EXHIBIT C
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1),(2),
(3) OR (7) UNDER THE SECURITIES ACT IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LAWS, THE HOLDER OF THESE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE THE DATE THAT IS FOUR (4) MONTHS AND A DAY
AFTER THE DATE OF ISSUE OF THESE SECURITIES.
NORTH AMERICAN PALLADIUM LTD.
SERIES [__] WARRANT
Warrant No. [__] Dated: [____________], 2006
North American Palladium Ltd., a company organized under the Canada
Business Corporation Act (the "COMPANY"), hereby certifies that, for value
received, [______________] or its registered assigns (the "HOLDER"), is entitled
to purchase from the Company up to a total of [________] common shares (the
"COMMON SHARES"), of the Company (each such share, a "WARRANT SHARE" and all
such shares, the "WARRANT SHARES") at an exercise price per share equal to
US$13.48(1) (as adjusted from time to time as provided in SECTION 9, the
"EXERCISE PRICE"), at any time and from time to time from and after the date
hereof and through and including the four year anniversary of the date hereof
(the "EXPIRATION DATE"), and subject to the following terms and conditions. This
Series [_] Warrant (this "WARRANT") is one of a series of
----------------
(1) 125% of Market Price, but with respect to any Warrants issued pursuant
to the Second Closing or any Unit Warrant Closing, no less than the five
day volume weighted average price on the TSX at the time of such Second
Closing or Unit Warrant Closing (reflected in US$ using the applicable
daily exchange rate over such five-day period). For the purposes hereof,
"MARKET PRICE" means the VWAP for the five consecutive trading days
immediately prior to the Initial Closing Date.
similar warrants issued pursuant to that certain Securities Purchase Agreement,
dated as of the date hereof, by and among the Company and the Purchasers
identified therein (the "PURCHASE AGREEMENT"). All such warrants are referred to
herein, collectively, as the "WARRANTS."
1. DEFINITIONS. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement.
2. REGISTRATION OF WARRANT. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the Holder hereof from time to time. The
Company may deem and treat the Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
3. REGISTRATION OF TRANSFERS. Subject to Section 4.1 of the
Purchase Agreement, the Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached as SCHEDULE 2 hereto duly completed and signed, to
the Company's transfer agent or to the Company at its address specified herein.
Upon any such registration or transfer, a new warrant to purchase Common Shares,
in substantially the form of this Warrant (any such new warrant, a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
4. EXERCISE AND DURATION OF WARRANT.
(a) This Warrant shall be exercisable by the Holder at any
time and from time to time on or after the date hereof to and including the
Expiration Date. At 5:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value.
(b) The Holder may exercise this Warrant by delivering to
the Company (i) an exercise notice, in the form attached as SCHEDULE 1 hereto
(the "EXERCISE NOTICE"), appropriately completed and duly signed, (ii) if the
Holder is exercising the Warrant other than pursuant to a "cashless exercise", a
signed letter substantially in the form attached as SCHEDULE 3 hereto, and (iii)
payment of the Exercise Price for the number of Warrant Shares as to which this
Warrant is being exercised (which may take the form of a "cashless exercise" if
so indicated in the Exercise Notice and if a "cashless exercise" may occur at
such time pursuant to SECTION 10 below), and the date such items are delivered
to the Company (as determined in accordance with the notice provisions hereof)
is an "EXERCISE DATE." The Holder shall be required to deliver the original
Warrant in order to effect an exercise hereunder. The Holder shall, however, be
entitled to effect the exercise of the remaining number of Warrant Shares by
notice to the Company at any time during which the Warrant is in transit to or
from the Company or in the possession of the Company.
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5. DELIVERY OF WARRANT SHARES.
(a) Upon exercise of this Warrant, the Company shall
promptly (but in no event later than three Trading Days after the Exercise Date)
issue or cause to be issued and cause to be delivered to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends unless a registration statement covering the resale of the
Warrant Shares and naming the Holder as a selling shareholder thereunder is not
then effective and the Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144 under the Securities Act; provided that if a
certificate for Warrant Shares is issued within 120 days of the date hereof,
such certificate will contain the legend set forth in Section 4.1(b)(B) of the
Purchase Agreement. The Holder, or any Person so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record of
such Warrant Shares as of the Exercise Date. The Company shall, upon request of
the Holder, except to the extent prohibited by law or to the extent the Company
cannot do so after using commercially reasonable efforts, use its best efforts
to deliver Warrant Shares hereunder electronically through the Depository Trust
Company or another established clearing corporation performing similar
functions.
(b) This Warrant is exercisable, either in its entirety or,
from time to time, for any number of Warrant Shares. Upon surrender of this
Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.
