
Class B Warrants are not present in person or by proxy at such
adjourned meeting.
(c) Votes on an extraordinary resolution shall always be given on a poll
and no demand for a poll on an extraordinary resolution shall be
necessary.
7.12 POWERS CUMULATIVE
Any one or more of the powers or any combination of the powers in
this Indenture stated to be exercisable by the Warrantholders by extraordinary
resolution or otherwise may be exercised from time to time and the exercise of
any one or more of such powers or any combination of powers from time to time
shall not be deemed to exhaust the right of the Warrantholders to exercise such
power or powers or combination of powers then or thereafter from time to time.
7.13 MINUTES
Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be provided from time
to time for that purpose by the Trustee at the expense of the Corporation, and
any such minutes as aforesaid, if signed by the chairman or the secretary of the
meeting at which such resolutions were passed or proceedings had shall be PRIMA
FACIE evidence of the matters therein stated and, until the contrary is proved,
every such meeting in respect of the proceedings of which minutes shall have
been made shall be deemed to have been duly convened and held, and all
resolutions passed thereat or proceedings taken shall be deemed to have been
duly passed and taken.
- 29 -
7.14 INSTRUMENTS IN WRITING
All actions which may be taken and all powers that may be exercised
by the Warrantholders at a meeting held as provided in this Article VII may also
be taken and exercised by Warrantholders entitled to acquire at least 75% of the
aggregate number of Common Shares which may be acquired pursuant to all the then
outstanding Class B Warrants by an instrument in writing signed in one or more
counterparts by such Warrantholders in person or by attorney duly appointed in
writing, provided that such instrument was submitted to, and the expression
"extraordinary resolution" when used in this Indenture shall include an
instrument so signed.
7.15 BINDING EFFECT OF RESOLUTIONS
Every resolution and every extraordinary resolution passed in
accordance with the provisions of this Article VII at a meeting of
Warrantholders shall be binding upon all the Warrantholders, whether present at
or absent from such meeting, and every instrument in writing signed by
Warrantholders in accordance with Section 7.14 shall be binding upon all the
Warrantholders, whether signatories thereto or not, and each and every
Warrantholder and the Trustee (subject to the provisions for indemnity herein
contained) shall be bound to give effect accordingly to every such resolution
and instrument in writing.
7.16 HOLDINGS BY CORPORATION DISREGARDED
In determining whether Warrantholders holding Warrant Certificates
evidencing the entitlement to acquire the required number of Common Shares are
present at a meeting of Warrantholders for the purpose of determining a quorum
or have concurred in any consent, waiver, extraordinary resolution,
Warrantholders' Request or other action under this Indenture, Class B Warrants
owned legally or beneficially by the Corporation or any subsidiary of the
Corporation shall be disregarded in accordance with the provisions of Section
10.08.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
8.01 PROVISION FOR SUPPLEMENTAL INDENTURES FOR CERTAIN PURPOSES
From time to time the Corporation (when authorized by action by the
directors) and the Trustee may, subject to the provisions hereof, and they
shall, when so directed in accordance with the provisions hereof, execute and
deliver by their proper officers, indentures or instruments supplemental hereto,
which thereafter shall form part hereof, for any one or more or all of the
following purposes:
- 30 -
(a) setting forth any adjustments resulting from the application of the
provisions of Article IV;
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of counsel, are necessary
or advisable in the premises, provided that the same are not in the
opinion of the Trustee, based upon the advice of counsel prejudicial
to the interests of the Warrantholders;
(c) giving effect to any extraordinary resolution passed as provided in
Article VII;
(d) making such provisions not inconsistent with this Indenture as may
be necessary or desirable with respect to matters or questions
arising hereunder or for the purpose of obtaining a listing or
quotation of the Class B Warrants on any stock exchange, provided
that such provisions are not, in the opinion of the Trustee, based
upon the advice of counsel prejudicial to the interests of the
Warrantholders;
(e) adding to or altering the provisions hereof in respect of the
transfer of Class B Warrants, making provision for the exchange of
Warrant Certificates, and making any modification in the form of the
Warrant Certificates which does not affect the substance thereof;
(f) modifying any of the provisions of this Indenture, including
relieving the Corporation from any of the obligations, conditions
or restrictions herein contained, provided that such modification
or relief shall be or become operative or effective only if, in the
opinion of the Trustee, based upon the advice of counsel, such
modification or relief in no way prejudices any of the rights of the
Warrantholders or of the Trustee, and provided further that the
Trustee may in its sole discretion decline to enter into any such
supplemental indenture which in its opinion, based upon the
advice of counsel, may not afford adequate protection to the
Trustee when the same shall become operative; and
(g) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors, mistakes
or omissions herein, provided that in the opinion of the Trustee,
based upon the advice of counsel, the rights of the Trustee and of
the Warrantholders are in no way prejudiced thereby.
