1
EXHIBIT 2.03
GRANGES INC.
- AND -
MONTREAL TRUST COMPANY OF CANADA
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WARRANT INDENTURE
Providing for the issue of
2,047,938 Class "A" and 2,529,161 Class "B"
Common Share Purchase Warrants
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June 7, 1996
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TABLE OF CONTENTS
Page
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ARTICLE ONE
Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Words Importing the Singular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Interpretation not Affected by Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 Day Not a Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 English Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 Meaning of "outstanding" for Certain Purposes . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE TWO
Issue of Warrants . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Creation and Issue of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Terms of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Issue in Substitution for Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Warrantholder not a Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Warrants to Rank Pari Passu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Signing of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Certification by the Trustee or Co-transfer Agent . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE THREE
Exchange and Ownership of Warrants . . . . . . . . . . . . . . . . . . . 11
3.1 Exchange of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Charges for Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Ownership of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Registration of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Warrants Not Transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE FOUR
Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Notice of Final Receipt Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2 Notice of Commencement of Class B Warrant Exercise Period . . . . . . . . . . . . . . . . . 13
4.3 Notice of Class B Warrant Exercise Period . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Method of Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Effect of the Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7 Expiry Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Expiration of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.9 Cancellation of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE FIVE
Adjustment of Exercise Number . . . . . . . . . . . . . . . . . . . . 18
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Adjustment of Exercise Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Subscription Rights Adjustment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Postponement of Share Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Protection of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 Proceedings Prior to Any Action Requiring Adjustment . . . . . . . . . . . . . . . . . . . 24
ARTICLE SIX
Rights and Covenants . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Purchase of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Trustee's Remuneration and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Performance of Covenants by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Notice to Warrantholders of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 Closure of Share Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE SEVEN
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Enforcement of Rights of the Warrantholder . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Immunity of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE EIGHT
Powers of Warrantholders . . . . . . . . . . . . . . . . . . . . . . 29
8.1 Powers Exercisable by the Warrantholder . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Powers Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Record of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 Binding Effect of Notices Upon Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE NINE
Supplemental Indentures and Successor Companies . . . . . . . . . . . . . . . . 30
9.1 Provision for Supplemental
Indentures for Certain Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Successor Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE TEN
Concerning the Trustee . . . . . . . . . . . . . . . . . . . . . . 32
10.1 Trust Indenture Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.3 Evidence, Experts and Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.4 Documents, Monies, etc. Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.5 Action by Trustee to Protect Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.6 Trustee not Required to Give Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.7 Protection of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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10.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.9 Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 Acceptance of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.11 Trustee Not to be Appointed Receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.12 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE ELEVEN
General . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.1 Notice to the Company or the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Notice to Warrantholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Sole Benefit of Parties and Warrantholders . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Discretion of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.6 Counterparts and Formal Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SCHEDULE "A" CLASS "A" COMMON SHARE PURCHASE WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE "B" CLASS "B" COMMON SHARE PURCHASE WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE "C" FORM OF DECLARATION FOR REMOVAL OF LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE "D" EXERCISE FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE "E" INSTRUCTIONS FOR THE TRANSFER OF COMMON SHARES BEARING A U.S. SECURITIES ACT LEGEND . . . . 1
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THIS WARRANT INDENTURE is dated as of June 7, 1996
BETWEEN:
GRANGES INC., a company incorporated under the laws of the
Province of British Columbia, having its head office at ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇
(the "Company")
AND:
MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated
under the laws of Canada, having an office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Trustee").
WHEREAS:
The Company has created and issued 2,047,938 Special Warrants
pursuant to the Special Warrant Indenture, each Special Warrant exercisable to
acquire one A Warrant and 2,529,161 B Warrants;
The Company is duly authorized to create and issue the
Warrants to be issued as herein provided;
Subject to adjustment in the circumstances herein provided,
one whole Warrant will entitle the holder thereof to purchase one Share for no
additional consideration;
2,047,938 A Warrants and 2,529,161 B Warrants will be issued
entitling the holder thereof to purchase in the aggregate up to 4,577,099
Shares, subject to adjustment as herein provided;
All things necessary have been done and performed to make the
Warrants, when certified by the Trustee and issued and delivered as herein
provided, legal, valid and binding upon the Company with the benefits of and
subject to the terms of this Indenture;
The Trustee has agreed to enter into this Indenture and to
hold all rights, interests and benefits contained herein for and on behalf of
the person who becomes the holder of Warrants from time to time issued pursuant
to this Indenture;
NOW THEREFORE THIS INDENTURE WITNESSES that in consideration
of the premises and the covenants of the parties, the Company hereby appoints
the Trustee as trustee for the Warrantholder, to hold all rights, interests and
benefits contained herein for and on behalf of that person who becomes the
holder of Warrants from time to time issued pursuant to this Indenture and it
is hereby agreed and declared as follows:
6
ARTICLE ONE
Interpretation
Definitions
In this Indenture and in the recitals and schedules hereto,
unless the subject matter or context is inconsistent therewith, the following
phrases and words shall have the following meanings:
"A Warrant" means a non-transferable Class "A" common share purchase
warrant authorized to be created by the Company under Section
2.1 and issued and certified under this Indenture and for the
time being outstanding;
"Applicable Legislation" means the provisions of any statute of Canada
or a province thereof, and the regulations under any such
statute relating to trust indentures or the rights, duties or
obligations of corporations and trustees under trust
indentures as are from time to time in force and applicable to
this Indenture;
"B Warrant" means a non-transferable Class "B" common share purchase
warrant authorized to be created by the Company under Section
2.1 and issued and certified under this Indenture and for the
time being outstanding;
"board" means the board of directors of the Company;
"business day" means a day that is not a Saturday, Sunday or civic or
statutory holiday in the city of Vancouver, British Columbia;
"Class A Warrant Exercise Date" means the later of:
the date of Closing stipulated in section 3.1 of the
executed Purchase Agreement; and
the earlier of:
the Final Receipt Date; and
June 7, 1997;
"Class A Warrant Expiry Time" means 4:30 p.m. (local time) on the
Class A Warrant Exercise Date;
"Class B Warrant Exercise Period" means the period commencing upon the
delivery of a Commencement Notice by the Company to the
Trustee and ending 15 days thereafter;
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"Class B Warrant Expiry Date" means the earlier of:
the fifteenth day after the delivery to the Trustee
by the Company of a Commencement Notice; and
the tenth day after the delivery to the Trustee by
the Company of an Expiry Notice;
"Class B Warrant Expiry Time" means 4:30 p.m. (local time) on the
Class B Warrant Expiry Date;
"Commencement Notice" has the meaning given in subsection 4.2;
"Company" means Granges Inc., a company incorporated under the laws of
the Province of British Columbia, and its lawful successors
from time to time as provided for in section 9.2;
"Company's auditors" means the firm of chartered accountants duly
appointed as auditors of the Company from time to time;
"Convertible Security" means a security of the Company (other than the
Special Warrants or Warrants) convertible into or otherwise
carrying the right to acquire authorized but unissued Shares;
"Co-transfer Agent" has the meaning given in section 2.1;
"Current Market Price", at any date, means the weighted average price
per Share at which the Shares have traded:
on The Toronto Stock Exchange;
if the Shares are not listed on The Toronto Stock
Exchange, on any stock exchange upon which
the Shares are listed as may be selected for
this purpose by the directors and approved by
the Trustee; or
if the Shares are not listed, on any over-the-counter
market as may be selected for this purpose by
the directors and approved by the Trustee;
during the 20 consecutive trading days (on each of which at
least 500 Shares are traded in board lots) ending the 15th
trading day before such date, and the weighted average price
shall be determined by dividing the aggregate sale price of
all Shares sold in board lots on the exchange or market, as
the case may be, during the 20 consecutive trading days by the
aggregate number of Shares sold;
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"director" means a director of the Company from time to time, and
reference without more to action by the directors shall mean
action by the directors as a board or by any authorized
committee thereof, in each case by resolution duly passed;
"dividends" means dividends or distributions (payable in cash or in
securities, property or assets of equivalent value) declared
payable on Shares;
"dividends paid in the ordinary course" means such dividends or
distributions declared payable on Shares in any fiscal year of
the Company to the extent that such dividends or distributions
in the aggregate do not exceed on a per Share basis 5% of the
Subscription Price, and for such purposes the amount of any
dividends or distributions paid in other than cash or shares
shall be the fair market value of such dividends as determined
by the directors;
"Excess Reserves Payment" means the payment required to be made by the
Company to L. B. Mining Co. pursuant to section 4.3 of the
Purchase Agreement of U.S. $30.00 per ounce for all Excess
Ounces (as defined in the Purchase Agreement) determined to
exist by the Semi-Annual Studies (as defined in the Purchase
Agreement);
"Exercise Date", with respect to any Warrant, means the date on which
the Warrant Certificate evidencing such Warrant is duly
exercised in accordance with the provisions of subsections
4.4(1) or (3);
"Exercise Number" at any time, means that number of Shares that
Warrantholders are entitled to receive from time to time for
each Warrant held upon exercise of the rights attached to the
Warrant as that number may be adjusted by Article Five hereof
and that number, as at the date hereof, is equal to one Share
for each Warrant;
"Expiry Notice" has the meaning given in section 4.7;
"Final Prospectus" means the final version of the prospectus to be
filed with each of the Securities Commissions relating to the
distribution of the Warrants issuable to the holders of the
Special Warrants upon exercise of the Special Warrants and
includes any amendments or supplements thereto;
"Final Receipt Date" means the day on which a receipt is issued for
the Final Prospectus by the last of the Securities Commissions
to do so under the applicable Securities Laws of the
Provinces;
"Option Agreement" means the exploration and purchase option agreement
dated as of June 7, 1996 between L. B. Mining Co. and the
Company;
"person" means an individual, a corporation, a partnership, a trust,
or any unincorporated organization, and words importing
persons have a similar meaning;
"Provinces" means the provinces of British Columbia and Ontario;
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"Purchase Agreement" means the stock purchase agreement to be entered
into between the Company and L. B. Mining Co. in accordance
with, and in the form attached as Exhibit D to, the Option
Agreement;
"Registrar" means a registrar, from time to time, of the Warrants
appointed pursuant to subsection 3.4(1);
"Regulation S" means Regulation S under the U.S. Securities Act;
"Securities Commissions" means, collectively, the securities
commission or other securities regulatory authority under the
applicable Securities Laws of each of the Provinces;
"Securities Laws" means, collectively, the applicable securities laws
of each of the Provinces and the respective regulations and
rules made and forms prescribed thereunder together with all
applicable published policy statements, notices, blanket
orders and rulings of the Securities Commissions;
"Shares" means the fully paid and non-assessable common shares without
par value in the capital of the Company; provided that in the
event of any adjustment pursuant to Article Five, "Shares"
shall thereafter mean the shares or other securities or
property that a Warrantholder is entitled to on an exchange
after the adjustment;
"Special Warrant Indenture" means the special warrant indenture dated
as of June 7, 1996 between the Company and the Trustee,
pursuant to which the Company authorized the creation and
issuance of 2,047,938 Special Warrants;
"Special Warrants" means the special warrants issued under the Special
Warrant Indenture entitling the holder thereof to acquire, at
no additional cost to the holder, Warrants upon the exercise
of the Special Warrant;
"Stock" has the meaning attributed thereto in the Option Agreement;
"subsidiary of the Company" means a corporation, more than 50% of the
outstanding voting shares of which are owned, directly or
indirectly other than by way of security only, by the Company
or by one or more of the subsidiaries of the Company. As used
in this definition, "voting shares" means shares of a class or
classes ordinarily entitled to vote for the election of a
majority of the directors of a corporation irrespective of
whether or not shares of any other class or classes have or
might have the right to vote for directors by reason of the
happening of any contingency;
"this Indenture", "hereto", "herein", "hereby", "hereunder", "hereof"
and similar expressions refer to this instrument and not to
any particular Article, section, subsection, paragraph,
clause, or other portion hereof, and include any and every
instrument supplemental or ancillary hereto or in
implementation hereof;
"Trustee" means Montreal Trust Company of Canada or any lawful
successor thereto in the trusts hereby created, including
through the operation of section 10.8;
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"U.S. Person" means a U.S. person as that term is defined in
Regulation S;
"U.S. Securities Act" means the Securities Act of 1933, as amended, of
the United States;
"United States" means the United States as that term is defined in
Regulation S;
"Warrant" means an "A Warrant" or a "B Warrant";
"Warrant Certificate" means a certificate in either of the forms
attached as Schedule "A" or Schedule "B" hereto, or such other
form as may be approved under subsection 2.3(1) evidencing one
or more Warrants;
"Warrantholder", "holder" or "holder of Warrants" means with respect
to the Warrants, L. B. Mining Co.; and
"Warrantholder's Request" means an instrument signed in one or more
counterparts by Warrantholders holding Warrants sufficient to
purchase not less than 25% of the aggregate number of Shares
that could be purchased under all Warrants then outstanding
requesting the Trustee to take some action or proceeding
specified therein.
