SPECIAL WARRANT AGREEMENT
THIS SPECIAL WARRANT AGREEMENT is dated as of April 27, 2000
BETWEEN:
XXXXXX.XX, INC.., a body corporate incorporated in the State of Nevada,
having an office at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx, X0X 0X0
(the "Company" )
A N D:
PACIFIC CORPORATE TRUST COMPANY, a trust company incorporated under the
laws of British Columbia, located at located at #000-000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Trustee")
WHEREAS:
A. Pursuant to the Agency Agreement (hereinafter defined), the
Company proposes to issue special warrants (the "Special Warrants") in
Canada and pursuant to an Administration and Services Agreement
(hereinafter defined) to issue Special Warrants in the Unite States each
exercisable by the holder on the terms set out in this Agreement into
securities of the Company as described in this Agreement;
B. All acts and deeds necessary have been done and performed to make
the Special Warrants, when issued as provided in this Agreement,
together with the Unit Warrants (as defined below), legal, valid and
binding upon the Company with the benefits and subject to the terms of
this Agreement; and
C. The foregoing recitals are made as representations and statements
of fact by the Company and not by the Trustee;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION tc "ARTICLE 1
DEFINITIONS AND INTERPRETATION"
1.1 Definitions (tc "1.1Definitions " \l 2)
In this Agreement, unless otherwise specified:
(a) "Administration and Services Agreement" means the administration
and services agreement dated as of April 10, 2000 between the Company
and InvestIn;
(b) "Agency Agreement" means the agency agreement dated as of April
10, 2000, between the Company and the Agent relating to the offering of
Special Warrants;
(c) "Agent" means Groome Xxxxxxx.xxx Inc.;
(d) "Applicable Legislation" means the provisions of the Company Act
(British Columbia) as from time to time amended, and any statute of
Canada or its provinces and the regulations under those statutes
relating to trust agreements or the rights, duties or obligations of
corporations and trustees under trust agreements as are from time to
time in force and applicable to this Agreement;
(e) "Applicable Securities Laws" means, collectively, the applicable
securities laws of the Qualifying Provinces, the regulations, rules,
rulings and orders made thereunder, the applicable policy statements
issued by the Commissions and the securities legislation and policies of
each other relevant jurisdiction in Canada, U.S. Securities Laws and the
applicable rules, regulations and policies of the Exchange;
(f) "B.C. Act" means the Securities Act (British Columbia), as
amended;
(g) "business day" means a day that is not a Saturday, Sunday, or
civic or statutory holiday in British Columbia;
(h) "Closing" means the closing of the Private Placement;
(i) "Closing Date" means April 27, 2000, or such other date as may be
mutually agreed upon between the Company and the Agent;
(j) "Commissions" means the Alberta Securities Commission, the British
Columbia Securities Commission, the Ontario Securities Commission, and
the Commission de valeurs mobilie du Quebec (Quebec Securities
Commission);
(k) "Common Shares" means fully paid and non-assessable common shares
with a par value of $0.001 per share in the capital of the Company;
provided that if the exercise rights are subsequently adjusted or
altered pursuant to section 7.7 or 7.8, "Common Shares" will thereafter
mean the shares or other securities or property that a Special
Warrantholder is entitled to on an exchange after the adjustment;
(l) "Company's auditors" means such firm of chartered accountants as
may be duly appointed as the auditors of the Company;
(m) "Convertible Security" means a security of the Company (other than
the Special Warrants) convertible into or exchangeable for or otherwise
carrying the right to acquire Common Shares;
(n) "Current Market Price" at any date means the average of the
closing prices of the Common Shares at which the Common Shares have
traded on the Exchange, or, if the Common Shares in respect of which a
determination of current market price is being made are not quoted on
the Exchange, on such stock exchange on which such shares are listed as
may be selected for such purpose by the directors and approved by the
Trustee, or, if the Common Shares are not listed on any stock exchange,
then on the over-the-counter market during the 20 consecutive trading
days (on each of which at least 500 Common Shares are traded in board
lots) ending on the third trading day prior to such date, and the
weighted average price will be determined by dividing the aggregate sale
price of all Common Shares sold in board lots on the exchange or market,
as the case may be, during the 20 consecutive trading days by the number
of Common Shares sold, or in the event that at any date the Common
Shares are not listed on any exchange or on the over-the-counter market,
the current market price shall be as determined by the directors and
approved by the Trustee;
(o) "director" means a director of the Company for the time being, and
unless otherwise specified herein, "by the directors" means action by
the directors of the Company as a board or, whenever duly empowered,
action by any committee of such board;
(p) "Distribution" means the proposed issuance of Unit Shares and Unit
Warrants to the holders of Special Warrants on the exercise or deemed
exercise of the Special Warrants;
(q) "Dividends Paid in the Ordinary Course" means dividends paid in
any financial year of the Company, whether in (i) cash, (ii) shares of
the Company, (iii) warrants or similar rights to purchase any shares of
the Company or property or other assets purchasable as of the date of
distribution of such warrants or similar rights, or (iv) property or
other assets of the Company, as the case may be, as determined by action
by the directors except that, in the case of warrants or similar rights
to purchase Common Shares or securities convertible into or exchangeable
for Common Shares, such fair market value of the warrants or similar
rights shall be equal to the number of Common Shares which may be
purchased thereby (or the number of Common Shares issuable upon
conversion or exchange) as of the date of distribution of such warrants
or similar rights, multiplied by the Current Market Price of the Common
Shares on the date of such distribution, provided that the value of
such dividends does not in such financial year exceed the greater of:
(i) the lesser of 50% of the retained earnings of the Company as
at the end of the immediately preceding financial year and 200% of the
aggregate amount of dividends paid by the Company on the Common Shares
in the 12 month period ending immediately prior to the first day of such
financial year; and
(ii) 100% of the consolidated net earnings from continuing
operations of the Company, before any extraordinary items, for the 12
month period ending immediately prior to the first day of such financial
year (such consolidated net earnings from continuing operations to be
computed in accordance with generally accepted accounting principles in
Canada consistent with those applied in the preparation of the most
recent audited financial statements of the Company);
(r) "Effective Date" means the date of this Special Warrant Agreement;
(s) "Effective Registration" means the registration of the resale of
the Unit Shares and the Common Shares issuable upon the exercise of the
Warrants, effected by the filing of a Registration Statement in
compliance with the 1933 Act and pursuant to rule 415 under the 1933
Act, or any successor rule providing for offering securities on a
continuing basis and the declaration or order of effectiveness of such
Registration Statement by the SEC under U.S. Securities Laws;
(t) "Exchange" means the Over the Counter Bulletin Board in the United
States;
(u) "Exchange Number" means the number of Securities to be received by
a Holder upon exercise or deemed exercise of the Special Warrants, as
may be adjusted under the provisions of this Agreement;
(v) "Exercise Date" with respect to any Special Warrant means the
earlier of the date on which the Special Warrant is duly surrendered in
accordance with the provisions of sections 6.4 to 6.6 or the date of
deemed exercise of the Special Warrants pursuant to section 6.12;
(w) "Exercise Period" means the period during which Investors may
exercise the Special Warrants, commencing on the Closing Date and ending
at 4:30 p.m. (Toronto time) on the day which is the earlier of:
(i) the fifth business day after the Qualification Date; or
(ii) the first anniversary of the date on which the Special
Warrants were issued;
(x) "InvestIn" means XxxxxxXx.xxx Securities Corp.;
(y) "Investor" or "Investors" means a purchaser or purchasers of
Special Warrants under the Private Placement;
(z) "person" means an individual, a corporation, a partnership, trust,
trustee, executor, administrator, legal representative or any
unincorporated organization and words importing persons have a similar
meaning;
(aa) "Private Placement" means the offering of the Special Warrants
pursuant to the Agency Agreement and as contemplated under the
Administration and Services Agreement;
(ab) "Prospectus" means the (final) prospectus and any amendment
thereto required to be filed with the Commissions pursuant to Applicable
Securities Laws, in respect of the distribution in the Qualifying
Provinces of the Unit Shares and Unit Warrants upon the exercise of the
Special Warrants;
(ac) "Qualification Date" means the date which is the later of the date
on which all of the Commissions have issued a receipt for the final
Prospectus and the date of an Effective Registration Statement;
(ad) "Qualification Deadline" means on or before 5:00 p.m. (Toronto
time) on September 25, 2000, which is the first regular business day 150
days after the Closing, or such later date as may be approved by the
Agent in its sole and absolute discretion by written notice to the
Trustee not less than five business days prior to the expiry of such 150
day period;
(ae) "Qualifying Provinces" means the Provinces of Alberta, British
Columbia, Ontario and Quebec;
(af) "Receipts" means the receipts for the final Prospectus to be
issued by the Commissions;
(ag) "Registration Statement" means a Registration Statement of the
Company under the 1933 Act;
(ah) "Regulatory Authorities" means the Exchange and the Commissions;
(ai) "SEC" means the United States Securities and Exchange Commission;
(aj) "Securities" means the Unit Shares and the Unit Warrants;
(ak) "Shareholder" means a holder of record or one or more Common
Shares;
(al) "Special Resolution" has the meaning given in sections 11.12 and
11.15;
(am) "Special Warrants" means the special warrants authorized to be
created by the Company under section 2.1 and issued and certified under
this Agreement entitling the holder to acquire one Unit;
(an) "Special Warrant Certificates" means certificates evidencing
Special Warrants, substantially in the form attached as Schedule "A" to
this Agreement, or such other form as may be approved under section 2.4;
(ao) "Special Warrant Agreement" means the special warrant agreement to
be entered into on the Closing Date between the Company and the Trustee
as trustee under the special warrant agreement pursuant to which the
Special Warrants will be issued and governed;
(ap) "Special Warrant Purchase Price" means US$1.25 per Special
Warrant;
(aq) "Special Warrantholders" or "Holders" means the registered holders
of Special Warrants for the time being;
(ar) "Special Warrantholders' Request" means an instrument signed in
one or more counterparts by Special Warrantholders holding, in the
aggregate, not less than 25% of the aggregate number of Special Warrants
then outstanding, requesting the Trustee to take some action or
proceeding specified therein;
(as) "Subscription Funds" means the total subscription price for the
Special Warrants;
(at) "trading day" with respect to a stock exchange means a day on
which the stock exchange is open for business;
(au) "Transfer Agent" means the transfer agent for the time being of
the Common Shares;
(av) "Trustee" means Pacific Corporate Trust Company, or any lawful
successor thereto including through the operation of section 13.8;
(aw) "Unit" means a unit of the Company issuable, for no additional
consideration, upon the exercise or deemed exercise of the Special
Warrants, each consisting of one Unit Share and one-half of one Unit
Warrant, subject to adjustment as provided under Articles 7 and 8;
(ax) "Unit Shares" means the previously unissued Common Shares which
are issuable as part of the Units upon exercise or deemed exercise of
the Special Warrants;
(ay) "Unit Warrants" means the share purchase warrants of the Company
to be issued as part of the Units upon the exercise or deemed exercise
of the Special Warrants, with each whole Unit Warrant entitling the
holder to purchase one additional Common Share, at a price of US$5.00
per Common Share, at any time up to 4:30 p.m. (Toronto time) on the day
which is 24 months from the Closing Date;
(az) "U.S. Securities Laws" means, collectively, all applicable federal
and state laws in the United States, including all "Blue Sky" laws, and
all regulations and forms prescribed thereunder, together with all
applicable published policy statements, releases, and rulings of the SEC
and any applicable state securities regulatory authorities;
(ba) "Warrant Certificates" means the certificates evidencing the Unit
Warrants;
(bb) "Warrant Record Date" means the date on which the Special Warrants
are exercised or deemed to be exercised in accordance with the Special
Warrant Agreement;
(bc) "Warrant Share" means a Common Share issuable upon the exercise of
one Unit Warrant;
(bd) "Warrantholders" means the registered holders of the Unit Warrants
for the time being;
(be) "written request of the Company" and "certificate of the Company"
mean respectively a written request and certificate signed in the name
of the Company by any one director or senior officer and may consist of
one or more instruments so executed; and
(bf) "1933 Act" means the United States Securities Act of 1933, as
amended.