(c) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder a certificate representing Warrant
Shares by the third Trading Day after the date on which delivery of such
certificate is required by this Warrant, and if after such third Trading Day the
Holder purchases (in an open market transaction or otherwise) Common Shares to
deliver in satisfaction of a sale by the Holder of the Warrant Shares that the
Holder anticipated receiving from the Company (a "BUY-IN"), then in the Holder's
sole discretion, the Company shall within three Trading Days after the Holder's
request, either (i) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions, if any) for the Common
Shares so purchased (the "BUY-IN PRICE"), at which point the Company's
obligation to deliver such certificate (and to issue such Common Shares) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Common Shares and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In Price over the
product of (i) such number of Common Shares, multiplied by (ii) the Closing
Price on the date of the event giving rise to the Company's obligation to
deliver such certificate.
(d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with
3
the issuance of Warrant Shares. Nothing herein shall limit the Holder's right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing Common Shares upon exercise of this Warrant as
required pursuant to the terms hereof.
6. CHARGES, TAXES AND EXPENSES. Issuance and delivery of
certificates for Common Shares upon exercise of this Warrant shall be made
without charge to the Holder for any issue or transfer tax, withholding tax,
transfer agent fee or other incidental tax or expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the
Company; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder or an Affiliate thereof. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
7. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost,
stolen or destroyed, or the Holder fails to deliver such certificate as may
otherwise be provided herein, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, bearing the same legend, if any,
but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction (in such case) and, in each case, a customary and
reasonable indemnity. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe.
8. RESERVATION OF WARRANT SHARES. The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Shares, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of SECTION 9). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. The Company will take all such action as may be necessary to
assure that such Common Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Shares
may be listed.
9. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this SECTION 9.
(a) DIVIDENDS AND STOCK SPLITS. If the Company, at any time
while this Warrant is outstanding, (i) pays a share dividend on its Common
Shares or otherwise makes a distribution on any class of capital stock that is
payable in Common Shares, (ii) subdivides
4
outstanding Common Shares into a larger number of shares, or (iii) combines
outstanding Common Shares into a smaller number of shares, then in each such
case the Exercise Price shall be multiplied by a fraction the numerator of which
shall be the number of Common Shares outstanding immediately before such event
and the denominator of which shall be the number of Common Shares outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
(b) PRO RATA DISTRIBUTIONS. If the Company, at any time
while this Warrant is outstanding, distributes to holders of Common Shares (i)
evidences of its indebtedness, (ii) any security (other than a distribution of
Common Shares covered by the preceding paragraph), (iii) rights or warrants to
subscribe for or purchase any security, or (iv) any other asset (in each case,
"DISTRIBUTED PROPERTY"), then in each such case the Exercise Price in effect
immediately prior to the record date fixed for determination of shareholders
entitled to receive such distribution shall be adjusted (effective on such
record date) to equal the product of such Exercise Price multiplied by a
fraction the denominator of which shall be the average of the Closing Prices for
the five Trading Days immediately prior to (but not including) such record date
and the numerator of which shall be such average less the then fair market value
of the Distributed Property distributed in respect of one outstanding Common
Share, as determined by the Company's independent certified public accountants
that regularly examine the financial statements of the Company (an "APPRAISER").
In such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the
Appraiser and such additional appraiser. Subject to TSX approval (which upon the
request of the Holder, the Company will promptly seek and use its commercially
reasonable best efforts to obtain), as an alternative to the foregoing
adjustment to the applicable Exercise Price, at the request of the Holder
delivered before the 60th day after the record date fixed for determination of
shareholders entitled to receive such distribution, the Company will hold the
Distributed Property in escrow and deliver to the Holder, the Distributed
Property that the Holder would have been entitled to receive in respect of such
number of Warrant Shares had the Holder been the record holder of such Warrant
Shares immediately prior to such record date within three Trading Days following
exercise of this Warrant.