Words Importing the Singular
Words importing the singular include the plural and vice
versa, and words importing a particular gender include all genders.
Interpretation not Affected by Headings
The division of this Indenture into Articles, sections,
subsections and paragraphs, the provision of a table of contents and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Indenture.
Day Not a Business Day
In the event the Warrant Expiry Date or any day on or before
which any action is required to be taken hereunder is not a business day, then
the Warrant Expiry Date shall be or the action shall be required to be taken on
or before the requisite time on the next succeeding day that is a business day.
Time of the Essence
Time shall be of the essence in all respects in this
Indenture, the Warrants and the Warrant Certificates.
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Currency
Except as otherwise stated, all dollar amounts herein are
expressed in Canadian dollars.
Applicable Law
This Indenture and the Warrant Certificates shall be governed
by, construed and enforced in accordance with the laws of the Province of
British Columbia and shall be treated in all respects as British Columbia
contracts.
English Language
The parties hereby confirm that they accept this Indenture, as
well as notices and certificates relating directly or indirectly to the subject
matter hereof, as drawn in the English language.
Meaning of "outstanding" for Certain Purposes
Every Warrant Certificate certified and delivered by the
Trustee hereunder is deemed to be outstanding until the Warrant Expiry Time, or
until it is surrendered to the Trustee pursuant to this Indenture, provided
that:
a Warrant which has been partially exercised shall be deemed to be
outstanding only to the extent of the unexercised part of the
Warrant;
where a Warrant Certificate has been issued in substitution for a
Warrant Certificate which has been lost, stolen or destroyed,
only the latest Warrant Certificate issued shall be counted
for the purpose of determining the Warrants outstanding; and
for the purpose of any provision of this Indenture entitling holders
of outstanding Warrants to vote, sign consents, requests or
other instruments or take any other action under this
Indenture, Warrants owned legally or equitably by the Company
or any subsidiary of the Company shall be disregarded, except
that:
for the purpose of determining whether the Trustee
shall be protected in relying on any such
vote, consent, request or other instrument or
other action, only the Warrants of which the
Trustee has notice that they are so owned
shall be so disregarded; and
Warrants so owned which have been pledged in good
faith other than to the Company or any
subsidiary of the Company shall not be so
disregarded if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's
right to vote the Warrants in his discretion
free from the control of the Company or any
subsidiary of the Company pursuant to the
terms of the pledge.
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ARTICLE TWO
Issue of Warrants
Creation and Issue of Warrants
A total of 2,047,938 A Warrants, each entitling the holder
thereof to receive from the Company on the Class A Warrant Exercise Date one
Share, as adjusted from time to time pursuant to this Indenture, and 1.2349792
B Warrants, each entitling the holder thereof to acquire from the Company upon
due exercise thereof during the Class B Warrant Exercise Period one Share, as
adjusted from time to time pursuant to this Indenture, are hereby authorized to
be created and issued upon the exercise or deemed exercise of Special Warrants
in accordance with the terms of the Special Warrant Indenture. The Warrants so
issued shall be executed by the Company and certified by or on behalf of the
Trustee, or by such other person as the Company may from time to time appoint
with the approval of the Trustee (hereinafter referred to as a "Co-transfer
Agent") and delivered by the Company in accordance with subsection 2.3(3).
Terms of Warrants
Subject to the provisions of Articles Four and Five, each
whole A Warrant issued under section 2.1 shall entitle the holder thereof to
receive one Share, subject to adjustment in accordance with Article Five, in
partial consideration for the purchase by the Company of the Stock in
accordance with the Option Agreement on the Class A Warrant Exercise Date.
Subject to the provisions of Articles Four and Five, each
whole B Warrant issued under section 2.1 shall entitle the holder thereof to
acquire one Share, subject to adjustment in accordance with Article Five, in
partial payment of the Excess Reserves Payment in accordance with the Purchase
Agreement at any time during the Class B Warrant Exercise Period.
Fractional Warrants shall not be issued or provided for.
Warrant Certificates
A Warrants and B Warrants shall be issued in registered form
only and shall be evidenced only by Warrant Certificates, which shall be
substantially in the forms attached as Schedule "A" or Schedule "B" hereto,
respectively, with such additions, variations or omissions as may be permitted
by the provisions of this Indenture or may from time to time be agreed upon
between the Company and the Trustee, shall be dated as of date hereof
(regardless of their actual dates of issue), shall bear such legends and
distinguishing letters and numbers as the Company shall, with the approval of
the Trustee, prescribe, shall be issuable in any denomination excluding
fractions, and each Warrant Certificate issued upon the exercise of a Special
Warrant the certificate of which contains the legend set forth in subsection
2.2(2) of the Special Warrant Indenture, and all certificates issued in
exchange therefor or in substitution thereof, will bear a legend to the
following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED. THE HOLDER HEREOF, BY PURCHASING SUCH
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13
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED."
The Trustee shall maintain and make available to the Company
lists of all persons who are entitled to Warrant Certificates, and the Trustee
shall mail or deliver Warrant Certificates evidencing whole Warrants to those
persons or as directed by the Company.
Issue in Substitution for Lost Certificates
If a Warrant Certificate becomes mutilated or is lost,
destroyed or stolen, the Company, subject to applicable law and to subsection
2.4(2), shall issue, and thereupon the Trustee shall countersign or certify and
deliver, a new Warrant Certificate of like date and tenor as the one mutilated,
lost, destroyed or stolen upon surrender of and in place of and upon
cancellation of the mutilated Warrant Certificate or in lieu of and in
substitution for the lost, destroyed or stolen Warrant Certificate. The
substituted Warrant Certificate shall be in a form approved by the Trustee, be
entitled to the benefit hereof, rank equally in accordance with its terms with
all other Warrant Certificates issued or to be issued hereunder and bear the
same legends as the Warrant Certificate being replaced.
The applicant for the issue of a new Warrant Certificate
pursuant to this section 2.4 shall bear the cost of the issue thereof and in
case of loss, destruction or theft will, as a condition precedent to the issue
thereof, furnish to the Company and to the Trustee such evidence of ownership
and of the loss, destruction or theft of the Warrant Certificate so lost,
destroyed or stolen as shall be satisfactory to the Company and to the Trustee
in their discretion, and if required, furnish an indemnity in amount and form
satisfactory to the Company and to the Trustee in their discretion and pay the
reasonable charges of the Company and the Trustee in connection therewith.
Warrantholder not a Shareholder
Nothing in this Indenture or in the holding of a Warrant
evidenced by a Warrant Certificate, or otherwise, will be construed as
conferring on the Warrantholder any right or interest whatsoever as a
shareholder of the Company, including but not limited to any right to vote at,
to receive notice of, or to attend, meetings of shareholders or any other
proceedings of the Company or any right to receive any dividend or other
distribution.
Warrants to Rank Pari Passu
Except as otherwise provided herein, a Warrant shall rank pari
passu with all other Warrants issued under this Indenture, whatever may be the
actual dates of issue of the Warrant Certificates that evidence them.
Signing of Warrant Certificates
The Warrant Certificates shall be signed by any two or more of
the directors or officers of the Company and need not be under the seal of the
Company. The signature of any of these directors or officers may be
mechanically reproduced in facsimile and Warrant Certificates bearing those
facsimile signatures shall be binding upon the Company as if they had been
manually signed by the director or officer. Notwithstanding that any of the
persons whose manual or
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14
facsimile signature appears on any Warrant Certificates as an officer or
director may no longer hold office at the date of the Warrant Certificate or at
the date of certification or delivery thereof, any Warrant Certificate signed
as aforesaid shall, subject to section 2.8, be valid and binding upon the
Company.
Certification by the Trustee or Co-transfer Agent
The Trustee shall certify Warrant Certificates upon the
written direction of the Company. No Warrant Certificate shall be issued, or
if issued, shall be valid or entitle the holder to the benefit hereof until it
has been certified by manual signature by or on behalf of the Trustee or by
manual signature by the Co-transfer Agent, substantially in the form approved
by the Company and the Trustee and the certification by the Trustee or by the
Co-transfer Agent upon any Warrant Certificate shall be conclusive evidence as
against the Company that the Warrant Certificate so certified has been duly
issued hereunder and is a valid obligation of the Company, and that the holder
is entitled to the attributes and characteristics of the Warrants provided for
in this Indenture.
The certificate of the Trustee or of the Co-transfer Agent on
any Warrant Certificate issued hereunder shall not be construed as a
representation or warranty by the Trustee or by the Co-transfer Agent as to the
validity of this Indenture or of the Warrant Certificates (except the due
certification thereof) and the Trustee or the Co-transfer Agent shall in no
respect be liable or answerable for the use made of the Warrants or Warrant
Certificates or any of them or of the consideration therefor, except as
otherwise specified herein.
ARTICLE THREE
Exchange and Ownership of Warrants
Exchange of Warrants
One or more Warrant Certificates may, upon compliance with the
reasonable requirements of the Trustee, be exchanged for one or more Warrant
Certificates of the same tenor but of different denominations evidencing, in
the aggregate, the same number of Warrants as the Warrant Certificate or
Warrant Certificates being exchanged.
Warrant Certificates may be exchanged only at the principal
transfer offices of the Trustee in the city of Vancouver or at the principal
transfer office of the Co-transfer Agent designated by the Company or at any
other place that is designated by the Company with the approval of the Trustee.
Any Warrant Certificates tendered for exchange shall be surrendered to the
Trustee or to its agent or the Co-transfer Agent and, upon issuance of new
Warrant Certificates in exchange therefore, cancelled. The Company shall sign
all Warrant Certificates necessary to carry out exchanges as aforesaid and
those Warrant Certificates shall be certified by or on behalf of the Trustee
and will bear the same legends as the Warrant Certificates being exchanged.
Charges for Exchange
For each Warrant Certificate exchanged, the Trustee, or the
Co-transfer Agent except as otherwise herein provided, shall charge, if
required by the Company, a reasonable sum in respect of each Warrant
Certificate exchanged. The party requesting the exchange, as a condition
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15
precedent thereto, shall pay such charges and shall pay or reimburse the
Trustee, the Co-transfer Agent or the Company for all exigible transfer taxes
or governmental or similar transfer charges required to be paid in connection
therewith.
Ownership of Warrants
The Company and the Trustee and their respective agents may
deem and treat the holder of the Warrants as the absolute owner of the Warrants
for all purposes, and the Company and the Trustee and their respective agents
shall not be affected by any notice or knowledge to the contrary except as
required by statute or by order of a court of competent jurisdiction.
Registration of Warrants
The Company hereby appoints the Trustee as Registrar of the
Warrants. The Company may hereafter, with the consent of the Trustee, appoint
one or more other additional Registrars of the Warrants, including the
Co-transfer Agent.
The Company shall cause a register to be kept by the Trustee,
and the Trustee agrees to maintain such a register at its principal transfer
offices in the city of Vancouver, in which shall be entered the name and
address of the Warrantholder and other particulars of the Warrants held by it
and a register of all exercises of Warrants and the date and other particulars
of each exercise. Such registration shall be noted on the Warrant Certificates
by the Trustee or other Registrar duly appointed pursuant to subsection 3.4(1).