1.2 Interpretation (tc "1.2 Interpretation " \l 2)
For the purposes of this Agreement and unless otherwise provided or
unless the context otherwise requires:
(a) "this Agreement", "this Special Warrant Agreement", "herein",
"hereby" and similar expressions mean or refer to this Special Warrant
Agreement and any agreement, deed or instrument supplemental or
ancillary hereto; and the expressions "Article", "section" or
"subsection" followed by a number or letter mean and refer to the
specified Article, section or subsection of this Agreement;
(b) words importing the singular include the plural and vice versa and
words importing the masculine gender include the feminine and neuter
genders;
(c) the division of this Agreement into Articles, sections,
subsections and paragraphs, the provision of a table of contents and the
insertion of headings are for convenience of reference only and will not
affect the construction or interpretation of this Agreement;
(d) the word "including", when following any general statement, term
or matter, is not to be construed to limit such general statement, term
or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation" or "but not limited
to" or words of similar import) is used with reference thereto but
rather refers to all other items or matters that could reasonably fall
within the broadest possible scope of such general statement, term or
matter;
(e) any reference to a statute includes and, unless otherwise
specified herein, is a reference to such statute and to the regulations
made pursuant thereto, with all amendments made thereto and in force
from time to time, and to any statute or regulations that may be passed
which has the effect of supplementing or superseding such statute or
such regulation;
(f) any capitalized term in this Agreement which is not defined in
section 1.1 will have the meanings ascribed elsewhere in this Agreement;
and
(g) in the event that any day on which the Exercise Period expires or
on or before which any action is required to be taken hereunder is not a
business day, then the Exercise Period will expire on or the action will
be required to be taken on or before the next succeeding day that is a
business day.
1.3 Schedules (tc "1.3 Schedules " \l 2)
The schedules attached to this Agreement are incorporated herein by
reference.
1.4 Time of the Essence (tc "1.4 Time of the Essence " \l 2)
Time is of the essence in this Agreement.
1.5 Applicable Law (tc "1.5Applicable Law " \l 2)
This Agreement, the Special Warrant Certificates and the Warrant
Certificates will be construed and enforced in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable
therein, and will be treated in all respects as British Columbia
contracts. The parties hereto agree to attorn to the courts thereof.
1.6 Currency (tc "1.6 Currency " \l 2)
Except as otherwise stated, all dollar amounts herein are expressed in
United States dollars.
1.7 Date of Issue (tc "1.7 Date of Issue " \l 2)
A Receipt shall conclusively be deemed to be issued on the date
appearing on such Receipt as the Receipt's date.
ARTICLE 2
ISSUE OF SPECIAL WARRANTS tc "ARTICLE 2
ISSUE OF SPECIAL WARRANTS"
2.1 Issue of Special Warrants (tc "2.1 Issue of Special Warrants "
\l 2)
A total of up to 20,000,000 Special Warrants, each of which entitles the
Holder to acquire, without additional consideration, one Unit, subject
to adjustment in accordance with Articles 7 and 8, are hereby created
and authorized to be issued. Subject to section 2.2 and Articles 5 and
6, upon receipt by the Company of the Special Warrant Purchase Price for
each Special Warrant purchased, the Company will execute and the Trustee
will certify up to 20,000,000 Special Warrants.
2.2 Terms of Special Warrants (tc "2.2 Terms of Special Warrants "
\l 2)
Subject to the provisions of Articles 5 and 6, each Special Warrant will
entitle the holder thereof, upon exercise or deemed exercise at any time
during the Exercise Period and without payment of any additional
consideration, to be issued, subject to adjustment in accordance with
Articles 7 and 8, one Unit.
2.3 Fractional Special Warrants (tc "2.3 Fractional Special Warrants
" \l 2)
Notwithstanding any adjustments provided for in this Agreement, the
Company shall not be required upon the exercise or deemed exercise of
any Special Warrants to issue fractional Unit Shares in satisfaction of
its obligations hereunder. Where a fractional Unit Share, but for this
section 2.3, would have been issued upon exercise of a Special Warrant,
in lieu thereof there shall be paid to the holder an amount equal
(rounded to the nearest $0.01) to the product obtained by multiplying
such fractional share interest by the Current Market Price at the date
of delivery of each respective Special Warrant Certificate, which
payment shall be made within ten business days of such delivery.
Notwithstanding the foregoing, the Company shall not be required to make
any payment, calculated as aforesaid, that is less than $5.00.
2.4 Form of Special Warrant Certificates (tc "2.4 Form of Special
Warrant Certificates " \l 2)
Special Warrants will be issued in registered form only and will be
evidenced only by Special Warrant Certificates, which will be
substantially in the form attached as Schedule "A" or in such other form
as may be approved by the Company, the Agent and the Trustee, will be
dated as of the date of this Agreement (regardless of their actual dates
of issue), and will bear such distinguishing letters and numbers as the
Company will prescribe with the approval of the Trustee and will bear
such legends as may be required under the Applicable Securities Laws and
shall be issuable in any denomination excluding fractions.
2.5 Delivery of Special Warrant Certificates (tc "2.5 Delivery of
Special Warrant Certificates " \l 2)
The Special Warrant Certificates for the non U.S. Investors will be
delivered to the Agent and for the U.S. Investors will be delivered to
InvestIn on the Closing Date.
2.6 Issue in Substitution of Special Warrants (tc "2.6 Issue in
Substitution of Special Warrants " \l 2)
If any of the Special Warrant Certificates becomes mutilated, lost,
destroyed or stolen (the "Old Certificate"), the Company, subject to
applicable law and to section 2.7, will issue and the Trustee will
certify and deliver a new Special Warrant Certificate of like date and
tenor as the Old Certificate, upon surrender of, in place of and upon
cancellation of the mutilated Old Certificate or in substitution for the
lost, destroyed or stolen Old Certificate, and the substituted Special
Warrant Certificate will be in a form approved by the Trustee and will
be entitled to the benefit hereof and rank equally in accordance with
its terms with all other Special Warrant Certificates issued or to be
issued under this Agreement.
2.7 Conditions for Replacement of Special Warrants (tc "2.7 Conditions
for Replacement of Special Warrants " \l 2)
The applicant for the issue of a new Special Warrant Certificate
pursuant to section 2.6 will bear the cost of the issue thereof and in
case of loss, destruction or theft will, as a condition precedent to the
issue thereof furnish to the Company and to the Trustee such evidence of
ownership and of the loss, destruction or theft of the Special Warrant
Certificate so lost, destroyed or stolen as will be satisfactory to the
Company and to the Trustee in their sole discretion and the applicant
may also be required to furnish an indemnity and surety bond or such
security in amount and form satisfactory to them in their discretion,
and will pay the reasonable charges of the Company and the Trustee in
connection with the issue of the new Special Warrant Certificate.
2.8 Special Warrantholder not a Shareholder (tc "2.8 Special
Warrantholder not a Shareholder " \l 2)
Nothing in this Agreement or in the holding of a Special Warrant
evidenced by a Special Warrant Certificate, or otherwise, will be
construed as conferring upon a Special Warrantholder any right or
interest whatsoever as a shareholder, including but not limited to the
right to vote at, to receive notice of, or to attend meetings of
shareholders or any other proceedings of the Company or the right to
receive any dividend and other distribution (except as provided in
section 9.3).
2.9 Special Warrants to Rank Pari Passu (tc "2.9 Special Warrants to
Rank Pari Passu " \l 2)
Each Special Warrant will rank pari passu with all other Special
Warrants, whatever may be the actual date of issue.
2.10 Signing of Special Warrants (tc "2.10 Signing of Special Warrants
" \l 2)
The Special Warrant Certificates will be signed by any one of the
directors or officers of the Company and need not be under the seal of
the Company. The signatures of any of these directors or officers may
be mechanically reproduced in facsimile and Special Warrant Certificates
bearing those facsimile signatures will be binding upon the Company as
if they had been manually signed by the directors or officers.
Notwithstanding that any of the persons whose manual or facsimile
signature appears on any Special Warrant Certificate as a director or
officer may no longer hold office at the date of the Special Warrant
Certificate or at the date of certification or delivery thereof, any
Special Warrant Certificate signed as aforesaid will, subject to section
2.11, be valid and binding upon the Company.
2.11 Certification by the Trustee (tc "2.11 Certification by the
Trustee " \l 2)
No Special Warrant Certificate will be issued or, if issued, will be
valid for any purpose or entitle the holder to the benefit hereof until
it has been certified by manual signature by or on behalf of the Trustee
in the form of the certificate set out in Schedule "A" hereto, and the
certification by the Trustee upon any Special Warrant Certificate will
be conclusive evidence as against the Company that the Special Warrant
Certificate so certified has been duly issued under this Agreement and
that the holder is entitled to the benefit of this Agreement.
2.12 Certification Not a Representation or Warranty (tc "2.12
Certification Not a Representation or Warranty " \l 2)
The certification of the Trustee on Special Warrant Certificates issued
under this Agreement will not be construed as a representation or
warranty by the Trustee as to the validity of this Agreement or of the
Special Warrant Certificates (except the due certification thereof) and
the Trustee will in no respect be liable or answerable for the use made
of the Special Warrants or any of them or of the consideration therefor,
except as otherwise specified in this Agreement.
ARTICLE 3
EXCHANGE AND OWNERSHIP OF SPECIAL WARRANTS
EXCHANGE AND OWNERSHIP OF SPECIAL WARRANTS"
3.1 Exchange of Special Warrant Certificates
Any Special Warrant Certificate representing a certain number of Special
Warrants may, upon compliance with the reasonable requirements of the
Trustee, be exchanged for one or more Special Warrant Certificates
representing an equal aggregate number of Special Warrants.
3.2Place for Exchange of Special Warrant
Special Warrants may be exchanged only at the principal transfer office
of the Trustee in the city of Vancouver, Canada or at any other place
that is designated by the Company with the Trustee's approval. Any
Special Warrants tendered for exchange will be surrendered to the
Trustee and cancelled. The Company will sign all Special Warrant
Certificates necessary to carry out exchanges as aforesaid and those
Special Warrant Certificates will be certified by or on behalf of the
Trustee.