(c) FUNDAMENTAL CHANGES. If, at any time while this Warrant
is outstanding, (i) the Company effects any merger or consolidation of the
Company with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Shares are permitted to
tender or exchange their shares for other securities, cash or property, or (iv)
the Company effects any reclassification of the Common Shares or any compulsory
share exchange pursuant to which the Common Shares are effectively converted
into or exchanged for other securities, cash or property (other than as a result
of a subdivision or combination of shares of Common Shares covered by SECTION
9(A) above) or any other Change of Control (in any such case, a "FUNDAMENTAL
CHANGE"), then the Holder shall have the right thereafter only to receive, upon
5
exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Change if it had been, immediately prior to such Fundamental Change,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the "ALTERNATE CONSIDERATION"). The aggregate Exercise Price
for this Warrant will not be affected by any such Fundamental Change, but the
Company shall apportion such aggregate Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of Common Shares
are given any choice as to the securities, cash or property to be received in a
Fundamental Change, then the Holder shall be given the same choice as to the
Alternate Consideration it is entitled to receive upon any exercise of this
Warrant following such Fundamental Change. At the Holder's request, any
successor to the Company or surviving entity in such Fundamental Change shall
issue to the Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder's right to purchase only the Alternate Consideration for
the aggregate Exercise Price upon exercise thereof. The terms of any agreement
pursuant to which a Fundamental Change is effected shall include terms requiring
any such successor or surviving entity to comply with the provisions of this
SECTION 9(C) and ensuring that this Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Change. If any Fundamental Change constitutes or results in a Change
of Control, then at the request of the Holder delivered before the 90th day
after such Fundamental Change, the Company (or any such successor or surviving
entity) will purchase this Warrant from the Holder for a purchase price, payable
in cash within five Trading Days after such request (or, if later, on the
effective date of the Fundamental Change), equal to the value of the remaining
unexercised portion of this Warrant on the date of such request calculated using
the binomial option pricing model.
(d) SUBSEQUENT EQUITY SALES.
(i) If, at any time prior to September [__], 2007,
the Company or any Subsidiary issues additional Common Shares or rights,
warrants, options or other securities or debt convertible, exercisable
or exchangeable for Common Shares or otherwise entitling any Person to
acquire Common Shares (collectively, "COMMON SHARE EQUIVALENTS") at a
purchase price per Common Share (the "EFFECTIVE PRICE") less than the
Exercise Price (as adjusted hereunder to such date), then the Exercise
Price shall be reduced to equal the Effective Price; provided that in no
event shall the Exercise Price be reduced below US$[___](2) (as adjusted
for any stock split, stock combination, reorganization or similar event
affecting the capital stock of the Company). For purposes of this
paragraph, in connection with any issuance of any Common Share
Equivalents, (A) the maximum number of Common Shares potentially
issuable at any time upon conversion, exercise or exchange of such
Common Share Equivalents (the "DEEMED NUMBER") shall be deemed to be
outstanding upon issuance of such Common Share Equivalents, (B) the
Effective Price applicable to such Common Shares shall equal the minimum
dollar value of consideration payable to the Company to purchase such
Common Share Equivalents and to convert, exercise or exchange them into
Common Shares, divided by the Deemed Number, (C) no further adjustment
shall be made to the
----------------------
(2) Price reflecting the five day volume weighted average price on the TSX
at the time of issuance, as required by the TSX (reflected in US$ using
the applicable daily exchange rate over such five-day period).
6
Exercise Price upon the actual issuance of Common Shares upon
conversion, exercise or exchange of such Common Share Equivalents, and
(D) to the extent that any such Common Share Equivalents expire before
fully converted, exercised or exchanged, the Exercise Price will be
readjusted to reflect such expiration.
(ii) If, at any time while this Warrant is
outstanding, the Company directly or indirectly issues Common Share
Equivalents with an Effective Price or a number of underlying shares
that floats or resets or otherwise varies or is subject to adjustment
based (directly or indirectly) on market prices of the Common Shares (a
"FLOATING PRICE SECURITY"), then for purposes of applying the preceding
paragraph in connection with any subsequent conversion, the Effective
Price will be determined separately on each Exercise Date and will be
deemed to equal the lowest Effective Price at which any holder of such
Floating Price Security is entitled to acquire Common Shares on such
Exercise Date (regardless of whether any such holder actually acquires
any shares on such date).
(iii) Notwithstanding the foregoing, no adjustment
will be made under this paragraph (d) in respect of any issuances of
Common Shares and Common Share Equivalents made pursuant to the
definition of Excluded Stock.
(e) NUMBER OF WARRANT SHARES. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraphs (a), (b) or (d) of this
Section, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the increased or
decreased number of Warrant Shares shall be the same as the aggregate Exercise
Price in effect immediately prior to such adjustment.
(f) CALCULATIONS. All calculations under this SECTION 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of Common Shares outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the sale
or issuance of any such shares shall be considered an issue or sale of Common
Shares.
(g) DEFERRAL OF DE MINIMUS ADJUSTMENT. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price, provided that any adjustment
which does not meet this threshold and is not made shall be carried forward and
taken into account in subsequent adjustments.
(h) NOTICE OF ADJUSTMENTS. Upon the occurrence of each
adjustment pursuant to this SECTION 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's transfer agent.