- 31 -
8.02 SUCCESSOR CORPORATIONS
In the case of the consolidation, amalgamation, merger or transfer
of the undertaking or assets of the Corporation as an entirety or substantially
as an entirety to another corporation ("successor corporation"), the successor
corporation resulting from such consolidation, amalgamation, merger or transfer
(if not the Corporation) shall expressly assume, by supplemental indenture
satisfactory in form to the Trustee and executed and delivered to the Trustee,
the due and punctual performance and observance of each and every covenant and
condition of this Indenture to be performed and observed by the Corporation.
ARTICLE IX
CONCERNING THE TRUSTEE
9.01 TRUST INDENTURE LEGISLATION
(a) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.
(b) The Corporation and the Trustee agree that each will, at all times
in relation to this Indenture and any action to be taken hereunder,
observe and comply with and be entitled to the benefits of
Applicable Legislation.
9.02 RIGHTS AND DUTIES OF TRUSTEE
(a) In the exercise of the rights and duties prescribed or conferred by
the terms of this Indenture, the Trustee shall exercise that degree
of care, diligence and skill that a reasonably prudent trustee would
exercise in comparable circumstances. No provision of this Indenture
shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own
wilful misconduct or bad faith.
(b) The obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the
Trustee or the Warrantholders hereunder shall be conditional upon
the Warrantholders furnishing, when required by notice by the
Trustee, sufficient funds to commence or to continue such act,
action or proceeding and an indemnity reasonably satisfactory to
the Trustee to protect and to hold harmless the Trustee against
the costs, charges and expenses and liabilities to be incurred
thereby and any loss and damage it may suffer by reason thereof.
- 32 -
None of the provisions contained in this Indenture shall require the
Trustee to expend or to risk its own funds or otherwise to incur
financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers unless indemnified and
funded as aforesaid.
(c) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Warrantholders, at whose instance it is acting to deposit with the
Trustee the Class B Warrants held by them, for which Class B
Warrants the Trustee shall issue receipts.
(d) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, of this Section 9.02 and of Section 9.03.
9.03 EVIDENCE, EXPERTS AND ADVISERS
(a) In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Corporation shall furnish
to the Trustee such additional evidence of compliance with any
provision hereof, and in such form, as may be prescribed by
Applicable Legislation or as the Trustee may reasonably require by
written notice to the Corporation.
(b) In the exercise of its rights and duties hereunder, the Trustee may,
if it is acting in good faith, rely as to the truth of the
statements and the accuracy of the opinions expressed in statutory
declarations, opinions, reports, written requests, consents, or
orders of the Corporation, certificates of the Corporation or other
evidence furnished to the Trustee pursuant to any provision hereof
or of Applicable Legislation or pursuant to a request of the
Trustee, provided that such evidence complies with Applicable
Legislation and that the Trustee examines the same and determines
that such evidence complies with the applicable requirements of this
Indenture.
(c) Whenever it is provided in this Indenture or under Applicable
Legislation that the Corporation shall deposit with the Trustee
resolutions, certificates, reports, opinions, requests, orders or
other documents, it is intended that the trust, accuracy and good
faith on the effective date thereof and the facts and opinions
stated in all such documents so deposited shall, in each and every
- 33 -
such case, be conditions precedent to the right of the Corporation
to have the Trustee take the action to be based thereon.
(d) Proof of the execution of an instrument in writing, including a
Warrantholders' Request, by an Warrantholder may be made by the
certificate of a notary public, or other officer with similar
powers, that the person signing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such
execution or in any other manner which the Trustee may consider
adequate.
(e) The Trustee may employ or retain such counsel, accountants,
appraisers or other experts or advisers as it may reasonably
require for the purpose of discharging its duties hereunder and
may pay reasonable remuneration for all services so performed by
any of them, without taxation of costs of any counsel, and shall
not be responsible for any misconduct or negligence on the part
of any such experts or advisers who have been appointed with
due care by the Trustee.
9.04 DOCUMENTS, MONIES, ETC. HELD BY TRUSTEE
Any securities, documents of title or other instruments that may at
any time be held by the Trustee subject to the trusts hereof may be placed in
the deposit vaults of the Trustee or of any Canadian chartered bank or deposited
for safekeeping with any such bank. Unless herein otherwise expressly provided,
any monies so held pending the application or withdrawal thereof under any
provisions of this Indenture may be deposited in the name of the Trustee in any
Canadian chartered bank at the rate of interest (if any) then current on similar
deposits or, with the consent of the Corporation, 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, 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 any Canadian chartered bank or loan or
trust company. Unless the Corporation shall be in default
hereunder, all interest or other income received by the
Trustee in respect of such deposits and investments shall
belong to the Corporation.
- 34 -
9.05 ACTIONS BY TRUSTEE TO PROTECT INTEREST
The Trustee shall have power to institute and to maintain such
actions and proceedings as it may consider necessary or expedient to preserve,
protect or enforce its interests and the interests of the Warrantholders.
9.06 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts and powers of this Indenture or otherwise
in respect of the premises.
9.07 PROTECTION OF TRUSTEE
By way of supplement to the provisions of any law for the time being
relating to Trustees it is expressly declared and agreed as follows:
(a) the Trustee shall not be liable for or by reason of any statements
of fact or recitals in this Indenture or in the Warrant Certificates
(except the representation contained in Section 9.09 or in the
signature of the Trustee on the Warrant Certificates) or be required
to verify the same, but all such statements or recitals are and
shall be deemed to be made by the Corporation;
(b) nothing herein contained shall impose any obligation on the Trustee
to see to or to require evidence of the registration or filing (or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;
(c) the Trustee shall not be bound to give notice to any person or
persons of the execution hereof; and
(d) the Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach on
the part of the Corporation of any of the covenants herein contained
or of any acts of any directors, officers, employees, agents or
servants of the Corporation.
9.08 REPLACEMENT OF TRUSTEE; SUCCESSOR BY MERGER
(a) The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder, subject to this Section 9.08, by
giving to the Corporation not less than 90 days' prior notice in
writing or such shorter prior notice as the Corporation may accept
as sufficient. The Warrantholders by extraordinary resolution shall
- 35 -
have power at any time to remove the existing Trustee and to appoint
a new trustee. In the event of the Trustee resigning or being
removed as aforesaid or being dissolved, becoming bankrupt, going
into liquidation or otherwise becoming incapable of acting
hereunder, the Corporation shall forthwith appoint a new trustee
unless a new trustee has already been appointed by the
Warrantholders; failing such appointment by the Corporation, the
retiring Trustee or any Warrantholder may apply to a justice of the
Supreme Court of the Province of British Columbia, on such notice as
such justice may direct, for the appointment of a new trustee; but
any new trustee so appointed by the Corporation or by the Court
shall be subject to removal as aforesaid by the Warrantholders. Any
new trustee appointed under any provision of this Section 9.08 shall
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 for any other provinces, in such other
provinces. On any such appointment the new trustee shall be vested
with the same powers, rights, duties and responsibilities as if it
had been originally named herein as Trustee hereunder.
(b) Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Warrantholders thereof in the manner provided
for in Article X hereof.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation resulting
therefrom to which the Trustee shall be a party, or any
corporation succeeding to the trust business of the Trustee shall
be the successor to the Trustee hereunder without any further act
on its part or any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor
trustee under subsection 9.08(a).
(d) Any Warrant Certificates countersigned but not delivered by a
predecessor trustee may be countersigned by the successor trustee in
the name of the predecessor or successor trustee.
9.09 CONFLICT OF INTEREST
(a) The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest
exists between its role as a trustee hereunder and its role in any
other capacity and agrees that in the event of a material conflict
of interest arising hereafter it will, within 90 days after
ascertaining
- 36 -
that it has such material conflict of interest, either eliminate the
same or assign its trust hereunder to a successor trustee approved
by the Corporation and meeting the requirements set forth in
subsection 9.08(a). Notwithstanding the foregoing provisions of this
subsection 9.09(a), if any such material conflict of interest exists
or hereafter shall exist, the validity and enforceability of this
Indenture and the Warrant Certificates shall not be affected in any
manner whatsoever by reason thereof.
(b) Subject to subsection 9.09(a), the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the
Corporation and generally may contract and enter into financial
transactions with the Corporation or any subsidiary of the
Corporation without being liable to account for any profit made
thereby.
9.10 ACCEPTANCE OF TRUST
The Trustee hereby accepts the trusts in this Indenture declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth.
9.11 TRUSTEE NOT TO BE APPOINTED RECEIVER
The Trustee and any person related to the Trustee shall not be
appointed a receiver, a receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.
9.12 INDEMNIFICATION
Without limiting any protection or indemnity of the Trustee under
any other provision hereof, or otherwise at law, the Corporation 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 Indenture.
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.
- 37 -
ARTICLE X
GENERAL
10.01 NOTICE TO THE CORPORATION AND THE TRUSTEE
(a) Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or the Trustee shall be deemed to be
validly given if delivered or if sent by registered letter, postage
prepaid:
if to the Corporation:
Seven Seas Petroleum Inc.
Suite 960 Three Post Oak Central
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
ATTENTION: ▇▇▇ ▇▇▇▇▇▇▇▇
if to the Trustee:
Montreal Trust Company of Canada
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇
ATTENTION: MANAGER, CORPORATE TRUST
and any such notice delivered in accordance with the foregoing shall be deemed
to have been received on the date of delivery or, if mailed, on the fifth
Business Day following the date of the postmark on such notice.
(b) The Corporation or the Trustee, as the case may be, may from
time to time notify the other in the manner provided in
subsection 10.01(a) of a change of address which, from the
effective date of such notice and until changed by like notice,
shall be the address of the Corporation or the Trustee, as the case
may be, for all purposes of this Indenture. A copy of any notice
of change of address given pursuant to subsection 10.01(b) shall
be sent to the Warrant Agency, where it shall be available for
inspection by Warrantholders during normal business hours.
- 38 -
(c) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the Trustee or to the Corporation hereunder could reasonably be
considered unlikely to reach its destination, such notice shall be
valid and effective only if it is delivered to the named officer of
the party to which it is addressed or, if it is delivered to such
party at the appropriate address provided in subsection 10.01(a),
by cable, telegram, telex or other means of prepaid, transmitted
and recorded communication.
10.02 NOTICE TO WARRANTHOLDERS
(a) Any notice to the Warrantholders under the provisions of this
Indenture shall be valid and effective if sent by telegram, telex or
telecopier or letter or circular through the ordinary post addressed
to such holders at their post office addresses appearing on the
register hereinbefore mentioned and shall be deemed to have been
effectively given on the date of delivery or, if mailed, five
Business Days following actual posting of the notice.
(b) If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the Warrantholders hereunder could reasonably be considered
unlikely to reach its destination, such notice shall be valid and
effective only if it is delivered personally to such Warrantholders
or if delivered to the address for such Warrantholders contained
in the register of Class B Warrants maintained by the Trustee, by
cable, telegram, telex or other means of prepaid, transmitted and
recorded communication.
10.03 OWNERSHIP OF CLASS B WARRANTS
The Corporation and the Trustee may deem and treat the registered
owner of any Warrant Certificate as the absolute owner of the Class B Warrant
represented thereby for all purposes, and the Corporation and the Trustee shall
not be affected by any notice or knowledge to the contrary except where the
Corporation or the Trustee is required to take notice by statute or by order of
a court of competent jurisdiction. A Warrantholder shall be entitled to the
rights evidenced by such Warrant Certificate free from all equities or rights of
set-off or counterclaim between the Corporation and the original or any
intermediate holder thereof and all persons may act accordingly and the receipt
of any such Warrantholder for the Common Shares which may be acquired pursuant
thereto shall be a good discharge to the Corporation and the Trustee for the
same and neither the Corporation nor the Trustee shall be bound to inquire into
the title of any such holder except where the Corporation or the
- 39 -
Trustee is required to take notice by statute or by order of a court of
competent jurisdiction.
10.04 Intentionally Left Blank.
- 40 -
10.05 COUNTERPARTS
This Indenture may be executed in several counterparts, each of
which when so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument and notwithstanding their
date of execution they shall be deemed to be dated as of the date hereof.
10.06 SATISFACTION AND DISCHARGE OF INDENTURE
Upon the earlier of:
(a) the date by which there shall have been delivered to the Trustee for
exercise or destruction all Warrant Certificates theretofore
countersigned hereunder; or
(b) the Time of Expiry;
this Indenture shall cease to be of further effect and the Trustee, on demand of
and at the cost and expense of the Corporation and upon delivery to the Trustee
of a certificate of the Corporation stating that all conditions precedent to the
satisfaction and discharge of this Indenture have been complied with, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture.
- 41 -
10.07 PROVISIONS OF INDENTURES AND CLASS B WARRANTS FOR THE SOLE BENEFIT
OF PARTIES AND WARRANTHOLDERS
Nothing in this Indenture or in the Warrant Certificates, expressed
or implied, shall give or be construed to give to any person other than the
parties hereto and the Warrantholders, as the case may be, any legal or
equitable right, remedy or claim under this Indenture, or under any covenant or
provision herein or therein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and the Warrantholders.
- 42 -
10.08 COMMON SHARES OR CLASS B WARRANTS OWNED BY THE CORPORATION
OR ITS SUBSIDIARIES - CERTIFICATE TO BE PROVIDED
For the purpose of disregarding any Class B Warrants owned legally
or beneficially by the Corporation or any subsidiary of the Corporation in
Section 7.16, the Corporation shall provide to the Trustee, from time to time, a
certificate of the Corporation setting forth as at the date of such certificate:
(a) the names (other than the name of the Corporation) of the registered
holders of Common Shares which, to the knowledge of the Corporation,
are owned by or held for the account of the Corporation or any
Subsidiary of the Corporation; and
(b) the number of Class B Warrants owned legally or beneficially by
the Corporation or any subsidiary of the Corporation;
and the Trustee, in making the computations in Section 7.16, shall be entitled
to rely on such certificate without more.
IN WITNESS WHEREOF the parties hereto have executed this Indenture under their
respective corporate seals and the hands of their proper officers in that behalf
as of the date first above written.
SEVEN SEAS PETROLEUM INC.
Per: _________________________________
Per: _________________________________
MONTREAL TRUST COMPANY OF CANADA
Per: _________________________________
Per: _________________________________
THIS IS SCHEDULE "A" TO A Class B WARRANT INDENTURE
MADE AS OF OCTOBER 15, 1996 BETWEEN
SEVEN SEAS PETROLEUM INC.
MONTREAL TRUST COMPANY OF CANADA, AS TRUSTEE.
THE Class B WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND
OF NO VALUE UNLESS EXERCISED BY 5:00 P.M. (VANCOUVER TIME) ON
OCTOBER 15, 1997.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (THE "U.S. ACT"), AS AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE
THEREOF, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR
ITS TERRITORIES OR POSSESSIONS OR TO A CITIZEN, RESIDENT OR NATIONAL OF THE
UNITED STATES DURING THE 40 DAY PERIOD COMMENCING ON THE DATE OF ISSUANCE OF THE
SECURITIES REPRESENTED HEREBY UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE
U.S. ACT OR PURSUANT TO AN EXEMPTION FROM THE U.S. ACT.
CLASS B WARRANTS
SEVEN SEAS PETROLEUM INC.
Suite 960 Three Post Oak Central
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
(Incorporated under the laws of the Province of British Columbia)
Class B WARRANT _____________ Class B WARRANTS
CERTIFICATE NO.______________ one such warrant entitling the holder to
purchase 1 Common Share at a price of
U.S. $18.50 per Common Share on or
before October 15, 1997.
THIS IS TO CERTIFY THAT ____________________________________________________
(herein called the "holder") is entitled to acquire in the manner herein
provided, subject to the restrictions herein contained, during the period
commencing on the date hereof and ending at 5:00 p.m. (Vancouver time) on
October 15, 1997 (the "Expiry Date"), the number of fully paid and
non-assessable common shares ("Common Shares") without nominal or par value of
Seven Seas Petroleum Inc. ("the Corporation") as set forth above.
- 2 -
Such right to purchase Common Shares may only be exercised by the holder hereof
within the time hereinbefore set out by:
(a) duly completing in the manner indicated and executing the
Exercise Form attached hereto; and
(b) surrendering this Class B Warrant Certificate to Montreal Trust
Company of Canada (the "Trustee") at the principal office of the
Trustee in the City of Vancouver, British Columbia; and
(c) payment by cash or certified cheque or money order in lawful monies
of the United States of America, payable to or to the order of the
Corporation in the amount of EIGHTEEN DOLLARS AND FIFTY CENTS
($18.50), for each Common Share to be purchased until the Expiry
Date (the "Exercise Price") at the principal office of the Trustee
in the City of Vancouver, British Columbia.
These Class B Warrants shall be deemed to be so surrendered only upon personal
delivery thereof or, if sent by post or other means of transmission, upon actual
receipt thereof by the Trustee at the office referred to above.
Upon such surrender, the person or persons in whose name or names the Common
Shares issuable upon exercise of the Class B Warrants are to be issued shall be
deemed for all purposes (except as provided in the Indenture hereinafter
referred to) the holder or holders of record of such Common Shares and the
Corporation covenants that it will (subject to the provisions of the Indenture)
cause a certificate or certificates representing such Common Shares to be
delivered or mailed to such person or persons at the address or addresses
specified in such Exercise Form.
The registered holder of these Class B Warrants may acquire any lesser number of
Common Shares than the number of Common Shares which may be acquired for the
Class B Warrants represented by this Class B Warrant Certificate and in such
event shall be entitled to receive a new Class B Warrant Certificate in respect
of the balance of the Common Shares which may be acquired.
To the extent that the Class B Warrants represented by this Class B Warrant
Certificate confer the right to acquire a fraction of a Common Share, such right
may be exercised in respect of such fraction only in combination with an
additional Class B Warrant or Class B Warrants which in the aggregate entitle
the holder to acquire a whole number of Common Shares. No fractional Common
Shares will be issued.
The Class B Warrants represented by this Class B Warrant Certificate are issued
under and pursuant to a Class B Warrant indenture (herein called the
"Indenture") made as of October 15, 1996, between the Corporation and the
Trustee (which expression shall include any successor trustee appointed under
the Indenture), to which Indenture
- 3 -
and any instruments supplemental thereto reference is hereby made for a full
description of the rights of the holders of the Class B Warrants and the terms
and conditions upon which such Class B Warrants are, or are to be, issued and
held, all to the same effect as if the provisions of the Indenture and all
instruments supplemental thereto were herein set forth, and to all of which
provisions the holder of these Class B Warrants by acceptance hereof assents.