3.3 Charges for Exchange
For each Special Warrant Certificate exchanged, the Trustee, except as
otherwise herein provided, will charge a reasonable sum for each new
Special Warrant Certificate issued. The party requesting the exchange,
as a condition precedent to such exchange, will pay such charges and
will pay or reimburse the Trustee or the Company for all exigible
transfer taxes or governmental or other similar transfer charges
required to be paid in connection with such exchange.
3.4 Ownership of Special Warrants
The Company and the Trustee and their respective agents may deem and
treat the holder of any Special Warrant as the absolute owner of that
Special Warrant for all purposes, and the Company and the Trustee and
their respective agents will not be affected by any notice or knowledge
to the contrary except where so required by court order of a court of
competent jurisdiction or by statute, concerning which the Company and
the Trustee shall be entitled to rely upon advice from legal counsel.
Subject to the provisions of this Agreement and applicable law, the
holder of any Special Warrant will be entitled to the rights evidenced
by that Special Warrant free from all equities or rights of set-off or
counterclaim between the Company and the original or any intermediate
holder thereof and all persons may act accordingly and the receipt from
any holder for the Units or monies obtainable pursuant thereto will be a
good discharge to the Company and the Trustee for the same and neither
the Company nor the Trustee will be bound to inquire into the title of
any holder except where so required by court order or by statute,
concerning which the Company and the Trustee shall be entitled to rely
upon advice from legal counsel.
ARTICLE 4
REGISTRAR AND TRANSFER AGENCIES
4.1 Appointment of Trustee as Registrar
The Company hereby appoints the Trustee as registrar of the Special
Warrants. The Company may hereafter with the consent of the Trustee,
appoint one or more other additional registrars of the Special Warrants.
4.2 Register
The Trustee shall maintain a register, at its principal transfer office
in the city of Vancouver, in which will be entered the names and
addresses of the Special Warrantholders and other particulars of the
Special Warrants held by each of them respectively permitted by this
Agreement.
4.3 Register to be Open for Inspection
The register referred to in section 4.2 will at all reasonable times be
open for inspection by the Company by the Trustee and by any Special
Warrantholder. The register required to be kept at the city of Vancouver
will not be closed at any time.
4.4 List of Special Warrantholders
The Trustee will, when requested so to do by the Company, furnish the
Company with a list of names and addresses of the Special Warrantholders
showing the number of Special Warrants held by each Special
Warrantholder.
4.5 Obligations of Trustee
Except as required by law, neither the Trustee nor any other registrar
nor the Company will be charged with notice of or be bound to see to the
execution of any trust, whether express, implied or constructive, in
respect of any Special Warrant.
ARTICLE 5
TRANSFER OF SPECIAL WARRANT CERTIFICATES
5.1 Transfer of Special Warrant Certificates
Subject to compliance with all applicable securities laws and
requirements of regulatory authorities, including without limitation,
any undertaking required to be given to the Exchange by the transferor
and transferee, the holder of a Special Warrant may at any time and from
time to time have the Special Warrants transferred by the Trustee in
accordance with the conditions herein and such reasonable requirements
as the Trustee may prescribe. Any such transfer shall be duly noted in
the register of Special Warrants maintained by the Trustee. Upon
compliance with the foregoing requirements, the Trustee shall issue to
the transferee a Special Warrant Certificate representing the Special
Warrants transferred. Compliance with all applicable securities laws
and requirements of regulatory authorities shall be the Holder's
responsibility and not that of the Trustee.
5.2 Validity of Transfer
No transfer of Special Warrants will be valid unless made by the holder
or the holder's executors or administrators or other legal
representatives or the holder's attorney duly appointed by an instrument
in writing in form and executed in a manner satisfactory to the
registrar, and upon compliance with such requirements as the registrar
may prescribe.
ARTICLE 6
EXERCISE OF SPECIAL WARRANTS
6.1 Exercise During Exercise Period
The holder of a Special Warrant Certificate may exercise the Special
Warrants represented by the Special Warrant Certificate at any time and
from time to time in whole or in part during the Exercise Period. Any
such exercise, or any deemed exercise pursuant to section 6.12, will be
subject to the holder providing such assurances and executing such
documents as may, in the reasonable opinion of the Company or the
Trustee, be required to ensure compliance with Applicable Securities
Laws.
6.2 Notice of Qualification Date
If the Qualification Date occurs during the Exercise Period, the Company
will forthwith give notice of such occurrence to the Trustee, together
with copies of the Receipts. The notice will contain the certificate
required under section 9.5.
6.3 Notice of Exercise Period
Upon receipt by the Trustee of the notice referred to in section 6.2,
the Trustee will forthwith give notice to the Special Warrantholders
specifying the end of the Exercise Period and such information as may be
needed, if any, to allow the Special Warrantholders to acquire Units
issuable upon the exercise or deemed exercise of Special Warrants.
6.4 Method of Exercise of Special Warrants
A Special Warrantholder may, during the Exercise Period, exercise the
right under a Special Warrant to acquire a Unit by surrendering to the
Trustee at its principal transfer office in the city of Vancouver or at
any other place or places that may be designated by the Company with the
approval of the Trustee, a certificate or certificates representing one
Special Warrant for each Unit to be acquired, together with a fully
completed and duly executed exercise form in the form attached to the
Special Warrant Certificate.
6.5 Surrender of Special Warrants
Except as provided in section 6.12, the Special Warrants will only be
deemed to have been surrendered upon personal delivery of the applicable
Special Warrant Certificate(s) to, or if sent by mail or other means of
transmission, upon actual receipt thereof by the Trustee.
6.6 Completion and Execution of Exercise Form
Any exercise form referred to in section 6.4 will be signed by the
Special Warrantholder or the Special Warrantholder's executors or
administrators, successors or other legal representatives or an attorney
of the Special Warrantholder duly appointed by an instrument in writing
satisfactory to the Trustee. The exercise form attached to the Special
Warrant Certificate will be completed to specify the number of Special
Warrants being exercised, and the address to which the certificates
representing the Unit Shares and the Unit Warrants should be delivered
if different from that appearing on the Special Warrant Certificate
surrendered. If any of the Securities to be acquired are to be issued
to a person or persons other than the Special Warrantholder, the Special
Warrantholder will pay, as a condition to the issue and delivery of the
certificates evidencing the Securities, to the Trustee or to its agent,
on behalf of the Company, all exigible transfer taxes or governmental or
other charges required to be paid in respect of the transfer of the
Special Warrants or Securities.
6.7 Resale Restriction Legends
If, at the time of exercise of the Special Warrants, there remain
restrictions on resale under applicable securities legislation on the
Securities acquired, the Company may, on the advice of counsel, endorse
the certificates representing the Securities with respect to those
restrictions, and prior to the issuance of any such certificates the
Trustee shall consult with the Company to determine whether such
endorsing or legending is required.
6.8 Effect of Exercise of Special Warrants
Upon exercise or deemed exercise of the Special Warrants and compliance
by the Special Warrantholder with sections 6.4 to 6.7, subject to
sections 6.10, 6.11 and 7.9, the holder of the Special Warrants will be
entitled to receive, without further payment therefor, one Unit for each
Special Warrant exercised, and the Trustee will cause the holder thereof
to be entered forthwith on its register of shareholders as the holder of
the Unit Shares as of the Exercise Date.
6.9 Delivery of Securities Upon Exercise of Special Warrants
Upon the due exercise of the Special Warrants as described in this
Article 6, the Company will, within five business days after the
Exercise Date, without charge therefor except as provided in section
6.6, forthwith cause to be mailed to the Holders at such person's
address specified in the exercise form or, if not specified in the
exercise form, then at the address recorded in the register of the
Special Warrants, certificates for the appropriate number of Securities
to which the Holder is entitled.
6.10 No Fractional Unit Shares
Notwithstanding any adjustments provided for in this Agreement, the
Company shall not be required upon the exercise or deemed exercise of
any Special Warrants to issue fractional Unit Shares in satisfaction of
its obligations hereunder. Where a fractional Unit Share, but for this
section 6.10, would have been issued upon exercise of a Special
Warrant, in lieu thereof, there shall be paid to the holder an amount
equal (rounded to the nearest $0.01) to the product obtained by
multiplying such fractional share interest by the closing price of the
Common Shares on the Exchange (or if the Common Shares are not then
listed thereon on such other exchange on which the Common Shares are
then listed or, if not listed on, in the over-the-counter market as
designated by the directors) for the last trading day prior to the
Exercise Date at the date of delivery of each respective certificate,
which payment shall be made within ten business days of such delivery.
Notwithstanding the foregoing, the Company shall not be required to make
any payment, calculated as aforesaid, that is less than $5.00.
6.11 Expiration of Special Warrants
The Special Warrants and the rights thereunder shall terminate and be of
no further effect upon their exercise or deemed exercise.
6.12 Delivery of Securities Upon Deemed Exercise of Special Warrants
If, immediately prior to the expiry of the Exercise Period, any Special
Warrants have not been exercised by their Holders, such Special Warrants
will be deemed to have been then exercised and surrendered by the Holder
without any further action on the part of the Holder. In that event,
subject to section 6.1, the Trustee will mail certificates evidencing
the Securities issued upon such deemed exercise in the name of such
Holder to the address of such Holder as recorded in the register of
Special Warrants.
6.13 Accounting and Recording
The Trustee will promptly notify the Company in writing with respect to
Special Warrants exercised. The Trustee will, within five business days
of each Exercise Date, specify the particulars of the Special Warrants
exercised which will include the name(s) and addresses of the Holders
whose Special Warrants have been exercised and the Exercise Date.
6.14 Cancellation of Surrendered Special Warrants
All Special Warrant Certificates surrendered to the Trustee in
accordance with the provisions of this Special Warrant Agreement will be
cancelled by the Trustee and upon request therefor of the Company, the
Trustee will furnish the Company with written confirmation of the
Special Warrant Certificates so cancelled and the number of Securities
which have been acquired pursuant to each.
ARTICLE 7
ADJUSTMENT OF EXCHANGE NUMBER
7.1 Definitions
In this Article the terms "record date" and "effective date" means the
close of business on the relevant date.
7.2 Adjustment of Exchange Number
The Exchange Number (or the number and kind of shares or securities to
be received upon exercise in the case of sections 7.6 and 7.7) will be
subject to adjustment from time to time in the events and in the manner
provided in this Article.
7.3 Share Reorganization
If and whenever at any time from the date hereof during the Exercise
Period the Company:
(a) issues to all or substantially all the holders of the Common
Shares, by way of a stock dividend or other distribution, other than
Dividends Paid in the Ordinary Course, Common Shares or Convertible
Securities; or
(b) subdivides, redivides or changes its outstanding Common Shares
into a greater number of shares; or
(c) combines, consolidates or reduces its outstanding Common Shares
into a smaller number of shares,
(any of those events being a "Share Reorganization"), the Exchange
Number will be adjusted effective immediately after the record date at
which the holders of Common Shares are determined for the purposes of
the Share Reorganization to a number that is the product of (1) the
Exchange Number in effect on the record date and (2) a fraction:
(i) the numerator of which will be the number of Common Shares
outstanding after giving effect to the Share Reorganization; and
(ii) the denominator of which will be the number of Common Shares
outstanding on the record date before giving effect to the Share
Reorganization.
