THIS SPECIAL WARRANT INDENTURE is made as of February 5, 1997.
BETWEEN:
DAKOTA MINING CORPORATION, a company governed
by the laws of Canada (the "Corporation"),
AND:
MONTREAL TRUST COMPANY OF CANADA, a trust
company incorporated under the laws of Canada (the "Trustee").
WHEREAS the Corporation is proposing to issue Special Warrants in the
manner herein set forth;
WHEREAS one Special Warrant shall entitle the holder thereof to
acquire one $1,000 principal amount 7.5% unsecured convertible
debenture of the Corporation at no additional cost upon the terms and
conditions herein set forth; and
WHEREAS all acts and deeds necessary have been done and performed to
make the Special Warrants when issued, as in this Indenture provided,
legal, valid and binding upon the Corporation with the benefits and
subject to the terms of this Indenture;
NOW THEREFORE THIS INDENTURE WITNESSES that in consideration of the
mutual covenants and agreements of the parties contained herein, the
parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions - In this Indenture, including the recitals and schedules
hereto and in all indentures supplemental hereto:
(a) "1934 Act" means the United States Securities and Exchange Act of
1934, as amended;
(b) "Agency Agreement" means the agreement dated the date hereof between
the Corporation and the Agents respecting the issue and sale of the
Special Warrants;
(c) "Agents" means Canaccord Capital Corporation, ScotiaMcLeod Inc. and
Newcrest Capital Inc.;
144554\0512890.WP
2
(d) "Agents' Commission" means the commission paid to the Agents on the
sale of the Special Warrants in accordance with the Agency Agreement;
(e) "Applicable Legislation" means the provisions of the Canada Business
Corporations Act, as amended, and any statute of Canada or a province
thereof, and the regulations under any such named or other statute,
relating to trust indentures or to the rights, duties and obligations
of trustees and of corporations under trust indentures, to the extent
that such provisions are at the time in force and applicable to this
Indenture;
(f) "Business Day" means a day which is not Saturday, Sunday or a
statutory holiday in the cities of Xxxxxxxxx, Xxxxxxx Xxxxxxxx xxx
Xxxxxxx, Xxxxxxx;
(g) "Common Shares" means fully paid and non-assessable common shares of
the Corporation;
(h) "Compliance Notice" means a notice in writing from the Corporation and
Canaccord Capital Corporation, on behalf of the Agents, to the Trustee
to the effect that all of the Shareholder Approval Date, the
Qualification Date and the Merger Completion Date have occurred prior
to the Qualification Deadline.
(i) "Corporation's Auditors" means the firm of chartered accountants duly
appointed as auditors of the Corporation;
(j) "Counsel" means a barrister or solicitor or firm of barristers and
solicitors acceptable to the Trustee;
(k) Intentionally Deleted;
(l) "Debenture Trust Indenture" means the trust indenture between the
Corporation and the Montreal Trust Company of Canada, as trustee,
dated the date hereof;
(m) "Debenture Trustee" means the trustee under the Debenture Trust
Indenture;
(n) "Debentures" means the $25 million aggregate principal amount of 7.5%
unsecured convertible debentures of the Corporation issuable under and
governed by the Debenture Trust Indenture and each individual
"Debenture" means a Debenture in the principal amount of $1,000;
(o) "Default Notice" has the meaning set out in section 3.4(b) hereof;
(p) "Effective Date" means the date hereof;
144554\0512890.WP
3
(q) "Escrowed Proceeds" means the gross proceeds received from the sale of
the Special Warrants, less the Agents' Commission and, if applicable,
less the USMX Loan Amount if it has been released pursuant to section
6.3, deposited with the Trustee pursuant to Article 6 hereof;
(r) "Exercise Date" means, with respect to any Special Warrant, the date
on which the Warrant Certificate representing a Special Warrant is
surrendered for exercise or otherwise deemed to have been exercised in
accordance with the provisions of Article 3;
(s) "Expiry Time" means 5:00 p.m. (local time) on the earlier of: (A) the
5th Business Day following the day on which a Compliance Notice is
delivered by the Corporation to the Trustee in accordance with section
3.1(d), and (B) February 5, 1998;
(t) "Final Prospectus" means a final prospectus qualifying for sale in the
Qualifying Jurisdictions the Debentures issuable upon exercise of the
Special Warrants and the Common Shares issuable upon conversion of the
Debentures, and any amendment or supplement thereto;
(u) "Merger" means the merger between the Corporation and USMX, Inc. as
contemplated in the Merger Letter Agreement;
(v) "Merger Completion Date" means the date on which the Merger is
completed in accordance with the Merger Letter Agreement;
(w) "Merger Completion Notice" means a notice in writing from the
Corporation and Canaccord Capital Corporation, on behalf of the
Agents, to the Trustee to the effect that the Merger Completion Date
has occurred prior to the Qualification Deadline.
(x) "Merger Default Notice" means a notice in writing from the Corporation
to the Trustee to the effect that the Merger Completion Date has not
occurred prior to Qualification Deadline;
(y) "Merger Agreement" means the merger agreement between the Corporation
and USMX, Inc. dated the date hereof;
(z) "Notice of Shareholder Approval Default" means notice in writing from
the Corporation to the Trustee to the effect that the Shareholder
Approval Date has not occurred prior to the Shareholder Approval
Deadline;
144554\0512890.WP
4
(aa) "Notice of Non-Qualification" means notice in writing from the
Corporation to the Trustee to the effect that the Qualification Date
has not occurred prior to the Qualification Deadline;
(bb) "Permitted Investments" means obligations of or guaranteed by the
government of Canada or any province of Canada;
(cc) "person" means an individual, body corporate, partnership, trust,
trustee, executor, administrator, legal representative or any
unincorporated organization;
(dd) "Preliminary Prospectus" means a preliminary prospectus of the
Corporation relating to the qualification for sale in the Qualifying
Jurisdictions of the Debentures issuable upon exercise of the Special
Warrants and the Common Shares issuable upon conversion or, if
applicable, redemption of the Debentures, and any amendment or
supplement thereto;
(ee) "Qualification Date" means the date on which a receipt is issued for
the Final Prospectus by the last of the Securities Commissions to
issue a receipt for the Final Prospectus;
(ff) "Qualification Deadline" means 5:00 p.m. (Vancouver time) on the later
of: (A) May 31, 1997 and (B) the day that is 120 days after the
Effective Date or such later date as the Agents in their sole
discretion may determine in a written notice given to the Corporation
and the Trustee;
(gg) "Qualification Notice" means notice in writing from the Corporation
and Canaccord Capital Corporation, on behalf of the Agents, to the
Trustee to the effect that the Qualification Date has occurred prior
to the Qualification Deadline and attaching thereto the receipts for
the Final Prospectus from the Securities Commissions;
(hh) "Qualifying Jurisdictions" means British Columbia, Alberta, Ontario
and Quebec;
(ii) "Retraction Cut-off Date" has the meaning set out in section 3.4(b)
hereof;
(jj) "Regulation S" means Regulation S adopted by the SEC under the U.S.
Securities Act;
(kk) "SEC" means the United States Securities and Exchange Commission;
(ll) "Securities Commissions" means the securities commissions of each of
the Qualifying Jurisdictions;
144554\0512890.WP
5
(mm) "Securities Laws" means the applicable securities laws of the
Qualifying Jurisdictions and the respective regulations made and forms
prescribed thereunder together with all applicable published policy
statements and blanket orders and rulings of the Securities
Commissions;
(nn) "Series A Exercise Period" means the period from and including the
date of issuance of the Special Warrants and ending at the Expiry
Time;
(oo) "Series A Special Warrant Certificate" means a certificate for Series
A Special Warrants issued on or after the Effective Date to evidence
Series A Special Warrants;
(pp) "Series A Special Warrants" means the first series of Special Warrants
created and authorized for issuance under this Indenture which series
shall be comprised of 16,119 Special Warrants;
(qq) "Series B Exercise Period" means the period from and including the day
that is the Shareholder Approval Date and ending at the Expiry Time;
(rr) "Series B Special Warrant Certificate" means a certificate for Series
B Special Warrants issued on or after the Effective Date to evidence
Series B Special Warrants;
(ss) "Series B Special Warrants" means the second series of Special
Warrants created and authorized for issuance under this Indenture
which series shall be comprised of 8,881 Special Warrants;
(tt) "Shareholder" means a holder of record of one or more Common Shares;
(uu) "Shareholder Approval Date" means the day on which shareholders of the
Corporation approve the issue of the Common Shares issuable upon
conversion of the Debentures;
(vv) "Shareholder Approval Deadline" means April 30, 1997, unless extended
to May 31, 1997 in accordance with the Merger Agreement and upon
notice thereof by the Corporation to the Trustee;
(ww) "Shareholder Approval Notice" means notice in writing from the
Corporation and Canaccord Capital Corporation, on behalf of the
Agents, to the Trustee to the effect that the Shareholder Approval
Date has occurred;
(yy) "Special Warrant Agency" means the principal office of the Trustee in
the city of Vancouver, British Columbia;
144554\0512890.WP
6
(zz) "Special Warrant Purchase Price" means $1,000 per Special Warrant;
(aaa)"Special Warrants" means either Series A Special Warrants or Series B
Special Warrants issued by the Corporation in registered form in
accordance with the terms and conditions of this Indenture;
(bbb)"this Special Warrant Indenture", "this Indenture", "herein", "hereby"
and similar expressions mean and refer to this Indenture and any
indenture, deed or instrument supplemental hereto; and the expressions
"Article" and "section" followed by a number mean and refer to the
specified article or section of this Indenture;
(ccc)"Trading Day " means, with respect to a stock exchange, a day on which
such exchange is open for the transaction of business;
(ddd)"Transfer Agent" means the transfer agent for the time being of the
Common Shares;
(eee)"United States" means the United States of America, its territories
and possessions, any state of the United States, and the District of
Columbia;
(fff)"USMX Loan Amount" means the US$5 million to be loaned by the
Corporation to USMX, Inc. in accordance with the Merger Agreement;
(ggg)"USMX Loan Notice" means a notice in writing signed by Canaccord
Capital Corporation, on behalf of the Agents, and the Corporation to
the effect that the Trustee is to release the USMX Loan Amount out of
the Escrowed Proceeds to, or to the direction of, the Corporation;
(hhh)"U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(iii)"U.S. Securities Act" means the United States Securities Act of 1933,
as amended;
(jjj)"Warrant Certificates" means either Series A Special Warrant
Certificates or Series B Special Warrant Certificates;
(kkk)"Warrantholder" means a holder of record of one or more Special
Warrants;
(lll)"Warrantholders" or "holders" means the persons who, after the
Effective Date, are registered owners of Special Warrants;
(mmm)"Warrantholders' Request" means an instrument signed in one or more
counterparts by Warrantholders holding in the aggregate not less than
25%
144554\0512890.WP
7
of the aggregate number of Special Warrants then unexercised and
outstanding, requesting the Trustee to take some action or proceeding
specified therein;
(nnn)"written order of the Corporation", "written request of the
Corporation", "written consent of the Corporation" and "certificate of
the Corporation" mean, respectively, a written order, request, consent
and certificate signed in the name of the Corporation by its Chief
Executive Officer, or a director and, in addition, by its Chief
Financial Officer, or a director, and may consist of one or more
instruments so executed.
1.2 Gender and Number - Unless herein otherwise expressly provided or unless
the context otherwise requires, words importing the singular include the
plural and vice versa and words importing gender include all genders.
1.3 Interpretation not Affected by Headings, Etc. - The division of this
Indenture into Articles and sections, the provision of a table of contents
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Indenture.
1.4 Day not a Business Day - In the event that any day on or before which any
action is required to be taken hereunder is not a Business Day, then such
action shall be required to be taken at or before the requisite time on the
next succeeding day that is a Business Day.
1.5 Time of the Essence - Time shall be of the essence of this Indenture.
-------------------
1.6 Applicable Law - This Indenture and the Warrant Certificates shall be
construed in accordance with the laws of the Province of British Columbia
and shall be treated in all respects as British Columbia contracts.
1.7 Currency - All references to currency herein are to Canadian dollars unless
otherwise specified.
ARTICLE 2
ISSUE AND FORM OF SPECIAL WARRANTS
2.1 Issue of Special Warrants
(a) 25,000 Special Warrants entitling the holders thereof to acquire $25
million aggregate principal amount of Debentures are hereby created
and authorized to be issued.
(b) The Canadian and United States forms of Series A Special Warrant
Certificates and the Canadian and United States forms of Series B
Special Warrant
144554\0512890.WP
8
Certificates shall be substantially in the forms set out in the
attached Schedules A through D, respectively, shall be dated as of the
Effective Date (regardless of the actual date of issue), shall bear
such distinguishing letters and numbers as the Corporation may, with
the approval of the Trustee, prescribe, and shall be issuable in any
denomination excluding fractions.
2.2 Terms of Special Warrants
(a) Each Special Warrant authorized to be issued hereunder shall entitle
the holder thereof to acquire, in accordance with and subject to the
terms of Article 3 hereof and at no additional cost to the holder, one
Debenture in the principal amount of $1,000.
(b) No fractional Special Warrants shall be issued or otherwise provided
for hereunder.
2.3 Warrantholder not a Shareholder - Nothing in this Indenture or in the
holding of a Special Warrant evidenced by a Warrant Certificate or
otherwise, shall, in itself, confer or be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder or as any
other shareholder of the Corporation, including, but not limited to, the
right to vote at, to receive notice of, or to attend, meetings of
shareholders or any other proceedings of the Corporation, or the right to
receive dividends and other distributions.
2.4 Special Warrants to Rank Pari Passu - All Special Warrants shall rank pari
passu, whatever may be the actual date of issue of the same.
2.5 Form of Warrant Certificates - The Warrants Certificates (including all
replacements issued in accordance with this Indenture) shall be
substantially in the forms set out in Schedules A through D hereto, shall
be dated as of the Effective Date, shall bear such distinguishing letters
and numbers as the Corporation may, with the approval of the Trustee,
prescribe and shall be issuable in any denominations excluding fractions.
2.6 U.S. Legend - The Special Warrants issued pursuant to an exemption from the
registration requirements of the U.S. Securities Act to U.S. Persons (and
all Special Warrants issued in exchange therefor or in substitution
thereof), shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITIES
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
144554\0512890.WP
9
REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER, IF AVAILABLE, AND THE COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS OR (D) IN COMPLIANCE WITH CERTAIN OTHER
PROCEDURES SATISFACTORY TO THE COMPANY.
and that all certificates representing Debentures issuable upon
exercise of Special Warrants and Common Shares issuable upon
conversion or, if applicable, redemption of Debentures (and all
certificates issued in exchange therefor or in substitution thereof)
issuable upon exercise of the securities so legended will bear the
same legend and will bear the following additional legend:
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE. A NEW
CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD
DELIVERY", MAY BE OBTAINED FROM THE TRANSFER AGENT UPON DELIVERY OF
THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO THE TRANSFER AGENT 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 U.S. SECURITIES ACT.
provided, however, that if the securities are being sold under
paragraph (B) above, the legend may be removed by providing a
declaration to the Trustee as transfer agent for the securities to the
following effect:
The undersigned (A) acknowledges that the sale of the securities 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 "U.S. Securities Act") and (B) certifies that (1) it is not an
affiliate (as defined in Rule 405 under the U.S. Securities Act) of
Dakota Mining Corporation, (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 believe that
the buyer was outside the United States, or (B) the transaction was
executed on or through the facilities of The Toronto Stock Exchange,
the Montreal Exchange, the Vancouver Stock Exchange or the Alberta
Stock Exchange and neither the seller nor any affiliate of the seller
nor any person acting on any of their behalf has engaged or will engage
in any directed selling efforts in the United States in connection with
the offer and sale of such securities, (4) the sale is bona fide and
not for the purpose of "washing off" the resale restrictions imposed
because the securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the U.S. Securities Act), (5) the
seller does not intend to replace the securities and (6) the
144554\0512890.WP
10
contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S,
is part of a plan or scheme to evade the registration provisions of the
U.S. Securities Act. Terms used herein have the meanings given to them
by Regulation S.
2.7 Signing of Warrant Certificates - The Warrant Certificates shall be signed
under seal by any one director or officer of the Corporation. The signature
of such director or officer may be mechanically reproduced in facsimile and
Warrant Certificates bearing such facsimile signatures shall be binding
upon the Corporation as if they had been manually signed by such directors
or officers. Notwithstanding that any of the persons whose manual or
facsimile signature appears on any Warrant Certificate as one of such
directors or officers may no longer hold office at the date of such Warrant
Certificate or at the date of certification or delivery thereof, any
Warrant Certificate signed as aforesaid shall, subject to section 2.8, be
valid and binding upon the Corporation and the holder thereof shall be
entitled to the benefits of this Indenture.
2.8 Countersignature by the Trustee
(a) No Warrant Certificate shall be issued or, if issued, shall be valid
for any purpose or entitle the holder to the benefit hereof until it
has been countersigned by manual signature by or on behalf of the
Trustee substantially in the forms of the certificates set out in
Schedules A through D hereto, and such countersignature by the Trustee
upon any Warrant Certificate shall be conclusive evidence as against
the Corporation that the Warrant Certificate so certified has been
duly issued hereunder and that the holder is entitled to the benefits
hereof.
(b) The countersignature of the Trustee on Warrant Certificates issued
hereunder shall not be construed as a representation or warranty by
the Trustee as to the validity of this Indenture or the Warrant
Certificates (except the due countersigning thereof) and the Trustee
shall in no respect be liable or answerable for the use made of the
Warrant Certificate or any of them or of the consideration therefor
except as otherwise specified herein.
2.9 Issue in Substitution for Warrant Certificates Lost, Etc.
---------------------------------------------------------
(a) In case any of the Warrant Certificates shall become mutilated or be
lost, destroyed or stolen, the Corporation, subject to applicable law,
shall issue and thereupon the Trustee shall certify and deliver, a new
Warrant Certificate of like tenor as the one mutilated, lost,
destroyed or stolen in exchange for and in place of and upon
cancellation of such mutilated Warrant Certificate, or in lieu of and
in substitution for such lost, destroyed or stolen Warrant
Certificate, and the substituted Warrant Certificate shall be in a
form approved by the Trustee and shall be entitled to the benefits
hereof and shall rank equally in accordance with its terms and all
other Warrant Certificates issued or to be issued hereunder.
144554\0512890.WP
11
(b) The applicant for the issue of a new Warrant Certificate pursuant to
this section 2.9 shall bear the cost of the issue thereof and in case
of loss, destruction or theft shall, as a condition precedent to the
issue thereof, furnish to the Corporation and to the Trustee such
evidence of ownership and of the loss, destruction or theft of the
Warrant Certificate so lost, destroyed or stolen as shall be
satisfactory to the Corporation and to the Trustee in their sole
discretion, and such applicant may also be required to furnish an
indemnity and surety bond in amount and form satisfactory to the
Corporation and the Trustee in their discretion and shall pay the
reasonable charges of the Corporation and the Trustee in connection
therewith.
2.10 Exchange of Warrant Certificates
(a) Warrant Certificates representing Special Warrants to acquire any
specified principal amount of Debentures, may, upon compliance with
the reasonable requirements of the Trustee, be exchanged for another
Warrant Certificate or Warrant Certificates entitling the holder
thereto to acquire in the aggregate the same principal amount of
Debentures as may be acquired under the Warrant Certificate or Warrant
Certificates so exchanged.
(b) Warrant Certificates may be exchanged only at the Special Warrant
Agency or at any other place that is designated by the Corporation
with the approval of the Trustee. Any Warrant Certificate tendered for
exchange shall be cancelled and surrendered to the Trustee at the
Special Warrant Agency.
2.11 Charges for Exchange of Previously Issued Warrant Certificates - Except as
otherwise herein provided, the Special Warrant Agency shall charge to the
holder requesting an exchange a reasonable fee for each new Warrant
Certificate issued in exchange for previously issued Warrant Certificates
and payment of such charge and reimbursement of the Trustee or the
Corporation for any and all stamp taxes or governmental or other charges
required to be paid shall be made by such holder as a condition precedent
to such exchange.
2.12 Ownership of Special Warrants - The Corporation and the Trustee may deem
and treat the registered owner of any Warrant Certificate as the absolute
owner of the Special Warrants represented thereby for all purposes, and the
Corporation and the Trustee shall not be affected by any notice or
knowledge to the contrary except where the Corporation or the Trustee is
required to take notice by statute or by order of a court of competent
jurisdiction. A Warrantholder shall be entitled to the rights evidenced by
such Warrant Certificate free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate
holder thereof and all persons may act accordingly and the receipt of any
such Warrantholder of Debentures which may be acquired pursuant thereto
shall be a good discharge to the Corporation and the Trustee for the same
and neither the Corporation nor the Trustee shall be bound to inquire into
the title of any such holder except where the Corporation or the Trustee is
required to take notice by statute or by order of a court of competent
jurisdiction.
144554\0512890.WP
12
2.13 Registration and Transfer
(a) The Corporation will at all times cause to be kept by and at the
Special Warrant Agency and at such other place or places, if any, as
may be designated by the Corporation with the approval of the Trustee,
registers in which names and addresses of Warrantholders and
particulars of the Special Warrants held by them will be entered, such
registration to be noted on the Special Warrants by the Trustee or
other registrar.
(b) No transfer of a Special Warrant will be valid unless made on one of
the registers to be kept by and at the office of the Special Warrant
Agency or at such other place or places, if any, as may be designated
by the Corporation with the approval of the Trustee, on surrender to
the Trustee of the Warrant Certificate duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory
to the Trustee executed by, the registered holder or his executors,
administrators, or other legal representative or his or their attorney
duly appointed by instrument in writing in form and execution
satisfactory to the Trustee or other registrar upon compliance with
such reasonable requirements as the Trustee may prescribe, nor unless
such transfer will have been noted on the Special Warrant by the
Trustee or other registrar.
(c) Notwithstanding any other provision hereof, the transfer by the Agents
to the Purchasers (as defined in the Underwriting Agreement) of
Special Warrants issued to the Agents under a global certificate to
facilitate the closing of the initial sale of the Special Warrants may
be effected by the surrender to the Trustee of the global certificate
together with a direction from the Agents requesting the issue of
Warrant Certificates in the names of the Purchasers.
(d) The registers referred to in section 2.13(a) hereof will, during
business hours, be open to the inspection of the Corporation and any
person designated by it in writing and any Warrantholder free of
charge. In addition, every registrar will from time to time when
requested to do so by the Corporation or by the Trustee furnish the
Corporation or the Trustee with a list of the names and addresses of
the Warrantholders whose Special Warrants are listed on the register
kept by such registrar and showing the number of Special Warrants
registered in the name of each such holder.
(e) Notwithstanding anything contained in this Indenture, in the Warrant
Certificates or in any subscription agreements under which Special
Warrants were issued and sold, the Trustee, relying solely on the
transfer form or such other reasonable requirements as the Corporation
and Trustee may prescribe pursuant to section 2.13(b) hereof or this
subsection:
(i) shall not register any transfer of a Special Warrant, unless:
144554\0512890.WP
13
(A) the Trustee, prior to such transfer, has received a properly
completed and executed Selling Warrantholders's Certificate
in the form attached to the Warrant Certificates, from the
Warrantholder; and
(B) the Special Warrant is transferred (i) outside the United
States to a non-U.S. person pursuant to Rule 904 of
Regulation S or (ii) within the United States pursuant to
Rule 144 under the U.S. Securities Act provided the
transferee properly completes, executes and delivers to the
Trustee a Special Warrant Purchaser's Certificate in the
form attached to the Warrant Certificates, or (iii) pursuant
to another exemption from registration under the U.S.
Securities Act after receipt by the Corporation and the
Trustee of a written opinion of counsel or other evidence
satisfactory to them that such transfer of Special Warrants
is in compliance with the U.S. Securities Act and applicable
state securities laws; however, upon receipt of such duly
executed certificates, the Trustee will proceed with such
registration, subject to such terms and conditions,
including legending the Warrant Certificates, as may be
required by law; and
(ii) shall not register any transfer of Special Warrants if it has
reasonable grounds to believe that such transfer is otherwise not
in accordance with applicable law.
(f) Upon any transfer of Special Warrants in accordance with the
provisions of this Indenture, the Corporation covenants and agrees
with the Trustee, on behalf of the transferee holder and with the
transferee holder, that the transferee holder is a permitted assignee
of the transferring holder and is entitled to the benefits of the
covenant of the Corporation to be set forth under the heading
"Contractual Right of Action for Rescission" in the Final Prospectus
subject, in each case, to the restrictions and limitations described
thereunder.
ARTICLE 3
EXERCISE OR RETRACTION OF SPECIAL WARRANTS
3.1 Notices to Trustee
(a) Upon the occurrence of the Shareholder Approval Date prior to the
Shareholder Approval Deadline, the Corporation shall forthwith, and in
any event not later than the second Business Day thereafter, give a
Shareholder Approval Notice to the Trustee;
144554\0512890.WP
14
(b) Upon the occurrence of the Qualification Date prior to the
Qualification Deadline, the Corporation shall forthwith, and in any
event not later than the second Business Day thereafter, give a
Qualification Notice to the Trustee;
(c) Upon occurrence of the Merger Completion Date prior to the
Qualification Deadline, the Corporation shall forthwith, and in any
event not later than the second Business Day thereafter, give a Merger
Completion Notice to the Trustee;
(d) In the event that all of the Shareholder Approval Date, the Merger
Completion Date and the Qualification Date all occur prior to the
Qualification Deadline, the Corporation shall forthwith, and in any
event not later that the second Business Day after the last of such
three Dates to occur, give a Compliance Notice to the Trustee;
(e) In the event that the Shareholder Approval Date has not occurred prior
to the Shareholder Approval Deadline, the Corporation shall forthwith,
and in any event not later than the second Business Day after the
Shareholder Approval Deadline, give a Notice of Shareholder Approval
Default to the Trustee;
(f) In the event that the Qualification Date has not occurred prior to the
Qualification Deadline, the Corporation shall forthwith, and in any
event not later than the second Business Day after the Qualification
Deadline, give a Notice of Non-Qualification to the Trustee;
(g) In the event that the Merger Completion Date has not occurred prior to
the Qualification Deadline, the Corporation shall forthwith, and in
any event not later than the second Business Day after the
Qualification Deadline, give a Merger Default Notice to the Trustee;
3.2 Exercise of Special Warrants
(a) Upon and subject to the provisions and conditions of this Article, the
holder of a Special Warrant may, at its option, at any time and from
time to time during the Series A Exercise Period or the Series B
Exercise Period, as applicable, exercise the right to acquire one
Debenture for each Special Warrant held without payment of any
consideration in addition to the consideration paid for the Special
Warrant by completing the exercise form attached to the Special
Warrant Certificate and delivering it and the Special Warrant
Certificate to the Trustee at the Special Warrant Agency or at any
other place or places that may be designated by the Corporation with
the approval of the Trustee.
(b) Any Special Warrant not exercised pursuant to section 3.2(a) prior to
the Expiry Time will be exercised by the Trustee on behalf of the
holder thereof and deemed
144554\0512890.WP
15
to be surrendered (without any further action on the part of the
holder or the Corporation) immediately prior to the Expiry Time as
applicable.
(c) Any exercise by a Warrantholder pursuant to section 3.2(a), or any
exercise by the Trustee on behalf of a holder of Special Warrants
pursuant to section 3.2(b) hereof, shall be subject to the holder
providing such assurances and executing such documents as may, in the
reasonable opinion of the Corporation or the Trustee, be required to
ensure compliance with applicable Securities Laws.
(d) Upon the exercise by a Warrantholder or exercise by the Trustee on
behalf of a Warrantholder of any Special Warrants pursuant to this
section 3.2, the Debentures thereby issuable shall be deemed to have
been issued and the Warrant Certificates cancelled and the person or
persons to whom such securities are to be issued shall be deemed to
have become the holder of record of such Debentures on the Exercise
Date unless the registers of the Corporation shall be closed on such
date, in which case the Debentures shall be deemed to have been
issued, and such person or persons deemed to have become the holder or
holders of record of such Debentures on the date on which such
registers are reopened.
(e) As promptly as possible and in any event within five Business Days
after the Exercise Date of any Special Warrant as aforesaid, the
Corporation shall cause to be delivered to the person or persons in
whose name or names the Debentures have been issued at the address
specified in the exercise form attached to the Warrant Certificate or,
if so specified therein, cause to be delivered to such person or
persons at the Special Warrant Agency, certificates representing the
appropriate amount of Debentures so issued and shall, if applicable,
deliver to the Warrantholder a Warrant Certificate or Warrant
Certificates representing the balance of the Special Warrants
remaining after such exercise.
3.3 Penalty
(a) Upon receipt by the Trustee of a Notice of Non-Qualification, the
Trustee shall forthwith give notice to the Warrantholders, the Agents
and the Debenture Trustee specifying that the Qualification Date has
not occurred prior to the Qualification Deadline and that the
Debentures for which the Special Warrants are exercisable will be
convertible, for no additional consideration, into 1.10 Common Shares
for every one Common Share that would otherwise have been issuable
upon conversion of the Debentures had the Qualification Date occurred
prior to the Qualification Deadline.
3.4 Retraction of Special Warrants
(a) Upon receipt by the Trustee of a Notice of Shareholder Approval
Default, the Trustee shall forthwith give notice to the Warrantholders
and to the Agents
144554\0512890.WP
16
specifying that the Shareholder Approval Date has not occurred prior
to the Shareholder Approval Deadline and stating that all Series B
Special Warrants will be automatically retracted by the Corporation in
accordance with section 6.6 hereof without any further action on the
part of the Warrantholders.
(b) Upon receipt of by the Trustee of a Merger Default Notice, the Trustee
shall forthwith give notice ("Default Notice") to the Warrantholders
and to the Agents specifying that the Merger Completion Date has not
occurred prior to the Qualification Deadline and stating that
Warrantholders have five Business Days from the deemed receipt (in
accordance with section 11.2) of the Default Notice (the last of such
Business Days being the "Retraction Cut-off Date") to surrender any or
all of their Special Warrants then outstanding to the Trustee for
retraction and setting out the requirements for so doing in accordance
with section 6.4.
(c) Any retraction of Special Warrants from a Warrantholder pursuant to
this section 3.4 will be subject to the holder providing such
assurances and executing such documents as may, in the reasonable
opinion of the Corporation or the Trustee, be required to ensure
compliance with applicable Securities Laws.
3.5 No Fractional Debentures - The Corporation will not under any circumstances
be obligated to issue any fraction of a Debenture on the exercise or deemed
exercise of Special Warrants. To the extent that a holder of Special
Warrants would otherwise have been entitled to receive, on the exercise or
deemed exercise of such Special Warrants, a fraction of a Debenture, such
entitlement shall be disregarded unless such holder exercises such right in
respect of such fraction in combination with another Special Warrant or
Special Warrants which, in the aggregate, entitle the holder to be issued a
whole number of Debentures. In no event shall the Corporation be obligated
to make any payment or adjustment in respect of any fraction of a Debenture
disregarded as aforesaid.
3.6 Exercise by U.S. Persons - The Special Warrants may not be exercised in the
United States or by a U.S. Person prior to the Expiry Time unless:
(a) the holder certifies in writing to the Corporation and the Trustee
that the holder is an original subscriber of the Special Warrants and
that all of the representations and warranties made by the holder in
such holder's subscription agreement for the purchase of the Special
Warrants remain true and correct; or
(b) the holder is the registered holder of such Special Warrants which
were received pursuant to a transfer in accordance with the provisions
of section 2.13(e)(i)(B) hereof; provided that the foregoing shall not
apply to any exercise by the Trustee of Special Warrants pursuant to
this Article 3.
144554\0512890.WP
17
3.7 Securities Restrictions - Notwithstanding anything herein contained,
Debentures will only be issued upon exercise of any Special Warrants in
compliance with the securities laws of any applicable jurisdiction, and
without limiting the generality of the foregoing, in the event that the
Special Warrants are exercised pursuant to this Article 3 prior to the
Qualification, the certificates representing the Debentures thereby issued,
or any Common Shares into which the Debentures are converted, will bear
such legend as may, in the opinion of counsel to the Corporation, be
necessary in order to avoid a violation of any securities laws of any
province in Canada or the United States or to comply with the requirements
of any stock exchange on which the Common Shares are listed, provided that
if, at any time, in the opinion of counsel to the Corporation, such legends
are no longer necessary in order to avoid a violation of any such laws, or
the holder of any such legended certificate, at the holder's expense,
provides the Corporation with evidence satisfactory in form and substance
to the Corporation (which may include an opinion of counsel satisfactory to
the Corporation) to the effect that such holder is entitled to sell or
otherwise transfer such Debentures in a transaction in which such legends
are not required, such legended certificate may thereafter be surrendered
to the Corporation in exchange for a certificate which does not bear such
legend.
Article 4 intentionally deleted.
ARTICLE 5
COVENANTS OF THE CORPORATION
5.1 General Covenants - The Corporation covenants with the Trustee for the
benefit of the Trustee and of the Warrantholders that so long as any
Special Warrants remain outstanding:
(a) it will at all times maintain its corporate existence and will keep or
cause to be kept proper books of account in accordance with generally
accepted accounting principles;
(b) it will send to each Warrantholder a copy of all financial statements
and other material furnished to the holders of Common Shares after the
date of this Indenture;
(c) it will reserve and keep available a sufficient number of Common
Shares for the purpose of enabling it to satisfy its obligations to
issue Common Shares upon the exercise of the Debentures;
(d) it will cause the Debentures and the certificates representing the
same from time to time acquired pursuant to the exercise of the
Special Warrants to be duly issued and delivered in accordance with
the Warrant Certificates and the terms hereof;
144554\0512890.WP
18
(e) all Common Shares which shall be issued upon exercise of Debentures
shall be fully paid and non-assessable;
(f) it will use its reasonable best efforts to ensure that all Common
Shares of the Corporation outstanding or issuable from time to time
continue to be traded on The Toronto Stock Exchange and the American
Stock Exchange;
(g) it will make all requisite filings under applicable securities
legislation including those necessary to remain a reporting issuer not
in default in the Qualifying Jurisdictions;
(h) it will deliver, or cause to be delivered, a notice to each holder of
Special Warrants of the issuance of the receipt for the Final
Prospectus, which notice may be the Qualification Notice, together
with a copy of the Final Prospectus, within two Business Days of the
issuance of such receipt;
(i) generally, it will well and truly perform and carry out all of the
acts or things to be done by it as provided in this Indenture; and
(j) it will comply with all covenants and satisfy all terms and conditions
on its part to be performed or satisfied under the Agency Agreement.
5.2 Trustee's Remuneration and Expenses
(a) The Corporation covenants that it will pay to the Trustee from time to
time reasonable remuneration for its services hereunder and will pay
or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in the
administration or execution of the trusts hereby created (including
the reasonable compensation and the disbursements of its counsel and
all other advisers and assistants not regularly in its employ) both
before any default hereunder and thereafter until all duties of the
Trustee hereunder shall be finally and fully performed, except any
such expense, disbursement or advance as may arise from the negligence
or wilful misconduct of the Trustee or of persons for whom the Trustee
is responsible.
(b) The Trustee shall not have a lien against any of the Escrowed Proceeds
deposited with it and held in escrow pursuant to section 6.1 or
against any income earned thereon, in respect of its remuneration or
expenses, disbursements and advances.
5.3 Performance of Covenants by Trustee - If the Corporation shall fail to
perform any of its covenants contained in this Warrant Indenture, the
Trustee may notify the Warrantholders of such failure on the part of the
Corporation or may itself perform any of the said covenants capable of
being performed by it, but, subject to section 10.2, shall be under no
obligation to perform said covenants or to notify the Warrantholders of
such performance by it.
144554\0512890.WP
19
All sums expended or advanced by the Trustee in so doing shall be repayable
as provided in section 5.2. No such performance, expenditure or advance by
the Trustee shall relieve the Corporation of any default hereunder or of
its continuing obligations under the covenants herein contained.
5.4 Securities Qualification Requirements
(a) The Corporation will, as soon as practicable, prepare and file, under
the applicable Securities Laws, and use its reasonable best efforts to
obtain receipts from the Securities Commissions for the Preliminary
Prospectus and prepare and file other related documents relating to
the distribution of the Debentures issuable upon exercise of the
Special Warrants.
(b) The Corporation will use its best efforts to satisfy as expeditiously
as possible any comments with respect to the Preliminary Prospectus
made by any of the Securities Commissions.
(c) The Corporation will, as soon as practicable after any comments
referred to in clause (b) above are satisfied, prepare and file, under
the applicable Securities Laws, the Final Prospectus and other related
documents and will thereafter use its best efforts to obtain receipts
for the Final Prospectus from the Securities Commissions and take all
other steps and proceedings that may be necessary in order to qualify,
under the applicable Securities Laws, the distribution of the
Debentures issuable upon exercise of the Special Warrants to the
Special Warrantholders upon the exercise or deemed exercise thereof.
(d) If, in the opinion of counsel, any instrument (not including the Final
Prospectus), except as required in this section 5.4, is required to be
filed with, or any permission is required to be obtained from any
governmental authority in Canada or the United States or any other
step is required under any federal or provincial law of Canada or any
federal or state law of the United States before any Debentures which
a Warrantholder is entitled to acquire pursuant to the exercise of any
Special Warrants or any Common Share which a holder of Debentures is
entitled to acquire pursuant to the exercise of the Debentures may
properly and legally be issued upon due exercise thereof and
thereafter traded, without further formality or restriction, the
Corporation covenants that it will use its reasonable best efforts to
take such required action.
(e) The Corporation will give notice of the issue of Debentures pursuant
to the exercise of Special Warrants or the issue of Common Shares
pursuant to the exercise of the Debentures, in such detail as may be
required, to the Securities Commissions or similar regulatory
authority in each jurisdiction in Canada and the United States in
which there is legislation or regulation permitting or requiring the
giving of any such notice in order that such issue of Debentures or
Common
144554\0512890.WP
20
Shares and the subsequent disposition of the Debentures or Common
Shares so issued will not be subject to the prospectus qualification
requirements of such legislation or regulation.
ARTICLE 6
ESCROWED PROCEEDS AND RETRACTION
6.1 Deposit of Escrowed Proceeds in Escrow - The Corporation agrees to deposit
or cause to be deposited on behalf of the Warrantholders, the Escrowed
Proceeds in escrow with the Trustee who shall hold the Escrowed Proceeds in
trust for the benefit of the Warrantholders upon and subject to the
following irrevocable authorizations and instructions to deal with the
Escrowed Proceeds in accordance with the provisions of this Article.
6.2 Investment of Funds - The Escrowed Proceeds deposited with the Trustee
hereunder, pending any release or application thereof as required in
accordance with the provisions of this Article, shall be invested by the
Trustee in its name in Permitted Investments in accordance with any written
directions of the Corporation from time to time given to the Trustee or, in
the absence of any such directions, shall be invested by the Trustee in its
name in accordance with section 10.4.
6.3 Release of Escrowed Proceeds
(a) If the Trustee receives a USMX Loan Notice, the Trustee shall pay to,
or to the direction of, the Corporation forthwith and in any event not
later than one Business Day after receipt of such notice an amount
equal to the USMX Loan Amount out of the Escrowed Proceeds; and
(b) Upon the exercise or deemed exercise of any Special Warrants in
accordance with Article 3 hereof, the Trustee shall pay to the
Corporation forthwith and in any event not later than three Business
Days after such exercise or deemed exercise an amount, less any
amounts paid or to be paid to the Trustee pursuant to section 5.2,
equal to a proportionate share of the Escrowed Proceeds attributable
to the exercised or deemed exercised Special Warrants and in such case
all income earned thereon while the monies were held by the Trustee
shall be paid on a pro rata basis to the holders of the Special
Warrants contemporaneously with the delivery of the Debentures in
accordance with section 3.2(e) by delivery to such holder of a trust
cheque for the applicable amount (less any tax required to be withheld
therefrom). Any payment made in accordance with the provisions of this
section shall, to the extent of the sum represented thereby (plus the
amount of any tax so withheld), satisfy and discharge all liability of
the Corporation with respect to such payment, unless such cheque is
not paid at par on presentation. In event of non-receipt of any such
cheque by the person to whom it is so sent as aforesaid, or the loss
or destruction thereof, the Trustee will issue to such
144554\0512890.WP
21
person a replacement cheque for a like amount upon being furnished
with such evidence of non-receipt, loss destruction and with such
indemnity as the Trustee may reasonably require.
6.4 Surrender of Special Warrants for Retraction - If the Trustee has delivered
a Merger Default Notice to Warrantholders in accordance with section
3.4(b), or has not received a Notice of Merger as co-signed by the Agents
on or by the Qualification Deadline, the Trustee shall not later than the
fifth Business Day following the Retraction Cut-off Date, pay out of the
Escrowed Proceeds to Warrantholders who have elected pursuant to, and
complied with the provisions of, section 3.4 hereof to retract any or all
of their Special Warrants, the aggregate Special Warrant Purchase Price for
such Special Warrants surrendered for retraction together with a pro rata
share of the income earned on such Escrowed Proceeds while the monies were
held by the Trustee (less any tax required to be withheld therefrom). If
the Escrowed Proceeds are not sufficient to redeem all tendered Special
Warrants because the Agents' Commission and/or the USMX Loan Amount has
been deducted from the Escrowed Proceeds, then a pro rata number of Special
Warrants tendered for retraction will be retracted from each Special
Warrantholder using the remaining Escrowed Proceeds.
6.5 Method of Repayment on Voluntary Retraction by Holder - Not later than the
fifth Business Day after Retraction Cut-off Date, the Trustee will mail to
a Warrantholder who has elected in accordance with section 3.4 to retract
any or all of his Special Warrants or to such person as such holder may
otherwise specify by written notice given to the Trustee prior to such
mailing, at the address of such holder or, if so specified, of such person,
or, if specified by written notice given to the Trustee prior to such
mailing, will deliver to such holder or person, a trust cheque for the
applicable amount as determined in accordance with section 6.4, plus an
amount (less any tax required to be withheld therefrom) equal to the pro
rata portion of the income earned on the Escrowed Proceeds with respect to
such Special Warrants surrendered for retraction and accepted for
repurchase by the Corporation from the Effective Date to the date of the
Notice of Merger Default and shall simultaneously return by mail
certificates representing those Special Warrants not repurchased by the
Corporation. Any payment made in accordance with the provisions of this
section 6.5 shall, to the extent of the sum represented thereby (plus the
amount of any tax so withheld), satisfy and discharge all liability of the
Corporation with respect to such payment, unless such cheque is not paid at
par on presentation. In the event of non-receipt of any such cheque by the
person to whom it is so sent as aforesaid, or the loss or destruction
thereof, the Trustee will issue to such person a replacement cheque for a
like amount upon being furnished with such evidence of non-receipt, loss or
destruction and with such indemnity as the Trustee may reasonably require.
6.6 Mandatory Retraction of Series B Special Warrants - If the Trustee has
received from the Corporation a Notice of Shareholder Approval Default in
accordance with Section 3.4(a), or has not received a Notice of Shareholder
Approval as co-signed by the Agents by or on the Shareholder Approval
Deadline:
144554\0512890.WP
22
(a) all outstanding Series B Special Warrants shall be retracted by the
Trustee on behalf of the holders as of the Shareholder Approval
Deadline without any further action on the part of the holders and
immediately thereafter cancelled without any further action on the
part of the Corporation or the Trustee; and
(b) the Trustee shall not later than the fifth Business Day following the
day it receives the Notice of Shareholder Approval Default repay, out
of the Escrowed Proceeds, to each holder of Series B Special Warrants
the aggregate Special Warrant Purchase Price for such Series B Special
Warrants retracted together with a pro rata share of the income earned
on such Escrowed Proceeds while the monies were held by the Trustee
(less any tax required to be withheld therefrom).
6.7 Method of Repayment on Retraction by Corporation - Not later than the fifth
Business Day after the day the Trustee receives the Notice of Shareholder
Approval Default, the Trustee will mail to each holder of the then
cancelled Series B Special Warrants or to such person as such holder may
otherwise specify by written notice given to the Trustee prior to such
mailing, at the address of such holder or, if so specified, of such person,
or, if specified by written notice given to the Trustee prior to such
mailing, will deliver to such holder or person, a trust cheque for the
applicable amount as determined in accordance with section 6.6, plus an
amount (less any tax required to be withheld therefrom) equal to the pro
rata portion of the income earned on the Escrowed Proceeds with respect to
such Series B Special Warrants retracted from the Effective Date to the
date of such retraction. Any payment made in accordance with the provisions
of this section 6.7 shall, to the extent of the sum represented thereby
(plus the amount of any tax so withheld), satisfy and discharge all
liability of the Corporation with respect to such payment, unless such
cheque is not paid at par on presentation. In the event of non-receipt of
any such cheque by the person to whom it is so sent as aforesaid, or the
loss or destruction thereof, the Trustee will issue to such person a
replacement cheque for a like amount upon being furnished with such
evidence of non-receipt, loss or destruction and with such indemnity as the
Trustee may reasonably require.
6.8 Corporation to Provide Funds - The Trustee will apply the Escrowed Proceeds
and the interest earned thereon held by the Trustee pursuant to this
Article to any payment required to be made pursuant to section 6.4 or
section 6.6. To the extent that such monies are not sufficient to enable
the Trustee to make any such required payment pursuant to section 6.4 or
section 6.6 in full, the Corporation will, within one Business Day after
receipt of written notice from the Trustee specifying such deficiency,
provide the Trustee with sufficient funds to enable the Trustee to make
such payment in full. The Trustee shall have no responsibility for any
deficiency for amounts to be paid from the Escrowed Proceeds.
144554\0512890.WP
23
ARTICLE 7
ENFORCEMENT
7.1 Suits by Warrantholders - All or any of the rights conferred upon any
Warrantholder by any of the terms of the Warrant Certificates or of this
Indenture, or of both, may be enforced by the Warrantholder by appropriate
proceedings but without prejudice to the right which is hereby conferred
upon the Trustee to proceed in its own name to enforce each and all of the
provisions herein contained for the benefit of the Warrantholders.
7.2 Immunity of Shareholders, Etc. - The Trustee and, by the acceptance of the
Warrant Certificates and as part of the consideration for the issue of the
Special Warrants, the Warrantholders hereby waive and release any right,
cause of action or remedy now or hereafter existing in any jurisdiction
against any incorporator or any past, present or future shareholder,
director, officer, employee or agent of the Corporation or any successor
corporation for the issue of the Debentures pursuant to any Special
Warrants or on any covenant, agreement, representation or warranty by the
Corporation herein or contained in the Warrant Certificates.
7.3 Limitation of Liability - The obligations hereunder are not personally
binding upon, nor shall resort hereunder be had to, the private property of
any of the past, present or future directors or shareholders of the
Corporation or any successor corporation or any of the past, present or
future officers, employees or agents of the Corporation or any successor
corporation, but only the property of the Corporation or any successor
corporation shall be bound in respect hereof.
7.4 Waiver of Default - Upon the happening of any default hereunder:
-----------------
(a) the holders of not less than 51% of the Special Warrants then
outstanding shall have power (in addition to the powers exercisable by
extraordinary resolution as provided in section 8.10) by requisition
in writing to instruct the Trustee to waive any default hereunder and
the Trustee shall thereupon waive the default upon such terms and
conditions as shall be prescribed in such requisition; or
(b) the Trustee shall have power to waive any default hereunder upon such
terms and conditions as the Trustee may deem advisable, if, in the
Trustee's opinion, the same shall have been cured or adequate
provision made therefor; provided that no delay or omission of the
Trustee or of the Warrantholders to exercise any right or power
accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or acquiescence
therein and provided further that no act or omission either of the
Trustee or of the Warrantholders shall extend to or be taken in any
manner whatsoever to affect any prior or subsequent default hereunder
or the rights resulting therefrom.
144554\0512890.WP
24
ARTICLE 8
MEETINGS OF WARRANTHOLDERS
8.1 Right to Convene Meetings - The Trustee may at any time and from time to
time, and, on receipt of a written request of the Corporation or of a
Warrantholders' Request and upon being indemnified and funded to its
reasonable satisfaction by the Corporation or by the Warrantholders signing
such Warrantholders' Request against the costs which may be incurred in
connection with the calling and holding of such meeting, shall convene a
meeting of the Warrantholders. In the event of the Trustee failing to
convene a meeting within seven days after receipt of such written request
of the Corporation or such Warrantholders' Request and indemnity given as
aforesaid, the Corporation or such Warrantholders, as the case may be, may
convene such meeting. Every such meeting shall be held in the city of
Vancouver, British Columbia or at such other place as may be approved or
determined by the Trustee and the Corporation.
8.2 Notice - At least 25 days' prior notice of any meeting of Warrantholders
shall be given to the Warrantholders in the manner provided for in section
11.2 and a copy of such notice shall be sent by mail to the Trustee (unless
the meeting has been called by the Trustee) and to the Corporation (unless
the meeting has been called by the Corporation). Such notice shall state
the time when and the place where the meeting is to be held, shall state
briefly the general nature of the business to be transacted thereat and
shall contain such information as is reasonably necessary to enable the
Warrantholders to make a reasoned decision on the matter, but it shall not
be necessary for any such notice to set out the terms of any resolution to
be proposed or any of the provisions of this Article 8.
8.3 Chairman - An individual (who need not be a Warrantholder) designated in
writing by the Trustee shall be chairman of the meeting and if no
individual is so designated, or if the individual so designated is not
present within 15 minutes from the time fixed for the holding of the
meeting, the Warrantholders present in person or by proxy shall choose some
individual present to be chairman.
8.4 Quorum - Subject to the provisions of section 8.11, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person
or by proxy and holding at least 25% of the aggregate number of Special
Warrants then outstanding. If a quorum of the Warrantholders shall not be
present within 30 minutes from the time fixed for holding any meeting, the
meeting, if summoned by the Warrantholders or on a Warrantholders' Request,
shall be dissolved; but in any other case the meeting shall be adjourned to
the same day in the next week (unless such day is not a Business Day, in
which case it shall be adjourned to the next following Business Day) at the
same time and place and no notice of the adjournment need be given. Any
business may be brought before or dealt with at an adjourned meeting which
might have been dealt with at the original meeting in accordance with the
notice calling the same. No business shall be transacted at any meeting
unless a quorum be present at the commencement of business. At the
adjourned meeting the Warrantholders present in person or by proxy shall
form a quorum and may transact the business for which the meeting was
originally convened,
144554\0512890.WP
25
notwithstanding that they may not hold at least 25% of the aggregate number
of Special Warrants then outstanding.
8.5 Power to Adjourn - The chairman of any meeting at which a quorum of the
Warrantholders is present may, with the consent of the meeting, adjourn any
such meeting, and no notice of such adjournment need be given except such
notice, if any, as the meeting may prescribe.
8.6 Show of Hands - Every question submitted to a meeting shall be decided in
the first place by a majority of the votes given on a show of hands except
that votes on an extraordinary resolution shall be given in the manner
hereinafter provided. At any such meeting, unless a poll is duly demanded
as herein provided, a declaration by the chairman that a resolution has
been carried or carried unanimously or by a particular majority or lost or
not carried by a particular majority shall be conclusive evidence of the
fact.
8.7 Poll and Voting - On every extraordinary resolution, and on any other
question submitted to a meeting and after a vote by show of hands when
demanded by the chairman or by one or more of the Warrantholders acting in
person or by proxy holding at least 5% of the aggregate number of Special
Warrants then outstanding, a poll shall be taken in such manner as the
chairman shall direct. Questions other than those required to be determined
by extraordinary resolution shall be decided by a majority of the votes
cast on the poll.
On a show of hands, every person who is present and entitled to vote,
whether as a Warrantholder or as proxy for one or more absent
Warrantholders, or both, shall have one vote. On a poll, each Warrantholder
present in person or represented by a proxy duly appointed by instrument in
writing shall be entitled to one vote in respect of each whole Common Share
which he is entitled to acquire pursuant to the Special Warrant or Special
Warrants then held or represented by him. A proxy need not be a
Warrantholder. The chairman of any meeting shall be entitled, both on a
show of hands and on a poll, to vote in respect of the Special Warrants, if
any, held or represented by him.
8.8 Regulations - The Trustee, or the Corporation with the approval of the
Trustee, may from time to time make and from time to time vary such
regulations as it shall think fit for:
(a) the setting of the record date for a meeting for the purpose of
determining Warrantholders entitled to receive notice of and to vote
at a meeting;
(b) the issue of voting certificates by any bank, trust company or other
depository satisfactory to the Trustee stating that the Warrant
Certificates specified therein have been deposited with it by a named
person and will remain on deposit until after the meeting, which
voting certificates shall entitle the persons named therein to be
present and vote at any such meeting and at any adjournment thereof or
to appoint a proxy or proxies to represent them and vote for them at
any such meeting and at any adjournment thereof in the same manner and
with the same
144554\0512890.WP
26
effect as though the persons so named in such voting certificates were
the actual bearers of the Warrant Certificates specified therein;
(c) the deposit of voting certificates and instruments appointing proxies
at such place and time as the Trustee, the Corporation or the
Warrantholders convening the meeting, as the case may be, may in the
notice convening the meeting direct;
(d) the deposit of voting certificates and instruments appointing proxies
at some approved place or places other than the place at which the
meeting is to be held and enabling particulars of such instruments
appointing proxies to be mailed, telecopied, telegraphed or sent by
other means of electronic transmission before the meeting to the
Corporation or to the Trustee at the place where the same is to be
held and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting;
(e) the form of the instrument of proxy; and
(f) generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted.
Save as such regulations may provide, the only persons who shall be
recognized at any meeting as a Warrantholder, or be entitled to vote
or be present at the meeting in respect thereof (subject to section
8.9), shall be Warrantholders or their counsel, or proxies of
Warrantholders.
8.9 Corporation and Trustee may be Represented - The Corporation and the
Trustee, by their respective directors, officers and employees and the
counsel for the Corporation and for the Trustee may attend any meeting
of the Warrantholders, but shall have no vote as such unless in their
capacity as a Warrantholder.
8.10 Powers Exercisable by Extraordinary Resolution - In addition to all
other powers conferred upon them by any other provisions of this
Indenture or by law, the Warrantholders at a meeting shall, subject to
the provisions of section 8.11, have the power, exercisable from time
to time by extraordinary resolution:
(a) to agree to any modification, abrogation, alteration, compromise
or arrangement of the rights of Warrantholders or the Trustee in
its capacity as trustee hereunder or on behalf of the
Warrantholders against the Corporation whether such rights arise
under this Indenture or the Warrant Certificates or otherwise;
(b) to amend, alter or repeal any extraordinary resolution previously
passed or sanctioned by the Warrantholders;
144554\0512890.WP
27
(c) to direct or to authorize the Trustee to enforce any of the
covenants on the part of the Corporation contained in this
Indenture or the Warrant Certificates or to enforce any of the
rights of the Warrantholders in any manner specified in such
extraordinary resolution or to refrain from enforcing any such
covenant or right;
(d) to waive, and to direct the Trustee to waive, any default on the
part of the Corporation in complying with any provisions of this
Indenture or the Warrant Certificates either unconditionally or
upon any conditions specified in such extraordinary resolution;
(e) to restrain any Warrantholder from taking or instituting any
suit, action or proceeding against the Corporation for the
enforcement of any of the covenants on the part of the
Corporation in this Indenture or the Warrant Certificates or to
enforce any of the rights of the Warrantholders;
(f) to direct any Warrantholder who, as such, has brought any suit,
action or proceeding to stay or to discontinue or otherwise to
deal with the same upon payment of the costs, charges and
expenses reasonably and properly incurred by such Warrantholder
in connection therewith;
(g) to assent to any change in or omission from the provisions
contained in the Warrant Certificates and this Indenture or any
ancillary or supplemental instrument which may be agreed to by
the Corporation, and to authorize the Trustee to concur in and
execute any ancillary or supplemental indenture embodying the
change or omission;
(h) with the consent of the Corporation, to remove the Trustee or its
successor in office and to appoint a new trustee or trustees to
take the place of the Trustee so removed; and
(i) to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured
or otherwise, and with holders of any shares or other securities
of the Corporation.
8.11 Meaning of Extraordinary Resolution
(a) The expression "extraordinary resolution" when used in this Indenture
means, subject as hereinafter provided in this section 8.11 and in
section 8.14, a resolution proposed at a meeting of Warrantholders
duly convened for that purpose and held in accordance with the
provisions of this Article 8 at which there are present in person or
by proxy Warrantholders holding at least 51% of the aggregate number
of Special Warrants then outstanding and passed by the affirmative
votes of Warrantholders holding not less than 66 2/3% of the
144554\0512890.WP
28
aggregate number of Special Warrants represented at the meeting and
voted on the poll upon such resolution.
(b) If, at any meeting called for the purpose of passing an extraordinary
resolution, the quorum required by section 8.11(a) above is not
present within 30 minutes after the time appointed for the meeting,
then the meeting, if convened by Warrantholders or on a
Warrantholders' Request, shall be dissolved; but in any other case it
shall stand adjourned to such day, being not less than 15 or more than
60 days later, and to such place and time as may be appointed by the
chairman. Not less than ten days' prior notice shall be given of the
time and place of such adjourned meeting in the manner provided for in
section 11.2. Such notice shall state that at the adjourned meeting
the Warrantholders present in person or by proxy did not form a quorum
but it shall not be necessary to set forth the purposes for which the
meeting was originally called or any other particulars. At the
adjourned meeting the Warrantholders present in person or by proxy
shall form a quorum and may transact the business for which the
meeting was originally convened and a resolution proposed at such
adjourned meeting and passed by the requisite vote as provided in
section 8.11(a) shall be an extraordinary resolution within the
meaning of this Indenture notwithstanding that Warrantholders holding
at least 51% of the aggregate number of Special Warrants then
outstanding are not present in person or by proxy at such adjourned
meeting.
(c) Votes on an extraordinary resolution shall always be given on a poll
and no demand for a poll on an extraordinary resolution shall be
necessary
8.12 Powers Cumulative - Any one or more of the powers or any combination of the
powers in this Indenture stated to be exercisable by the Warrantholders by
extraordinary resolution or otherwise may be exercised from time to time
and the exercise of any one or more of such powers or any combination of
powers from time to time shall not be deemed to exhaust the right of the
Warrantholders to exercise such power or powers or combination of powers
then or thereafter from time to time.
8.13 Minutes - Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be provided from
time to time for that purpose by the Trustee at the expense of the
Corporation, and any such minutes as aforesaid, if signed by the chairman
or the secretary of the meeting at which such resolutions were passed or
proceedings had shall be prima facie evidence of the matters therein stated
and, until the contrary is proved, every such meeting in respect of the
proceedings of which minutes shall have been made shall be deemed to have
been duly convened and held, and all resolutions passed thereat or
proceedings taken shall be deemed to have been duly passed and taken.
144554\0512890.WP
29
8.14 Instruments in Writing - All actions which may be taken and all powers that
may be exercised by the Warrantholders at a meeting held as provided in
this Article 8 may also be taken and exercised by Warrantholders holding at
least 66 2/3% of the aggregate number of Special Warrants then outstanding
by an instrument in writing signed in one or more counterparts by such
Warrantholders in person or by attorney duly appointed in writing, provided
that such instrument was submitted to, and the expression "extraordinary
resolution" when used in this Indenture shall include an instrument so
signed.
8.15 Binding Effect of Resolutions - Every resolution and every extraordinary
resolution passed in accordance with the provisions of this Article 8 at a
meeting of Warrantholders shall be binding upon all the Warrantholders,
whether present at or absent from such meeting, and every instrument in
writing signed by Warrantholders in accordance with section 8.14 shall be
binding upon all the Warrantholders, whether signatories thereto or not,
and each and every Warrantholder and the Trustee (subject to the provisions
for indemnity herein contained) shall be bound to give effect accordingly
to every such resolution and instrument in writing.
8.16 Holdings by Corporation Disregarded - In determining whether Warrantholders
holding the required number of Special Warrants are present at a meeting of
Warrantholders for the purpose of determining a quorum or have concurred in
any consent, waiver, extraordinary resolution, Warrantholders' Request or
other action under this Indenture, Special Warrants owned legally or
beneficially by the Corporation or any subsidiary of the Corporation, as
determined in accordance with the provisions of section 11.7, shall be
deemed not to be outstanding.
ARTICLE 9
SUPPLEMENTAL INDENTURES
9.1 Provision for Supplemental Indentures for Certain Purposes - From time to
time the Corporation (when authorized by action by the directors) and the
Trustee may, subject to the provisions hereof, and they shall, when so
directed in accordance with the provisions hereof, execute and deliver by
their proper officers, indentures or instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more or all of the
following purposes:
(a) [Intentionally Deleted]
(b) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of the Trustee based on
the advice of counsel, are necessary or advisable in the
premises, provided that the same are not in the opinion of the
Trustee prejudicial to the interests of the Warrantholders;
(c) giving effect to any extraordinary resolution passed as provided
in Article 8;
144554\0512890.WP
30
(d) making such provisions not inconsistent with this Indenture as
may be necessary or desirable with respect to matters or
questions arising hereunder or for the purpose of obtaining a
listing or quotation of the Special Warrants on any stock
exchange, provided that such provisions are not, in the opinion
of the Trustee based on the advice of counsel, prejudicial to the
interests of the Warrantholders;
(e) adding to or altering the provisions hereof in respect of the
transfer of Special Warrants, making provision for the exchange
of Warrant Certificates, and making any modification in the form
of the Warrant Certificates which does not affect the substance
thereof;
(f) modifying any of the provisions of this Indenture, including
relieving the Corporation from any of the obligations, conditions
or restrictions herein contained, provided that such modification
or relief shall be or become operative or effective only if, in
the opinion of the Trustee based on the advice of counsel, such
modification or relief in no way prejudices any of the rights of
the Warrantholders or of the Trustee, and provided further that
the Trustee may in its sole discretion decline to enter into any
such supplemental indenture which in its opinion may not afford
adequate protection to the Trustee when the same shall become
operative; and
(g) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or inconsistent provisions, errors,
mistakes or omissions herein or any deed or indenture
supplemental or ancillary hereto, provided that in the opinion of
the Trustee based on the advice of counsel the rights of the
Trustee and of the Warrantholders are in no way prejudiced
thereby.
9.2 Successor Corporations - In the case of the consolidation,
amalgamation, merger or transfer of the undertaking or assets of the
Corporation as an entirety or substantially as an entirety to another
corporation ("successor corporation"), the successor corporation
resulting from such consolidation, amalgamation, merger or transfer
(if not the Corporation) shall expressly assume, by supplemental
indenture satisfactory in form to the Trustee and executed and
delivered by the successor corporation to the Trustee, the due and
punctual performance and observance of each and every covenant and
condition of this Indenture to be performed and observed by the
Corporation.
144554\0512890.WP
31
ARTICLE 10
CONCERNING THE TRUSTEE
10.1 Trust Indenture Legislation
(a) If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.
(b) The Corporation and the Trustee agree that each will, at all
times in relation to this Indenture and any action to be taken
hereunder, observe and comply with and be entitled to the
benefits of Applicable Legislation.
10.2 Rights and Duties of Trustee
(a) In the exercise of the rights and duties prescribed or conferred
by the terms of this Indenture, the Trustee shall exercise that
degree of care, diligence and skill that a reasonably prudent
trustee would exercise in comparable circumstances. No provision
of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct.
(b) The obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of
the Trustee or the Warrantholders hereunder shall be conditional
upon the Warrantholders furnishing, when required by notice by
the Trustee, sufficient funds to commence or to continue such
act, action or proceeding and an indemnity reasonably
satisfactory to the Trustee to protect and to hold harmless the
Trustee against the costs, charges and expenses and liabilities
to be incurred thereby and any loss and damage it may suffer by
reason thereof. None of the provisions contained in this
Indenture shall require the Trustee to expend or to risk its own
funds or otherwise to incur financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers unless indemnified and funded as aforesaid.
(c) The Trustee may, before commencing or at any time during the
continuance of any such act, action or proceeding, require the
Warrantholders, at whose instance it is acting to deposit with
the Trustee the Special Warrants held by them, for which Special
Warrants the Trustee shall issue receipts.
(d) Every provision of this Indenture that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation, of this section 10.2, section 10.3 and section 10.8.
144554\0512890.WP
32
10.3 Evidence, Experts and Advisers
(a) In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Corporation shall
furnish to the Trustee such additional evidence of compliance
with any provision hereof, and in such form, as may be prescribed
by Applicable Legislation or as the Trustee may reasonably
require by written notice to the Corporation.
(b) In the exercise of its rights and duties hereunder, the Trustee
may, if it is acting in good faith, rely as to the truth of the
statements and the accuracy of the opinions expressed in
statutory declarations, opinions, reports, written requests,
consents, or orders of the Corporation, certificates of the
Corporation or other evidence furnished to the Trustee pursuant
to any provision hereof or of Applicable Legislation or pursuant
to a request of the Trustee, provided that such evidence complies
with Applicable Legislation and that the Trustee complies with
Applicable Legislation and that the Trustee examines the same and
determines that such evidence complies with the applicable
requirements of this Indenture.
(c) Whenever Applicable Legislation requires that evidence referred
to in section 10.3(a) be in the form of a statutory declaration,
the Trustee may accept the statutory declaration in lieu of a
certificate of the Corporation required by any provision hereof.
Any such statutory declaration may be made by any one or more of
the Chief Executive Officer, the Chief Financial Officer, any
vice-president, the secretary or any assistant secretary of the
Corporation.
(d) The Trustee may employ or retain such counsel, accountants,
appraisers or other experts or advisers as it may reasonably
require for the purpose of discharging its duties hereunder and
may pay reasonable remuneration for all services so performed by
any of them, without taxation of costs of any counsel, and shall
not be responsible for any misconduct or negligence on the part
of any such experts or advisers who have been appointed with due
care by the Trustee.
10.4 Documents, Monies, etc. held by Trustee - Any securities, documents of
title or other instruments that may at any time be held by the Trustee
subject to the trusts hereof may be placed in the deposit vaults of the
Trustee or of any Canadian Schedule "1" chartered bank or deposited for
safekeeping with any such bank. Any monies so held pending the application
or withdrawal thereof under any provisions of this Indenture shall be
deposited in the Trustee's trust account or in the name of the Trustee in
any Canadian Schedule "1" chartered bank as non-interest bearing deposits
or, as directed by the Corporation, invested in Permitted Investments.
Subject to section 5.2, all interest or other income received by the
Trustee in respect of such investments shall belong to the Warrantholders.
144554\0512890.WP
33
10.5 Actions by Trustee to Protect Interest - The Trustee shall have power to
institute and to maintain such actions and proceedings as it may consider
necessary or expedient to preserve, protect or enforce its interests and
the interests of the Warrantholders.
10.6 Trustee not Required to Give Security - The Trustee shall not be required
to give any bond or security in respect of the execution of the trusts and
powers of this Indenture or otherwise in respect of the premises.
10.7 Protection of Trustee - By way of supplement to the provisions of any law
for the time being relating to Trustees it is expressly declared and agreed
as follows:
(a) the Trustee shall not be liable for or by reason of any statements of
fact or recitals in this Indenture or in the Warrant Certificates
(except the representation contained in section 10.9 or in the
signature of the Trustee on the Warrant Certificates) or be required
to verify the same, but all such statements or recitals are and shall
be deemed to be made by the Corporation;
(b) nothing herein contained shall impose any obligation on the Trustee to
see to or to require evidence of the registration or filing (or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;
(c) the Trustee shall not be bound to give notice to any person or persons
of the execution hereof;
(d) the Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach on the
part of the Corporation of any of the covenants herein contained or of
any acts of any directors, officers, employees, agents or servants of
the Corporation; and
(e) 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 so to do under the
terms hereof nor shall the Trustee be required to take notice of any
default of the Corporation 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
Corporation 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.
10.8 Indemnification - Without limiting any protection or indemnity of the
Trustee under any other provision hereof, or otherwise at law, the
Corporation hereby agrees to indemnify and hold harmless the Trustee from
and against any and all liabilities, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements, including
144554\0512890.WP
34
reasonable legal or advisor fees and disbursements, of whatever kind and
nature which may at any time be imposed on, incurred by or asserted against
the Trustee in connection with the performance of its duties and
obligations hereunder, other than such liabilities, losses, damages,
penalties, claims, actions, suits, costs, expenses and disbursements
arising by reason of the negligence or wilful misconduct of the Trustee.
This provision shall survive the resignation or removal of the Trustee, or
the termination of this Indenture.
10.9 Replacement of Trustee; Successor by Merger
-------------------------------------------
(a) The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder, subject to this section 10.9, by
giving to the Corporation not less than 90 days' prior notice in
writing or such shorter prior notice as the Corporation may accept as
sufficient. The Warrantholders by extraordinary resolution shall have
power at any time to remove the existing Trustee and to appoint a new
trustee. In the event of the Trustee resigning or being removed as
aforesaid or being dissolved, becoming bankrupt, going into
liquidation or otherwise becoming incapable of acting hereunder, the
Corporation shall forthwith appoint a new trustee unless a new trustee
has already been appointed by the Warrantholders; failing such
appointment by the Corporation, the retiring Trustee or any
Warrantholder may apply to a justice of the Supreme Court of the
Province of British Columbia, on such notice as such justice may
direct, for the appointment of a new trustee; but any new trustee so
appointed by the Corporation or by the Court shall be subject to
removal as aforesaid by the Warrantholders. Any new trustee appointed
under any provision of this section 10.9 shall be a corporation
authorized to carry on the business of a trust company in the Province
of British Columbia and, if required by the Applicable Legislation for
any other provinces, in such other provinces. On any such appointment
the new trustee shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named herein as
Trustee hereunder.
(b) Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Warrantholders thereof in the manner provided for
in Article 11 hereof.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation resulting therefrom to
which the Trustee shall be a party, or any corporation succeeding to
the trust business of the Trustee shall be the successor to the
Trustee hereunder without any further act on its part or any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor trustee under section 10.8(a).
(d) Any Warrant Certificates countersigned but not delivered by a
predecessor trustee may be delivered by the successor trustee in the
name of the predecessor or successor trustee.
144554\0512890.WP
35
10.10 Conflict of Interest
(a) The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest exists
between its role as a trustee hereunder and its role in any other
capacity and agrees that in the event of a material conflict of
interest arising hereafter it will, within 30 days after ascertaining
that it has such material conflict of interest, either eliminate the
same or assign its trust hereunder to a successor trustee approved by
the Corporation and meeting the requirements set forth in section
10.9(a). Notwithstanding the foregoing provisions of this section
10.10(a), if any such material conflict of interest exists or
hereafter shall exist, the validity and enforceability of this
Indenture and the Warrant Certificates shall not be affected in any
manner whatsoever by reason thereof.
(b) Subject to section 10.10(a), the Trustee, in its personal or any other
capacity, may buy, lend upon and deal in securities of the Corporation
and generally may contract and enter into financial transactions with
the Corporation or any subsidiary of the Corporation without being
liable to account for any profit made thereby.
10.11Acceptance of Trust - The Trustee hereby accepts the trusts in this
Indenture declared and provided for and agrees to perform the same upon the
terms and conditions herein set forth and agrees to hold all rights,
interests and benefits contained herein for and on behalf of those persons
who become holders of Special Warrants from time to time issued pursuant to
this Indenture.
10.12Trustee not to be Appointed Receiver - The Trustee and any person related
to the Trustee shall not be appointed a receiver, a receiver and manager or
liquidator of all or any part of the assets or undertaking of the
Corporation.
ARTICLE 11
GENERAL
11.1 Notice to the Corporation and the Trustee
-----------------------------------------
(a) Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or the Trustee shall be deemed to be
validly given if delivered or if sent by registered letter, postage
prepaid or if sent by facsimile transmission:
144554\0512890.WP
36
if to the Corporation:
Dakota Mining Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx
X.X.X.
00000
Attention: Mr. Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
if to the Trustee:
Montreal Trust Company of Canada
Montreal Trust Centre
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Corporate Services Division
Facsimile No.: (000) 000-0000
and any such notice delivered in accordance with the foregoing
shall be deemed to have been received on the date of delivery
or facsimile transmission or, if mailed, on the fifth Business
Day following the date of the postmark on such notice.
(b) The Corporation or the Trustee, as the case may be, may from time
to time notify the other in the manner provided in section
11.1(a) of a change of address which, from the effective date of
such notice and until changed by like notice, shall be the
address of the Corporation or the Trustee, as the case may be,
for all purposes of this Indenture. A copy of any notice of
change of address given pursuant to section 11.1(b) shall be sent
to the Special Warrant Agency, where it shall be available for
inspection by Warrantholders during normal business hours.
(c) If, by reason of a strike, lockout or other work stoppage, actual
or threatened, involving postal employees, any notice to be given
to the Trustee or to the Corporation hereunder could reasonably
be considered unlikely to reach its destination, such notice
shall be valid and effective only if it is delivered to the of
the party to which it is addressed or given by facsimile
transmission.
144554\0512890.WP
37
11.2 Notice to Warrantholders
(a) Any notice to the Warrantholders under the provisions of this
Indenture shall be valid and effective if sent by facsimile or
letter or circular by personal delivery or through the ordinary
post addressed to such holders at their post office addresses
appearing on the register hereinbefore mentioned and shall be
deemed to have been effectively given, if sent by facsimile, one
Business Day after being sent, if personally delivered, on the
day of delivery, or, if mailed, five Business Days following
actual posting of the notice.
(b) If, by reason of a strike, lockout or other work stoppage, actual
or threatened, involving postal employees, any notice to be given
to the Warrantholders hereunder could reasonably be considered
unlikely to reach its destination, such notice shall be valid and
effective only if it is delivered personally to such
Warrantholders or if delivered to the address for such
Warrantholders contained in the register of Special Warrants
maintained by the Trustee, by facsimile or other means of
prepaid, transmitted and recorded communication.
(c) A copy of each and every notice provided to the Warrantholders
shall be concurrently provided to Canaccord Capital Corporation
at X.X. Xxx 0, Xxxxx 0000, 000 Xxx Xxxxxx Xxxxxxx, Xxxxxxx, X0X
0X0, Attention: Xxxx X. Polubiec, Facsimile (000) 000-0000, with
a copy to Xxxxxxx Xxxxx & Xxxxxxxxx, Scotia Plaza, Suite 2100, 00
Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx, X0X 0X0, Attention: Xxxxx
Xxxxxxx, Facsimile (000) 000-0000.
11.3 Counterparts - This Indenture may be executed in several counterparts, each
of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument and
notwithstanding their date of execution they shall be deemed to be dated as
of the date hereof.
11.4 Satisfaction and Discharge of Indenture
On the earlier of:
(a) the date by which there has been delivered to the Trustee for
exercise, surrender for cancellation or destruction all Special
Warrant Certificates theretofore certified hereunder; or
(b) the Expiry Time:
and if all certificates representing the Debentures to be issued in
compliance with the provisions hereof have been issued and delivered
hereunder or to the Trustee in accordance with such provisions, all
monies to be paid hereunder have been paid and all other obligations
of the Corporation to the Warrantholders in connection with the
exercise, deemed exercise or surrender
144554\0512890.WP
38
and repurchase of the Special Warrants by the Corporation have been
satisfied, this Indenture will cease to be of further effect and, on
demand of and at the cost and expense of the Corporation and on
delivery to the Trustee of a certificate of the Corporation stating
that all conditions precedent to the satisfaction and discharge of
this Indenture have been complied with and on payment to the Trustee
of the fees, expenses and any other amount whatsoever and other
remuneration payable to the Trustee hereunder, the Trustee will
execute proper instruments acknowledging satisfaction of and
discharging this Indenture.
11.5 Provisions of Indentures and Special Warrants for the Sole Benefit of
Parties and Warrantholders - Nothing in this Indenture or in the Warrant
Certificates, expressed or implied, shall give or be construed to give to
any person other than the parties hereto and the Warrantholders, as the
case may be, any legal or equitable right, remedy or claim under this
Indenture, or under any covenant or provision herein or therein contained,
all such covenants and provisions being for the sole benefit of the parties
hereto and the Warrantholders.
11.6 Special Warrants Owned by the Corporation or its Subsidiaries - Certificate
to be Provided - For the purpose of determining any Special Warrants owned
legally or beneficially by the Corporation or any subsidiary of the
Corporation for the purposes of section 8.16, the Corporation shall provide
to the Trustee, from time to time, a certificate of the Corporation setting
forth as at the date of such certificate:
(a) the names (other than the name of the Corporation) of the
registered holders of Special Warrants which, to the knowledge of
the Corporation, are owned by or held for the account of the
Corporation or any subsidiary of the Corporation; and
(b) the number of Special Warrants owned legally or beneficially by
the Corporation or any subsidiary of the Corporation;
and the Trustee, in making the computations in section 8.16,
shall be entitled to rely on such certificate without more.
144554\0512890.WP
39
11.7 Further Assurances - The parties will execute and deliver all such further
documents, do or cause to be done all such further acts and things, and
give all such further assurances as may be necessary to give full effect to
the provisions and intent of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Indenture under their
respective corporate seals and the hands of their proper officers in that behalf
as of the date first above written.
DAKOTA MINING CORPORATION
Per: ___________________________
MONTREAL TRUST COMPANY OF CANADA
Per: ___________________________
Per: ___________________________
144554\0512890.WP
SCHEDULE A
(form of Canadian Series A Special Warrant Certificate)
THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO
VALUE UPON EXERCISE PURSUANT TO THE SPECIAL WARRANT INDENTURE MADE AS OF
FEBRUARY 5, 1997.
SERIES A SPECIAL WARRANTS
February 5, 1997
(Canadian Form)
DAKOTA MINING CORPORATION
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx, X.X.X.
00000
(Governed by the laws of Canada)
Series A Special Warrant ___________________ SERIES A
SPECIAL
CERTIFICATE NO. WARRANTS one such warrant entitling the holder to acquire
$ principal amount unsecured convertible
-------------
debentures.
THIS IS TO CERTIFY THAT
(the "holder") is entitled to acquire, for no additional consideration and in
the manner herein provided, subject to the restrictions herein contained, the
principal amount of 7.5% unsecured convertible debentures ("Debentures") of
DAKOTA MINING CORPORATION ("the Corporation") as set forth above (or such other
securities or property in lieu thereof as may be contemplated by the Indenture,
as hereinafter defined).
The Debentures shall be issued pursuant to a indenture dated as of February 5,
1997 (the "Debenture Trust Indenture") between the Corporation and the Montreal
Trust Company of Canada, as trustee. The Debentures will mature on February 5,
2004. Interest will be payable on the Debentures semi-annually on June 30 and
December 31. One $1,000 principal amount Debenture shall entitle the holder to
acquire 500 Common Shares (subject to adjustment) conversion at a price of $2.00
at any time prior to maturity.
The Series A Special Warrants represented by this Certificate are issued under
and pursuant to a special warrant indenture (the "Indenture") dated as of
February 5, 1997 between the Corporation and Montreal Trust Company of Canada
(the "Trustee"), as trustee to which Indenture and any instruments supplemental
thereto reference is hereby made for a full description of the rights of the
holders of the Series A Special Warrants and the terms and conditions upon which
the Series A Special Warrants are, or are to be, issued, held, exchanged and
surrendered, all to the same effect as if the provisions of the Indenture and
all instruments supplemental thereto were herein set forth, and to all of which
provisions the holder of these Series A Special Warrants by acceptance hereof
assents. Capitalized terms used in this Certificate and not otherwise defined
shall have the meanings ascribed to them in the Indenture.
The Series A Exercise Period commences on the date of the Indenture and ends at
the Expiry Time. The Expiry Time is 5:00 p.m. (Vancouver time) on the earlier of
(A) the fifth Business Day following the day on which a Compliance Notice
(defined below) is delivered by the Corporation to the Trustee under the
Indenture and (B) February 5, 1998.
The Compliance Notice is a notice to be given to the Trustee when all of the
following conditions have been met: (A) a receipt is issued for a final
prospectus of the Corporation (the "Prospectus") qualifying for sale the
Debentures issuable on exercise of the Special Warrants and the Common Shares
issuable on exercise of the
A2
Debentures by the last of the securities regulatory authorities in British
Columbia, Alberta, Ontario and Quebec (the "Qualifying Jurisdictions") to issue
such a receipt; (B) shareholders of the Corporation have approved the issue of
the Series B Special Warrants; and (C) the proposed merger of the Corporation
and USMX, Inc. (the "Merger") in accordance with an agreement dated February 5,
1997 (the "Merger Agreement") between such parties has been cowmpleted. The
Trustee will give notice to each holder of Series A Special Warrants specifying
if and when the Compliance Notice has been given.
The holder of the Series A Special Warrants may elect to exercise all or any of
such Warrants during the Series A Exercise Period by duly completing and
executing the exercise form attached to and forming part of this Warrant
Certificate, and surrendering this Certificate to the Trustee at the principal
office of the Trustee in Vancouver, British Columbia or Xxxxxxx, Xxxxxxx, and
upon so doing the holder hereof shall be entitled to receive, subject to the
terms of the Indenture, certificates representing the Debentures issuable upon
such exercise, forthwith, and in any event not later than five Business Days,
after the date of surrender to the Trustee of this Certificate. Any such
exercise, at a time when the Corporation has not received a receipt for the
Prospectus from the applicable regulatory authorities in each of the Qualifying
Jurisdictions is subject to compliance with, and may be restricted by, the
securities laws of the Qualifying Jurisdictions and is further subject to the
holder providing such assurances and executing such documents as may, in the
reasonable opinion of the Corporation or the Trustee, be required to ensure
compliance with applicable securities legislation. If, at the time of the
exercise of the Series A Special Warrants, there remains restrictions on resale
under applicable securities legislation on the Debentures to be acquired, the
Corporation may, if required on the advice of counsel to the Corporation,
endorse the certificates representing the Debentures to be acquired with respect
to such resale restrictions, including as described below.
Any Series A Special Warrants remaining outstanding at the Expiry Time will be
deemed to be exercised automatically without any further action of the part of
the holder hereof.
The Series A Special Warrants represented hereby are subject to certain rights
of retraction. The Debentures issuable upon conversion of the Series A Special
Warrants are subject to certain rights of adjustment. Reference should be made
to the Indenture for the details of such rights.
The Series A Special Warrants represented hereby have not been and will not be
qualified for sale under the securities laws of any province or territory of
Canada. Accordingly, the Series A Special Warrants represented by this
Certificate may not be distributed in any province or territory or to, or for
the benefit of, any resident thereof in contravention with the laws of any such
jurisdiction. Compliance with the securities laws of any jurisdiction is the
responsibility of the Warrantholder or its transferee.
The holder of this Certificate may at any time up to the Expiry Time upon
written instruction delivered to the Trustee and payment of the charges provided
for in the Indenture and otherwise in accordance with the provisions of the
Indenture, exchange this Certificate for other Certificates evidencing the
number of Series A Special Warrants entitling the holder to acquire in the
aggregate the same principal amount of Debentures as may be acquired under this
Series A Special Warrant Certificate.
The holding of the Series A Special Warrants evidenced by this Certificate does
not constitute the Warrantholder a shareholder of the Corporation or entitle
such holder to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Series A Special Warrants evidenced by this Certificate may be transferred
only upon compliance with the conditions prescribed in the Indenture, on the
register kept by the Trustee, by the registered Warrantholder (or its legal
representatives or its attorney duly appointed) and its transferee duly
executing the transfer form attached hereto and complying with applicable laws
and such other reasonable requirements as the Corporation and Trustee may
prescribe.
144554\0512890.WP
A3
The Series A Special Warrants represented hereby, the Debentures issuable upon
exercise of such Series A Special Warrants and the Common Shares issuable upon
exercise of the Debentures (collectively, the "Securities") have not been
registered under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or the securities laws of any state of the United States. As a
result, the Securities may not be sold, transferred, exercised or delivered
within the United States or to or for the account or benefit of a person in the
United States or a U.S. person, unless such Securities are registered under the
U.S. Securities Act and the securities laws of any state in which the transferee
holder is resident or unless an exemption from such registration requirements is
available and its availability is satisfactorily evidenced to the Corporation
and the Trustee.
This Series A Special Warrant Certificate and the Indenture shall be governed
by, performed, construed, and enforced in accordance with the laws of British
Columbia and the federal laws of Canada applicable therein.
This Certificate shall not be valid for any purpose whatsoever unless and until
it has been countersigned by or on behalf of the Trustee.
IN WITNESS WHEREOF the undersigned has caused this Certificate to be duly
executed as of February , 1997.
DAKOTA MINING CORPORATION
By:____________________________
TRUSTEE'S CERTIFICATE
These Special Warrants are a portion of the Series A Special Warrants dated
February , 1997 referred to in the Indenture within mentioned.
MONTREAL TRUST COMPANY OF CANADA
By:____________________________
Authorized Officer
144554\0512890.WP
A4
TRANSFER FORM FOR SERIES A SPECIAL WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
-------------------------------,
(Name) (Address)
the Series A Special Warrants registered in the name of the undersigned
represented by the within certificate.
DATED the _____ day of ________________, 199___.
------------------------------ ---------------------------------
Signature Guaranteed (Signature of Warrantholder)
144554\0512890.WP
A5
EXERCISE FORM
TO: DAKOTA MINING CORPORATION
AND TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned holder of Series A Special Warrants hereby
exercises in respect of such Warrants the right provided for in the Indenture to
receive Debentures of Dakota Mining Corporation (or other securities or property
in lieu thereof) on the basis specified in the Indenture.
The undersigned hereby irrevocably directs that the said Debentures be issued
and delivered as follows:
==============================================================================
Name(s) in Full Address(es) Principal Amount of Debentures
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
=============================================================================
Please print in full the name in which the certificates are to be issued. If any
of the securities are to be issued to a person or persons other than the
Warrantholder, the Transfer Form for Series A Special Warrants should be
endorsed with the signature of the registered holder which must be guaranteed by
a Canadian chartered bank, trust company or by a member of the Vancouver or
Toronto stock exchanges or other entity acceptable to the Trustee, and the
Warrantholder must pay to the Trustee all eligible transfer or taxes or other
government charges.
The undersigned hereby represents and warrants to the
Corporation as follows (check one):
|_| the undersigned is not a U.S. person and the Special Warrants are not
being exercised within the United States or on behalf or for the
account or benefit of a U.S. person; or
|_| the undersigned is a U.S. person or the Special Warrants are being
exercised within the United States or on behalf or for the account or
benefit of a U.S. person and the undersigned herewith, all
documentation and assurances as may reasonably be required by the
Corporation and the Trustee to ensure compliance with applicable
United States laws.
"United States" and "U.S. person" are as defined by Regulation S under the
United States Securities Act of 1933, as amended.
DATED this ____ day of ___________________, 199 .
-------------------------- ------------------------------------
Witness Signature of Subscriber
------------------------------------
Name of Subscriber
------------------------------------
------------------------------------
Address of Subscriber
|_| Please check box if these certificates are to be delivered to the
office where this Certificate is surrendered, failing which the
certificates will be mailed to the address shown on the register of
Series A Special Warrants of the Corporation.
144554\0512890.WP
SCHEDULE B
(form of United States Series A Special Warrant Certificate)
THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO
VALUE UPON EXERCISE PURSUANT TO THE SPECIAL WARRANT INDENTURE MADE AS OF
FEBRUARY 5, 1997.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
(A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT, (C) WITH THE PRIOR WRITTEN CONSENT
OF THE ISSUER, PURSUANT TO ANOTHER APPLICABLE EXEMPTION FROM REGISTRATION UNDER
THE U.S. SECURITIES ACT; PROVIDED AN OPINION OF COUNSEL OF RECOGNIZED STANDING
REASONABLY SATISFACTORY TO THE ISSUER IS DELIVERED.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY
U.S. PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
SERIES A SPECIAL WARRANTS
February 5, 1997
(United States Form)
DAKOTA MINING CORPORATION
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx, X.X.X.
00000
(Governed by the laws of Canada)
Series A Special Warrant _______________ SERIES A SPECIAL WARRANTS
one
CERTIFICATE NO. ___________ such warrant entitling the holder to acquire Cdn. $
principal amount 7.5% unsecured convertible debenture.
THIS IS TO CERTIFY THAT
(the "holder") is entitled to acquire, for no additional consideration and in
the manner herein provided, subject to the restrictions herein contained, the
principal amount of 7.5% unsecured convertible debentures ("Debentures") of
DAKOTA MINING CORPORATION ("the Corporation") as set forth above (or such other
securities or property in lieu thereof as may be contemplated by the Indenture,
as hereinafter defined).
The Debentures shall be issued pursuant to an indenture dated as of February 5,
1997 (the "Debenture Trust Indenture") between the Corporation and Montreal
Trust Company of Canada, as trustee. The Debentures will mature on February 5,
2004. Interest will be payable on the Debentures semi-annually on June 30 and
December 31. One Cdn. $1,000 principal amount Debenture shall entitle the holder
to acquire 500 Common Shares (subject to adjustment) at a conversion price of
Cdn. $2.00 at any time prior to maturity of such Debentures.
The Series A Special Warrants represented by this Certificate are issued under
and pursuant to a special warrant indenture (herein called the "Indenture")
dated as of February 5, 1997 between the Corporation and Montreal Trust Company
of Canada (the "Trustee"), as trustee to which Indenture and any instruments
supplemental thereto reference is hereby made for a full description of the
rights of the holders of the Series A Special Warrants and the terms and
conditions upon which the Series A Special Warrants are, or are to be, issued,
held, exchanged and surrendered, all to the same effect as if the provisions of
the Indenture and all instruments supplemental thereto were herein set forth,
and to all of which provisions the holder of these Series A Special Warrants by
acceptance hereof assents. Capitalized terms used in this Certificate and not
otherwise defined shall have the meanings ascribed to them in the Indenture.
144554\0512890.WP
B1
The Series A Exercise Period defined below commences on the date of the
Indenture and ends at the Expiry Time. The Expiry Time is 5:00 p.m. (Vancouver
time) on the earlier of (A) the fifth Business Day following the day on which a
Compliance Notice (defined below) is delivered by the Corporation to the Trustee
under the Indenture and (B) February 5, 1998.
The Compliance Notice is a notice to be given to the Trustee when all of the
following conditions have been met: (A) a receipt is issued for a final
prospectus of the Corporation (the "Prospectus") qualifying for sale the
Debentures issuable on exercise of the Special Warrants and the Common Shares
issuable on exercise of the Debentures by the last of the securities regulatory
authorities in British Columbia, Alberta, Ontario and Quebec (the "Qualifying
Jurisdictions") to issue such a receipt; (B) shareholders of the Corporation
have approved the issue of the Series B Special Warrants and (C) the proposed
merger of the Corporation and USMX, Inc. (the "Merger") in accordance with an
agreement dated February 5, 1997 between such parties has been completed. The
Trustee will give notice to each holder of Series A Special Warrants specifying
if and when the Compliance Notice has been given.
The holder of the Series A Special Warrants represented by this Certificate may
elect to exercise all or any of such Warrants represented by this Warrant
Certificate during the Series A Exercise Period by duly completing and executing
the exercise form attached to and forming part of this Warrant Certificate, and
surrendering this Certificate to the Trustee at the principal office of the
Trustee in the City of Vancouver, British Columbia or Xxxxxxx, Xxxxxxx, and upon
so doing the holder hereof shall be entitled to receive, subject to the terms of
the Indenture, certificates representing the Debentures issuable upon such
exercise, forthwith, and in any event not later than 5 Business Days, after the
date of surrender to the Trustee of this Certificate. Any such exercise, at a
time when the Corporation has not received a receipt for the Prospectus from the
applicable regulatory authorities in each of the Qualifying Jurisdictions is
subject to compliance with, and may be restricted by, the securities laws of the
Qualifying Jurisdictions and is further subject to the holder providing such
assurances and executing such documents as may, in the reasonable opinion of the
Corporation or the Trustee, be required to ensure compliance with applicable
securities legislation. If, at the time of the exercise of the Series A Special
Warrants, there remains restrictions on resale under applicable securities
legislation on the Debentures to be acquired, the Corporation may, if required
on the advice of counsel to the Corporation, endorse the certificates
representing the Debentures to be acquired with respect to such resale
restrictions, including as described below.
Any Series A Special Warrants remaining outstanding at the Expiry Time will be
deemed to be exercised automatically without any further action of the part of
the holder hereof.
The Series A Special Warrants represented hereby are subject to certain rights
of retraction. The Debentures issuable upon conversion of the Series A Special
Warrants are subject to certain rights of adjustment. Reference should be had to
the Indenture for the details of such rights.
The Series A Special Warrants represented hereby have not been and will not be
qualified for sale under the securities laws of any province or territory of
Canada. Accordingly, the Series A Special Warrants may not be distributed in any
province or territory or to, or for the benefit of, any resident thereof in
contravention with the laws of any such jurisdiction. Compliance with the
securities laws of any jurisdiction is the responsibility of the Warrantholder
or its transferee.
The holder of this Certificate may at any time up to the Series A Expiry Time
upon written instruction delivered to the Trustee and payment of the charges
provided for in the Indenture and otherwise in accordance with the provisions of
the Indenture, exchange this Certificate for other Certificates evidencing the
number of Series A Special Warrants entitling the holder to acquire in the
aggregate the same principal amount of Debentures as may be acquired under this
Series A Special Warrant Certificate.
The holding of the Series A Special Warrants evidenced by this Certificate does
not constitute the Warrantholder a shareholder of the Corporation or entitle
such holder to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Series A Special Warrants evidenced by this Certificate may be transferred
only upon compliance with the conditions prescribed in the Indenture, on the
register kept by the Trustee, by the registered Warrantholder (or
144554\0512890.WP
B2
its legal representatives or its attorney duly appointed) and its transferee
duly executing the transfer form attached hereto and complying with applicable
laws and such other reasonable requirements as the Corporation and Trustee may
prescribe.
In connection with a transfer of Series A Special Warrants, the Corporation and
the Trustee, prior to such transfer, must have received a properly completed and
executed Seller's Certificate attached hereto from the holder of this
Certificate and a Purchaser's Certificate attached hereto, from the transferee.
The Series A Special Warrants represented hereby, the Debentures issuable upon
exercise of such Series A Special Warrants and the Common Shares issuable upon
exercise of the Debentures (collectively, the "Securities") have not been
registered under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or the securities laws of any state of the United States. As a
result, the Securities may not be sold, transferred, exercised or delivered
within the United States or to or for the account or benefit of a person in the
United States or a U.S. person, unless such securities are registered under the
U.S. Securities Act and the securities laws of any state in which the transferee
holder is resident or unless an exemption from such registration requirements is
available and its availability is satisfactorily evidenced to the Corporation
and the Trustee.
The Debentures issuable upon the exercise of Series A Special Warrants issued to
a U.S. person under the U.S. Securities Act or pursuant to an exemption from the
registration requirements of the U.S. Securities Act or otherwise issuable to
U.S. persons, persons in the United States or persons who are acting on behalf
or for the account or benefit of a U.S. person or a person in the United States,
and the Common Shares deliverable upon the exercise of the Debentures (and all
Debentures and Common Shares issued in exchange therefor or in substitution
thereof), shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITIES
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND THE COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR (D) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES
SATISFACTORY TO THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO
STOCK EXCHANGE. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH
WILL CONSTITUTE "GOOD DELIVERY", MAY BE OBTAINED FROM THE TRANSFER
AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT 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 U.S. SECURITIES ACT.
provided, however, that if the Debentures or the Common Shares are being sold
under paragraph (B) above, the legend may be removed by providing a declaration
to the Trustee as transfer agent for the securities to the following effect:
The undersigned (A) acknowledges that the sale of the securities 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 "U.S. Securities Act") and (B) certifies that (1) it is not an
affiliate (as defined in Rule 405 under the U.S. Securities Act) of
Dakota Mining Corporation, (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
(B) the transaction was executed on or through the facilities of The
Toronto Stock Exchange, the Montreal Exchange, the Vancouver Stock
Exchange or the Alberta Stock Exchange and neither the seller nor any
affiliate of the seller nor any person acting on any of their
144554\0512890.WP
B3
behalf has engaged or will engage in any directed selling efforts in
the United States in connection with the offer and sale of such
securities, (4) the sale is bona fide and not for the purpose of
"washing off" the resale restrictions imposed because the securities
are "restricted securities" (as such term is defined in Rule 144(a)(3)
under the U.S. Securities Act), (5) the seller does not intend to
replace the securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in
technical compliance with Regulation S, is part of a plan or scheme to
evade the registration provisions of the U.S. Securities Act. Terms
used herein have the meanings given to them by Regulation S.
This Series A Special Warrant Certificate and the Indenture shall be governed
by, performed, construed, and enforced in accordance with the laws of British
Columbia and the federal laws of Canada applicable therein.
This Certificate shall not be valid for any purpose whatsoever unless and until
it has been countersigned by or on behalf of the Trustee.
IN WITNESS WHEREOF the undersigned has caused this Certificate to be duly
executed as of February , 1997.
DAKOTA MINING CORPORATION
By:____________________________
TRUSTEE'S CERTIFICATE
These Special Warrants are a portion of the Series A Special Warrants dated
February , 1997 referred to in the Indenture within mentioned.
MONTREAL TRUST COMPANY OF CANADA
By:____________________________
Authorized Officer
144554\0512890.WP
B4
TRANSFER FORM FOR SERIES A SPECIAL WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
-------------------------------, ------------------------------------
(Name) (Address)
the Series A Special Warrants registered in the name of the undersigned
represented by the within certificate.
DATED the _____ day of ________________, 199___.
------------------------------ ------------------------------------
Signature Guaranteed (Signature of Warrantholder)
Note to Warrantholders: In order to transfer the Series A Special Warrants
represented by this certificate, this transfer form must be delivered to
Montreal Trust Company of Canada, together with a duly completed Seller's
Certificate and a Purchaser's Certificate in the forms attached to this
certificate.
144554\0512890.WP
B5
SELLER'S CERTIFICATE
The undersigned is delivering this certificate in connection with the
sale or transfer by the undersigned of special warrants (the "Special Warrants")
issued by Dakota Mining Corporation (the "Corporation") pursuant to the special
warrant indenture dated as of February 5, 1997 (the "Indenture") between the
Corporation and Montreal Trust Company of Canada (the "Trustee"), as trustee.
This certificate is delivered to the Corporation pursuant to Section 2.13 of the
Indenture to provide evidence of compliance by the undersigned with the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"). The
undersigned hereby makes the following representation to the Corporation and the
Trustee (check one of the following boxes):
|_| The sale of the Special Warrants is being made pursuant to Rule 904 of
Regulation S under the U.S. Securities Act, and:
(a) the sale of the Special Warrants is being made in an "offshore
transaction" (as defined by Rule 902 of Regulation S under the
U.S. Securities Act);
(b) neither the undersigned, an affiliate thereof or any person
acting on their behalf has engaged or will engage in "directed
selling efforts" (as defined by Rule 902 of Regulation S under
the U.S. Securities Act); and
(c) the undersigned is not now an officer, director or otherwise an
"affiliate" of the Corporation (as defined Rule 144 under the
U.S. Securities Act).
|_| The sale of the Special Warrants is being made pursuant to the
exemption from registration requirements under the U.S. Securities Act
provided by Rule 144(k) under the U.S. Securities Act, and:
(a) a period of at least three years has elapsed since the latter of
the date of acquisition of the Special Warrants from the
Corporation or from an affiliate of the Corporation (calculated
in accordance with Rule 144(d) under the U.S. Securities Act);
and
(b) the undersigned is not an affiliate of the Corporation and has
not been an affiliate of the Corporation during the preceding
three months.
|_| The sale of the Special Warrants is being made pursuant to another
exemption from registration requirements under the U.S. Securities Act
and in accordance with any applicable State securities laws, and is
furnishing herewith to the Corporation and the Trustee an opinion to
the effect that counsel of recognized standing and experience in
matters involving the U.S. Securities Act and reasonably satisfactory
to the Corporation and the Trustee.
The undersigned further represents that the sale of the Special
Warrants is not part of a plan or scheme to evade the registration
requirements of the U.S. Securities Act.
Signed:
Name (please print)(to be the same as it appears on the
face of the Special Warrant Certificate)
Address
144554\0512890.WP
B6
PURCHASER'S CERTIFICATE
1. The Purchaser either (i) is not a "U.S. person" (as defined in Regulation S
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), which definition includes, but is not limited to, an
individual resident in the United States and an estate or trust of which
any executor or administrator or trustee, respectively, is a U.S. person
and any partnership or corporation organized or incorporated under the laws
of the United States; (ii) otherwise purchasing the Special Warrants
pursuant to an applicable exemption from registration under the U.S.
Securities Act;
2. The Purchaser is resident at the address set forth on the signature page of
this certificate;
3. The Purchaser acknowledges that the Special Warrants, the Debentures
issuable upon exercise thereof and the Common Shares issuable upon exercise
of the Debentures (collectively, the "Securities") have not been registered
under the U.S. Securities Act and may not be offered or sold in the United
States unless registered under the U.S. Securities Act and the securities
laws of all applicable states of the United States or an exemption from
such registration requirements is available, and that the Corporation has
no obligation or present intention of filing a registration statement under
the U.S. Securities Act in respect of the Securities.
4. Unless the Purchaser is otherwise purchasing the Securities pursuant to an
applicable exemption from registration under the U.S. Securities Act, the
Securities are not being acquired directly or indirectly for the account or
benefit of a U.S. person and the Purchaser does not have any agreement or
understanding (either written or oral) with any U.S. person respecting:
(i) the transfer or assignment of any rights or interest in any of the
Securities;
(ii) the division of profits, losses, fees, commissions, or any financial
stake in connection with this purchase; or
(iii) the voting of the Debentures;
5. The Purchaser agrees that if it decides to offer, sell or otherwise
transfer any of the Securities, it will not offer, sell or otherwise
transfer any of such Securities, directly or indirectly to a U.S. person,
unless:
(i) the sale is to the Corporation;
(ii) the sale is made outside the United States in a transaction meeting
the requirements of Rule 904 of Regulation S under the U.S. Securities
Act;
(iii)the sale is made pursuant to the exemption from the registration
requirements of the U.S. Securities Act provided by Rule 144
thereunder and in accordance with any applicable State securities or
"Blue Sky" laws;
(iv) the sale is made in another type of transaction that does not require
registration under the U.S. Securities Act or any applicable State
securities or "Blue Sky" laws, and it has prior to such sale furnished
to the Corporation and to Montreal Trust Company of Canada an opinion
to that effect of counsel or recognized experience in matters
involving the U.S. Securities Act and reasonably satisfactory to the
Corporation and Montreal Trust Company of Canada;
6. Unless the Purchaser is purchasing the Securities pursuant to an applicable
exemption from registration under the U.S. Securities Act, no offers to
sell the Special Warrants were made by any person to the Purchaser while
the Purchaser was in the United States.
7. Unless the Purchaser is purchasing the Securities pursuant to an applicable
exemption from registration under the U.S. Securities Act, the Purchaser
was outside the United States at the time of the Purchaser's purchase of
the Special Warrants;
8. The Purchaser acknowledges that the certificates representing the Special
Warrants will bear a legend to the effect that the Debentures and Common
Shares issuable thereunder have not been and will not be registered under
the U.S. Securities Act or the securities laws of any state of the United
States;
9. The Purchaser acknowledges that any person who exercises a Special Warrant
will be required to provide to the Corporation written certification that
it is not a U.S. person and the Special Warrant is not being exercised
within the United States or on behalf of a U.S. person; and
10. The Purchaser acknowledges that the Special Warrants may be transferred
only if (i) prior to such transfer the holder of the Special Warrants
properly complete, executes and delivers to the Corporation the certificate
attached to the form of Special Warrant and (ii) the transferee properly
completes, executes and delivers to the Corporation a certificate
substantially in the form hereof.
Signed:
Signature of Purchaser/Transferor
Name (please print)
144554\0512890.WP
B7
Address
144554\0512890.WP
B8
EXERCISE FORM
TO: DAKOTA MINING CORPORATION
AND TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned holder of Series A Special Warrants hereby
exercises in respect of Series A Special Warrants the right provided for in the
Indenture to receive Debentures of Dakota Mining Corporation (or other
securities or property in lieu thereof) on the basis specified in the Indenture.
The undersigned hereby irrevocably directs that the said
Debentures be issued and delivered as follows:
==============================================================================
Name(s) in Full Address(es) Principal Amount of Debentures
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
=============================================================================
(Please print in full the name in which the certificates are to be issued. If
any of the securities are to be issued to a person or persons other than the
Warrantholder, the Transfer Form for Series A Special Warrants should be
endorsed with the signature of the registered holder which must be guaranteed by
a Canadian chartered bank, trust company or by a member of the Vancouver or
Toronto stock exchanges or other entity acceptable to the Trustee and the
Warrantholder must pay to the Trustee all eligible transfer or taxes or other
government charges.)
The undersigned hereby represents and warrants to the Corporation as
follows (check one):
|_| the undersigned is not a U.S. person and the Special Warrants are not
being exercised within the United States or on behalf or for the
account or benefit of a U.S. person; or
|_| the undersigned is a U.S. person or the Special Warrants are being
exercised within the United States or on behalf or for the account or
benefit of a U.S. person and the undersigned has previously delivered
to the Corporation, or is delivering concurrently herewith, a
certificate in the form of the Purchaser's Certificate attached to the
Special Warrant Certificate.
"United States" and "U.S. person" are as defined by Regulation S under the
United States Securities Act of 1993, as amended.
DATED this ____ day of ___________________, 199 .
-------------------------- ------------------------------------
Witness Signature of Subscriber
------------------------------------
Name of Subscriber
------------------------------------
------------------------------------
Address of Subscriber
|_| Please check box if these certificates are to be delivered to the
office where this Warrant Certificate is surrendered, failing which
the certificates will be mailed to the address shown on the register
of Special Warrants of the Corporation.
144554\0512890.WP
SCHEDULE C
(form of Canadian Series B Special Warrant Certificate)
THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO
VALUE UPON EXERCISE PURSUANT TO THE SPECIAL WARRANT INDENTURE MADE AS OF
FEBRUARY 5, 1997.
SERIES B SPECIAL WARRANTS February 5, 1997
(Canadian Form)
DAKOTA MINING CORPORATION
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx, X.X.X.
00000
(Governed by the laws of Canada)
Series B Special Warrant _______________ SERIES B SPECIAL WARRANTS one such
warrant
CERTIFICATE NO. ___________ entitling the holder to acquire $ principal amount
-------------------------
unsecured convertible debentures.
THIS IS TO CERTIFY THAT ___________________________________________________ (the
"holder") is entitled to acquire, for no additional consideration and in the
manner herein provided, subject to the restrictions herein contained, the
principal amount of 7.5% unsecured convertible debentures ("Debentures") of
DAKOTA MINING CORPORATION ("the Corporation") as set forth above (or such other
securities or property in lieu thereof as may be contemplated by the Indenture,
as hereinafter defined).
The Debentures shall be issued pursuant to a indenture dated as of February 5,
1997 (the "Debenture Trust Indenture") between the Corporation and the Montreal
Trust Company of Canada, as trustee. The Debentures will mature on February 5,
2004. Interest will be payable on the Debentures semi-annually on June 30 and
December 31. One $1,000 principal amount Debenture shall entitle the holder to
acquire 500 Common Shares (subject to adjustment) conversion at a price of $2.00
at any time prior to maturity.
The Series B Special Warrants represented by this Certificate are issued under
and pursuant to a special warrant indenture (the "Indenture") dated as of
February 5, 1997 between the Corporation and Montreal Trust Company of Canada
(the "Trustee"), as trustee to which Indenture and any instruments supplemental
thereto reference is hereby made for a full description of the rights of the
holders of the Series B Special Warrants and the terms and conditions upon which
the Series B Special Warrants are, or are to be, issued, held, exchanged and
surrendered, all to the same effect as if the provisions of the Indenture and
all instruments supplemental thereto were herein set forth, and to all of which
provisions the holder of these Series B Special Warrants by acceptance hereof
assents. Capitalized terms used in this Certificate and not otherwise defined
shall have the meanings ascribed to them in the Indenture.
The Series B Exercise Period commences on the date of Shareholder Approval (as
defined below) and ends at the Expiry Time. The Expiry Time is 5:00 p.m.
(Vancouver time) on the earlier of (A) the fifth Business Day following the day
on which a Compliance Notice (defined below) is delivered by the Corporation to
the Trustee under the Indenture and (B) February 5, 1998.
The Compliance Notice is a notice to be given to the Trustee when all of the
following conditions have been met: (A) a receipt is issued for a final
prospectus of the Corporation (the "Prospectus") qualifying for sale the
Debentures issuable on exercise of the Special Warrants and the Common Shares
issuable on exercise of the Debentures by the last of the securities regulatory
authorities in British Columbia, Alberta, Ontario and Quebec (the "Qualifying
Jurisdictions") to issue such a receipt; (B) shareholders of the Corporation
have approved the issue of the Series B Special Warrants ("Shareholder
Approval"); and (C) the proposed merger of the Corporation and USMX, Inc. (the
"Merger") in accordance with an agreement dated February 5, 1997 (the "Merger
Agreement") between such parties has been completed. The Trustee will give
notice to each holder of Series B Special Warrants specifying if and when the
Compliance Notice has been delivered.
If Shareholder Approval does not occur prior to April 30, 1997 or such later
date as may be determined pursuant to the Merger Agreement, then all Series B
Special Warrants will be automatically retracted by the Corporation without
further actin on the part of the Warrant-holder. In such case, the holder hereof
will receive the original purchase price paid for the Series B Special Warrants
represented hereby plus a pro rata share of the interest earned on such purchase
price since the date hereof.
144554\0512890.WP
C2
The holder of the Series B Special Warrants may elect to exercise all or any of
such Warrants during the Series B Exercise Period by duly completing and
executing the exercise form attached to and forming part of this Warrant
Certificate, and surrendering this Certificate to the Trustee at the principal
office of the Trustee in Vancouver, British Columbia or Xxxxxxx, Xxxxxxx, and
upon so doing the holder hereof shall be entitled to receive, subject to the
terms of the Indenture, certificates representing the Debentures issuable upon
such exercise, forthwith, and in any event not later than five Business Days,
after the date of surrender to the Trustee of this Certificate. Any such
exercise, at a time when the Corporation has not received a receipt for the
Prospectus from the applicable regulatory authorities in each of the Qualifying
Jurisdictions is subject to compliance with, and may be restricted by, the
securities laws of the Qualifying Jurisdictions and is further subject to the
holder providing such assurances and executing such documents as may, in the
reasonable opinion of the Corporation or the Trustee, be required to ensure
compliance with applicable securities legislation. If, at the time of the
exercise of the Series B Special Warrants, there remains restrictions on resale
under applicable securities legislation on the Debentures to be acquired, the
Corporation may, if required on the advice of counsel to the Corporation,
endorse the certificates representing the Debentures to be acquired with respect
to such resale restrictions, including as described below.
Any Series B Special Warrants remaining outstanding at the Expiry Time will be
deemed to be exercised automatically without any further action of the part of
the holder hereof.
The Series B Special Warrants represented hereby are subject to certain other
rights of retraction. The Debentures issuable upon conversion of the Series A
Special Warrants are subject to certain rights of adjustment. Reference should
be made to the Indenture for the details of such rights.
The Series B Special Warrants represented hereby have not been and will not be
qualified for sale under the securities laws of any province or territory of
Canada. Accordingly, the Series B Special Warrants represented by this
Certificate may not be distributed in any province or territory or to, or for
the benefit of, any resident thereof in contravention with the laws of any such
jurisdiction. Compliance with the securities laws of any jurisdiction is the
responsibility of the Warrantholder or its transferee.
The holder of this Certificate may at any time up to the Expiry Time upon
written instruction delivered to the Trustee and payment of the charges provided
for in the Indenture and otherwise in accordance with the provisions of the
Indenture, exchange this Certificate for other Certificates evidencing the
number of Series B Special Warrants entitling the holder to acquire in the
aggregate the same principal amount of Debentures as may be acquired under this
Series B Special Warrant Certificate.
The holding of the Series B Special Warrants evidenced by this Certificate does
not constitute the Warrantholder a shareholder of the Corporation or entitle
such holder to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Series B Special Warrants evidenced by this Certificate may be transferred
only upon compliance with the conditions prescribed in the Indenture, on the
register kept by the Trustee, by the registered Warrantholder (or its legal
representatives or its attorney duly appointed) and its transferee duly
executing the transfer form attached hereto and complying with applicable laws
and such other reasonable requirements as the Corporation and Trustee may
prescribe.
The Series B Special Warrants represented hereby, the Debentures issuable upon
exercise of such Series B Special Warrants and the Common Shares issuable upon
exercise of the Debentures (collectively, the "Securities") have not been
registered under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or the securities laws of any state of the United States. As a
result, the Securities may not be sold, transferred, exercised or delivered
within the United States or to or for the account or benefit of a person in the
United States or a U.S. person, unless such Securities are registered under the
U.S. Securities Act and the securities laws of any state in which the transferee
holder is resident or unless an exemption from such registration requirements is
available and its availability is satisfactorily evidenced to the Corporation
and the Trustee.
This Series B Special Warrant Certificate and the Indenture shall be governed
by, performed, construed, and enforced in accordance with the laws of British
Columbia and the federal laws of Canada applicable therein.
This Certificate shall not be valid for any purpose whatsoever unless and until
it has been countersigned by or on behalf of the Trustee.
144554\0512890.WP
C3
IN WITNESS WHEREOF the undersigned has caused this Certificate to be duly
executed as of February , 1997.
DAKOTA MINING CORPORATION
By:____________________________
TRUSTEE'S CERTIFICATE
These Special Warrants are a portion of the Series B Special Warrants
dated February , 1997 referred to in the
Indenture within mentioned.
MONTREAL TRUST COMPANY OF CANADA
By:____________________________
Authorized Officer
144554\0512890.WP
C4
TRANSFER FORM FOR SERIES B SPECIAL WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
,
(Name) (Address)
the Series B Special Warrants registered in the name of the undersigned
represented by the within certificate.
DATED the _____ day of ________________, 199___.
------------------------------ ------------------------------------
Signature Guaranteed (Signature of Warrantholder)
144554\0512890.WP
C5
EXERCISE FORM
TO: DAKOTA MINING CORPORATION
AND TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned holder of Series B Special Warrants hereby
exercises in respect of such Warrants the right provided for in the Indenture to
receive Debentures of Dakota Mining Corporation (or other securities or property
in lieu thereof) on the basis specified in the Indenture.
The undersigned hereby irrevocably directs that the said
Debentures be issued and delivered as follows:
=============================================================================
Name(s) in Full Address(es) Principal Amount of Debentures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
==========================================================================
Please print in full the name in which the certificates are to be issued. If any
of the securities are to be issued to a person or persons other than the
Warrantholder, the Transfer Form for Series B Special Warrants should be
endorsed with the signature of the registered holder which must be guaranteed by
a Canadian chartered bank, trust company or by a member of the Vancouver or
Toronto stock exchanges or other entity acceptable to the Trustee, and the
Warrantholder must pay to the Trustee all eligible transfer or taxes or other
government charges.
The undersigned hereby represents and warrants to the Corporation as follows
(check one):
|_| the undersigned is not a U.S. person and the Special Warrants are not
being exercised within the United States or on behalf or for the
account or benefit of a U.S. person; or
|_| the undersigned is a U.S. person or the Special Warrants are being
exercised within the United States or on behalf or for the account or
benefit of a U.S. person and the undersigned herewith, all
documentation and assurances as may reasonably be required by the
Corporation and the Trustee to ensure compliance with applicable
United States laws.
"United States" and "U.S. person" are as defined by Regulation S under the
United States Securities Act of 1933, as amended.
DATED this ____ day of ___________________, 199 .
-------------------------- ------------------------------------
Witness Signature of Subscriber
------------------------------------
Name of Subscriber
------------------------------------
------------------------------------
Address of Subscriber
|_| Please check box if these certificates are to be delivered to the
office where this Certificate is surrendered, failing which the
certificates will be mailed to the address shown on the register of
Series B Special Warrants of the Corporation.
144554\0512890.WP
SCHEDULE D
(form of United States Series B Special Warrant Certificate)
THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO
VALUE UPON EXERCISE PURSUANT TO THE SPECIAL WARRANT INDENTURE MADE AS OF
FEBRUARY 5, 1997.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
(A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT, (C) WITH THE PRIOR WRITTEN CONSENT
OF THE ISSUER, PURSUANT TO ANOTHER APPLICABLE EXEMPTION FROM REGISTRATION UNDER
THE U.S. SECURITIES ACT; PROVIDED AN OPINION OF COUNSEL OF RECOGNIZED STANDING
REASONABLY SATISFACTORY TO THE ISSUER IS DELIVERED.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY
U.S. PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
SERIES B SPECIAL WARRANTS
February 5, 1997
(United States Form)
DAKOTA MINING CORPORATION
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx, X.X.X.
00000
(Governed by the laws of Canada)
Series B Special Warrant _______________ SERIES B SPECIAL WARRANTS one such
warrant
CERTIFICATE NO. entitling the holder to acquire Cdn. $ principal
---------------------------
amount 7.5% unsecured convertible debenture.
THIS IS TO CERTIFY THAT ___________________________________________________ (the
"holder") is entitled to acquire, for no additional consideration and in the
manner herein provided, subject to the restrictions herein contained, the
principal amount of 7.5% unsecured convertible debentures ("Debentures") of
DAKOTA MINING CORPORATION ("the Corporation") as set forth above (or such other
securities or property in lieu thereof as may be contemplated by the Indenture,
as hereinafter defined).
The Debentures shall be issued pursuant to an indenture dated as of February 5,
1997 (the "Debenture Trust Indenture") between the Corporation and Montreal
Trust Company of Canada, as trustee. The Debentures will mature on February 5,
2004. Interest will be payable on the Debentures semi-annually on June 30 and
December 31. One Cdn. $1,000 principal amount Debenture shall entitle the holder
to acquire 500 Common Shares (subject to adjustment) at a conversion price of
Cdn. $2.00 at any time prior to maturity of such Debentures.
The Series B Special Warrants represented by this Certificate are issued under
and pursuant to a special warrant indenture (herein called the "Indenture")
dated as of February 5, 1997 between the Corporation and Montreal Trust Company
of Canada (the "Trustee"), as trustee to which Indenture and any instruments
supplemental thereto reference is hereby made for a full description of the
rights of the holders of the Series B Special Warrants and the terms and
conditions upon which the Series B Special Warrants are, or are to be, issued,
held, exchanged and surrendered, all to the same effect as if the provisions of
the Indenture and all instruments supplemental thereto were herein set forth,
and to all of which provisions the holder of these Series B Special Warrants by
acceptance hereof assents. Capitalized terms used in this Certificate and not
otherwise defined shall have the meanings ascribed to them in the Indenture.
The Series B Exercise Period defined below commences on the date of Shareholder
Approval (as defined below) and ends at the Expiry Time. The Expiry Time is 5:00
p.m. (Vancouver time) on the earlier of (A) the fifth Business Day following the
day on which a Compliance Notice (defined below) is delivered by the Corporation
to the Trustee under the Indenture and (B) February 5, 1998.
The Compliance Notice is a notice to be given to the Trustee when all of the
following conditions have been met: (A) a receipt is issued for a final
prospectus of the Corporation (the "Prospectus") qualifying for sale the
Debentures issuable on exercise of the Special Warrants and the Common Shares
issuable on exercise of the Debentures by the last of the
144554\0512890.WP
D2
securities regulatory authorities in British Columbia, Alberta, Ontario and
Quebec (the "Qualifying Jurisdictions") to issue such a receipt; (B)
shareholders of the Corporation have approved the issue of the Series B Special
Warrants ("Shareholder Approval") and (C) the proposed merger of the Corporation
and USMX, Inc. (the "Merger") in accordance with an agreement dated February 5,
1997 between such parties has been completed. The Trustee will give notice to
each holder of Series B Special Warrants specifying if and when the Compliance
Notice has been given.
If Shareholder Approval does not occur prior to April 30, 1997 or such later
date as may be determined pursuant to the Merger Agreement, then all Series B
Special Warrants will be automatically retracted by the Corporation without
further action on the part of the Warrant-holder. In such case, the holder
hereof will receive the original purchase price paid for the Series B Special
Warrants represented hereby plus a pro rata share of the interest earned on such
purchase price since the date hereof.
The holder of the Series B Special Warrants represented by this Certificate may
elect to exercise all or any of such Warrants represented by this Warrant
Certificate during the Series B Exercise Period by duly completing and executing
the exercise form attached to and forming part of this Warrant Certificate, and
surrendering this Certificate to the Trustee at the principal office of the
Trustee in the City of Vancouver, British Columbia or Xxxxxxx, Xxxxxxx, and upon
so doing the holder hereof shall be entitled to receive, subject to the terms of
the Indenture, certificates representing the Debentures issuable upon such
exercise, forthwith, and in any event not later than 5 Business Days, after the
date of surrender to the Trustee of this Certificate. Any such exercise, at a
time when the Corporation has not received a receipt for the Prospectus from the
applicable regulatory authorities in each of the Qualifying Jurisdictions is
subject to compliance with, and may be restricted by, the securities laws of the
Qualifying Jurisdictions and is further subject to the holder providing such
assurances and executing such documents as may, in the reasonable opinion of the
Corporation or the Trustee, be required to ensure compliance with applicable
securities legislation. If, at the time of the exercise of the Series B Special
Warrants, there remains restrictions on resale under applicable securities
legislation on the Debentures to be acquired, the Corporation may, if required
on the advice of counsel to the Corporation, endorse the certificates
representing the Debentures to be acquired with respect to such resale
restrictions, including as described below.
Any Series B Special Warrants remaining outstanding at the Expiry Time will be
deemed to be exercised automatically without any further action of the part of
the holder hereof.
The Series B Special Warrants represented hereby are subject to certain rights
of retraction. The Debentures issuable upon conversion of the Series B Special
Warrants are subject to certain rights of adjustment. Reference should be had to
the Indenture for the details of such rights.
The Series B Special Warrants represented hereby have not been and will not be
qualified for sale under the securities laws of any province or territory of
Canada. Accordingly, the Series B Special Warrants may not be distributed in any
province or territory or to, or for the benefit of, any resident thereof in
contravention with the laws of any such jurisdiction. Compliance with the
securities laws of any jurisdiction is the responsibility of the Warrantholder
or its transferee.
The holder of this Certificate may at any time up to the Series B Expiry Time
upon written instruction delivered to the Trustee and payment of the charges
provided for in the Indenture and otherwise in accordance with the provisions of
the Indenture, exchange this Certificate for other Certificates evidencing the
number of Series A Special Warrants entitling the holder to acquire in the
aggregate the same principal amount of Debentures as may be acquired under this
Series B Special Warrant Certificate.
The holding of the Series B Special Warrants evidenced by this Certificate does
not constitute the Warrantholder a shareholder of the Corporation or entitle
such holder to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Series B Special Warrants evidenced by this Certificate may be transferred
only upon compliance with the conditions prescribed in the Indenture, on the
register kept by the Trustee, by the registered Warrantholder (or its legal
representatives or its attorney duly appointed) and its transferee duly
executing the transfer form attached hereto and complying with applicable laws
and such other reasonable requirements as the Corporation and Trustee may
prescribe.
In connection with a transfer of Series B Special Warrants, the Corporation and
the Trustee, prior to such transfer, must have received a properly completed and
executed Seller's Certificate attached hereto from the holder of this
Certificate and a Purchaser's Certificate attached hereto, from the transferee.
The Series B Special Warrants represented hereby, the Debentures issuable upon
exercise of such Series B Special Warrants and the Common Shares issuable upon
exercise of the Debentures (collectively, the "Securities") have not been
registered under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or the securities laws of any state
144554\0512890.WP
D3
of the United States. As a result, the Securities may not be sold, transferred,
exercised or delivered within the United States or to or for the account or
benefit of a person in the United States or a U.S. person, unless such
securities are registered under the U.S. Securities Act and the securities laws
of any state in which the transferee holder is resident or unless an exemption
from such registration requirements is available and its availability is
satisfactorily evidenced to the Corporation and the Trustee.
The Debentures issuable upon the exercise of Series B Special Warrants issued to
a U.S. person under the U.S. Securities Act or pursuant to an exemption from the
registration requirements of the U.S. Securities Act or otherwise issuable to
U.S. persons, persons in the United States or persons who are acting on behalf
or for the account or benefit of a U.S. person or a person in the United States,
and the Common Shares deliverable upon the exercise of the Debentures (and all
Debentures and Common Shares issued in exchange therefor or in substitution
thereof), shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITIES
MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND THE COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR (D) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES
SATISFACTORY TO THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO
STOCK EXCHANGE. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH
WILL CONSTITUTE "GOOD DELIVERY", MAY BE OBTAINED FROM THE TRANSFER
AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT 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 U.S. SECURITIES ACT.
provided, however, that if the Debentures or the Common Shares are being sold
under paragraph (B) above, the legend may be removed by providing a declaration
to the Trustee as transfer agent for the securities to the following effect:
The undersigned (A) acknowledges that the sale of the securities 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 "U.S. Securities Act") and (B) certifies that (1) it is not an
affiliate (as defined in Rule 405 under the U.S. Securities Act) of
Dakota Mining Corporation, (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
(B) the transaction was executed on or through the facilities of The
Toronto Stock Exchange, the Montreal Exchange, the Vancouver Stock
Exchange or the Alberta Stock Exchange and neither the seller nor any
affiliate of the seller nor any person acting on any of their behalf
has engaged or will engage in any directed selling efforts in the
United States in connection with the offer and sale of such securities,
(4) the sale is bona fide and not for the purpose of "washing off" the
resale restrictions imposed because the securities are "restricted
securities" (as such term is defined in Rule 144(a)(3) under the U.S.
Securities Act), (5) the seller does not intend to replace the
securities and (6) the contemplated sale is not a transaction, or part
of a series of transactions which, although in technical compliance
with Regulation S, is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act. Terms used herein
have the meanings given to them by Regulation S.
This Series B Special Warrant Certificate and the Indenture shall be governed
by, performed, construed, and enforced in accordance with the laws of British
Columbia and the federal laws of Canada applicable therein.
This Certificate shall not be valid for any purpose whatsoever unless and until
it has been countersigned by or on behalf of the Trustee.
IN WITNESS WHEREOF the undersigned has caused this Certificate to be duly
executed as of February , 1997.
DAKOTA MINING CORPORATION
By:____________________________
144554\0512890.WP
D4
TRUSTEE'S CERTIFICATE
These Special Warrants are a portion of the Series B Special Warrants
dated February , 1997 referred to in the
Indenture within mentioned.
MONTREAL TRUST COMPANY OF CANADA
By:____________________________
Authorized Officer
144554\0512890.WP
D5
TRANSFER FORM FOR SERIES B SPECIAL WARRANTS
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
-------------------------------, ------------------------------------
(Name) (Address)
the Series A Special Warrants registered in the name of the undersigned
represented by the within certificate.
DATED the _____ day of ________________, 199___.
------------------------------ ------------------------------------
Signature Guaranteed (Signature of Warrantholder)
Note to Warrantholders: In order to transfer the Series B Special Warrants
represented by this certificate, this transfer form must be delivered to
Montreal Trust Company of Canada, together with a duly completed Seller's
Certificate and a Purchaser's Certificate in the forms attached to this
certificate.
144554\0512890.WP
D6
SELLER'S CERTIFICATE
The undersigned is delivering this certificate in connection with the
sale or transfer by the undersigned of special warrants (the "Special Warrants")
issued by Dakota Mining Corporation (the "Corporation") pursuant to the special
warrant indenture dated as of February 5, 1997 (the "Indenture") between the
Corporation and Montreal Trust Company of Canada (the "Trustee"), as trustee.
This certificate is delivered to the Corporation pursuant to Section 2.13 of the
Indenture to provide evidence of compliance by the undersigned with the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"). The
undersigned hereby makes the following representation to the Corporation and the
Trustee (check one of the following boxes):
|_| The sale of the Special Warrants is being made pursuant to Rule 904 of
Regulation S under the U.S. Securities Act, and:
(a) the sale of the Special Warrants is being made in an "offshore
transaction" (as defined by Rule 902 of Regulation S under the
U.S. Securities Act);
(b) neither the undersigned, an affiliate thereof or any person
acting on their behalf has engaged or will engage in "directed
selling efforts" (as defined by Rule 902 of Regulation S under
the U.S. Securities Act); and
(c) the undersigned is not now an officer, director or otherwise an
"affiliate" of the Corporation (as defined Rule 144 under the
U.S. Securities Act).
|_| The sale of the Special Warrants is being made pursuant to the
exemption from registration requirements under the U.S. Securities Act
provided by Rule 144(k) under the U.S. Securities Act, and:
(a) a period of at least three years has elapsed since the latter of
the date of acquisition of the Special Warrants from the
Corporation or from an affiliate of the Corporation (calculated
in accordance with Rule 144(d) under the U.S. Securities Act);
and
(b) the undersigned is not an affiliate of the Corporation and has
not been an affiliate of the Corporation during the preceding
three months.
|_| The sale of the Special Warrants is being made pursuant to another
exemption from registration requirements under the U.S. Securities Act
and in accordance with any applicable State securities laws, and is
furnishing herewith to the Corporation and the Trustee an opinion to
the effect that counsel of recognized standing and experience in
matters involving the U.S. Securities Act and reasonably satisfactory
to the Corporation and the Trustee.
The undersigned further represents that the sale of the Special Warrants is
not part of a plan or scheme to evade the registration requirements of the
U.S. Securities Act.
Signed:
Name (please print)(to be the same as it appears on the face of the Special
Warrant Certificate)
Address
144554\0512890.WP
D7
PURCHASER'S CERTIFICATE
1. The Purchaser either (i) is not a "U.S. person" (as defined in Regulation S
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), which definition includes, but is not limited to, an
individual resident in the United States and an estate or trust of which
any executor or administrator or trustee, respectively, is a U.S. person
and any partnership or corporation organized or incorporated under the laws
of the United States; (ii) otherwise purchasing the Special Warrants
pursuant to an applicable exemption from registration under the U.S.
Securities Act;
2. The Purchaser is resident at the address set forth on the signature page of
this certificate;
3. The Purchaser acknowledges that the Special Warrants, the Debentures
issuable upon exercise thereof and the Common Shares issuable upon exercise
of the Debentures (collectively, the "Securities") have not been registered
under the U.S. Securities Act and may not be offered or sold in the United
States unless registered under the U.S. Securities Act and the securities
laws of all applicable states of the United States or an exemption from
such registration requirements is available, and that the Corporation has
no obligation or present intention of filing a registration statement under
the U.S. Securities Act in respect of the Securities.
4. Unless the Purchaser is otherwise purchasing the Securities pursuant to an
applicable exemption from registration under the U.S. Securities Act, the
Securities are not being acquired directly or indirectly for the account or
benefit of a U.S. person and the Purchaser does not have any agreement or
understanding (either written or oral) with any U.S. person respecting:
(i) the transfer or assignment of any rights or interest in any of the
Securities;
(ii) the division of profits, losses, fees, commissions, or any financial
stake in connection with this purchase; or
(iii) the voting of the Debentures;
5. The Purchaser agrees that if it decides to offer, sell or otherwise
transfer any of the Securities, it will not offer, sell or otherwise
transfer any of such Securities, directly or indirectly to a U.S. person,
unless:
(i) the sale is to the Corporation;
(ii) the sale is made outside the United States in a transaction meeting
the requirements of Rule 904 of Regulation S under the U.S. Securities
Act;
(iii)the sale is made pursuant to the exemption from the registration
requirements of the U.S. Securities Act provided by Rule 144
thereunder and in accordance with any applicable State securities or
"Blue Sky" laws;
(iv) the sale is made in another type of transaction that does not require
registration under the U.S. Securities Act or any applicable State
securities or "Blue Sky" laws, and it has prior to such sale furnished
to the Corporation and to Montreal Trust Company of Canada an opinion
to that effect of counsel or recognized experience in matters
involving the U.S. Securities Act and reasonably satisfactory to the
Corporation and Montreal Trust Company of Canada;
6. Unless the Purchaser is purchasing the Securities pursuant to an applicable
exemption from registration under the U.S. Securities Act, no offers to
sell the Special Warrants were made by any person to the Purchaser while
the Purchaser was in the United States.
7. Unless the Purchaser is purchasing the Securities pursuant to an applicable
exemption from registration under the U.S. Securities Act, the Purchaser
was outside the United States at the time of the Purchaser's purchase of
the Special Warrants;
8. The Purchaser acknowledges that the certificates representing the Special
Warrants will bear a legend to the effect that the Debentures and Common
Shares issuable thereunder have not been and will not be registered under
the U.S. Securities Act or the securities laws of any state of the United
States;
9. The Purchaser acknowledges that any person who exercises a Special Warrant
will be required to provide to the Corporation written certification that
it is not a U.S. person and the Special Warrant is not being exercised
within the United States or on behalf of a U.S. person; and
144554\0512890.WP
D8
10. The Purchaser acknowledges that the Special Warrants may be transferred
only if (i) prior to such transfer the holder of the Special Warrants
properly complete, executes and delivers to the Corporation the certificate
attached to the form of Special Warrant and (ii) the transferee properly
completes, executes and delivers to the Corporation a certificate
substantially in the form hereof.
Signed:
Signature of Purchaser/Transferor
Name (please print)
Address
144554\0512890.WP
D9
EXERCISE FORM
TO: DAKOTA MINING CORPORATION
AND TO: MONTREAL TRUST COMPANY OF CANADA
The undersigned holder of Series B Special Warrants hereby exercises
in respect of Series B Special Warrants the right provided for in the
Indenture to receive Debentures of Dakota Mining Corporation (or other
securities or property in lieu thereof) on the basis specified in the
Indenture.
The undersigned hereby irrevocably directs that the said Debentures be
issued and delivered as follows:
==============================================================================
Name(s) in Full Address(es) Principal Amount of Debentures
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
==============================================================================
(Please print in full the name in which the certificates are to be issued. If
any of the securities are to be issued to a person or persons other than the
Warrantholder, the Transfer Form for Series B Special Warrants should be
endorsed with the signature of the registered holder which must be guaranteed by
a Canadian chartered bank, trust company or by a member of the Vancouver or
Toronto stock exchanges or other entity acceptable to the Trustee and the
Warrantholder must pay to the Trustee all eligible transfer or taxes or other
government charges.)
The undersigned hereby represents and warrants to the Corporation as
follows (check one):
|_| the undersigned is not a U.S. person and the Special Warrants are not
being exercised within the United States or on behalf or for the
account or benefit of a U.S. person; or
|_| the undersigned is a U.S. person or the Special Warrants are being
exercised within the United States or on behalf or for the account or
benefit of a U.S. person and the undersigned has previously delivered
to the Corporation, or is delivering concurrently herewith, a
certificate in the form of the Purchaser's Certificate attached to the
Special Warrant Certificate.
"United States" and "U.S. person" are as defined by Regulation S under the
United States Securities Act of 1993, as amended.
DATED this ____ day of ___________________, 199 .
-------------------------- ------------------------------------
Witness Signature of Subscriber
------------------------------------
Name of Subscriber
------------------------------------
------------------------------------
Address of Subscriber
|_| Please check box if these certificates are to be delivered to the
office where this Warrant Certificate is surrendered, failing which
the certificates will be mailed to the address shown on the register
of Special Warrants of the Corporation.
144554\0512890.WP
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION
1.1 Definitions.........................................................1
1.2 Gender and Number...................................................7
1.3 Interpretation not Affected by Headings, Etc........................7
1.4 Day not a Business Day..............................................7
1.5 Time of the Essence.................................................7
1.6 Applicable Law......................................................7
1.7 Currency............................................................7
ARTICLE 2 ISSUE AND FORM OF SPECIAL WARRANTS
2.1 Issue of Special Warrants...........................................7
2.2 Terms of Special Warrants...........................................8
2.3 Warrantholder not a Shareholder.....................................8
2.4 Special Warrants to Rank Pari Passu.................................8
2.7 Signing of Warrant Certificates.....................................10
2.8 Countersignature by the Trustee.....................................10
2.9 Issue in Substitution for Warrant Certificates Lost, Etc............10
2.10 Exchange of Warrant Certificates...................................11
2.11 Charges for Exchange of Previously Issued Warrant Certificates.....11
2.12 Ownership of Special Warrants......................................11
2.13 Registration and Transfer..........................................12
ARTICLE 3 EXERCISE OR RETRACTION OF SPECIAL WARRANTS
3.1 Notices to Trustee..................................................13
3.2 Exercise of Special Warrants........................................14
3.4 Retraction of Special Warrants......................................15
Article 4 intentionally deleted.
ARTICLE 5 COVENANTS OF THE CORPORATION
5.1 General Covenants....................................................17
5.2 Trustee's Remuneration and Expenses..................................18
5.3 Performance of Covenants by Trustee..................................18
5.4 Securities Qualification Requirements................................19
ARTICLE 6 ESCROWED PROCEEDS AND RETRACTION
6.1 Deposit of Escrowed Proceeds in Escrow...............................20
6.2 Investment of Funds..................................................20
6.3 Release of Escrowed Proceeds.........................................20
6.4 Surrender of Special Warrants for Retraction.........................21
6.5 Method of Repayment on Voluntary Retraction by Holder................21
6.6 Mandatory Retraction of Series B Special Warrants....................21
6.7 Method of Repayment on Retraction by Corporation.....................22
(i)
6.8 Corporation to Provide Funds.........................................22
7.1 Suits by Warrantholders..............................................23
7.2 Immunity of Shareholders, Etc........................................23
7.3 Limitation of Liability..............................................23
7.4 Waiver of Default....................................................23
ARTICLE 8 MEETINGS OF WARRANTHOLDERS
8.1 Right to Convene Meetings............................................24
8.2 Notice...............................................................24
8.3 Chairman.............................................................24
8.4 Quorum...............................................................24
8.5 Power to Adjourn.....................................................25
8.6 Show of Hands........................................................25
8.7 Poll and Voting......................................................25
8.8 Regulations..........................................................25
8.9 Corporation and Trustee may be Represented...........................26
8.10 Powers Exercisable by Extraordinary Resolution......................26
8.11 Meaning of Extraordinary Resolution.................................27
8.12 Powers Cumulative...................................................28
8.13 Minutes.............................................................28
8.14 Instruments in Writing..............................................29
8.15 Binding Effect of Resolutions.......................................29
8.16 Holdings by Corporation Disregarded.................................29
ARTICLE 9 SUPPLEMENTAL INDENTURES
9.1 Provision for Supplemental Indentures for Certain Purposes...........29
9.2 Successor Corporations...............................................30
ARTICLE 10 CONCERNING THE TRUSTEE
10.1 Trust Indenture Legislation.........................................31
10.2 Rights and Duties of Trustee........................................31
10.3 Evidence, Experts and Advisers......................................32
10.4 Documents, Monies, etc. held by Trustee.............................32
10.5 Actions by Trustee to Protect Interest..............................33
10.6 Trustee not Required to Give Security...............................33
10.7 Protection of Trustee...............................................33
10.8 Indemnification.....................................................33
10.9 Replacement of Trustee; Successor by Merger.........................34
10.10 Conflict of Interest...............................................35
10.11 Acceptance of Trust................................................35
10.12 Trustee not to be Appointed Receiver...............................35
ARTICLE 11 GENERAL
11.1 Notice to the Corporation and the Trustee...........................35
11.2 Notice to Warrantholders............................................37
11.3 Counterparts........................................................37
11.4 Satisfaction and Discharge of Indenture.............................37
(ii)
iii
11.5 Provisions of Indentures and Special Warrants for the Sole Benefit of
Parties and Warrantholders..............................................38
11.6 Special Warrants Owned by the Corporation or its Subsidiaries -
Certificate to be Provided..............................................38
11.7 Further Assurances.................................................39
(iii)
Dated as of February 5, 1997
DAKOTA MINING CORPORATION
and
MONTREAL TRUST COMPANY OF CANADA
Trustee
SPECIAL WARRANT INDENTURE
Providing for the Issue of
Special Warrants
XxXxxxxx Xxxxxxxx, Vancouver