In the event of any alteration of the Common Shares, including any subdivision,
consolidation or reclassification, and in the event of any form of
reorganization of the Corporation, including any amalgamation, merger or
arrangement, an adjustment shall be made to the terms of the Class B Warrants
such that the holders thereof, upon exercise of any Class B Warrants following
the completion of any of the above noted events, will be entitled to receive the
same number and kind of securities that they would have been entitled to receive
had they exercised their Class B Warrants immediately prior to such event.
The registered holder of this Class B Warrant Certificate may at any time prior
to the Expiry Date of the Class B Warrants, upon surrender hereof to the Trustee
at its principal office in the City of Vancouver, British Columbia and payment
of the charges provided for in the Indenture, exchange this Class B Warrant
Certificate for other Class B Warrant Certificates evidencing Class B Warrants
entitling the holder to acquire in the aggregate the same number of Common
Shares as may be acquired under this Class B Warrant Certificate.
The holding of the Class B Warrants evidenced by this Class B Warrant
Certificate shall not constitute the holder hereof a shareholder of the
Corporation or entitle such holder to any right or interest in respect thereof
except as herein and in the Indenture expressly provided.
The Indenture contains provisions making binding upon all holders of Class B
Warrant Certificates outstanding thereunder resolutions passed at meetings of
such holders held in accordance with such provisions and instruments in writing
signed by the holders of Class B Warrants entitled to acquire a specified
majority of the Common Shares which may be acquired pursuant to all then
outstanding Class B Warrant Certificates.
The Class B Warrants evidenced by this Class B Warrant Certificate may not be
transferred or assigned.
This Class B Warrant Certificate shall not be valid for any purpose whatever
unless and until it has been countersigned by or on behalf of the Trustee.
Time shall be of the essence hereof.
- 4 -
Words and phrases defined in the Indenture where used in this Class B Warrant
Certificate shall be given the meanings ascribed thereto in the Indenture unless
otherwise defined herein.
IN WITNESS WHEREOF the Corporation has caused this Class B Warrant Certificate
to be signed by its duly authorized officers effective as of October 15, 1996.
SEVEN SEAS PETROLEUM INC.
Per:_______________________________
Per:_______________________________c/s
Countersigned by:
MONTREAL TRUST COMPANY OF CANADA
TRUSTEE
By:_______________________________
Authorized Signature
EXERCISE FORM
TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned hereby exercises the right to acquire _________________ Common
Shares without nominal or par value of Seven Seas Petroleum Inc. (or such number
of other securities or property to which such Class B Warrants entitle the
undersigned in lieu thereof or in addition thereto under the provisions of the
Indenture mentioned in the Class B Warrant Certificate) according to the terms
of the Indenture mentioned in the Class B Warrant Certificate.
Such securities or property are to be issued as follows:
NAME:_________________________________________________
ADDRESS IN FULL:______________________________________
______________________________________
______________________________________
DATED this ______ day of ___________________, 19___.
SIGNATURE GUARANTEED SIGNATURE
(BY A CANADIAN CHARTER BANK, TRUST
COMPANY OR A MEMBER OF THE VANCOUVER, (PRINT FULL NAME)
TORONTO, MONTREAL OR NEW YORK STOCK
EXCHANGES)
(PRINT FULL ADDRESS)
- 2 -
INSTRUCTIONS:
The registered holder may exercise his right to acquire Common Shares by
completing the above form, surrendering this Class B Warrant Certificate and
paying the Exercise Price to Montreal Trust Company of Canada at its principal
office in Vancouver, British Columbia. For the protection of the holder, it
would be prudent to register if forwarding by mail. Certificates for Common
Shares will be delivered or mailed as soon as practicable after the exercise of
the Class B Warrants. The rights of the registered holder cease if the Class B
Warrants are not exercised prior to 5:00 p.m. (Vancouver time) on the Expiry
Date. If any of the Common Shares subscribed for are to be issued to a person or
persons other than the registered holder, the signature of the registered holder
must be guaranteed by a Canadian chartered bank, trust company or by a member of
the Vancouver, Toronto, Montreal or New York stock exchanges.