For the purposes of determining the number of Common Shares outstanding
at any particular time for the purpose of this section 7.3 there will be
included that number of Common Shares which would have resulted from the
conversion at that time of all outstanding Convertible Securities
(which, for greater certainty, includes the unexercised Special Warrants
and the Unit Warrants issuable upon exercise of those Special Warrants).
7.4 Rights Offering
If and whenever at any time during the Exercise Period, the Company
shall fix a record date for the issue of rights, options or warrants to
all or substantially all of the holders of Common Shares entitling the
holders thereof, within a period expiring not more than 45 days after
the record date for such issue, to subscribe for or purchase Common
Shares (or Convertible Securities) at a price per share (or having a
conversion or exchange price per share) less than 95% of the Current
Market Price on such record date, then the Exchange Number will be
adjusted immediately after such record date so that it will equal the
rate determined by multiplying the Exchange Number in effect on such
record date by a fraction, of which the denominator shall be the total
number of Common Shares outstanding on such record date plus the number
of Common Shares equal to the number arrived at by dividing the
aggregate price of the total number of additional Common Shares so
offered for subscription or purchase (or the aggregate conversion or
exchange price of the convertible or exchangeable securities so offered)
by such Current Market Price, and of which the numerator shall be the
total number of Common Shares outstanding on such record date plus the
total number of additional Common Shares so offered for subscription or
purchase (or into or for which the convertible or exchangeable
securities so offered are convertible or exchangeable). Any Common
Shares owned by or held for the account of the Company or any subsidiary
of the Company shall be deemed not to be outstanding for the purpose of
any such computation. Such adjustment will be made successively
whenever such a record date is fixed, provided that if two or more such
record dates or record dates referred to in this Section 2.1(b)(ii) are
fixed within a period of 25 trading days, such adjustment will be made
successively as if each of such record dates occurred on the earliest of
such record dates. To the extent that any such rights, options or
warrants are not exercised prior to the expiration thereof, the Exchange
Number will then be readjusted to the Exchange Number which would then
be in effect based upon the number of Common Shares (or securities
convertible into or exchangeable for Common Shares) actually issued upon
the exercise of such rights, options or warrants, as the case may be.
7.5 Special Distribution
If and whenever at any time from the date hereof during the Exercise
Period the Company issues or distributes to all or substantially all
the holders of Common Shares:
(a) shares of any class other than shares distributed to holders of
Common Shares pursuant to their exercise of options to receive dividends
in the form of such shares in lieu of Dividends Paid in the Ordinary
Course on the Common Shares;
(b) rights, options or warrants other than Unit Warrants and other
than rights, options or warrants exercisable within 45 days from the
date of issue thereof at a price, or at a conversion price, of at least
95% of the Current Market Price at the record date for such
distribution;
(c) evidences of indebtedness; or
(d) any other assets including shares of other corporations (excluding
cash dividends that Special Warrantholders receive under section 9.3)
and that issuance or distribution does not constitute a Share
Reorganization or a Rights Offering,
(any of those events being a "Special Distribution"), the Exchange
Number will be adjusted effective immediately after the record date at
which the holders of Common Shares are determined for purposes of the
Special Distribution to an Exchange Number that is the product of (1)
the Exchange Number in effect on the record date and (2) a fraction:
(e) the numerator of which will be the product of (A) the sum of the
number of Common Shares outstanding on the record date plus the number
of Common Shares which the Special Warrantholders would be entitled to
receive upon exercise of all their outstanding Special Warrants and Unit
Warrants if they were exercised on the record date and (B) the Current
Market Price thereof on that date; and
(f) the denominator of which will be the product of:
(i) the sum of the number of Common Shares outstanding on the
record date plus the number of Common Shares which the Special
Warrantholders would be entitled to receive upon exercise of all their
outstanding Special Warrants and Unit Warrants if they were exercised on
the record date; and
(ii) the Current Market Price thereof on that date, less the
aggregate fair market value, as determined by the board, whose
determination, absent manifest error, will be conclusive, of the shares,
rights, options, warrants, evidences of indebtedness or other assets
issued or distributed in the Special Distribution.
Any Common Shares owned by or held for the account of the Company will
be deemed not to be outstanding for the purpose of any such computation;
to the extent that the distribution of shares, rights, options,
warrants, evidences of indebtedness or assets is not so made or to the
extent that any rights, options or warrants so distributed are not
exercised, the Exchange Number will be readjusted to the Exchange Number
that would then be in effect based upon shares, rights, options,
warrants, evidences of indebtedness or assets actually distributed or
based upon the number of Common Shares or Convertible Securities
actually delivered upon the exercise of the rights, options or warrants,
as the case may be, but subject to any other adjustment required
hereunder by reason of any event arising after the record date.
7.6 Capital Reorganization
If and whenever at any time from the date hereof during the Exercise
Period there is a reorganization of the Company not otherwise provided
for in section 7.3 or a consolidation or merger or amalgamation of the
Company with or into another body corporate or other entity including a
transaction whereby all or substantially all of the Company's
undertaking and assets become the property of any other body corporate,
trust, partnership or other entity (any such event being a "Capital
Reorganization"), any Special Warrantholder who has not exercised his
Special Warrants prior to the effective date of the Capital
Reorganization will be entitled to receive and will accept, upon the
exercise of his right at any time after the effective date of the
Capital Reorganization, in lieu of the number of Securities to which he
would have been entitled upon exercise of the Special Warrants, the
aggregate number of shares or other securities or property of the
Company, or the continuing, successor or purchasing body corporate,
trust, partnership or other entity, as the case may be, under the
Capital Reorganization that the holder would have been entitled to
receive as a result of the Capital Reorganization if, on the effective
date thereof, he had been the holder of the number of Securities to
which immediately before the transaction he was entitled upon exercise
of the Special Warrants; no Capital Reorganization will be carried into
effect unless all necessary steps will have been taken so that the
holders of Special Warrants will thereafter be entitled to receive the
number of shares or other securities or property of the Company, or of
the continuing, successor or purchasing body corporate, trust,
partnership or other entity, as the case may be, under the Capital
Reorganization, subject to adjustment thereafter in accordance with
provisions the same, as nearly as may be possible, as those contained in
sections 7.2 to 7.8. If determined appropriate by the Trustee to give
effect to or to evidence the provisions of this section 7.6, the
Company, its successor, or such purchasing body corporate, partnership,
trust or other entity, as the case may be, shall, prior to or
contemporaneously with any such Capital Reorganization, enter into an
agreement which shall provide, to the extent possible, for the
application of the provisions set forth in this Special Warrant
Agreement with respect to the rights and interests thereafter of the
Special Warrantholders to the end that the provisions set forth in this
Special Warrant Agreement shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, with respect to any shares,
other securities or property to which a Special Warrantholder is
entitled on the exercise of its acquisition rights thereafter. Any
agreement entered into between the Company and the Trustee pursuant to
the provisions of this section 7.6 shall be a supplemental agreement
entered into pursuant to the provisions of Article 12 hereof. Any
agreement entered into between the Company, any successor to the Company
or such purchasing body corporate, partnership, trust or other entity
and the Trustee shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this
Article 7 and which shall apply to successive reclassifications,
reorganizations, amalgamations, consolidations, mergers, sales or
conveyances.
7.7 Reclassification of Common Shares
If the Company reclassifies or otherwise change the outstanding Common
Shares, the exercise right will be adjusted effective immediately upon
the reclassification becoming effective so that holders of Special
Warrants who exercise their rights thereafter will be entitled to
receive such shares as they would have received had the Special Warrants
been exercised immediately prior to the effective date, subject to
adjustment thereafter in accordance with provisions the same, as nearly
as may be possible, as those contained in sections 7.3 to 7.8.
7.8 Exercise Rights Adjustment Rules
The following rules and procedures will be applicable to adjustments
made pursuant to sections 7.3 to 7.7:
(a) the adjustments and readjustments provided for in this Article 7
are cumulative and subject to subsection 7.8(b), will apply (without
duplication) to successive issues subdivisions, combinations,
consolidations, distributions and any other events that require
adjustment of the Exchange Number or the number or kind of shares or
securities to be issued upon exercise of the Special Warrants;
(b) no adjustment in the Exchange Number will be required unless the
adjustment would result in a change of at least 1% in the Exchange
Number then in effect provided however, that any adjustments that,
except for the provisions of this subsection 7.8(b) would otherwise have
been required to be made, will be carried forward and taken into account
in any subsequent adjustment;
(c) no adjustment in the Exchange Number will be made in respect of
any event described in subsection 7.3(a) or sections 7.4 or 7.5 if the
Special Warrantholders are entitled to participate in the event on the
same terms mutatis mutandis as if they had exercised their Special
Warrants immediately prior to the effective date or record date of the
event;
(d) no adjustment in the Exchange Number will be made pursuant to any
of sections 7.3 to 7.7 in respect of the issue of Common Shares issuable
from time to time as Dividends Paid in the Ordinary Course;
(e) if a dispute arises with respect to adjustments of the Exchange
Number, the dispute will be conclusively determined by the auditors of
the Company or, if they are unable or unwilling to act, by such firm of
independent chartered accountants as may be selected by the directors of
the Company and any such determination, absent manifest error, will be
binding upon the Company, the Trustee and all Special Warrantholders;
(f) if during the Exercise Period the Company takes any action
affecting the Common Shares, other than actions described in this
Article, which in the opinion of the board of directors of the Company
would materially affect the rights of the Holder, the Exchange Number
will be adjusted in such manner, if any, and at such time, by action by
the directors of the Company in such manner as they may reasonably
determine to be equitable in the circumstances but subject in all cases
to any necessary regulatory approval. Failure of the taking of action
by the directors of the Company so as to provide for an adjustment on or
prior to the effective date of any action by the Company affecting the
Common Shares will be conclusive evidence that the board of directors of
the Company has determined that it is equitable to make no adjustment in
the circumstances; and
(g) if the Company sets a record date to determine the holders of
Common Shares for the purpose of entitling them to receive any dividend
or distribution or any subscription or purchase rights and thereafter
legally abandons its plans to pay or deliver the dividend, distribution
or subscription or purchase rights then no adjustment in the Exchange
Number will be required by reason of the setting of the record date.
7.9 Postponement of Subscription
In any case where the application of any of sections 7.3 to 7.7 results
in an increase of the Exchange Number taking effect immediately after
the record date for or occurrence of a specific event, if any Special
Warrants are exercised after that record date or occurrence and prior to
completion of the event or of the period for which a calculation is
required to be made, the Company may postpone the issuance, to the
Holder, of the Securities to which the Holder is entitled by reason of
the increase of the Exchange Number but the Securities will be so issued
and delivered to that holder upon completion of that event or period,
with the number of those Securities calculated on the basis of the
Exchange Number on the Exercise Date adjusted for completion of that
event or period, and the Company will forthwith after the Exercise Date
deliver to the person or persons in whose name or names the Securities
are to be issued an appropriate instrument evidencing the person's or
persons' right to receive the Securities.
7.10 Notice of Certain Events
Upon the occurrence of any event referred to in sections 7.3 to 7.8 that
requires an adjustment or readjustment in the Exchange Number, the
Company will promptly thereafter:
(a) file with the Trustee a certificate of the Company specifying the
particulars of the event giving rise to the adjustment or readjustment
and, if determinable, the adjustment and setting forth in reasonable
detail a computation of the adjustment including the method of
computation and which certificate shall be supported by a certificate of
the Company's auditors verifying such calculation; and
(b) give notice to the Special Warrantholders of the particulars of
the event and, if determinable, the adjustment.