The registers referred to in this section 3.4 shall at all
reasonable times be open for inspection by the Company, by the Trustee and by
any Warrantholder.
The registered holder of a Warrant may at any time and from
time to time have the registration of the Warrant transferred from the register
in which the registration thereof appears to another authorized register upon
compliance with such reasonable requirements as the Trustee or other Registrar
duly appointed pursuant to subsection 3.4(1) may prescribe.
The Trustee and every Registrar duly appointed pursuant to
subsection 3.4(1) shall from time to time, when requested so to do by the
Company, by the Trustee or by the Warrantholder, furnish the Company, the
Trustee or, upon payment by the Warrantholder of a reasonable fee, the
Warrantholder, as the case may be, with a list of the number of Warrants held
by the Warrantholder.
Warrants Not Transferable
The Warrants authorized to be created by the Company under
Section 2.1 and issued under this Indenture are not transferable by the holder
thereof.
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ARTICLE FOUR
Exercise of Warrants
Notice of Final Receipt Date
If the Final Receipt Date occurs on or before June 7, 1997,
the Company shall forthwith give notice of such occurrence, together with
copies of the receipts for the Final Prospectus, to the Trustee.
Notice of Commencement of Class B Warrant Exercise Period
If a Semi-Annual Study (as defined in the Purchase Agreement)
determines that there are more than 500,000 Excess Ounces (as defined in the
Purchase Agreement), the Company shall, not later than the time it delivers the
Semi-Annual Study that determines the existence of more than 500,000 Excess
Ounces in accordance with section 4.3 of the Purchase Agreement deliver a
Commencement Notice to the Trustee, which notice shall indicate the
commencement of the Class B Warrant Exercise Period.
Notice of Class B Warrant Exercise Period
Upon receipt by the Trustee of a Commencement Notice, the
Trustee shall forthwith give notice to the Warrantholder specifying the
duration and expiry of the Class B Warrant Exercise Period.
Method of Exercise of Warrants
Forthwith after the execution and delivery by the parties
thereto of the Purchase Agreement and not more than 48 hours prior to the date
of the Closing stipulated in section 3.1 of the Purchase Agreement, the Company
will give a written notice to the Trustee at its principal office in Vancouver
that the A Warrants will be deemed to be exercised at the Class A Warrant
Exercise Time. Provided the completion of the transactions contemplated by the
Purchase Agreement occurs on the date of the Closing stipulated in section 3.1
of the Purchase Agreement, the A Warrants shall be deemed to be exercised by
the holder at the Class A Warrant Exercise Time without any further action on
the part of the holder. Any such deemed exercise shall be subject to the
holder providing such assurances and executing such documents as may, in the
reasonable opinion of the Company or the Trustee, be required to ensure
compliance with applicable securities legislation.
The Trustee shall only issue a certificate or certificates
representing the Shares issuable upon the exercise of the A Warrants after the
Warrantholder has surrendered the Warrant Certificate or Warrant Certificates
representing all of the A Warrants to the Trustee at its principal transfer
office in the city of Vancouver or at any other place or places that may be
designated by the Company with the approval of the Trustee, or to the
Co-Transfer Agent at its principal transfer office designated by the Company,
during normal business hours on a business day at that place following the
Class A Warrant Exercise Time together with a duly completed and executed
exercise form attached to such Warrant Certificate or Warrant Certificates, in
the form set out in Schedule "D" attached hereto.
Subject to and upon compliance with the provisions of this
Article Four and Article Five, the holder of the Warrant Certificate or Warrant
Certificates representing the B Warrants may exercise the right to acquire all
of the Shares therein provided for by surrendering the Warrant Certificate or
Warrant Certificates to the Trustee at its principal transfer office in the
city of Vancouver or at any other place or places that may be designated by the
Company with the
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approval of the Trustee, or to the Co-transfer Agent at its principal transfer
office designated by the Company, during normal business hours on a business
day at that place, during the Class B Warrant Exercise Period together with a
duly completed and executed exercise form attached to the Warrant Certificate
in the form set out in Schedule "D" attached hereto. Any such exercise shall
be subject to the holder providing such assurances and executing such documents
as may, in the reasonable opinion of the Company, the Trustee or the
Co-transfer Agent, be required to ensure compliance with all applicable
securities legislation and with the Purchase Agreement.
Surrender of a Warrant Certificate and the exercise form in
accordance with subsections 4.4(2) and (3) will be deemed to have been effected
only on personal delivery thereof to or, if sent by mail or other means of
transmission on actual receipt thereof, by the Trustee or the Co-transfer Agent
at the office specified in subsections 4.4(2) and (3).
Any exercise form referred to in subsections 4.4(2) and (3)
shall be signed by a duly authorized officer of the Warrantholder or other
legal representative or an attorney of the Warrantholder duly appointed by an
instrument in writing satisfactory to the Trustee or the Co-transfer Agent, as
the case may be. The exercise form attached to the Warrant Certificate shall
specify the person or persons in whose name or names the Shares which the
holder desires to acquire are to be issued and his or their address or
addresses and the number of Shares to be issued to each such person. If any
Shares subscribed for are to be issued to a person or persons other than the
Warrantholder, the Warrantholder shall pay to the Trustee or to its agent all
exigible transfer taxes or governmental or other charges required to be paid in
respect of the transfer of the Shares and the Company will not be required to
issue or deliver any certificate evidencing any Shares unless or until that
amount has been so paid or the Warrantholder has established to the
satisfaction of the Company that the taxes and charges have been paid or that
no taxes or charges are owing.
Unless box B has been checked on the exercise form referred to
in subsections 4.4(2) and (3), (i) B Warrants may not be exercised within the
United States or by or on behalf of any U.S. Person, (ii) no Shares shall be
issued to any person who has an address in the United States on the exercise
form and (iii) no Shares issued upon exercise of Warrants will be delivered to
any address in the United States.
In the event that any Warrant Certificate or Warrant
Certificates have been delivered to the Trustee pursuant to subsection 4.4(2)
or (3) and box B has been checked on the accompanying exercise form, then the
Trustee shall cause the certificates representing the Shares issued upon
exercise of any such Warrants to be affixed with the following legend (the
"U.S. Legend"):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT OR (C) INSIDE THE UNITED STATES IN ACCORDANCE
WITH (1) CERTAIN PROCEDURES SATISFACTORY TO THE COMPANY OR (2)
RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE.
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DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD
DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF
WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM
MONTREAL TRUST COMPANY OF CANADA UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO MONTREAL TRUST COMPANY OF CANADA AND THE
COMPANY, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT;"
provided, that if any such Share is being sold or transferred in compliance
with Rule 904 of Regulation S, the U.S. Legend may be removed by providing a
declaration to the Trustee substantially in the form set forth in Schedule C
attached hereto, and provided further that if any such Share is being sold in
compliance with Rule 144 under the U.S. Securities Act, the U.S. Legend may be
removed by delivery to the Trustee of an opinion of counsel, of recognized
standing reasonably satisfactory to the Company, to the effect that such legend
is no longer required under the applicable requirements of the U.S. Securities
Act or state securities laws.
In the event that the A Warrants are exercised in accordance
with subsection 4.4(1), the Trustee shall cause the certificates representing
the Shares issued upon exercise of any such Warrants to be affixed with the
U.S. Legend.
If, at the time of exercise of the Warrants, there remain
restrictions on resale under applicable securities legislation in respect of
the Shares issuable upon exercise of the Warrants, the Company may, on the
advice of counsel, endorse the certificate representing the Shares with respect
to those restrictions.
Effect of the Exercise of Warrants
Upon exercise of a Warrant in accordance with section 4.4 and
subject to sections 4.6, 4.8, 4.9 and 5.4, the holder of the Warrants shall be
entitled without further payment therefor to receive from the Company the
number of Shares that is equal to the number of Warrants exercised or deemed
exercised multiplied by the Exchange Number in effect at the date of the
exercise or deemed exercise of the Warrants and the Company shall cause the
holder thereof to be entered forthwith on its register of shareholders as the
holder of the Shares to be issued to such holder or, in the case of B Warrants,
to the person or persons in whose name or names the Shares are to be issued as
specified in the exercise form. The number of Shares to be issued to such
person or persons shall be so issued and such person or persons shall become
the shareholder or shareholders of record of those Shares with effect from the
date on which the Warrant is exercised unless the register of the Company shall
be closed on that date, in which case the Shares so subscribed for shall be
deemed to be issued and the person or persons shall be deemed to become the
shareholder or shareholders of record of the Shares on the date on which the
register is reopened and the Shares shall be issued on the later date.
Upon the exercise or deemed exercise of the Warrants as
aforesaid the Company shall, without charge therefor except as provided in
subsection 4.4(5), forthwith cause to be delivered to the Trustee, as agent for
the person or persons in whose name or names the Shares are
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to be issued, certificates for the appropriate number of Shares that the
Warrantholder is entitled to. Upon receipt by the Trustee of the Warrant
Certificates for the A Warrants or B Warrants that have been so exercised, the
Trustee shall cause such certificates to be delivered forthwith in accordance
with the written delivery instructions of the holder, or in the absence of such
instructions, by registered mail without charge therefor.
No Fractional Shares
The Company will not, pursuant to section 5.1 or under any
other circumstances, be obligated to issue any fraction of a Share on the
exercise of a Warrant or Warrants. If any fractional interest in a Share
would, except for the provisions of this section, be deliverable upon the
exercise of any Warrant, the Company shall in lieu of delivering a fractional
Share therefor, satisfy the right to receive the fractional Share by payment to
the holder of the Warrant of an amount in cash (computed, in the case of a
fraction of a cent, to the next lower cent) equal to the same fraction of the
Current Market Price per Share on the date of exercise of the Warrant.
Expiry Notice
If:
one of the first three Semi-Annual Studies (as defined in the Purchase
Agreement) determine the existence of a total of more than
333,333 Excess Ounces (as defined in the Purchase Agreement)
but less than 500,001 Excess Ounces, and L. B. Mining Co. has
notified the Company in writing pursuant to subsection 4.3(i)
of the Purchase Agreement and the fourth Semi-Annual Study
indicates that no more than 500,000 Excess Ounces had been
determined to exist, the Company shall deliver an Expiry
Notice to the Trustee forthwith upon the fourth Semi-Annual
Study being delivered to the Company; and
one of the first three Semi-Annual Studies determines the existence of
a total of more than 333,333 Excess Ounces but less than
500,001 Excess Ounces and L. B. Mining Co. notifies the
Company in writing pursuant to subsection 4.3(ii) of the
Purchase Agreement, the Company shall deliver the Expiry
Notice to the Trustee forthwith upon receipt of notice from L.
B. Mining Co. pursuant to subsection 4.3(ii) of the Purchase
Agreement; and
none of the Semi-Annual Studies determine the existence of a total of
more than 333,333 Excess Ounces, the Company shall deliver an
Expiry Notice to the Trustee forthwith upon the fourth
Semi-Annual Study being delivered to the Company.
Expiration of Warrants
In the event that the Purchase Agreement is not entered into
between the Company and L. B. Mining Co. within the time stipulated in the
Option Agreement or, after the Purchase Agreement has been entered into, the
transactions contemplated therein are not consummated for any reason on or
before the Closing (as defined in section 3.1 of the Purchase Agreement), all
rights under this Indenture and under any A Warrant or B Warrant shall wholly
cease and terminate and the Warrant Certificates therefor shall be wholly void
and of no effect.
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After the Class B Warrant Expiry Time, all rights under this
Indenture and under any B Warrants that have not been exercised shall wholly
cease and terminate and the Warrant Certificate or Warrant Certificates
therefor shall be wholly void and of no effect.
Cancellation of Warrants
All Warrant Certificates representing Warrants exercised as
provided in section 4.4 or exchanged for other Warrants as provided in section
3.1 shall be cancelled and destroyed by the Trustee and, if required by the
Company, the Trustee shall furnish the Company with a certificate identifying
the Warrant Certificates so cancelled and the number of Shares which have been
issued pursuant to each.
ARTICLE FIVE
Adjustment of Exercise Number
Definitions
In this Article Five, the terms "record date" and "effective
date" where used herein shall mean 4:30 p.m. (Vancouver time) on the relevant
date.
Adjustment of Exercise Number
The Exercise Number (or the number and kind of Shares or
securities to be received upon exercise in the case of subsections 5.2(4) and
5.2(5) below) shall be subject to adjustment from time to time in the events
and in the manner provided in section 5.3 and as follows:
If prior to the exercise or deemed exercise of the Warrants
the Company:
issues to all or substantially all the holders of the Shares
by way of a stock dividend or otherwise Shares or
Convertible Securities, other than (i) the issue from
time to time of Shares or Convertible Securities by
way of stock dividend to shareholders who elect to
receive Shares or Convertible Securities in lieu of
cash dividends in the ordinary course or pursuant to
a dividend reinvestment plan or (ii) as dividends
paid in the ordinary course; or
subdivides or redivides its outstanding Shares into a greater
number of Shares; or
combines, consolidates or reduces its outstanding Shares into
a smaller number of Shares
(any of those events being herein called a "Share
Reorganization"),
the Exercise Number shall be adjusted effective immediately after the record
date at which the holders of Shares are determined for the purposes of the
Share Reorganization or the effective date if no record date is fixed to a
number that is the product of (1) the Exercise Number in effect on the record
date and (2) a fraction:
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the numerator of which shall be the number of Shares
outstanding after giving effect to the Share
Reorganization; and
the denominator of which shall be the number of
Shares outstanding on the record date before
giving effect to the Share Reorganization.
For the purposes of determining the number of Shares outstanding at any
particular time for the purpose of this subsection 5.2(1) there shall be
included that number of Shares which would have resulted from the conversion at
that time of all outstanding Convertible Securities.
If prior to exercise or deemed exercise of the Warrants the
Company shall issue rights, options or warrants (other than the Warrants) to
all or substantially all the holders of the Shares pursuant to which those
holders are entitled to subscribe for, purchase or otherwise acquire Shares or
Convertible Securities within a period of 45 days from the date of issue
thereof at a price per share, or at a conversion price per share, of less than
95% of the Current Market Price at the record date for such distribution (any
such issuance being herein called a "Rights Offering" and Shares that may be
acquired in exercise of the Rights Offering, or upon conversion of the
Convertible Securities offered by the Rights Offering, being herein called the
"Offered Shares"), the Exercise Number shall be adjusted effective immediately
after the record date at which holders of Shares are determined for the
purposes of the Rights Offering to an Exercise Number that is the product of
(1) the Exercise Number in effect on the record date and (2) a fraction:
the numerator of which shall be the sum of (a) the
number of Shares outstanding on the record
date plus (b) the number of Offered Shares
offered pursuant to the Rights Offering or
the maximum number of Offered Shares into
which the Convertible Securities so offered
pursuant to the Rights Offering may be
converted, as the case may be; and
the denominator of which shall be the sum of:
(A) the number of Shares outstanding on
the record date; and
(A) the number arrived at when (I)
either the product of (a) the number
of Offered Shares so offered and (b)
the price at which those shares are
offered, or the product of (c) the
conversion price thereof and (d) the
maximum number of Offered Shares for
or into which the Convertible
Securities so offered pursuant to
the Rights Offering may be
converted, as the case may be, is
divided by (II) the Current Market
Price of the Shares on the record
date.
Any Offered Shares owned by or held for the account of the Company or a
subsidiary of the Company shall be deemed not to be outstanding for the purpose
of any such computation; if all the rights, options or warrants are not so
issued or if all rights, options or warrants are not exercised
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prior to the expiration thereof, the Exercise Number shall be readjusted to the
Exercise Number in effect immediately prior to the record date, and the
Exercise Number shall be further adjusted based upon the number of Offered
Shares (or Convertible Securities that are convertible into Offered Shares)
actually delivered upon the exercise of the rights, options or warrants, as the
case may be, but subject to any other adjustment required hereunder by reason
of any event arising after that record date.
If prior to exercise or deemed exercise of the Warrants the
Company shall issue or distribute to all or substantially all the holders of
Shares, (i) shares of any class other than Shares, or (ii) rights, options or
warrants other than Warrants and other than rights, options or warrants
exercisable within 45 days from the date of issue thereof at a price, or at a
conversion price, of at least 95% of the Current Market Price at the record
date for such distribution, or (iii) evidences of indebtedness, or (iv) any
other cash, securities or other property or assets and that issuance or
distribution does not constitute a Share Reorganization or a Rights Offering
(any of those events being herein called a "Special Distribution"), the
Exercise Number shall be adjusted effective immediately after the record date
at which the holders of Shares are determined for purposes of the Special
Distribution to an Exercise Number that is the product of (1) the Exercise
Number in effect on the record date and (2) a fraction:
the numerator of which shall be the product of (I)
the sum of the number of Shares outstanding
on the record date plus the number of Shares
which the Warrantholders would be entitled to
receive upon exercise of all their
outstanding Warrants if they were exercised
on the record date and (II) the Current
Market Price thereof on that date; and
the denominator of which shall be:
(A) the product of (I) the sum of the
number of Shares outstanding on the
record date plus the number of
Shares which the Warrantholders
would be entitled to receive upon
exercise of all their outstanding
Warrants if they were exercised on
the record date and (II) the Current
Market Price thereof on the earlier
of such record date and the date on
which the Company announces its
intention to make such distribution;
less
(A) the aggregate fair market value, as
determined by the board at the time
such distribution is authorized,
whose determination shall be
conclusive, of the shares, rights,
options, warrants, evidences of
indebtedness or other assets issued
or distributed in the Special
Distribution.
Any Shares owned by or held for the account of the Company shall be deemed not
to be outstanding for the purpose of any such computation; to the extent that
the distribution of shares, rights, options, warrants, evidences of
indebtedness or assets is not so made or to the extent that any rights, options
or warrants so distributed are not exercised, the Exercise Number shall be
readjusted
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to the Exercise Number that would then be in effect based upon shares, rights,
options, warrants, evidences of indebtedness or assets actually distributed or
based upon the number of Shares or Convertible Securities actually delivered
upon the exercise of the rights, options or warrants, as the case may be, but
subject to any other adjustment required hereunder by reason of any event
arising after the record date.
If during the Exercise Period there is a reorganization of the
Company not otherwise provided for in subsection 5.2(1) or a consolidation or
merger or amalgamation of the Company with or into another body corporate
including a transaction whereby all or substantially all of the Company's
undertaking and assets become the property of any other corporation through
sale, lease, exchange or otherwise (any such event being herein called a
"Capital Reorganization") any holder of a Special Warrant who has not exercised
his right to exchange his Special Warrant for Shares and Warrants prior to the
effective date of the Capital Reorganization shall be entitled to receive and
shall accept, upon the exercise of his right at any time after the effective
date of the Capital Reorganization, in lieu of the number of Shares and
Warrants (and any other securities or properties to which holders are entitled
upon exercise of the Warrants) to which he was theretofore entitled upon
exercise of the Special Warrant, the aggregate number of shares or other
securities or property of the Company, or the continuing, successor or
purchasing corporation, as the case may be, under the Capital Reorganization
that the holder would have been entitled to receive as a result of the Capital
Reorganization if, on the effective date thereof, he had been the holder of the
number of Shares and Warrants (and any other securities to which holders are
entitled upon exercise of the Warrants) to which immediately before the
transaction he was entitled upon exercise of the Warrants; no Capital
Reorganization shall be carried into effect unless all necessary steps shall
have been taken so that the holders of Warrants shall thereafter be entitled to
receive the number of shares or other securities or property of the Company, or
of the continuing, successor or purchasing corporation, as the case may be,
under the Capital Reorganization, subject to adjustment thereafter in
accordance with provisions the same, as nearly as may be possible, as those
contained in this section 5.2 and in section 5.3.
If the Company shall reclassify or otherwise change the
outstanding Shares, the exercise right shall be adjusted effective immediately
upon the reclassification becoming effective so that holders of Warrants who
exercise their rights thereafter shall be entitled to receive such shares as
they would have received had the Warrants been exercised immediately prior to
the effective date, subject to adjustment thereafter in accordance with
provisions the same, as nearly as may be possible, as those contained in this
section 5.2 and in section 5.3.
Subscription Rights Adjustment Rules
The following rules and procedures shall be applicable to
adjustments made pursuant to section 5.2:
The adjustments and readjustments provided for in this Article
Five are cumulative and, subject to subsection 5.3(2), shall apply (without
duplication) to successive issues, subdivisions, combinations, consolidations,
distributions and any other events that require adjustment of the Exercise
Number or the number or kind of shares or securities purchasable hereunder.
No adjustment in the Exercise Number shall be required unless
the adjustment would result in a change of at least 1% in the Exercise Number
then in effect provided, however, that any adjustments that, except for the
provisions of this subsection 5.3(2) would otherwise have
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been required to be made, shall be carried forward and taken into account in
any subsequent adjustment.
No adjustment in the Exercise Number shall be made in respect
of any event described in paragraph 5.2(l)(a) or subsections 5.2(2) or 5.2(3)
if the holders of the Warrants are entitled to participate in the event on the
same terms, mutatis mutandis, as if they had exercised their Warrants
immediately prior to the effective date or record date of the event.
No adjustment in the Exercise Number shall be made pursuant to
section 5.2 in respect of the issue of Shares, rights, options or warrants
pursuant:
to this Indenture;
to the special warrant indenture dated April 25, 1996 between the
Company and the Trustee relating to the issue of 9,699,800
special warrants, each of which is exercisable to acquire one
Share and one-half of a common share purchase warrant, subject
to adjustment;
to the warrant indenture dated April 25, 1996 between the Company and
the Trustee relating to the issuance of 4,849,900 common share
purchase warrants, each of which is exercisable to acquire one
Share at an exercise price of $3.00, subject to adjustment; or
the issuance of Shares pursuant to the exercise of directors, officers
and employees options or options granted for services in
accordance with the rules of The Toronto Stock Exchange;
and any such issue shall be deemed not to be a Share Reorganization, a Rights
Offering or a Special Distribution.
If a dispute shall at any time arise with respect to
adjustments of the Exercise Number, the dispute shall be conclusively
determined (as between the Company, the Warrantholders, the Trustee and all
transfer agents and shareholders of the Company) by the auditors of the Company
or if they are unable or unwilling to act, by such firm of independent
chartered accountants as may be selected by the directors and any such
determination shall be binding upon the Company, the Warrantholders, the
Trustee and all transfer agents and shareholders of the Company.
If the Company shall set a record date to determine the
holders of Shares for the purpose of entitling them to receive any dividend or
distribution or any subscription or purchase rights and shall, thereafter
legally abandon its plans to pay or deliver the dividend, distribution or
subscription or purchase rights, then no adjustment in the Exercise Number
shall be required by reason of the setting of the record date.
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Postponement of Share Issue
In any case where the application of section 5.2 results in an
increase of the Exercise Number taking effect immediately after the record date
for or occurrence of a specific event, if any Warrants are exercised after that
record date or occurrence and prior to completion of the event or of the period
for which a calculation is required to be made, the Company may postpone the
issuance to the holder of the Warrants of the Shares to which the holder is
entitled by reason of the increase of the Exercise Number but the Shares shall
be so issued and delivered to that holder upon completion of that event or
period, with the number of those Shares calculated on the basis of the Exercise
Number on the Exercise Date adjusted for completion of that event or period,
and the Company shall forthwith after the Exercise Date deliver to the person
or persons in whose name or names the Shares are to be issued an appropriate
instrument evidencing the person's or persons' right to receive the Shares.
Notice of Certain Events
Upon the occurrence of any event referred to in sections 5.2
or 5.3 that requires an adjustment in the Exercise Number, the Company shall
promptly thereafter:
file with the Trustee a certificate of the Company specifying the
particulars of the event and, if determinable, the adjustment
and a computation of the adjustment; and
give notice to the Warrantholders of the particulars of the event and,
if determinable, the adjustment.
If notice has been given under subsection 5.5(1) and the
adjustment is not then determinable, the Company shall promptly after the
adjustment is determinable:
file with the Trustee a certificate of the Company evidencing the
computation of the adjustment; and
(b) give notice to the Warrantholders of the adjustment.
Protection of Trustee
Subject to sections 10.2 and 10.3, the Trustee shall not at
any time be under any duty or responsibility to any Warrantholder to determine
whether any facts exist which may require any adjustment contemplated by
section 5.2, 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.
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 rights pursuant to any of the
Warrants, including the number of Shares which are to be received upon the
exercise of the Warrants, the Company shall take any corporate action which
may, in the opinion of counsel, be necessary in order that the Company has
unissued and reserved in its authorized capital and may validly and legally
issue as fully paid and non-
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assessable all the Shares which the holders of such Warrants are entitled to
receive on the full exercise thereof in accordance with the provisions hereof.
ARTICLE SIX
Rights and Covenants
Purchase of Warrants
The Company, when not in default under this Indenture, may
purchase all or any portion of the Warrants in such manner and on such terms as
the Company and the holder thereof may determine. All Warrants so purchased
shall forthwith be delivered to the Trustee and cancelled by it and no Warrants
shall be issued in substitution therefor.
General Covenants
The Company covenants with the Trustee that so long as any
Warrants remain outstanding and may be exercised:
the Company will at all times maintain its existence, carry on and
conduct its business in a prudent manner and in accordance
with industry standards and good business practice, keep or
cause to be kept proper books of account in accordance with
applicable law and, if and whenever required in writing by the
Trustee, file with the Trustee copies of all annual financial
statements of the Company furnished to its shareholders during
the term of this Indenture;
the Company shall maintain the listing of the Shares on The Toronto
Stock Exchange, and will take all steps necessary to ensure
that the Shares issuable upon exercise of the Warrants will be
listed and posted for trading on The Toronto Stock Exchange
upon their issue;
the Company will reserve and keep available a sufficient number of
Shares for issuance upon the exercise of Warrants issued by
the Company hereunder;
the Company will cause the Shares from time to time subscribed for and
purchased pursuant to the exercise of the Warrants, issued by
the Company hereunder, in the manner herein provided, to be
duly issued in accordance with the Warrants and the terms
hereof;
the Company will cause the certificates representing the Shares
issuable upon exercise of the Warrants from time to time in
the manner herein provided, to be duly issued and delivered in
accordance with the Warrants and the terms hereof;
upon the exercise by the holder of any Warrant, all Shares issuable
upon the exercise of Warrants shall be issued by the Company
as fully paid and non-assessable;
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the Company will use its best efforts to maintain its status as a
"reporting issuer" (or the equivalent thereof) not in default
of the requirements of the Securities Act (British Columbia)
and the Securities Act (Ontario);
the Company is duly authorized to create and issue the Warrants to be
issued hereunder, and the Warrant Certificates when issued and
certified as herein provided will be legal, valid and binding
obligations of the Company;
if, in the opinion of counsel, any prospectus or registration
statement is required to be filed with, or any permission is
required to be obtained from, any governmental authority or
any other step is required under any applicable securities
laws before any Shares which a Warrantholder is entitled to
purchase pursuant to his Warrant may properly and legally be
issued upon the due exercise thereof, the Company will take
such action so required; and
generally, the Company will well and truly perform and carry out all
the acts or things to be done by it as provided in this
Indenture.
Trustee's Remuneration and Expenses
The Company covenants that it will pay to the Trustee from
time to time such reasonable remuneration for its services hereunder as may be
agreed upon between the Company and the Trustee and will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances properly incurred or made by the Trustee in the administration or
execution of the trusts hereby created (including the reasonable compensation
and the disbursements of counsel and all other advisors and assistants not
regularly in its employ), both before any default hereunder and thereafter
until all duties of the Trustee under the trusts hereof shall be finally and
fully performed, except any expense, disbursement or advance as may arise from
the negligence, wilful misconduct or bad faith of the Trustee or of persons for
whom the Trustee is responsible.
Performance of Covenants by Trustee
If the Company shall fail to perform any of its covenants and
obligations contained in this Indenture, the Trustee may notify the
Warrantholders of the failure on the part of the Company or may itself perform
any of the said covenants capable of being performed by it, but shall be under
no obligation to do so or to notify the Warrantholders. All sums expended or
advanced by the Trustee in so doing shall be repayable as provided in Section
6.3. No performance, expenditure or advance by the Trustee shall be deemed to
relieve the Company of any default or of its continuing obligations hereunder.
Notice to Warrantholders of Certain Events
The Company covenants with the Trustee for the benefit of the
Trustee and the Warrantholders that, so long as any of the Warrants are
outstanding, it will not:
(a) pay any dividend payable in shares of any class to the holders
of its Shares or make any other distribution (other than a
cash distribution made as a dividend out of
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retained earnings or contributed surplus legally available for
the payment of dividends) to the holders of its Shares,
(a) offer to the holders of its Shares rights to subscribe for or
to purchase any Shares or shares of any class or any other
securities, rights, warrants or options,
(a) make any repayment of capital on, or distribution of evidences
of indebtedness or any of its assets (excluding cash
dividends) to the holders of, its Shares,
(a) amalgamate, consolidate or merge with any other person or sell
or lease the whole or substantially the whole of its assets or
undertaking,
(a) effect any subdivision, consolidation or reclassification of
its Shares, or
(a) liquidate, dissolve or wind-up,
unless, in each such case, the Company shall have given notice, in the manner
specified in section 11.2, to the Warrantholder, of the action proposed to be
taken and the date on which (a) the books of the Company shall close or a
record shall be taken for such dividend, repayment, distribution, subscription
rights or other rights, warrants or securities, or (b) such subdivision,
consolidation, reclassification, amalgamation, merger, sale or lease,
dissolution, liquidation or winding-up shall take place, as the case may be,
provided that the Company shall only be required to specify in the notice those
particulars of the action as shall have been fixed and determined at the date
on which the notice is given. The notice shall also specify the date as of
which the holders of Shares of record shall participate in the dividend,
repayment, distribution, subscription of rights or other rights, warrants or
securities, or shall be entitled to exchange their Shares for securities or
other property deliverable upon such reclassification, amalgamation, merger,
sale or lease, other disposition, dissolution, liquidation or winding-up, as
the case may be. The notice shall be given, with respect to the actions
described in subsections (a), (b), (c), (d), (e) and (f) not less than 21 days
prior to the record date or the date on which the Company's transfer books are
to be closed with respect thereto.
Closure of Share Transfer Books
The Company further covenants and agrees that it will not
during the period of any notice given under section 6.5 close its share
transfer books or take any other corporate action which might deprive the
Warrantholder of the opportunity of exercising its Warrants, provided that
nothing contained in this section 6.6 shall be deemed to affect the right of
the Company to do or take part in any of the things referred to in section 6.5
or to pay cash dividends on the shares of any class or classes in its capital
from time to time outstanding.
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ARTICLE SEVEN
Enforcement
Enforcement of Rights of the Warrantholder
The Warrantholder shall not have the right to institute any
action or proceeding or to exercise any other remedy authorized by this
Indenture for the purpose of enforcing any rights on behalf of the
Warrantholders for the execution of any trust or power hereunder unless a
requisition, in writing signed by the Warrantholder requesting the Trustee to
so act, and the indemnity referred to in subsection 10.2(3), have been tendered
to the Trustee and the Trustee shall have failed to act within a reasonable
time thereafter. In such case, but not otherwise, the Warrantholder acting on
behalf of itself shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken.
The Warrantholder shall not have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby created by its
action, or to enforce any right hereunder or under any Warrant Certificate,
except subject to the conditions and in the manner herein provided and all
powers and trusts hereunder shall be exercised and all proceedings at law shall
be instituted, had and maintained by the Trustee, except only as herein
provided, and in any event for the benefit of the Warrantholder.
Immunity of Shareholders
The Trustee, and by its acceptance of the Warrant Certificate
and as part of the consideration for the issue of the Warrants, the
Warrantholder, hereby waive and release any right, cause of action or remedy
now or hereafter existing in any jurisdiction against any past, present or
future shareholder, director or officer of the Company or of any of the
subsidiaries of the Company, or any subsidiary of the Company, in their
capacity as such, for the issue of Shares pursuant to any Warrants or on any
covenant, agreement, representation or warranty by the Company contained herein
or in the Warrant Certificates.
Limitation of Liability
The obligations hereunder are not personally binding upon, nor
shall resort hereunder be had to the private property of, any of the past,
present or future directors, shareholders, officers, employees or agents of the
Company or any of the subsidiaries of the Company, or any subsidiary of the
Company, but only the property of the Company (or any successor corporation)
shall be bound in respect hereof.
ARTICLE EIGHT
Powers of Warrantholders
Powers Exercisable by the Warrantholder
In addition to all other powers conferred upon it by any other
provisions of this Indenture or by law, the Warrantholder shall have the
following powers exercisable from time to time by notice to the Trustee and the
Company:
(a) power to agree to or sanction any amendment, modification,
abrogation, alteration, compromise or arrangement of the
rights of the Warrantholder and/or the Trustee in its capacity
as trustee hereunder or on behalf of the Warrantholder against
the
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Company, whether those rights arise under this Indenture or
the Warrants or otherwise, which shall be agreed to by the
Company, and to authorize the Trustee to concur in and execute
any indenture supplement;
(a) power to direct or authorize the Trustee to enforce any of the
obligations on the part of the Company contained in this
Indenture or the Warrants or to enforce any of the rights of
the Warrantholder in any manner specified in the notice or to
refrain from enforcing any such covenant or right;
(a) power to waive and direct the Trustee to waive any default on
the part of the Company in complying with any provisions of
this Indenture or the Warrants, either unconditionally or upon
any conditions specified in the notice;
(a) power from time to time and at any time, with the consent of
the Company, not to be unreasonably withheld, to remove the
Trustee and appoint a successor trustee; and
(a) power to assent to any compromise or arrangement with any
creditor or any class of creditors, whether secured or
otherwise, and with holders of any shares or other securities
of the Company.
Powers Cumulative
It is hereby declared and agreed that any one or more of the
powers or any combination of the powers in this Indenture stated to be
exercisable by the Warrantholder may be exercised from time to time and the
exercise of any one or more of the powers or any combination of the powers from
time to time shall not prevent the Warrantholder from exercising that power or
those powers or combination of powers then or any other power or powers or
combination of powers thereafter from time to time.
Record of Notices
A record of all notices delivered by the Warrantholder in
connection with any exercise of the powers set forth in section 8.1 shall be
made and duly entered in books from time to time to be provided for that
purpose by the Trustee at the expense of the Company and such record shall be
prima facie evidence of the matters therein stated.
Binding Effect of Notices Upon Trustee
The Trustee (subject to the provisions for its indemnity
herein contained) shall be bound to give effect accordingly to every notice
delivered by the Warrantholder in connection with any exercise of the powers
set forth in section 8.1.
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ARTICLE NINE
Supplemental Indentures and Successor Companies
Provision for Supplemental
Indentures for Certain Purposes
From time to time the Company and the Trustee may, subject to
the provisions hereof, and they shall, when so directed hereby, execute and
deliver by their proper officers or directors, as the case may be, indentures
or instruments supplemental hereto, which thereafter shall form part hereof,
for any one or more or all of the following purposes:
setting forth any adjustments resulting from the application of the
provisions of Article Five;
adding to the provisions hereto such additional covenants and
enforcement provisions as, in the opinion of counsel, are
necessary or advisable, provided that the same are not in the
opinion of the Trustee prejudicial to the interests of the
Warrantholder;
giving effect to any notice delivered pursuant to section 8.1 passed
as provided in Article Eight;
adding to, deleting or altering the provisions hereof in respect of
the transfer of Warrants, the exchange of Warrants and the
making of any modification in the form of a Warrant
Certificate which, in the opinion of the Trustee, does not
affect the substance thereof;
making any additions to, deletions from or alterations of the
provisions of this Indenture which, in the opinion of the
Trustee, do not materially and adversely affect the interests
of the Warrantholder and are necessary or advisable in order
to incorporate, reflect or comply with any Applicable
Legislation;
making provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions
arising hereunder or for the purpose of obtaining a listing or
quotation of the Shares issuable upon exercise of the Warrants
on a stock exchange, bourse or over-the-counter market,
provided that the provisions are not, in the opinion of the
Trustee, prejudicial to the interests of the Warrantholder;
modifying any of the provisions of this Indenture or relieving the
Company from any of the obligations, conditions or
restrictions herein contained, provided that no such
modification or relief shall be or become operative or
effective if in the opinion of the Trustee the modification or
relief impairs any of the rights of the Warrantholder provided
hereunder, or of the Trustee, and provided that the Trustee
may in its uncontrolled discretion decline to enter into any
supplemental indenture which in its opinion may not afford
adequate protection to the Trustee when the same shall become
operative;
evidencing any succession, or successive successions, of other bodies
corporate to the Company and the assumption by any successor
of the obligations of the Company herein and in the Warrant
Certificates as provided hereafter in this Article Nine;
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adding to, deleting or altering the provisions hereof relating to any
adjustment in the provisions of Article Five relating to the
subscription for Shares upon exercise of the Warrants; and
for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective provisions, errors or omissions herein,
provided that, in the opinion of the Trustee, the rights of
the Trustee or of the Warrantholder provided hereunder are in
no way prejudiced thereby,
provided that any amendment to this Indenture, by supplement or otherwise,
shall be subject to the prior consent of The Toronto Stock Exchange.
Successor Companies
In the case of the consolidation, amalgamation, arrangement,
merger or transfer of the undertaking or assets of the Company as an entirety
or substantially as an entirety to another corporation ("successor
corporation"), the successor corporation resulting from the consolidation,
amalgamation, arrangement, merger or transfer (if not the Company) will be
bound by the provisions hereof and for the due and punctual performance and
observance of each and every covenant and obligation contained in this
Indenture to be performed by the Company and, if requested by the Trustee, the
successor corporation shall, by supplemental indenture satisfactory in form to
the Trustee and executed and delivered to the Trustee, expressly assume those
obligations.
ARTICLE TEN
Concerning the Trustee
Trust Indenture Legislation
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with a mandatory requirement of Applicable
Legislation, the mandatory requirement shall prevail.
The Company and the Trustee each will, at all times in
relation to this Indenture and any action to be taken hereunder, observe and
comply with and be entitled to the benefits of Applicable Legislation.
Rights and Duties of Trustee
In the exercise of the rights, duties and obligations
prescribed or conferred by the terms of this Indenture, the Trustee shall act
honestly and in good faith with a view to the best interests of the
Warrantholder and shall exercise that degree of care, diligence and skill that
a reasonably prudent trustee would exercise in comparable circumstances.
No provision of this Indenture will be construed to relieve
the Trustee from liability for its own negligent act, negligent failure to act,
wilful misconduct or bad faith.
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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 Warrantholder or obligations of the Company hereunder shall be conditional
upon either the Warrantholder or the Company furnishing, when required by
notice in writing by the Trustee, sufficient funds to commence or continue such
act, action or proceeding and an indemnity reasonably satisfactory to the
Trustee to protect and hold harmless the Trustee against the costs, charges and
expenses and liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof. None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers unless indemnified as aforesaid.
The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding require the Warrantholder to
deposit with the Trustee the Warrant Certificates held by it, for which Warrant
Certificates the Trustee shall issue receipts.
Every provision of this Indenture that by its terms relieves
the Trustee of liability or entitles it to rely upon any evidence submitted to
it is subject to the provisions of Applicable Legislation, and of this section
10.2 and section 10.3.
Evidence, Experts and Advisors
In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Company will furnish to the Trustee
such additional evidence of compliance with any provision hereof, and in such
form, as is prescribed by Applicable Legislation or as the Trustee may
reasonably require by written notice to the Company.
In the exercise of its right or duty hereunder, the Trustee
may, if it is acting in good faith, rely as to the truth of the statements or
the accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, certificates or other evidence furnished to the Trustee
pursuant to a provision hereof or of Applicable Legislation or pursuant to a
request of the Trustee, provided the evidence complies with Applicable
Legislation and that the Trustee examines such evidence and determines that it
complies with the applicable requirements of this Indenture.
Whenever Applicable Legislation requires that evidence
referred to in subsection 10.3(1) be in the form of a statutory declaration,
the Trustee may accept the statutory declaration in lieu of a certificate of
the Company required by any provision hereof. Any statutory declaration may be
made by one or more of the officers of the Company.
Proof of the execution of an instrument in writing by the
Warrantholder may be made by the certificate of a notary public, or other
officer with similar powers, that the person signing the instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
the execution, or in any other manner that the Trustee may consider adequate.
The Trustee may employ or retain such counsel, accountants,
engineers, appraisers, or other experts or advisers as it may reasonably
require for the purpose of discharging its duties hereunder and may pay
reasonable remuneration for all services so performed by any of them, without
taxation of costs of any counsel, and will not be responsible for any
misconduct or negligence on the part of any of them who has been selected with
due care by the Trustee.
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The Trustee may, as a condition precedent to any action to be
taken by it under this Indenture, require such opinions, statutory
declarations, reports, certificates or other evidence as it, acting reasonably,
considers necessary or advisable under the circumstances.
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 Imperial Bank of
Commerce, Bank of Montreal, Bank of Nova Scotia, The Toronto-Dominion Bank, the
Royal Bank of Canada and the Hongkong Bank of Canada or deposited for
safekeeping with any of those Canadian chartered banks. Unless herein
otherwise expressly provided, any money so held pending the application or
withdrawal thereof under any provision of this Indenture shall be deposited in
the name of the Trustee in any of the foregoing Canadian chartered banks at the
rate of interest then current on similar deposits. Unless the Company is in
default hereunder, all interest or other income received by the Trustee in
respect of deposits and investments will belong to the Company.
Action by Trustee to Protect Interests
The Trustee shall have the power to institute and to maintain
such actions and proceedings as it may consider necessary or expedient to
preserve or protect its interests and the interests of the Warrantholders.
Trustee not Required to Give Security
The Trustee shall not be required to give any bond or security
in respect of the execution of the trusts and powers of this Indenture or
otherwise in respect of the premises contained herein.
Protection of Trustee
By way of supplement to the provisions of any law from time to
time applicable to trustees it is expressly declared and agreed as follows:
the Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Warrant
Certificates (except the representation contained in section
10.9 and by virtue of the certification by the Trustee of the
Warrant Certificates) or required to verify the same, but all
such statements or recitals are and shall be deemed to be made
by the Company;
nothing herein contained shall impose any obligation on the Trustee to
see or to require evidence of the registration (on filing or
renewal thereof) of this Indenture or any instrument ancillary
or supplemental hereto;
the Trustee shall not be bound to give notice to any person or persons
of the execution hereof;
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the Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach
on the part of the Company of any obligation herein contained
or of any acts of any director, officer, employee or agent of
the Company;
the Trustee shall not be bound to give any notice or to do or take any
act, action or proceeding by virtue of the powers conferred on
it hereby unless and until it shall have been required to do
so under the terms hereof, nor shall the Trustee be required
to take notice of any default of the Company hereunder unless
and until notified in writing of the default (which notice
must specify the nature of the default) and, in the absence of
that notice, the Trustee may for all purposes hereunder
conclusively assume that no default by the Company hereunder
has occurred. The giving of any notice shall in no way limit
the discretion of the Trustee hereunder as to whether any
action is required to be taken in respect of any default
hereunder;
the Trustee shall not be accountable with respect to the validity or
value (or the kind or amount) of any Shares or other
securities or property which may at any time be issued or
delivered upon the exercise of the rights attaching to any
Warrant; and
the Trustee is not responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver Shares or
certificates for the same upon the surrender of any Warrant
Certificates and payment of the Subscription Price applicable
thereto for the purpose of the exercise of the Warrants
represented by such Warrant Certificates or to comply with any
of the covenants contained in Article Six.
Replacement of Trustee
The Trustee may resign its trust and be discharged from all
further duties and liabilities hereunder, except as provided in this Article
Ten, by giving to the Company and the Warrantholders not less than 90 days
notice in writing or, if a new Trustee has been appointed, such shorter notice
as the Company accepts as sufficient. The Warrantholder by notice delivered
pursuant to section 8.1 shall have power at any time, with the consent of the
Company, not to be unreasonably withheld, to remove the Trustee and to appoint
a new Trustee. In the event of the Trustee resigning or being removed as
aforesaid or being dissolved, becoming bankrupt, going into liquidation or
otherwise becoming incapable of acting hereunder, the Company shall forthwith
appoint a new Trustee unless a new Trustee has already been appointed by the
Warrantholders. If for any reason the Company is unable to appoint a new
Trustee, the retiring Trustee or the Warrantholder may apply to the Supreme
Court of British Columbia, on such notice as the Court may direct, for the
appointment of a new Trustee. Any new Trustee so appointed by the Company or by
the Court shall be subject to removal as aforesaid by the Warrantholder and the
Company. Any new Trustee appointed under any provision of this section 10.8
shall be a corporation authorized to carry on the business of a trust company
in the Province of British Columbia and Ontario and, if required by the
Applicable Legislation of any other Province, in that other Province. On any
such appointment the new Trustee shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named herein as
Trustee without any further assurance, conveyance, act or deed, but there shall
be immediately executed, at the expense of the Company, all such conveyances or
other instruments as may, in the opinion of counsel, be necessary or advisable
for the purpose of assuring such powers, rights, duties and responsibilities of
the new Trustee.
- 31 -
36
Upon the appointment of a new Trustee, the Company shall
promptly give notice thereof to the Warrantholder.
Any corporation into or with which the Trustee may be merged
or consolidated or amalgamated, or any corporation succeeding to the trust
business of the Trustee, shall be the successor to the Trustee hereunder
without any further act on its part or any of the parties hereto provided that
the corporation would be eligible for appointment as a new Trustee under
subsection 10.8(1).
A Warrant Certificate certified but not delivered by a
predecessor Trustee may be delivered by the new or successor Trustee in the
name of the predecessor Trustee or successor Trustee.
Conflict of Interest
The Trustee represents to the Company that at the time of the
execution and delivery hereof no material conflict of interest exists between
the Trustee's role as a fiduciary hereunder and its role in any other capacity
and that if a material conflict of interest arises hereafter it will, within 90
days after ascertaining that it has a material conflict of interest, either
eliminate the conflict of interest or assign its trust hereunder to a successor
Trustee approved by the Company and meeting the requirements set forth in
subsection 10.8(1). Notwithstanding the foregoing provisions of this
subsection 10.9(1), if any such material conflict of interest exists or
hereafter shall exist, the validity and enforceability of this Indenture and
the Warrant Certificate shall not be affected in any manner whatsoever by
reason thereof.
Subject to subsection 10.9(1), the Trustee, in its personal or
any other capacity, may buy, lend on and deal in securities of the Company, may
act as registrar and transfer agent for the Shares and trustee for the Special
Warrants under the Special Warrant Indenture and generally may contract and
enter into financial transactions with the Company or any subsidiary of the
Company without being liable to account for any profit made thereby.
Acceptance of Trust
The Trustee hereby accepts the trusts in this Indenture
declared and provided for and agrees to perform them on the terms and
conditions herein set forth and agrees to hold all rights, interests and
benefits contained herein for and on behalf of those persons who become holders
of Warrants from time to time issued pursuant to this Indenture.
Trustee Not to be Appointed Receiver
The Trustee and any person related to the Trustee shall not be
appointed a receiver, a receiver manager or liquidator of all or any part of
the assets or undertaking of the Company.
Indemnity
Without limiting any protection or indemnity of the Trustee
under any other provision hereof, or otherwise at law, the Company hereby
agrees to indemnify and hold harmless the Trustee from and against any and all
liabilities, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including reasonable legal or advisor fees and
disbursements, of
- 32 -
37
whatever kind and nature which may at any time be imposed on, incurred by or
asserted against the Trustee in connection with the performance of its duties
and obligations hereunder, other than such liabilities, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements arising by
reason of the negligence, bad faith or wilful misconduct of the Trustee or of
persons for whom the Trustee is responsible. This provision shall survive the
resignation or removal of the Trustee, or the termination of the Indenture.
ARTICLE ELEVEN
General
Notice to the Company or the Trustee
Unless herein otherwise expressly provided, any notice to be
given hereunder to the Company or the Trustee shall be given in writing and
shall be deemed to be validly given if delivered or if sent by registered
letter, postage prepaid or if transmitted by facsimile:
(a) if to the Company:
Granges Inc.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇ Downs
Barristers & Solicitors
1200 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(a) if to the Trustee:
Montreal Trust Company of Canada
Montreal Trust Centre
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Manager, Corporate Trust Department
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 33 -
38
and any notice delivered in accordance with the foregoing shall be deemed to
have been received on the date of delivery or, if mailed, on the fifth business
day following the day of the mailing of the notice, or if transmitted by
facsimile, on the day following the transmission.
The Company or the Trustee, as the case may be, may from time
to time notify the other in the manner provided in subsection 11.1(1) of a
change of address which, from the effective date of the notice and until
changed by like notice, shall be the address of the Company or the Trustee, as
the case may be, for all purposes of this Indenture.
If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, a notice to be given to the
Trustee or to the Company hereunder could reasonably be considered unlikely to
reach or to be delayed in reaching its destination, the notice shall be valid
and effective only if it is delivered to an officer of the party to which it is
addressed or if it is delivered to that party at the appropriate address
provided in subsection 11.1(1) by cable, facsimile, telegram, telex or other
means of prepaid, transmitted, written communication, and any notice delivered
in accordance with the foregoing shall be deemed to have been received on the
date of delivery to the officer or if delivered by cable, facsimile, telegram,
telex or other means of prepaid, transmitted, recorded communication, on the
first business day following the date of the sending of the notice by the
persons giving the notice.
Notice to Warrantholder
Unless herein otherwise expressly provided, a notice to be
given hereunder to the Warrantholder shall be given in writing and shall be
deemed to be validly given if delivered or if sent by registered letter,
postage prepaid or if transmitted by facsimile to:
L. B. Mining Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and any notice given 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 mailing of the notice or, if transmitted by facsimile, on
the day following the transmission.
If the address and facsimile number of the Warrantholder
appearing on the register maintained by the Trustee is changed, the Trustee
shall notify the Company of such change of
- 34 -
39
address, which, from the effective date of the notice and until changed by like
notice, shall be the address to which any notice to be given to the
Warrantholder shall be delivered for all purposes of this Indenture.
If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, any notice to be given to the
Warrantholder hereunder could reasonably be considered unlikely to reach or to
be delayed in reaching its destination, the notice shall be valid and effective
only if it is delivered to an officer of the Warrantholder or if it is
delivered to the Warrantholder at the appropriate address provided in
subsection 10.2(1) by cable, telegram, telex, facsimile or other means of
prepaid, transmitted or written communication and any notice delivered in
accordance with the foregoing shall be deemed to have been received on the date
of delivery to the officer or if delivered by cable, telegram, telex, facsimile
or other means of prepaid, transmitted, recorded communication, on the first
business day following the date of the sending of the notice by the person
giving the notice.
Satisfaction and Discharge of Indenture
On the earlier of:
(a) the date by which there has been delivered to the Trustee for
exercise or destruction all Warrant Certificates representing
B Warrants theretofore certified hereunder, or
(a) the 61st day following the Class B Warrant Expiry Date,
and if all Shares required to be issued in compliance with the provisions
hereof have been issued and delivered hereunder, this Indenture will cease to
be of further effect and the Trustee, on demand of and at the cost and expense
of the Company and on delivery to the Trustee by the Company of a certificate
of the Company stating that all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with and on payment to the
Trustee of the fees and other remuneration payable to the Trustee, will execute
proper instruments acknowledging satisfaction of and discharging this
Indenture.
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 Warrantholder, as the case may be, any legal or
equitable right, remedy or claim under this Indenture, or under any covenant or
provision herein contained, all covenants and provisions being for the sole
benefit of the parties hereto and the Warrantholder.
- 35 -
40
Discretion of Directors
Any matter provided herein to be determined by the directors
will be determined by the directors in their sole discretion, and a
determination so made will be conclusive.
Counterparts and Formal Date
This Indenture may be executed in several counterparts, each
of which when so executed will be deemed to be an original, and the
counterparts together will constitute one and the same instrument and
notwithstanding the date of their execution will be deemed to be dated as of
June 7, 1996.
IN WITNESS WHEREOF the parties hereto have executed these
presents under their respective seals and the hands of their proper officers in
that behalf.
GRANGES INC.
By:
----------------------------
(C/S)
By:
----------------------------
MONTREAL TRUST COMPANY OF CANADA
By:
----------------------------
(C/S)
By:
----------------------------
- 36 -
41
SCHEDULE "A"
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED.
CLASS "A" COMMON SHARE PURCHASE WARRANT
to acquire Common Shares of
GRANGES INC.
(incorporated under the laws of British Columbia)
Warrant Certificate Certificate for 2,047,938
No. AW-00001 Class "A" Warrants, each entitling
the holder thereof to
acquire one Share of Granges
Inc.
THIS IS TO CERTIFY THAT,
L. B. Mining Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
--------------------------------------------------------------------------------
(the "holder") is the registered holder of the number of Class "A" common share
purchase warrants (the "Warrants") of Granges Inc. (the "Company") set forth
above, and is entitled, on deemed exercise of these Warrants upon and subject
to the terms and conditions set forth herein and in the Warrant Indenture
hereinafter referred to, to receive on the Class A Warrant Exercise Date
(hereinafter defined) one fully-paid and non-assessable common share (a
"Share") without par value in the capital of the Company as constituted on the
date hereof for each Warrant for no additional consideration upon surrendering
this certificate to Montreal Trust Company of Canada (the "Trustee") at its
principal transfer office in the city of Vancouver.
Surrender of this Warrant Certificate and the duly completed
exercise form will be deemed to have been effected only on personal delivery
thereof to, or if sent by mail or other means of transmission on actual receipt
therefor by, the Trustee at its principal transfer office in the city of
Vancouver.
The Warrants represented by this Warrant Certificate and the
Shares to be issued upon deemed exercise thereof have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any applicable State securities laws of the United
States. Accordingly, this Warrant does not constitute an offer to any person
within the United States or to any "U.S. Person" within the meaning of
Regulation S under the U.S. Securities Act and may not be exercised within the
United States or by or on behalf of any U.S. Person unless such person is an
institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) of the U.S. Securities Act.
A-1
42
Certificates for the Shares subscribed for will be mailed to
the holder hereof at its address specified in the register of Warrantholders
or, if requested by the holder hereof in writing, delivered to such persons at
the office where this Warrant Certificate is surrendered. No fractional Shares
will be issued upon exercise of any Warrant. In lieu of such fractional share,
the holder will receive a cash payment therefor.
This Warrant Certificate evidences Warrants of the Company
issued or issuable under the provisions of a warrant indenture (which indenture
together with all other instruments supplemental or ancillary thereto is herein
referred to as the "Warrant Indenture") dated as of June 7, 1996 between the
Company and the Trustee, as trustee, to which Warrant Indenture reference is
hereby made for particulars of the rights of the Warrantholder, the Company and
the Trustee in respect thereof and the terms and conditions on which the
Warrants are issued and held, all to the same effect as if the provisions of
the Warrant Indenture were herein set forth, to all of which the holder by
acceptance hereof assents. Capitalized terms used in this Warrant Certificate
and not otherwise defined shall have the meanings ascribed to them in the
Warrant Indenture.
The Company will furnish to the holder, on request and without
charge, a copy of the Warrant Indenture.
As set forth in the Warrant Indenture, the term "Class A
Warrant Exercise Date" means the later of:
the date of Closing stipulated in the executed stock purchase
agreement entered into between the Company and L. B. Mining
Co. in accordance with, and in the form attached as Exhibit D
to, the exploration and purchase option agreement dated as of
June 7, 1996 between L. B. Mining Co. and the Company; and
the earlier of (i) the date on which a receipt is issued for the Final
Prospectus relating to the distribution of the Warrants by the
last of the Securities Commissions to do so under the
applicable Securities Laws of the Provinces and (ii) June 7,
1997.
On presentation at the principal transfer office of the
Trustee in the city of Vancouver as specified below, subject to the provisions
of the Warrant Indenture and on compliance with the reasonable requirements of
the Trustee, one or more Warrant Certificates may be exchanged for one or more
Warrant Certificates entitling the holder thereof to purchase in the aggregate
an equal number of Shares as are purchasable under the Warrant Certificate or
Certificates so exchanged.
The Warrant Indenture provides for: (i) adjustments to certain
rights of the holder, including the number of Shares issuable upon exercise or
deemed exercise, upon the happening of certain stated events, including the
subdivision or consolidation of the outstanding Shares, certain distributions
of Shares or securities convertible or exchangeable into Shares or of other
securities or assets of the Company, certain offerings of rights, warrants or
options, and certain capital reorganizations; and (ii) payment of an amount to
compensate for dividends paid on Shares prior to the exercise of the Warrants.
Nothing contained in this Warrant Certificate, the Warrant
Indenture or elsewhere shall be construed as conferring upon the holder hereof
any right or interest whatsoever as a holder of Shares or any other right or
interest except as herein and in the Warrant Indenture expressly provided.
Time is of the essence hereof.
A-2
43
This Warrant Certificate will not be valid for any purpose
until it has been countersigned by or on behalf of the Trustee from time to
time under the Warrant Indenture.
IN WITNESS WHEREOF Granges Inc. has caused this Warrant
Certificate to be duly signed on _______________________, 199__.
GRANGES INC.
By: __________________________
Authorized Signatory
By: __________________________
Authorized Signatory
Countersigned and Registered by:
MONTREAL TRUST COMPANY OF CANADA,
Vancouver
Per: __________________________________
Authorized Signatory
A-3
44
SCHEDULE "B"
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED.
CLASS "B" COMMON SHARE PURCHASE WARRANT
to acquire Common Shares of
GRANGES INC.
(incorporated under the laws of British Columbia)
Warrant Certificate Certificate for 2,529,161
No. BW-00001 Class "B" Warrants, each
entitling the holder
thereof to acquire one
Share of Granges Inc.
THIS IS TO CERTIFY THAT,
L. B. Mining Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
--------------------------------------------------------------------------------
(the "holder") is the registered holder of the number of Class "B" common share
purchase warrants (the "Warrants") of Granges Inc. (the "Company") set forth
above, and is entitled, on exercise of these Warrants upon and subject to the
terms and conditions set forth herein and in the Warrant Indenture hereinafter
referred to, to acquire at any time during a Class B Warrant Exercise Period,
for no additional consideration, one fully-paid and non-assessable common share
(a "Share") without par value in the capital of the Company as constituted on
the date hereof for each Warrant by surrendering to Montreal Trust Company of
Canada (the "Trustee") at its principal transfer office in the city of
Vancouver, an exercise form in the form attached hereto duly completed and
executed, accompanied by this certificate.
Surrender of this Warrant Certificate and the duly completed
exercise form will be deemed to have been effected only on personal delivery
thereof to, or if sent by mail or other means of transmission on actual receipt
thereof by, the Trustee at its principal transfer office in the city of
Vancouver.
The Warrants represented by this Warrant Certificate and the
Shares to be issued upon exercise thereof have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any applicable State securities laws of the United
States. Accordingly, this Warrant does not constitute an offer to any person
within the United States or to any "U.S. Person" within the meaning of
Regulation S under the U.S. Securities Act and may not be exercised within the
United States or by or on behalf of any U.S. Person unless such person is an
institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) of the U.S. Securities Act and has checked box B of the attached exercise
form.
B-1
45
Certificates for the Shares will be mailed to the persons
specified in the exercise form at their respective addresses specified therein
or, if so specified in the exercise form, delivered to such persons at the
office where this Warrant Certificate is surrendered. If fewer Shares are
purchased than the number that can be purchased pursuant to this Warrant
Certificate, the holder hereof will be entitled to receive without charge a new
Warrant Certificate in respect of the balance of the Shares not so purchased.
No fractional Shares will be issued upon exercise of any Warrant. In lieu of
such fractional share, the holder will receive a cash payment therefor.
This Warrant Certificate evidences Warrants of the Company
issued or issuable under the provisions of a warrant indenture (which indenture
together with all other instruments supplemental or ancillary thereto is herein
referred to as the "Warrant Indenture") dated as of June 7, 1996 between the
Company and the Trustee, as trustee, to which Warrant Indenture reference is
hereby made for particulars of the rights of the Warrantholder, the Company and
the Trustee in respect thereof and the terms and conditions on which the
Warrants are issued and held, all to the same effect as if the provisions of
the Warrant Indenture were herein set forth, to all of which the holder by
acceptance hereof assents. Capitalized terms used in this Warrant Certificate
and not otherwise defined shall have the meanings ascribed to them in the
Warrant Indenture.
The Company will furnish to the holder, on request and without
charge, a copy of the Warrant Indenture.
The Trustee shall notify the Warrantholder of the duration and
expiry of any Class B Warrant Exercise Period.
On presentation at the principal transfer office of the
Trustee in the city of Vancouver as specified below, subject to the provisions
of the Warrant Indenture and on compliance with the reasonable requirements of
the Trustee, one or more Warrant Certificates may be exchanged for one or more
Warrant Certificates entitling the holder thereof to purchase in the aggregate
an equal number of Shares as are purchasable under the Warrant Certificate or
Certificates so exchanged.
The Warrant Indenture provides for: (i) adjustments to certain
rights of the holder, including the number of Shares issuable upon exercise or
deemed exercise, upon the happening of certain stated events, including the
subdivision or consolidation of the outstanding Shares, certain distributions
of Shares or securities convertible or exchangeable into Shares or of other
securities or assets of the Company, certain offerings of rights, warrants or
options, and certain capital reorganizations; and (ii) payment of an amount to
compensate for dividends paid on Shares prior to the exercise of the Warrants.
Nothing contained in this Warrant Certificate, the Warrant
Indenture or elsewhere shall be construed as conferring upon the holder hereof
any right or interest whatsoever as a holder of Shares or any other right or
interest except as herein and in the Warrant Indenture expressly provided.
Time is of the essence hereof.
This Warrant Certificate will not be valid for any purpose
until it has been countersigned by or on behalf of the Trustee from time to
time under the Warrant Indenture.
B-2
46
IN WITNESS WHEREOF Granges Inc. has caused this Warrant
Certificate to be duly signed on _______________________, 199__.
GRANGES INC.
By: __________________________
Authorized Signatory
By: __________________________
Authorized Signatory
Countersigned and Registered by:
MONTREAL TRUST COMPANY OF CANADA,
Vancouver
Per: __________________________________
Authorized Signatory
B-3
47
SCHEDULE "C"
FORM OF DECLARATION FOR REMOVAL OF LEGEND
To: Montreal Trust Company of Canada
Stock and Bond Transfer Department
The undersigned (A) acknowledges that the sale of the
securities, represented by certificate numbers ___________________, to which
this declaration relates is being made in reliance on Rule 904 of Regulation S
under the United States Securities Act of 1933, as amended (the "Securities
Act") and (B) certifies that (1) it is not an "affiliate" of Granges Inc. (as
defined in Rule 405 under the Securities Act), (2) the offer of such securities
was not made to a person in the United States and either (a) at the time the
buy order was originated, the buyer was outside the United States, or the
seller and any person acting on its behalf reasonably believed that the buyer
was outside the United States or (b) the transaction was executed on or through
the facilities of The Toronto Stock Exchange and neither the seller nor any
person acting on its behalf knows that the transaction has been prearranged
with a buyer in the United States and (3) neither the seller nor any person
acting on its behalf engaged in any directed selling efforts in connection with
the offer and sale of such securities. Terms used herein have the meanings
given to them by Regulation S.
Dated:
By:_____________________________________
Name:
Title:
C-1
48
SCHEDULE "D"
EXERCISE FORM
To: Granges Inc.
c/o Montreal Trust Company of Canada
The undersigned holder of the within Warrant Certificate,
being entitled to do so in accordance with the terms of the Purchase Agreement,
hereby exercises the right of such holder to acquire ___________________ common
shares ("Shares") of Granges Inc. (or such number of Shares or other securities
or property to which such subscription entitles him in lieu thereof or in
addition thereto under the provisions of the Warrant Indenture mentioned in the
Warrant Certificate) in accordance with the Warrant Certificate and Warrant
Indenture.
The undersigned certifies as follows (check one box):
A [ ] The undersigned (and any person named in Section 3
below) is not a "U.S. Person" within the meaning of
Regulation S under the U.S. Securities Act of 1933,
as amended (the "Securities Act"), and is not
exercising this Warrant on behalf of any U.S. Person.
B [ ] The undersigned (and any person named in Section 3
below) is an institutional "accredited investor", as
defined in Rule 501(a)(1), (2), (3) or (7) of the
Securities Act and is exercising this Warrant for its
own account or the account of an institutional
accredited investor over which it exercises sole
investment discretion.
By checking box B above, the undersigned represents that it
(and any person named in Section 3 below) has had access to such current public
information concerning Granges Inc. as it has considered necessary in
connection with its investment decision and understands that the Shares have
not been and will not be registered under the Securities Act and agrees that it
will only resell the Shares (i) to Granges Inc., (ii) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (iii)
inside the United States pursuant to the exemption from registration under the
Securities Act provided by Rule 144A or Rule 144 thereunder and in accordance
with applicable state securities laws or (iv) in a transaction that does not
require registration under the Securities Act or any applicable state
securities laws. If box B above is checked, the Shares issued pursuant to this
exercise form will bear a legend to the foregoing effect which may be removed
by providing a declaration to the registrar and transfer agent for the Shares
to the effect that such Shares have been sold in accordance with Rule 904 of
Regulation S under the Securities Act or by providing the registrar and
transfer agent an opinion of counsel, of recognized standing reasonably
satisfactory to Granges Inc., to the effect that such legend is no longer
required under applicable requirements of the Securities Act or state
securities laws.
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The undersigned hereby irrevocably directs that the said
Shares be issued and delivered as follows:
Name(s) in Full Address(es) Number(s) of Common shares
(Include Postal Code)
------------------ ------------------ ------------------
------------------ ------------------ ------------------
------------------ ------------------ ------------------
(Please print full name in which share certificates are to be issued. If any
shares are to be issued to a person or persons other than the Warrantholder,
the Warrantholder must pay to the Trustee all exigible transfer taxes or other
government charges.)
DATED this _____ day of _______________________ , 19__.
Signature Guaranteed By:
________________________ ________________________
Signature of Subscriber*
________________________
________________________
________________________
(Include Postal Code)
* This signature must correspond exactly with the name appearing on the
registration panel.
Please check box if the share certificates are to be delivered at the office
where this Warrant Certificate is surrendered, failing which the certificates
will be mailed.
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50
SCHEDULE "E"
INSTRUCTIONS FOR THE TRANSFER OF COMMON SHARES
BEARING A U.S. SECURITIES ACT LEGEND
______________________________________________
Granges Inc.
Common Shares
______________________________________________
Set forth below are the instructions to be followed by Montreal Trust
Company of Canada, as transfer agent and registrar of the common shares
("Shares") of Granges Inc. (the "Company"), in connection with (A) transfers of
Shares, bearing the U.S. Securities Act legend (the "U.S. Legend") set forth in
paragraph 2 below ("U.S. Legended Shares") to a person outside the United
States through a trade on The Toronto Stock Exchange or otherwise in compliance
with Rule 904 of Regulation S under the United States Securities Act of 1933
(the "U.S. Securities Act") or (B) transfers of U.S. Legended Shares other
than in the manner described in clause (A).
Transfers of U.S. Legended Shares through the facilities of The Toronto Stock
Exchange or otherwise in compliance with Rule 904 of Regulation S
Upon surrender for registration of transfer of any U.S. Legended Share
certificate at an authorized office of Montreal Trust Company of
Canada by a person who sold the Shares represented thereby on or
through the facilities of The Toronto Stock Exchange or otherwise in
compliance with Rule 904 of Regulation S under the U.S. Securities
Act, Montreal Trust Company of Canada shall certify, register and
deliver in the name of such transferee a new Share certificate without
the U.S. Legend representing the number of Shares so transferred,
provided that such transferor has delivered (by facsimile transmission
or otherwise) to Montreal Trust Company of Canada a duly executed
declaration stating the following:
The undersigned (A) acknowledges that the sale of the securities,
represented by certificate numbers __________, to which this
declaration relates is being made in reliance on Rule 904 of
Regulation S under the United States Securities Act of 1933, as
amended (the "Securities Act") and (B) certifies that (1) it is not an
"affiliate" of Granges Inc. (as defined in Rule 405 under the
Securities Act), (2) the offer of such securities was not made to a
person in the United States and either (a) at the time the buy order
was originated, the buyer was outside the United States, or the seller
and any person acting on its behalf reasonably believed that the buyer
was outside the United States or (b) the transaction was executed on
or through the facilities of The Toronto Stock Exchange and neither
the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States and
(3) neither the seller nor any person acting on its behalf engaged in
any directed selling efforts in connection with the offer and sale of
such securities. Terms used herein have the meanings given to them by
Regulation S.
Transfers of U.S. Legended Shares other than in the manner described in
Paragraph 1 above
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51
Upon surrender for registration of transfer of any U.S. Legended Share
certificate at an authorized office of Montreal Trust Company of
Canada, Montreal Trust Company of Canada shall certify, register and
deliver in the name of the transferee a new Share certificate with the
U.S. Legend in the following form printed on the face or reverse
thereof representing the aggregate number of Shares so transferred.
THE U.S. LEGEND:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT OR (C). INSIDE THE UNITED STATES IN ACCORDANCE
WITH (1) CERTAIN PROCEDURES SATISFACTORY TO THE COMPANY OR (2)
RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF
THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A
NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL
CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM MONTREAL TRUST
COMPANY OF CANADA UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION, IN A FORM SATISFACTORY TO MONTREAL TRUST
COMPANY OF CANADA AND THE COMPANY, TO THE EFFECT THAT THE SALE
OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT.
provided, however, that Montreal Trust Company of Canada shall
certify, register and deliver in the name of such transferee a new
Share certificate without the U.S. Legend representing the number of
Shares so transferred if such transferor has delivered to Montreal
Trust Company of Canada an opinion of counsel, of recognized standing
reasonably satisfactory to the Company, to the effect that the U.S.
Legend is no longer required under applicable requirements of the U.S.
Securities Act and state securities laws.
Exchanges of U.S. Legended Shares
If U.S. Legended Share certificates are presented to Montreal Trust
Company of Canada in exchange for new Share Certificates that are not
being transferred pursuant to paragraph 1 or 2 above (including any
Shares remaining untransferred after certificates are presented for
transfer pursuant to Paragraph 1 or 2 above), Montreal Trust Company
of Canada shall deliver to the holder thereof new Share certificates
bearing the U.S. Legend in the number requested, representing the
appropriate aggregate number of Shares.
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