7
(i) NOTICE OF CORPORATE EVENTS. If the Company (i) declares
a dividend or any other distribution of cash, securities or other property in
respect of its Common Shares, including without limitation any granting of
rights or warrants to subscribe for or purchase any capital stock of the Company
or any Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits shareholder approval for any Fundamental Change or
(iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction, at least seven
Trading Days prior to the applicable record or effective date on which a Person
would need to hold Common Shares in order to participate in or vote with respect
to such transaction, and the Company will take all steps reasonably necessary in
order to insure that the Holder is given the practical opportunity to exercise
this Warrant prior to such time so as to participate in or vote with respect to
such transaction; provided, however, that the failure to deliver such notice or
any defect therein shall not affect the validity of the corporate action
required to be described in such notice.
10. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise
Price in immediately available funds; provided, however, that if, on any
Exercise Date the shares issuable upon exercise of this Warrant are not freely
resalable without restriction under the Securities Act, the Holder may satisfy
its obligation to pay the Exercise Price through a "cashless exercise," in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to
the Holder.
Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.
A = the average of the Closing Prices for the five
Trading Days immediately prior to (but not
including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act,
it is intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Purchase Agreement (provided that the Commission continues to take the position
that such treatment is proper at the time of such exercise).
11. LIMITATION ON EXERCISE.
(a) Notwithstanding anything to the contrary contained
herein, the number of Common Shares that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to ensure that, following such
8
exercise (or other issuance), the total number of Common Shares then
beneficially owned by the Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Shares would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.9% (the
"MAXIMUM PERCENTAGE") of the total number of issued and outstanding Common
Shares (including for such purpose the Common Shares issuable upon such
exercise). Each delivery of an Exercise Notice by the Holder will constitute a
representation by the Holder that it has evaluated the limitation set forth in
this paragraph and determined that issuance of the full number of Warrant Shares
requested in such Exercise Notice is permitted under this paragraph. For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
The Company's obligation to issue Common Shares in excess of the limitation
referred to in this Section shall be suspended (and shall not terminate or
expire notwithstanding any contrary provisions hereof) until such time, if any,
as such Common Shares may be issued in compliance with such limitation, provided
that Common Shares may not be issued pursuant to the preceding clause beyond the
current Expiration Date without TSX approval, to the extent such approval is
required. [NEW PURCHASER WARRANT ONLY]
(b) Notwithstanding anything to the contrary contained
herein, the maximum aggregate number of Common Shares that may be issued
pursuant to the Transaction Documents shall not exceed the Issuable Maximum,
unless shareholder approval for issuances of Common Shares in excess of the
Issuable Maximum is obtained pursuant to Section 4.21 of the Purchase Agreement.
(c) Notwithstanding anything to the contrary contained
herein, the maximum aggregate number of Common Shares that may be issued to KFOC
pursuant to the Transaction Documents shall not exceed the KFOC Maximum, unless
shareholder approval for issuances of Common Shares in excess of the KFOC
Maximum is obtained pursuant to Section 4.21 of the Purchase Agreement. [KFOC
WARRANT ONLY].
(d) In the event that the Holder's receipt of Common Shares
upon exercise of this Warrant is restricted based on this SECTION 11 [except for
paragraph (a)] [NEW PURCHASER WARRANT ONLY], the Company shall within five
Trading Days after such event, pay cash to the Holder, as liquidated damages and
not as a penalty, in an amount equal to the binomial option pricing model value
of this Warrant with respect to the portion of this Warrant which is
unexercisable due to the Issuable Maximum after giving effect to the limitations
in this SECTION 11 [except for paragraph (a)] [NEW PURCHASER WARRANT ONLY],
measured as of the date of such event or, if greater, the date of payment (such
difference, the "CASH AMOUNT"). The portion of this Warrant in respect of which
the Cash Amount has been paid shall be cancelled and retired and the Company
shall have no further obligation with respect thereto.
12. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant. If
any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon exercise of this Warrant, the number of Warrant Shares
to be issued will be rounded down to the nearest whole share with the fractional
interest to be paid in cash based on the current market price.
9
13. NOTICES. Any and all notices or other communications or
deliveries hereunder (including any Exercise Notice) shall be in writing and
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in the Purchase Agreement prior to 5:30 p.m. (New
York City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in the Purchase Agreement on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of sending, if sent by nationally
recognized overnight courier service specifying next Business Day delivery, or
(iv) upon actual receipt by the party to whom such notice is required to be
given, if by hand delivery. The address and facsimile number of a party for such
notices or communications shall be as set forth in the Purchase Agreement,
unless changed by such party by two Trading Days' prior notice to the other
party in accordance with this SECTION 13.