If notice has been given under this section 7.10 and the adjustment is
not then determinable, the Company will promptly after the adjustment is
determinable:
(c) file with the Trustee a computation of the adjustment together
with a certificate of the Company's auditors verifying such calculation;
and
(d) give notice to the Special Warrantholders of the adjustment.
7.11 Protection of Trustee
The Trustee
(a) will not at any time be under any duty or responsibility to any
Special Warrantholder to determine whether any facts exist which may
require any adjustment contemplated by sections 7.3 to 7.7, or with
respect to the nature or extent of any such adjustment when made, or
with respect to the method employed in making such adjustment;
(b) is not accountable with respect to the validity or value (or the
kind or amount) of any shares or other securities or property which may
at any time be issued or delivered upon the exercise of the rights
attaching to any Special Warrant;
(c) is not responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver Common Shares or certificates
for the same upon the surrender of any Special Warrants for the purpose
of the exercise of such rights or to comply with any of the covenants
contained in this Article 7; and
(d) will not incur any liability or responsibility whatever or be in
any way responsible for the consequence of any breach on the part of the
Company of any of the representations, warranties or covenants in this
Agreement contained or any acts of the agents or servants of the
Company.
7.12 Entitlement to Common Shares on Exercise of Special Warrant
All shares of any class or other securities which a Special
Warrantholder is at the time in question entitled to receive on the
exercise of its Special Warrant, whether or not as a result of
adjustments made pursuant to this section, shall, for the purposes of
the interpretation of this Agreement be deemed to be shares which such
Special Warrantholder is entitled to acquire pursuant to such Special
Warrant.
7.13 Proceedings Prior to Any Action Requiring Adjustment
As a condition precedent to the taking of any action which would require
an adjustment in any of the acquisition rights pursuant to any of the
Special Warrants, including the number of Unit Shares which are to be
received upon the exercise thereof, the Company shall take any corporate
action which may, in the opinion of counsel, be necessary in order that
the Company has unissued and reserved in its authorized capital and may
validly and legally issue as fully paid and non-assessable all the
shares which the holders of such Special Warrants are entitled to
receive on the full exercise thereof in accordance with the provisions
hereof.
7.14 Notice of Special Matters
The Company covenants with the Trustee that, so long as any Special
Warrant remains outstanding, it will give notice to the Trustee and to
the Special Warrantholders of its intention to fix the record date for
any event referred to in Article 7 which may give rise to any adjustment
in the Exchange Number. Such notice shall specify the particulars of
such event, to the extent determinable, any adjustment required and the
computation of such adjustment and the record date for such event,
provided that the Company shall only be required to specify in the
notice such particulars of the event as shall have been fixed and
determined on the date on which the notice is given. The notice shall
be given in each cash not less than fourteen days prior to such
applicable record date. If any adjustment for which notice is given is
not then determinable, the Company shall, promptly after such adjustment
is determinable, give notice.
ARTICLE 8
ADJUSTMENT OF NUMBER OF SECURITIES
8.1 Adjustment of Number of Securities
In the event that the Qualification Date has not occurred by the
Qualification Deadline, the Special Warrantholder shall be entitled,
upon exercise of the Special Warrant, to acquire 1.1 Unit Shares (rather
than one Unit Share) and 0.55 Unit Warrants (rather than one-half of one
Unit Warrant) for no additional consideration.
ARTICLE 9
RIGHTS AND COVENANTS
9.1 General Covenants of the Company
The Company covenants with the Trustee that so long as any Special
Warrants remain outstanding and may be exchanged for the Securities:
(a) the Company will at all times maintain its corporate existence;
(b) the Company will reserve and keep available out of its authorized
common stock a sufficient number of Common Shares for issuance upon the
exercise of all outstanding Special Warrants and the exercise of all
outstanding Unit Warrants including with respect to any adjustments
required pursuant to Article 8;
(c) the Company will cause the Special Warrants and the Securities and
the certificates representing the Special Warrants and the Securities to
be duly issued in accordance with the Special Warrant Certificate and
the terms of this Agreement;
(d) all Common Shares that will be issued by the Company upon exercise
of the rights provided for in this Agreement will be issued as fully
paid and non-assessable and free from all taxes, liens and charges with
respect to the issue thereof and that upon issuance such shares shall be
listed on each national securities exchange on which the other shares of
outstanding common stock of the Company are then listed or shall be
eligible for inclusion in the Nasdaq National Market or the Nasdaq
SmallCap Market if the other shares of outstanding common stock of the
Company are so included;
(e) the Company will use its best efforts to ensure that all Common
Shares outstanding or issuable from time to time (including without
limitation the Unit Shares and Warrant Shares) continue to be or are
listed for trading on the Exchange and that it will use its commercial
best efforts to list the Unit Shares, Warrant Shares and all other
outstanding shares of its common stock on the NASDAQ National Market or
if the Company does not meet the listing requirements of the NASDAQ
National Market on the NASDAQ SmallCap Market as soon as possible after
the Closing Date;
(f) it will use its reasonable best efforts to have an Effective
Registration and to have the Receipts issued by the Commissions on or
before the Qualification Deadline and will, in the event that either an
Effective Registration is not filed or the Receipts are not issued on or
before the Qualification Deadline, continue to use its reasonable best
efforts to file an Effective Registration and / or obtain the Receipts
thereafter, as the case may be. Moreover, the Company covenants that if
any securities to be reserved for the purpose of the exercise of the
Special Warrants or the exercise of the Unit Warrants require
registration with, or approval of, any governmental authority under any
U.S. Securities Laws before such securities may be validly issued or
delivered upon such exercise, then the Company will in good faith and
expeditiously as reasonably possible to endeavour to secure such
registration or approval. The Company will use reasonable efforts to
obtain appropriate approvals or registrations under state "Blue Sky"
security laws as applicable;
(g) the Company will maintain its status as a reporting issuer in the
Qualifying Provinces and as a "reporting company" with a class of equity
securities registered pursuant to section 12(g) of the United States
Securities Act of 1934, as amended not in default of any reporting or
filing requirements under U.S. Securities Laws;
(h) the Company will send a written notice to the Trustee and to each
Special Warrantholder at the address of such Holder appearing in the
register of Special Warrants maintained pursuant to this Agreement, of
the filing of an Effective Registration and the issuance of the
Receipts, together with a commercial copy of the Prospectus for those
Holders in the Qualifying Provinces, as soon as practicable but, in any
event, not later than five business days after the filing of the
Effective Registration or the issuance of such Receipts, as the case
may be, together with confirmation of any adjustment to the number of
securities issuable pursuant to Article 8);
(i) the Company will generally well and truly perform and carry out
all the acts or things to be done by it as provided in this Agreement or
as the Trustee may reasonably require for the better accomplishing and
effecting of the intentions and provisions of this Agreement; and
(j) the Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the
issuance of the Special Warrants or the issuance or delivery of any
Common Shares or Unit Warrants upon the exercise of the Special
Warrants.
9.2 Trustee's Remuneration and Expenses
The Company covenants that it will pay to the Trustee from time to time
reasonable remuneration for its services under this Agreement and will
pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
the administration or execution hereof (including the reasonable
compensation and the disbursements of counsel and all other advisers and
assistants not regularly in its employ), both before any default under
this Agreement and thereafter until all duties of the Trustee under this
Agreement will be finally and fully performed, except any expense,
disbursement or advance as may arise from the negligence or wilful
misconduct of the Trustee or of persons for whom the Trustee is
responsible.
9.3 Right to Dividends or Distributions
If the Company pays a dividend or makes any distribution to all or
substantially all of the holders of Common Shares or if the Company
declares any dividend, or provides for any distribution, payable to all
or substantially all the holders of Common Shares of record during the
Exercise Period, the Company agrees that it will pay the same amount of
such dividend or make the same distribution of cash, property or
securities as a deposit to the Trustee, as if the Holders were the
holders of the number of Common Shares that they are entitled to receive
upon the exercise of the Special Warrants, and such payments or
distributions shall be held and dealt with by the Trustee in accordance
with the provisions of this Agreement.
9.4 Performance of Covenants by Trustee
If the Company fails to perform any of its covenants contained in this
Agreement, the Trustee may notify the Special Warrantholders of the
failure on the part of the Company or may itself perform any of the said
covenants capable of being performed by it, but will be under no
obligation to do so or to notify the Special Warrantholders. All sums
expended or advanced by the Trustee in so doing will be repayable as
provided in section 9.2. No performance, expenditure or advance by the
Trustee will be deemed to relieve the Company of any default under this
Agreement.
9.5 Certificate of the Company
The Company will deliver to the Trustee, on the same date that it
delivers the notice referred to in section 6.2 to the Trustee, or on the
last day of the Exercise Period if the Qualification Date does not occur
during the Exercise Period, a certificate indicating the Exchange Number
as at that date and whether or not any dividends or distributions
referred to in section 9.3 have been made.
9.6 Securities Qualification Requirements
(a) If, in the opinion of counsel, any instrument (not including a
prospectus) is required to be filed with, or any permission is required
to be obtained from any governmental authority in Canada or any other
step is required under any federal or provincial law of Canada before
any Securities which a Special Warrantholder is entitled to acquire
pursuant to the exercise of any Special Warrant may properly and legally
be issued upon due exercise thereof and thereafter traded, without
further formality or restriction, the Company covenants that it will
take such required action.
(b) The Company or, if required by the Company, the Trustee will give
notice of the issue of Securities pursuant to the exercise of Special
Warrants, in such detail as may be required, to each securities
commission or similar regulatory authority in each jurisdiction in
Canada in which there is legislation or regulation permitting or
requiring the giving of any such notice in order that such issue of
Common Shares and the subsequent disposition of Securities so issued
will not be subject to the prospectus qualification requirements of such
legislation or regulation.
ARTICLE 10
ENFORCEMENT
10.1 Suits by Special Warrantholders
All or any of the rights conferred upon a Special Warrantholder by the
terms of a Special Warrant or of this Agreement may be enforced by the
holder by appropriate legal proceedings but without prejudice to the
right that is hereby conferred upon the Trustee to proceed in its own
name to enforce each and all of the provisions herein contained for the
benefit of the holder of Special Warrants from time to time outstanding.
10.2 Immunity of Shareholders, Directors & Officers
The Trustee, and by their acceptance of the Special Warrant Certificates
and as part of the consideration for the issue of the Special Warrants,
the Special Warrantholders, hereby waive and release any right, cause of
action or remedy now or hereafter existing in any jurisdiction against
any past, present or future shareholder, director, officer, employee or
agent of the Company in their capacity as such, either directly or
through the Company, relating to any obligations, representations,
warranties and covenants under the Special Warrants or this Agreement,
it being acknowledged that all such obligations, representations,
warranties and covenants are solely those of the Company. Accordingly,
the obligations under the Special Warrants and this Agreement are not
personally binding upon, nor will resort hereunder be had to, the
private property of any of the past, present or future directors,
officers, shareholders, employees or agents of the Company but only the
property of the Company (or any successor corporation) will be bound in
respect hereof. The protection afforded under this paragraph shall not
extend to misrepresentations knowingly made.
10.3 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 the power (in addition to the powers exercisable
by extraordinary resolution) by requisition in writing to instruct the
Trustee to waive any default hereunder and the Trustee shall thereupon
waive the default upon such terms and conditions as shall be prescribed
in such requisition; or
(b) the Trustee shall have the power to waive any default hereunder
upon such terms and conditions as the Trustee may deem advisable if, in
the Trustee's opinion, the same shall have been cured or adequate
provision made therefor;
provided that no delay or omission of the Trustee or of the Special
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 Special
Warrantholders in the premises shall extend to or be taken in any manner
whatsoever to affect any subsequent default hereunder of the rights
resulting therefrom.
ARTICLE 11
MEETINGS OF SPECIAL WARRANTHOLDERS
11.1 Right to Convene Meetings
The Trustee may at any time and from time to time and will, on receipt
of a written request of the Company or of a Special Warrantholders'
Request and upon being indemnified to its reasonable satisfaction by the
Company or by the Special Warrantholders signing the Special
Warrantholders' Request against the cost that may be incurred in
connection with the calling and holding of the meeting, convene a
meeting of the Special Warrantholders. If, within 21 days after receipt
of the written request of the Company or Special Warrantholders' Request
and such indemnity has been given, the Trustee fails to give notice
convening a meeting, the Company or the Special Warrantholders, as the
case may be, may convene the meeting. Every meeting will be held in the
City of Vancouver or at such other place as may be approved or
determined by the Trustee.
11.2 Notice
At least 10 days' notice of any meeting will be given to the Special
Warrantholders in the manner provided in section 14.2 and a copy of the
notice will be sent by mail to the Trustee unless the meeting has been
called by it, and to the Company unless the meeting has been called by
it. Each notice will state the time when and the place where the meeting
is to be held and will state briefly the general nature of the business
to be transacted thereat and shall contain such information as is
reasonably necessary to enable the Special Warrantholders to make a
reasoned decision on the matter but it will not be necessary for the
notice to set out the terms of any resolution to be proposed or any of
the provisions of this Article 14.
11.3 Chairman
A person, who need not be a Special Warrantholder, designated in writing
by the Trustee will chair the meeting and if no person is so nominated,
or if the person so nominated is not present within 15 minutes from the
time fixed for the holding of the meeting, the Special Warrantholders
present in person or by proxy will choose a person present to chair the
meeting.
11.4Quorum
With respect to the quorum required for a meeting of Special
Warrantholders:
(a) at any meeting of the Special Warrantholders a quorum will consist
of Special Warrantholders present in person or by proxy and entitled to
acquire at least 20% of the aggregate number of Special Warrants then
outstanding, provided at least two persons entitled to vote thereat are
personally present;
(b) if a quorum of the Special Warrantholders is not present within 30
minutes from the time fixed for holding any meeting, the meeting, if
summoned by the Special Warrantholders or on a Special Warrantholders'
Request, will be dissolved; but, subject to section 11.12(b), in any
other case the meeting will be adjourned to the same day in the next
week (unless that day is not a business day, in which event the meeting
will be reconvened on the next day that is a business day) at the same
time and place and no notice need be given; and
(c) at the adjourned meeting, the Special Warrantholders present in
person or by proxy will form a quorum and may transact the business for
which the meeting was originally convened, notwithstanding that they may
not hold at least 20% of the aggregate number of Special Warrants then
outstanding.
11.5 Power to Adjourn
The chairman of any meeting at which a quorum of the Special
Warrantholders is present may, with the consent of the meeting, adjourn
the meeting and no notice of the adjournment need be given except such
notice, if any, as the meeting may prescribe.
11.6 Show of Hands
Every question submitted to a meeting will be decided in the first place
by a majority of the votes given on a show of hands except that votes on
an Special Resolution will be given in the manner provided in section
11.12(c). At any meeting, unless a poll is duly demanded as herein
provided, a declaration by the chairman that a resolution has been
carried or carried unanimously or by a particular majority or lost or
not carried by a particular majority will be conclusive evidence of the
fact.
11.7 Poll
On every Special Resolution, and on any other question submitted to a
meeting upon which a poll is directed by the chairman or requested by
one or more of the Special Warrantholders acting in person or by proxy
and representing in the aggregate at least 5% of the aggregate number of
Special Warrants then outstanding, a poll will be taken in such manner
as the chairman will direct. Questions other than an Special Resolution
will be decided by a majority of the votes cast on a poll.
11.8 Voting
On a show of hands every person who is present and entitled to vote,
whether as a Special Warrantholder or as proxy for one or more absent
Special Warrantholders or both, will have one vote. On a poll each
Special Warrantholder present in person or represented by a proxy duly
appointed by instrument in writing will be entitled to one vote in
respect of each Special Warrant then held by him. A proxy need not be a
Special Warrantholder.
11.9 Regulations
The Trustee or the Company with the approval of the Trustee may from
time to time make or vary such regulations as they will think fit:
(a) the setting of the record date for a meeting for the purpose of
determining Special Warrantholders entitled to receive notice of and to
vote at the meeting;
(b) for the issue of voting certificates by any bank, trust company or
other depositary satisfactory to the Trustee stating that the Special
Warrants specified therein have been deposited with the depository by a
named person and will remain on deposit until after the meeting, which
voting certificates will entitle the persons named therein to be present
and vote at the meeting and at any adjournment thereof or to appoint a
proxy or proxies to represent them and vote for them at that meeting and
at any adjournment thereof in the same manner and with the same effect
as though the persons so named in the voting certificates were the
actual holders of the Special Warrants specified therein;
(c) for the deposit of voting certificates and/or instruments
appointing proxies at such place and time as the Trustee, the Company or
the Special Warrantholders convening the meeting, as the case may be,
may in the notice convening the meeting direct;
(d) for the deposit of voting certificates and/or instruments
appointing proxies at some approved place or places other than the place
at which the meeting is to be held and enabling particulars of the
voting certificates and/or instruments appointing proxies to be sent by
mail, cable, telex or other means of prepaid, transmitted, recorded
communication before the meeting to the Company or to the Trustee at the
place where the same is to be held and for the voting of proxies so
deposited as though the instruments themselves were produced at the
meeting;
(e) for the form of instrument appointing a proxy; and
(f) generally for the calling of meetings of Special Warrantholders
and the conduct of business thereat.
Any regulations so made will be binding and effective and the votes
given in accordance therewith will be valid and will be counted. Except
as the regulations may provide, the only persons who will be recognized
at any meeting as the holders of any Special Warrants, or as entitled to
vote or, subject to section 11.10, be present at the meeting in respect
thereof, will be persons who are the registered holders of Special
Warrants or their duly appointed proxies.
11.10 Company and Trustee may be Represented
The Company and the Trustee by their respective officers or directors,
and the counsel to the Company and the Trustee may attend any meeting of
the Special Warrantholders, but will have no vote as such.
11.11 Powers Exercisable by Special Resolution
In addition to all other powers conferred upon them by any other
provisions of this Agreement or by law the Special Warrantholders at a
meeting will have the following powers exercisable from time to time by
Special Resolution:
(a) power to agree to any modification, abrogation, alteration,
compromise or arrangement of the rights of Special Warrantholders and/or
the Trustee in its capacity as trustee under this Agreement or on behalf
of the Special Warrantholders against the Company, whether those rights
arise under this Agreement or the Special Warrant certificates;
(b) power to direct or authorize the Trustee to enforce any of the
covenants on the part of the Company contained in this Agreement or the
Special Warrants or to enforce any of the rights of the Special
Warrantholders in any manner specified in the Special Resolution or to
refrain from enforcing any such covenant or right;
(c) power to restrain any Special Warrantholder from taking or
instituting any suit, action or proceeding against the Company for the
enforcement of any of the covenants on the part of the Company contained
in this Agreement or the Special Warrants or to enforce any of the
rights of the Special Warrantholders except for a suit or action against
the Company to compel payment to a Special Warrantholder in respect of
monies owing to him in accordance with the provisions of section 9.3;
(d) power to direct any Special Warrantholder who, as such, has
brought any suit, action or proceeding to stay or discontinue or
otherwise deal with the same upon payment of the costs, charges and
expenses reasonably and properly incurred by the Special Warrantholder
in connection therewith;
(e) power from time to time and at any time to remove the Trustee and
appoint a successor trustee;
(f) power to amend, alter or repeal any special resolution previously
passed or sanctioned by the Special Warrantholders; and
(g) power to assent to any compromise or arrangement with any creditor
or creditors or any class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of the
Company.
11.12 Meaning of "Special Resolution
(a) The expression "Special Resolution" when used in this Agreement
means, subject to the provisions in this subsection 11.12(b) and
11.12(c) and in sections 11.15 and 11.16 provided, a resolution proposed
at a meeting of the Special Warrantholders duly convened for that
purpose and held in accordance with the provisions of this Article 11 at
which there are present in person or by proxy Special Warrantholders
holding at least 20% of the aggregate number of Special Warrants then
outstanding and passed by the affirmative votes of Special
Warrantholders holding not less than two-thirds of the aggregate number
of Special Warrants represented at the meeting.
(b) If, at any meeting called for the purpose of passing a Special
Resolution, Special Warrantholders entitled to acquire at least 20% of
the aggregate number of Special Warrants then outstanding are not
present in person or by proxy within 30 minutes after the time appointed
for the meeting, then the meeting, if convened by Special Warrantholders
or on a Special Warrantholders' Request, will be dissolved; but in any
other case it will stand adjourned to such day, being not less than 15
or more than 60 days later, and to such place and time as may be
appointed by the chairman. Not less than 10 days' notice will be given
of the time and place of the adjourned meeting in the manner provided in
section 14.2. The notice will state that at the adjourned meeting the
Special Warrantholders present in person or by proxy will form a quorum
but it will not be necessary to set forth the purposes for which the
meeting was originally called or any other particulars. At the adjourned
meeting the Special Warrantholders present in person or by proxy will
form a quorum and may transact the business for which the meeting was
originally convened and a resolution proposed at the adjourned meeting
and passed by the requisite vote as provided in subsection 11.12(a) will
be a Special Resolution within the meaning of this Agreement
notwithstanding that Special Warrantholders entitled to acquire at least
20% of the aggregate number of Special Warrants then outstanding are not
present in person or by proxy at the adjourned meeting.
(c) Votes on a Special Resolution will always be given on a poll and
no demand for a poll on a Special Resolution will be necessary.
11.13Powers Cumulative
It is hereby declared and agreed that any one or more of the powers or
any combination of the powers in this Agreement stated to be exercisable
by the Special Warrantholders by Special Resolution or otherwise may be
exercised from time to time and the exercise of any one or more of the
powers or any combination of the powers from time to time will not be
deemed to exhaust the right of the Special Warrantholders to exercise
that power or those powers or combination of powers then or any other
power or powers or combination of powers thereafter from time to time.
11.14 Minutes
Minutes of all resolutions and proceedings at every meeting of Special
Warrantholders convened and held pursuant to this Article 11 will be
made and duly entered in books to be provided for that purpose by the
Trustee at the expense of the Company, and any such minutes, if signed
by the chairman of the meeting at which resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting of
the Special Warrantholders, will be prima facie evidence of the matters
as stated in the minutes and, until the contrary is proved, every
meeting, in respect of the proceedings of which minutes will have been
made, will be deemed to have been duly convened and held, and all
resolutions passed thereat or proceedings taken, to have been duly
passed and taken.
11.15 Instruments in Writing
All actions that may be taken and all powers that may be exercised by
the Special Warrantholders at a meeting held as provided in this Article
11 may also be taken and exercised by Special Warrantholders holding not
less than two-thirds of the aggregate number of Special Warrants then
outstanding by an instrument in writing signed in one or more
counterparts by Special Warrantholders in person or by attorney duly
appointed in writing and the expression "Special Resolution" when used
in this Agreement will include an instrument so signed.
11.16Binding Effect of Resolutions
Every resolution and every Special Resolution passed in accordance with
the provisions of this Article 11 at a meeting of Special Warrantholders
will be binding upon all the Special Warrantholders, whether present at
or absent from the meeting, and every instrument in writing signed by
Special Warrantholders in accordance with section 11.15 will be binding
upon all the Special Warrantholders, whether signatories thereto or not,
and each and every Special Warrantholder and the Trustee (subject to the
provisions for its indemnity herein contained) will be bound to give
effect accordingly to every resolution and instrument in writing passed
or executed in accordance with these provisions.
11.17 Holdings by Company Disregarded
In determining whether the requisite number of Special Warrantholders
are present for the purpose of obtaining a quorum or have voted or
consented to any resolution, Special Resolution, consent, waiver,
Special Warrantholders' Request or other action under this Agreement,
Special Warrants owned by the Company or any subsidiary of the Company
will be deemed to be not outstanding.
ARTICLE 12
SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES
12.1 Provision for Supplemental Agreements for Certain Purposes
From time to time the Company (when authorized by action of the
directors) and the Trustee may, subject to the provisions hereof, and
they will, when so directed hereby, execute and deliver by their proper
officers, agreements or instruments supplemental to this Agreement,
which thereafter will form part of this Agreement, for any one or more
or all of the following purposes:
(a) setting forth any adjustments resulting from the application of
the provisions of Article 7;
(b) adding to the provisions of this Agreement such additional
covenants and enforcement provisions as, in the opinion of counsel, are
necessary or advisable, provided that the same are not in the opinion of
counsel to the Trustee prejudicial to the interest of the Special
Warrantholders as a group;
(c) giving effect to any Special Resolution passed as provided in
Article 11;
(d) making provisions not inconsistent with this Agreement as may be
necessary or desirable with respect to matters or questions arising
under this Agreement provided that the provisions are not, in the
opinion of counsel to the Trustee, prejudicial to the interests of the
Special Warrantholders as a group;
(e) adding to or altering the provisions of this Agreement in respect
of the transfer of Special Warrants, making provision for the exchange
of Special Warrants, and making any modification in the form of the
Special Warrants that does not affect the substance of the Special
Warrants;
(f) modifying any of the provisions of this Agreement or relieving the
Company from any of the obligations, conditions or restrictions
contained in this Agreement, provided that no such modification or
relief will be or become operative or effective if in the opinion of
counsel to the Trustee the modification or relief impairs any of the
rights of the Special Warrantholders, as a group, or of the Trustee, and
provided that the Trustee may in its uncontrolled discretion decline to
enter into any supplemental agreement which in its opinion may not
afford adequate protection to the Trustee when the such supplemental
agreement becomes operative; and
(g) for any other purpose not inconsistent with the terms of this
Agreement, including the correction or rectification of any ambiguities,
defective provisions, errors or omissions in this Agreement, provided
that in the opinion of counsel to the Trustee the rights of the Trustee
and the Special Warrantholders, as a group, are in no way prejudiced
thereby.
12.2 Successor Companies
In the case of the consolidation, amalgamation, merger or transfer of
the undertaking or assets of the Company as an entirety or substantially
as an entirety to another corporation ("successor corporation"), the
successor corporation resulting from the consolidation, amalgamation,
merger or transfer (if not the Company) will be bound by the provisions
of this Agreement and all obligations for the due and punctual
performance and observance of each and every covenant and obligation
contained in this Agreement to be performed by the Company and, if
requested by the Trustee, the successor corporation will, by
supplemental agreement satisfactory in form to the Trustee and executed
and delivered to the Trustee, expressly assume those obligations.
ARTICLE 13
CONCERNING THE TRUSTEE
13.1 Trust Agreement Legislation
If and to the extent that any provision of this Agreement limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, the mandatory requirement will prevail. The Company and the
Trustee agree that each will at all times, in relation to this Agreement
and any action to be taken under this Agreement, observe and comply with
and be entitled to the benefits of Applicable Legislation.
13.2 Rights and Duties of Trustee
The rights and duties of the Trustee are as follows:
(a) in the exercise of the rights and duties prescribed or conferred
by the terms of this Agreement, the Trustee will act honestly and in
good faith with a view to the best interests of the Special
Warrantholders and will exercise that degree of care, diligence and
skill that a reasonably prudent trustee would exercise in comparable
circumstances. In the absence of negligence or fraud, the Company shall
indemnify and save harmless the Trustee from all loss, costs or damages
it may suffer in administering the trusts of this Agreement. No
provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure
to act, or its own negligence or fraud;
(b) the obligation of the Trustee to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the
Trustee or the Special Warrantholders under this Agreement will be
conditional upon the Special Warrantholders furnishing, when required by
notice in writing by the Trustee, sufficient funds to commence or
continue the act, action or proceeding and indemnity reasonably
satisfactory to the Trustee to protect and hold harmless the Trustee
against the costs, charges and expenses and liabilities to be incurred
thereby and any loss and damage it may suffer by reason thereof. None of
the provisions contained in this Agreement will require the Trustee to
expend or risk its own funds or otherwise incur financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers unless indemnified and funded as required in this
subsection 13.2(b);
(c) The Trustee may, before commencing action or proceeding, or at any
time during the continuance thereof, require the Special Warrantholders
at whose instance it is acting to deposit with the Trustee the Special
Warrant Certificates held by them, for which Special Warrant
Certificates the Trustee will issue receipts; and
(d) Every provision of this Agreement that by its terms relieves the
Trustee of liability or entitles it to rely upon any evidence submitted
to it is subject to the provisions of the Applicable Legislation, of
this section 13.2 and of section 13.3.
13.3 Evidence, Experts and Advisers
(a) In addition to the reports, certificates, opinions and other
evidence required by this Agreement, the Company will furnish to the
Trustee such additional evidence of compliance with any provision of
this Agreement, and in such form, as may be prescribed by Applicable
Legislation or as the Trustee may reasonably require by written notice
to the Company.
(b) In the exercise of its rights and duties, the Trustee may, if it
is acting in good faith, rely as to the truth of the statements and the
accuracy of the opinions expressed therein, upon statutory declarations,
opinions, reports, certificates or other evidence furnished to the
Trustee pursuant to any provision of this Agreement or of Applicable
Legislation or pursuant to a request of the Trustee provided that the
Trustee examines the evidence and determines that the evidence complies
with the applicable requirements of this Agreement.
(c) Whenever Applicable Legislation requires that evidence referred to
in subsection 13.3(a) be in the form of a statutory declaration, the
Trustee may accept a statutory declaration in lieu of a certificate of
the Company required by any provision of this Agreement. Any such
statutory declaration may be made by one or more of the officers or
directors of the Company.
(d) The Trustee may employ or retain such counsel, accountants,
engineers, appraisers, or other experts or advisers as it may reasonably
require for the purpose of discharging its duties under this Agreement
and may pay reasonable remuneration for all services so performed by any
of them, without taxation of costs of any counsel, and will not be
responsible for any misconduct on the part of any of them.
(e) The Trustee may, as a condition precedent to any action to be
taken by it under this Agreement, require such opinions, statutory
declarations, reports, certificates or other evidence as it, acting
reasonably, considers necessary or advisable in the circumstances.
(f) Proof of the execution of an instrument in writing, including a
Special Warrantholders' Request, by any Special Warrantholder may be
made by the certificate of a notary public, or other officer with
similar powers, that the person signing such instrument acknowledges to
the execution thereof, or by an affidavit of a witness to such execution
or in any other manner which the Trustee may consider adequate.
13.4 Securities, Documents and Monies Held by Trustee
Any securities, documents of title or other instruments that may at any
time be held by the Trustee subject to the trusts hereof may be placed
in the deposit vaults of the Trustee or of any of the Canadian Imperial
Bank of Commerce, Bank of Montreal, Bank of Nova Scotia, The
Toronto-Dominion Bank, the Royal Bank of Canada and the Hongkong Bank of
Canada or deposited for safekeeping with any of those Canadian chartered
banks. Unless otherwise expressly provided in this Agreement, any monies
held pending the application or withdrawal thereof under any provision
of this Agreement, may be deposited in the name of the Trustee in any of
the foregoing Canadian chartered banks at the rate of interest then
current on similar deposits or, with the consent of the Company may be
(i) deposited in the deposit department of the Trustee or any other loan
or trust company authorized to accept deposits under the laws of Canada
or a province thereof whose short term debt obligations or deposits have
a rating of at least R1 as rated by Dominion Bond Rating Service, or
(ii) invested in securities issued or guaranteed by the Government of
Canada or a province thereof or in obligations, maturing not more than
one year from the date of investment, of or guaranteed by any of the
foregoing Canadian chartered banks or loan or trust companies. All
interest or other income received by the Trustee in respect of such
deposits and investments will belong to the Company.
13.5 Action by Trustee to Protect Interests
The Trustee will have power to institute and to maintain such actions
and proceedings as it may consider necessary or expedient to preserve,
protect or enforce its interests and the interests of the holders of
Special Warrants.
13.6 Trustee not Required to Give Security
The Trustee will not be required to give any bond or security in respect
of the execution of the trusts and powers of this Agreement or otherwise
in respect of the premises.
13.7 Protection of Trustee
By way of supplement to the provisions of any law for the time being
relating to trustees, it is expressly declared and agreed as follows:
(a) the Trustee will not be liable for or by reason of any
representations, statements of fact or recitals in this Agreement or in
the Special Warrants (except the representation contained in section
13.9 or in the certificate of the Trustee on the Special Warrants) or
required to verify the same, but all those statements or recitals are
and will be deemed to be made by the Company;
(b) nothing in this Agreement will impose any obligation on the
Trustee to see to or to require evidence of the registration (or filing
or renewal thereof) of this Agreement or any instrument ancillary or
supplemental to this Agreement;
(c) the Trustee will not be bound to give notice to any person or
persons of the execution of this Agreement;
(d) the Trustee shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of any breach
on the part of the Company of any of the covenants herein contained or
of any acts of any directors, officers, employees, agents or servants of
the Company; and
(e) the Trustee shall not be bound to give any notice or do or take
any act, action or proceeding by virtue of the powers conferred on it
hereby unless it shall have been required to do so under the terms
hereof; nor shall the Trustee be required to take notice of any default
hereunder, unless and until notified in writing of such default, which
notice shall distinctly specify the default desired to be brought to the
attention of the Trustee and in the absence of any such notice the
Trustee may for all purposes of this Agreement conclusively assume that
no default has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions
contained herein. Any such notice shall in no way limit any discretion
herein given to the Trustee to determine whether or not the Trustee
shall take action with respect to any default.
13.8 Replacement of Trustee
(a) The Trustee may resign its trust and be discharged from all
further duties and liabilities under this Agreement by giving to the
Company not less than 90 days' notice in writing or such shorter notice
as the Company may accept as sufficient. The Special Warrantholders by
Special Resolution will have power at any time to remove the Trustee and
to appoint a new Trustee. In the event of the Trustee resigning or
being removed as pursuant to this subsection 13.8(a) or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming
incapable of acting under this Agreement, the Company will forthwith
appoint a new Trustee unless a new Trustee has already been appointed by
the Special Warrantholders; failing that appointment by the Company the
retiring Trustee or any Special Warrantholder may apply to a Justice of
the Supreme Court of British Columbia, on such notice as the Justice may
direct, for the appointment of a new Trustee; but any new Trustee so
appointed the Company or by the Court will be subject to removal as
aforesaid by the Special Warrantholders. Any new Trustee appointed under
any provision of this section 13.8 will be a corporation authorized to
carry on the business of a trust company in the Province of British
Columbia and, if required by the Applicable Legislation of any other
Province, in that other Province. On any appointment the new Trustee
will be vested with the same powers, rights, duties and responsibilities
as if it had been originally named in this Agreement as Trustee without
any further assurance, conveyance, act or deed; but there will be
immediately executed, at the expense of the Company, all such
conveyances or other instruments as may, in the opinion of counsel, be
necessary or advisable for the purpose of assuring the same of the new
Trustee.
(b) Upon the appointment of a new Trustee, the Company will promptly
give notice to the Special Warrantholders of the new Trustee.
(c) Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation succeeding to the trust
business of the Trustee will be the successor to the Trustee under this
Agreement without any further act on its part or any of the parties
hereto provided that the corporation would be eligible for appointment
as a new Trustee under subsection 13.8(a).
(d) Any Special Warrants certified but not delivered by a predecessor
Trustee may be certified by the new or successor Trustee in the name of
the predecessor or new or successor Trustee.
13.9 Conflict of Interest
(a) The Trustee represents to the Company that at the time of the
execution and delivery of this Agreement no material conflict of
interest exists in the Trustee's role as a fiduciary under this
Agreement and agrees that in the event of a material conflict of
interest it will, within 90 days after ascertaining that it has a
material conflict of interest, either eliminate the same or resign its
trust under this Agreement to a successor trustee approved by the
Company and meeting the requirements set forth in section 13.8.
Notwithstanding the foregoing provisions of this section 13.9(a), if any
such material conflict of interest exists or hereafter shall exist, the
validity and enforceability of this Agreement and the Special Warrant
Certificate shall not be affected in any manner whatsoever by reason
thereof.
(b) Subject to subsection 13.9(a), the Trustee, in its personal or any
other capacity may buy, lend upon and deal in securities of the Company,
may act as registrar and transfer agent for the Common Shares and
trustee for the Unit Warrants under the Unit Warrant Agreement, and
generally may contract and enter into financial transactions with the
Company or any subsidiary of the Company, all without being liable to
account for any profit made thereby.
13.10 Acceptance of Trust
The Trustee hereby accepts the trusts declared and provided for in this
Agreement, agrees to perform the same upon the terms and conditions set
out in this Agreement and agrees to hold all rights, interests and
benefits contained in this Agreement for and on behalf of those persons
who become holders of Special Warrants from time to time issued pursuant
to this Agreement.
13.11 Indemnity
Without limiting any protection or indemnity of the Trustee under any
other provisions hereof, or otherwise at law, the Company hereby agrees
to indemnify and hold harmless the Trustee from and against any and all
liabilities, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including reasonable legal or advisor fees
and disbursements, of whatever kind and nature which may at any time be
imposed on, incurred by or asserted against the Trustee in connection
with the performance of its duties and obligations hereunder, other than
such liabilities, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements arising by reason of the negligence or
fraud of the Trustee. This provision shall survive the resignation or
removal of the Trustee, or the termination of the Agreement. The
Trustee shall not be under any obligation to prosecute or to defend any
action or suit in respect of the relationship which, in the opinion of
its counsel, may involve it in expense or liability, unless the Company
shall, so often as required, furnish the Trustee with satisfactory
indemnity and funding against such expense or liability.
13.12 Survival on Termination
The indemnity of the Trustee provided for herein shall survive the
termination of this Agreement and the rights and obligations of the
parties hereunder.
13.13 Special Warrants Owned by the Company or its Subsidiaries
For the purpose of disregarding any Special Warrants owned legally or
beneficially by the Company or any Subsidiary of the Company in Section
7.4, the Company shall provide to the Trustee, from time to time, a
certificate of the Company setting forth as at the date of such
certificate:
(a) the names (other than the name of the Company) of the registered
holders of Special Warrants which, to the knowledge of the Company, are
owned by or held for the account of the Company or any Subsidiary of the
Company; and
(b) the number of Special Warrants owned legally or beneficially by
the Company or any Subsidiary of the Company,
and the Trustee, in making the computations in Section 7.4, shall be
entitled to rely on such certificate without any additional evidence.
ARTICLE 14
GENERAL
14.1 Notice to Company and Trustee
(a) Unless otherwise expressly provided in this Agreement, any notice
to be given under this Agreement to the Company or the Trustee will be
deemed to be validly given if delivered or if sent by registered letter,
postage prepaid or if transmitted by telecopy:
(i) if to the Company:
Xxxxxx.xx, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Maitland & Company
Barristers and Solicitors
000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Xxxxxxxxxxx X. Xxxxxx
Telephone: (604) 681 -7474
Fax: (604) 681 -3896
(ii) if to the Trustee:
Pacific Corporate Trust Company
#000-000 Xxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: Manager, Corporate Trust Department
Telephone: (000) 000-0000
Fax: (000) 000-0000
and any notice given in accordance with the foregoing will be deemed to
have been received on the date of delivery or, if mailed, on the fifth
business day following the day of the mailing of the notice or, if
transmitted by fax, at the time of transmission.
(b) The Company or the Trustee, as the case may be, may from time to
time notify the other, in the manner provided above, of a change of
address which, from the effective date of the notice and until changed
by like notice, will be the address of the Company or the Trustee, as
the case may be, for all purposes of this Agreement.
(c) If, by reason of a strike, lockout or other work stoppage, actual
or threatened, involving postal employees, any notice to be given to the
Trustee or to the Company under this Agreement could reasonably be
considered unlikely to reach its destination, the notice will be valid
and effective only if it is delivered to an officer of the party to
which it is addressed or if it is delivered to that party at the
appropriate address provided above by mail or by fax and any notice
delivered in accordance with the foregoing will be deemed to have been
received on the date of delivery to the officer or if delivered by mail
or by fax on the first business day following the date of the sending of
the notice by the person giving the notice.
14.2 Notice to Special Warrantholders
(a) Unless otherwise expressly provided in this Agreement, any notice
to be given under this Agreement to Special Warrantholders will be
deemed to be validly given if the notice is sent by prepaid mail,
addressed to the holder or delivered by hand or transmitted by fax (or
so mailed to certain holders and so delivered to other holders and so
faxed to other holders) at their respective addresses and fax number
appearing on the register maintained by the Trustee and if in the case
of joint holders of any Special Warrants more than one address or fax
number appears on the register in respect of that joint holding, the
notice will be addressed or delivered, as the case may be, only to the
first address or fax number, as the case may be so appearing. The
Trustee will give, in the same manner as for Special Warrantholders set
out above, a copy of each such notice to Maitland & Company, Barristers
& Solicitors, 000 - 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0 (Fax No.: (000) 000-0000) (Attention: Xxxxxxxxxxx X. Xxxxxx). Any
notice so given will be deemed to have been given and received on the
day of delivery by hand or fax, or on the next business day if delivered
by mail.
(b) If, by reason of strike, lock-out or other work stoppage, actual
or threatened, involving postal employees, any notice to be given to the
Special Warrantholders could reasonably be considered unlikely to reach
its destination, the notice may be published or distributed once in The
Globe and Mail newspaper, or, in the event of a disruption in the
circulation of that newspaper, once in the National Post, provided that
in the case of a notice convening a meeting of the holders of Special
Warrants, the Trustee may require such additional publications of that
notice, in the same or in other cities or both, as it may deem necessary
for the reasonable protection of the holders of Special Warrants or to
comply with any applicable requirement of law or any stock exchange. Any
notice so given will be deemed to have been given on the day on which it
has been published in all of the cities in which publication was
required (or first published in a city if more than one publication in
that city is required). In determining, under any provision of this
Agreement, the date when notice of any meeting or other event must be
given, the date of giving notice will be included and the date of the
meeting or other event will be excluded.
14.3 Satisfaction and Discharge of Agreement
Upon the date which there shall have been delivered to the Trustee for
exercise all Special Warrant Certificates certified hereunder and if all
certificates representing Units will have been delivered to Special
Warrantholders to the full extent of the rights attached to all Special
Warrants theretofore certified under this Agreement and the monies to be
paid under this Agreement have been paid, this Agreement will cease to
be of further effect and the Trustee, on demand of and at the cost and
expense of the Company and upon delivery to the Trustee of a certificate
of the Company stating that all conditions precedent to the satisfaction
and discharge of this Agreement have been complied with and upon payment
to the Trustee of the fees and other remuneration payable to the
Trustee, the parties hereto will execute proper instruments
acknowledging satisfaction of and discharging this Agreement.
Notwithstanding the foregoing, the indemnities provided to the Trustee
by the Company shall remain in full force and effect and survive the
termination of this Agreement.
14.4 Sole Benefit of Parties and Special Warrantholders
Nothing in this Agreement or in the Special Warrants, expressed or
implied, will give or be construed to give to any person other than the
parties hereto and the Special Warrantholders any legal or equitable
right, remedy or claim under this Agreement, or under any covenant or
provision therein contained, all such covenants and provisions being for
the sole benefit of the parties hereto and the Special Warrantholders.
14.5 Counterparts and Formal Date
This Agreement may be simultaneously executed in several counterparts,
each of which when so executed will be deemed to be an original and the
counterparts together will constitute one and the same instrument and
notwithstanding their date of execution will be deemed to bear the date
as of April 27, 2000.
14.6 Successors
This Agreement shall enure to the benefit of, and be binding upon, the
Company and the Trustee and their respective successors (including
successors by reason of amalgamation, merger, business combination or
arrangement) and legal representatives and nothing expresses or
mentioned in this Agreement is intended and shall be construed to give
any other person any legal or equitable right, remedy or claim under or
in respect of this Agreement, or any provision herein contained, this
Agreement and all conditions and provisions hereof being intended to be
and being for the sole and exclusive benefit of such persons and for the
benefit of no other person.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed
by their proper officers in that behalf.
XXXXXX.XX, INC.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, Chief Executive Officer
PACIFIC CORPORATE TRUST COMPANY
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx, President
By: /s/ Xxxx Xxxxxxxxxx
Xxxx Xxxxxxxxxx, Vice President