14. [OMITTED.]
15. MISCELLANEOUS.
(a) The Holder, solely in such Person's capacity as a holder
of this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person's capacity as the Holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, amalgamation, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise,
prior to the issuance to the Holder of the Warrant Shares which such Person is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on the Holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a shareholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
SECTION 15(A), the Company shall provide the Holder with copies of the same
notices and other information given to the shareholders of the Company,
contemporaneously with the giving thereof to the shareholders.
(b) Subject to the restrictions on transfer set forth on the
first page hereof and in Section 4.1 of the Purchase Agreement, this Warrant may
be assigned by the Holder. This Warrant may not be assigned by the Company
except to a successor in the event of a Fundamental Change. This Warrant shall
be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in
this Warrant shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder and their successors and assigns.
(c) The Company will not, by amendment of its governing
documents or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of
10
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company (i)
will take all such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (ii) will not close its
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
(D) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(e) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(f) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
NORTH AMERICAN PALLADIUM LTD.
By:__________________________________
Name:_____________________________
Title:____________________________
SCHEDULE 1
FORM OF EXERCISE NOTICE
(To be executed by the Holder to exercise the right to purchase Common Shares
under the foregoing Warrant)
To: North American Palladium Ltd.
The undersigned is the Holder of Warrant No. _______ (the "WARRANT") issued by
North American Palladium Ltd., a company organized under the Canada Business
Corporations Act (the "COMPANY"). Capitalized terms used herein and not
otherwise defined have the respective meanings set forth in the Warrant.
1. The Warrant is currently exercisable to purchase a total of
______________ Warrant Shares.
2. The undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the Warrant.
3. The Holder intends that payment of the Exercise Price shall be made as
(check one):
____ "Cash Exercise"
____ "Cashless Exercise"
4. If the Holder has elected a Cash Exercise, the Holder shall pay the sum
of $____________ to the Company in accordance with the terms of the
Warrant.
5. Pursuant to this exercise, the Company shall deliver to the Holder
_______________ Warrant Shares in accordance with the terms of the
Warrant.
6. Following this exercise, the Warrant shall be exercisable to purchase a
total of ______________ Warrant Shares.
Dated:______________, ____ Name of Holder:
(Print) ________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
(Signature must conform in all respects
to name of Xxxxxx as specified on the
face of the Warrant)
SCHEDULE 2
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ Common Shares of North American Palladium Ltd.
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of North American Palladium Ltd. with full
power of substitution in the premises.
Dated:______________, ____
________________________________________
(Signature must conform in all respects
to name of Xxxxxx as specified on the
face of the Warrant)
__________________________________
Address of Transferee
__________________________________
__________________________________
In the presence of:
__________________________
SCHEDULE 3
FORM OF LETTER TO BE DELIVERED UPON EXERCISE OF WARRANTS
To: North American Palladium Ltd.
The undersigned is delivering this letter in connection with the purchase of
Common Shares of North American Palladium Ltd., a corporation organized under
the Canada Business Corporations Act (the "COMPANY"), upon exercise of warrants
of the Company (the "WARRANTS").
The undersigned hereby confirms that (check one):
A. [ ]
The undersigned is not a U.S. Person or person in the United States, and
is not acquiring any of the Common Shares issuable upon exercise of the Warrants
for the account or benefit of a U.S. Person or person in the United States. For
the purposes hereof "United States." and "U.S. Person" shall have the meanings
given to such terms in Regulation S under the Securities Act.
OR
B. [ ]
The undersigned:
(a) is an institutional "accredited investor" within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act;
(b) is purchasing the Common Shares for its own account;
(c) has knowledge and experience in financial and business matters
such that it is are capable of evaluating the merits and risks of purchasing the
Common Shares;
(d) is not acquiring the Common Shares with a view to distribution
thereof in violation of applicable securities laws (without prejudice to the
undersigned's right to dispose of the Common Shares in compliance with such
laws);
(e) acknowledges that it has had access to such financial and other
information as requested by the undersigned in connection with their decision to
purchase the Common Shares; and
(f) acknowledges that it is not purchasing the Common Shares as a
result of any general solicitation or general advertising, as such terms are
defined in Regulation D under the Securities Act.
The undersigned understands that the Common Shares are being offered in a
transaction not involving any public offering within the U.S. within the meaning
of the Securities Act and that the Common Shares may resold only pursuant to an
effective registration statement under, or an exemption from the registration
requirements of, the Securities Act.
[NAME OF XXXXXX]
By:_________________________________
Name:
Title:
Address:
