EXHIBIT 4.3
WARRANT INDENTURE
THIS INDENTURE made this 27th day of September, 2004.
B E T W E E N:
ADSERO CORP., a corporation incorporated under the laws of
Delaware
(hereinafter called the "CORPORATION")
OF THE FIRST PART
- and -
XXXXX WINTER LLP, a partnership constituted under the laws of
the Province of Ontario
(hereinafter called the "WARRANT AGENT")
OF THE SECOND PART
WITNESSES THAT:
WHEREAS the Corporation proposes to issue Special Warrants (as defined herein)
each of which is exercisable, for no additional consideration, to acquire one
Common Share (as defined herein) and one Warrant;
AND WHEREAS the Warrants will be exercisable by the holders on the terms
hereinafter set out for the acquisition of Common Shares (as defined herein);
AND WHEREAS the Corporation is duly authorized to create and issue the Warrants
to be issued as herein provided;
AND WHEREAS all things necessary have been done and performed to make the
Warrants, when certified by the Warrant Agent and issued as in this Indenture
provided, legal, valid and binding upon the Corporation with the benefits of and
subject to the terms of this Indenture;
AND WHEREAS the Warrant Agent has agreed to enter into this Indenture and to
hold all rights, interests and benefits contained herein for and on behalf of
those persons who become holders of Warrants from time to time issued pursuant
to this Indenture;
AND WHEREAS each whole Warrant shall entitle the holder thereof to purchase,
subject to adjustment, one Warrant Share, at a price and upon the terms and
conditions herein set forth;
AND WHEREAS for such purpose the Corporation deems it necessary to create and
issue the Warrants constituted and issued in the manner hereinafter appearing;
The foregoing recitals are made as representations and statements of fact by the
Corporation and not by the Warrant Agent;
NOW THEREFORE in consideration of the premises and the covenants of the parties,
the Corporation hereby appoints the Warrant Agent as agent for the
Warrantholders (as hereinafter defined) to hold all rights, interests and
benefits contained herein for and on behalf of those persons who are holders of
Warrants from time to time issued pursuant to this Indenture and it is hereby
agreed and declared as follows:
ARTICLE 1 INTERPRETATION
1.1 DEFINITIONS.
In this Indenture and in the Warrant Certificates, unless there is something in
the subject matter or context inconsistent therewith:
(a) "AFFILIATE" has the meaning ascribed thereto under the Securities
Act (Ontario), as amended from time to time;
(b) "APPLICABLE LEGISLATION" means such provisions of any statute of
the United States (as subsequently defined), Canada, and or of a
province thereof, and of regulations under any such statute, relating
to trust indentures or to the rights, duties and obligations of
corporations and of agents under trust indentures, as are from time to
time in force and applicable to this Indenture;
(c) "BUSINESS DAY" means a day on which chartered banks are normally
open for business in the City of Toronto, excluding Saturdays, Sundays
and any statutory or civic holiday;
(d) "CLOSING DATE" means September 27, 2004 or such other date upon
which the Special Warrants are first issued and sold;
(e) "COMMON SHARES" means the fully-paid and non-assessable shares of
common stock (US$0.001 par value) in the capital of the Corporation;
(f) "CORPORATION" means Adsero Corp., the party of the first part
hereunder, and includes any successor corporation to or of the
Corporation which shall have complied with the provisions of Section
y8.2 hereof;
(g) "CORPORATION'S AUDITORS" means the firm of chartered accountants
appointed by the shareholders of the Corporation as the auditors of the
Corporation in accordance with the applicable laws of the State of
Delaware;
(h) "COUNSEL" means such law firm who may be counsel for the
Corporation, acceptable to the Warrant Agent;
(i) "CURRENT MARKET PRICE" has the meaning ascribed to that term in
Subsection y4.8(a)(i);
(j) "DIRECTOR" means a director of the Corporation and reference to
action by the directors means action by the directors of the
Corporation as a board or, whenever duly empowered, action by a
committee of the board;
(k) "EXERCISE DATE" means with respect to any Warrant exercised by the
holder thereof pursuant to Subsection y4.1(a) hereof, the day on which
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the Warrant Certificate evidencing such Warrant is surrendered to the
Warrant Agent in accordance with the provisions of Section y4.1 hereof;
(l) "EXERCISE PRICE" means US$1.50 per Warrant exercised, as adjusted;
(m) "EXPIRY DATE" means, with respect to a Warrant, September 27, 2006;
(n) "EXPIRY TIME" means 5:00 p.m. (Toronto time) on the Expiry Date;
(o) "EXTRAORDINARY RESOLUTION" has the meaning attributed thereto in
Sections 7.12 and 7.15 hereof;
(p) "OTCBB" means the NASDAQ over-the-counter bulletin board;
(q) "PERSON" means an individual, corporation, partnership, trustee or
unincorporated organization, and words importing persons have a similar
extended meaning;
(r) "QUALIFYING JURISDICTIONS" means the jurisdictions in which
purchasers of the Warrants reside;
(s) "RIGHTS OFFERING" has the meaning ascribed to that term in
Subsection y4.8(c) hereof;
(t) "RIGHTS PERIOD" has the meaning ascribed to that term in Subsection
y4.8(c) hereof;
(u) "SECURITIES REGULATORY AUTHORITIES" means the security commissions
and similar securities regulating authorities of the Qualifying
Jurisdictions;
(v) "SPECIAL DISTRIBUTION" has the meaning ascribed to that term in
Subsection y4.8(d) hereof;
(w) "SPECIAL WARRANTS" means those securities issued by the Corporation
on the Closing Date providing the holder with the right to acquire, for
no additional consideration, one A unit consisting of one Common Share
and one Warrant.
(x) "SUBSIDIARY" has the meaning ascribed to that term as defined in
the Securities Act (Ontario);
(y) "TRADING DAY" has the meaning ascribed to that term in Subsection
y4.8(a)(ii);
(z) "U.S. PERSON" has the meaning ascribed thereto in Regulation S
under the U.S. Securities Act;
(aa) "U.S. SECURITIES ACT" means the United States Securities Act of
1933, as amended;
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(bb) "UNITED STATES" means the United States of America, its
territories or possessions, any state thereof or the District of
Columbia collectively;
(cc) "VOTING SHARES" of any corporation means shares of one or more
classes or series of a class of shares of such corporation carrying
voting rights under all circumstances (and not by reason of the
happening of a contingency) sufficient if exercised to elect all of the
directors of such corporation, provided that such shares will be deemed
not to cease to be Voting Shares solely by reason of a right to vote
for the election of one or more of the directors of such corporation
accruing to shares of another class or series of a class of shares of
such corporation by reason of the happening of a contingency;
(dd) "WARRANT AGENT" means Xxxxx Winter LLP, and its successors;
(ee) "WARRANT CERTIFICATE" means a certificate evidencing one or more
Warrants, substantially in the form attached hereto as Schedule "A";
(ff) "WARRANT INDENTURE", "INDENTURE", "HERETO", "HEREUNDER",
"HEREOF'", "HEREIN", "HEREBY" and similar expressions mean or refer to
this Warrant Indenture and any indenture, deed or instrument
supplemental or ancillary hereto, and the expressions "Article",
"Section", "Subsection" and "paragraph" followed by a number mean the
specified Article, Section, Subsection or paragraph of this Indenture;
(gg) "WARRANT SHARES" means, subject to Section y4.8(r), the Common
Shares to be issued by the Corporation to Warrantholders upon the
exercise of Warrants hereunder;
(hh) "WARRANTHOLDERS" or "holders" means the persons for the time being
entered in the register of holders described in Section y3.1(a) hereof
as holders of Warrants;
(ii) "WARRANTHOLDERS' REQUEST" means an instrument, signed in one or
more counterparts by Warrantholders who hold in the aggregate not less
than 20% of the total number of Warrants then outstanding, requesting
the Warrant Agent to take some action or proceeding specified therein;
(jj) "WARRANTS" means the whole common share purchase warrants of the
Corporation issued hereunder entitling registered holders thereof to
receive upon exercise in accordance with Section y4.1 one Warrant Share
(or such kind and amount of shares or other securities or property as
may be determined pursuant to yArticle 4 hereof); and
(kk) "WRITTEN ORDER OF THE CORPORATION", "Written Request of the
Corporation", "Written Consent of the Corporation", "Written Direction
of the Corporation" and "Certificate of the Corporation" mean,
respectively, a written order, request, consent, direction and
certificate signed in the name of the Corporation by any director or
officer of the Corporation or by any other individual to whom such
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signing authority is delegated by the directors from time to time, and
may consist of one or more instruments so executed.
1.2 WORDS IMPORTING THE SINGULAR.
Words importing the singular include the plural and vice versa and words
importing a particular gender include both genders.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Indenture into Articles, Sections, Subsections, paragraphs,
subparagraphs, clauses and subclauses, the provision of a table of contents and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Indenture or the Warrants.
1.4 DAY NOT A BUSINESS DAY.
If the day on or before which any action that would otherwise be required to be
taken hereunder is not a Business Day in Toronto, Ontario, that action shall be
required to be taken on or before the requisite time on the next succeeding day
that is a Business Day.
1.5 TIME OF THE ESSENCE.
Time shall be of the essence in all respects in this Indenture and the Warrant
Certificates.
1.6 CURRENCY.
Except as otherwise stated, all dollar amounts herein and in the Warrant
Certificates are expressed in the United States dollars.
1.7 APPLICABLE LAW.
This Indenture and the Warrant Certificates shall be construed and enforced in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein and shall be treated in all respects as Ontario
contracts.
1.8 SEVERABILITY.
In the event that any provision hereof shall be determined to be invalid or
unenforceable in any respect such determination shall not affect such provision
in any other respect or any other provision hereof, all of which shall remain in
full force and effect.
1.9 CONFLICTS.
In the event there is any conflict between this Indenture and any Warrant
Certificates, the provisions herein shall govern and prevail.
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1.10 MEANING OF "OUTSTANDING".
Every Warrant represented by a Warrant Certificate countersigned and delivered
by the Warrant Agent hereunder shall be deemed to be outstanding until it shall
be cancelled or delivered to the Warrant Agent for cancellation or until the
Expiry Time; provided that where a new Warrant Certificate has been issued
pursuant to Section y2.7 hereof to replace one which has been mutilated, lost,
stolen or destroyed, the Warrants represented by only one of such Warrant
Certificates shall be counted for the purpose of determining the aggregate
number of Warrants outstanding.
ARTICLE 2 THE WARRANTS
2.1 CREATION AND ISSUE OF WARRANTS.
(a) CREATION AND ISSUE OF WARRANTS. A total of up to 750,000 Warrants
entitling the registered holders thereof to acquire an aggregate of up
to 750,000 Warrant Shares, subject to the adjustment provisions in
Section y4.8 of this Indenture, are hereby created and authorized to be
issued hereunder upon the terms and conditions herein set forth.
(b) CERTIFICATION OF WARRANTS. Upon the issue of the Warrants, Warrant
Certificates shall be executed by the Corporation and delivered to the
Warrant Agent, certified by the Warrant Agent upon the Written Order of
the Corporation and delivered by the Warrant Agent to the Corporation
or to the order of the Corporation pursuant to a Written Direction of
the Corporation, without any further act of or formality on the part of
the Corporation and without the Warrant Agent receiving any
consideration therefor. The Warrant Certificates will be in the form
attached hereto as Schedule "A".
2.2 TERMS OF WARRANTS.
(a) EXERCISE TERMS. At any time commencing on the Closing Date and
terminating at the Expiry Time, each Warrant issued hereunder shall
entitle the holder thereof, upon the exercise thereof and the payment
of $1.50 in accordance with the provisions of yArticle 4 hereof, to be
issued one Warrant Share.
(b) ADJUSTMENT. The number of Warrant Shares which may be issued upon
exercise of the Warrants will be adjusted in the events and in the
manner specified in Section y4.8 hereof.
(c) PURCHASE BY CORPORATION. The Corporation may from time to time
purchase Warrants, by private agreement or otherwise and any such
purchase may be made in such manner, from such persons, at such prices
and on such terms as the Corporation in its sole discretion may
determine. Warrant Certificates representing Warrants purchased
pursuant to this Section shall be surrendered to the Warrant Agent for
cancellation and shall be accompanied by a Written Direction of the
Corporation to cancel the Warrants represented thereby.
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2.3 FORM OF WARRANT CERTIFICATES.
(a) FORM. The Warrant Certificates (including the certificate of the
Warrant Agent endorsed thereon) will be substantially in the form
attached hereto as Schedule "A", will be dated as of the Closing Date
(regardless of the actual dates of their issue), will bear such
distinguishing letters and numbers as the Corporation, with the
approval of the Warrant Agent, may prescribe and such legends as the
Corporation may prescribe and will be issuable in any whole number
denomination.
(b) PRODUCTION. The Warrant Certificates may be engraved, lithographed
or printed (the expression "printed" including for purposes hereof both
original typewritten material as well as mimeographed, mechanically,
photographically, photostatically or electronically reproduced,
typewritten or other written material), or partly in one form and
partly in another, as the Corporation may determine.
(c) WARRANT CERTIFICATES. Upon the original issuance of Warrants to
purchasers, the Warrant Certificates and certificates issued in
exchange therefor or in substitution thereof, shall bear the following
legends until the expiration of the applicable hold period in respect
of the Warrants or until counsel to the Corporation advises that the
legend is no longer required or an alternative legend is required:
"The securities represented hereby have not been registered
under the United States Securities Act of 1933, as amended
(the "US Securities Act"), or any state securities laws in
reliance on Regulation S and may be offered, sold, pledged,
transferred or otherwise disposed of only (A) pursuant to a
registration statement with respect to such securities which
has been declared effective under the US Securities Act; (B)
in an offshore transaction meeting the requirements of Rule
904 of Regulation S under the US Securities Act and in
compliance with any applicable securities laws; (C) for so
long as the securities represented hereby or underlying
securities are eligible for resale pursuant to Rule 144; or
(E) pursuant to any other available exemption from the
registration requirements under the US Securities Act."
"THE WARRANTS EVIDENCED HEREBY ARE EXERCISABLE ON OR BEFORE
5:00 P.M. (TORONTO TIME) ON SEPTEMBER 27, 2006, AFTER WHICH
TIME THE WARRANTS EVIDENCED HEREBY SHALL BE DEEMED TO BE VOID
AND OF NO FURTHER FORCE OR EFFECT."
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2.4 SIGNING OF WARRANT CERTIFICATES.
(a) SIGNING OFFICERS. The Warrant Certificates will be signed by one of
the Chairman, Chief Executive Officer, President, Vice-President,
Finance, a Vice-President or Secretary of the Corporation or by any
other individual to whom such signing authority is delegated by the
directors of the Corporation from time to time, subject to delivery to
the Warrant Agent of a certified copy of a resolution of the board of
directors, delegating such authority and a certificate of incumbency
relating to those persons authorized thereunder.
(b) SIGNATURES. The signatures of any of the officers or individuals
referred to in Subsection y2.4(a) hereof may be manual signatures,
engraved, lithographed or printed in facsimile and Warrant Certificates
bearing such facsimile signatures will, subject to Section y2.5 hereof,
be binding on the Corporation as if they had been manually signed by
such officers or individuals.
(c) NO LONGER OFFICER. Notwithstanding that any person whose manual or
facsimile signature appears on a Warrant Certificate as one of the
officers or individuals referred to in Subsection y2.4(a) hereof no
longer holds the same or any other office with the Corporation at the
date of issue of any Warrant Certificate or at the date of
certification or delivery thereof, such Warrant Certificate will,
subject to Section y2.5 hereof, be valid and binding on the
Corporation.
2.5 CERTIFICATION BY WARRANT AGENT.
(a) CERTIFICATION. No Warrant Certificate will be issued or, if issued,
will be valid or entitle the holder to the benefits hereof until it has
been certified by manual signature by or on behalf of the Warrant Agent
substantially in the form of the certificate attached hereto as
Schedule "A" or in such other form as may be approved by the Warrant
Agent. The certification by the Warrant Agent on a Warrant Certificate
will be conclusive evidence as against the Corporation that such
Warrant Certificate has been issued hereunder and that the holder
thereof is entitled to the benefits hereof.
(b) CERTIFICATION NO REPRESENTATION. The certification by the Warrant
Agent on any Warrant Certificate issued hereunder will not be construed
as a representation or warranty by the Warrant Agent as to the validity
of this Warrant Indenture or such Warrant Certificate (except the due
certification thereof) or as to the performance by the Corporation of
its obligations under this Warrant Indenture and the Warrant Agent will
in no respect be liable or answerable for the use made of any Warrant
Certificate or of the consideration therefor, except as otherwise
specified herein.
2.6 WARRANTS TO RANK PARI PASSU.
All Warrants will rank pari passu, whatever may be the actual dates of issue of
the Warrant Certificates by which they are evidenced.
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2.7 ISSUE IN SUBSTITUTION FOR LOST CERTIFICATES, ETC.
(a) SUBSTITUTION. If any Warrant Certificate becomes mutilated or is
lost, destroyed or stolen, the Corporation, subject to applicable law
and to Subsection y2.7(b) hereof, will issue, and thereupon the Warrant
Agent will certify and deliver, a new Warrant Certificate of like tenor
as the one mutilated, lost, destroyed or stolen in exchange for and in
place of and on surrender and cancellation of such mutilated
certificate or in lieu of and in substitution for such lost, destroyed
or stolen certificate.
(b) COST OF SUBSTITUTION. The applicant for the issue of a new Warrant
Certificate pursuant to this Section y2.7 will bear the reasonable cost
of the issue thereof and in the case of loss, mutilation, destruction
or theft will, as a condition precedent to the issue thereof:
(i) furnish to the Corporation and to the Warrant Agent such
evidence of ownership and of the loss, mutilation, destruction
or theft of the Warrant Certificate to be replaced as is
satisfactory to the Corporation and to the Warrant Agent in
their discretion, acting reasonably;
(ii) furnish an indemnity in amount and form satisfactory to
the Corporation and to the Warrant Agent in their discretion,
acting reasonably; and
(iii) pay the reasonable charges of the Corporation and the
Warrant Agent in connection therewith.
2.8 CANCELLATION OF SURRENDERED WARRANTS.
All Warrant Certificates surrendered to the Warrant Agent in accordance with the
provisions of this Warrant Indenture will be cancelled by the Warrant Agent and,
if requested in writing in advance by the Corporation, the Warrant Agent will
furnish the Corporation with a cancellation certificate identifying each Warrant
Certificate so cancelled.
2.9 WARRANTHOLDER NOT A SHAREHOLDER.
Nothing in this Warrant Indenture or in the holding of a Warrant evidenced by a
Warrant Certificate, or otherwise, will be construed as conferring on any
Warrantholder any right or interest whatsoever as a shareholder of the
Corporation, including but not limited to any right to vote at, to receive
notice of, or to attend any meeting of shareholders or any other proceeding of
the Corporation or any right to receive any dividend or other distribution,
including the rights to be issued pursuant to a Rights Offering.
ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP OF WARRANTS
3.1 REGISTRATION AND TRANSFER OF WARRANTS.
(a) REGISTER. The Corporation will cause to be kept by the Warrant
Agent at the office of the Warrant Agent in Toronto, Ontario:
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(i) a register of holders in which shall be entered in
alphabetical order the names and addresses of the holders of
Warrants and particulars of the Warrants held by them; and
(ii) a register of transfers in which all transfers of
Warrants and the date and other particulars of each transfer
shall be entered.
(b) TRANSFER. No transfer of any Warrant will be valid unless entered
on the register of transfers referred to in Subsection y3.1y(a) hereof,
and on any branch registers maintained pursuant to Subsection y3.1(g)
hereof, upon surrender to the Warrant Agent of the Warrant Certificate
evidencing such Warrant, duly endorsed by, or accompanied by a Form of
Transfer in the form attached to such Warrant Certificate executed by
the registered holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an
instrument in writing in form and executed in a manner satisfactory to
the Warrant Agent, and, upon compliance with such requirements and such
other reasonable requirements as the Warrant Agent and the Corporation
may prescribe, such transfer will be duly noted on such register(s) of
transfers by the Warrant Agent.
(c) REGISTER OF TRANSFERS. The transferee of any Warrant will, after
surrender to the Warrant Agent of the Warrant Certificate evidencing
such Warrant as required by Subsection y3.1(b) hereof and upon
compliance with all other conditions in respect thereof required by
this Warrant Indenture or by law, be entitled to be entered on the
register of holders referred to in Subsection y3.1y(a) hereof, and on
any branch registers of holders maintained pursuant to Subsection
y3.1(g) hereof, as the owner of such Warrant free from all equities or
rights of set-off or counterclaim between the Corporation and the
transferor or any previous holder of such Warrant, except in respect of
equities of which the Corporation is required to take notice by statute
or by order of a court of competent jurisdiction.
(d) REFUSAL OF REGISTRATION. The Corporation will be entitled, and may
direct the Warrant Agent, to refuse to recognize any transfer, or enter
the name of any transferee, of any Warrant on the registers referred to
in Subsection y3.1y(a) hereof, or on any branch registers maintained
pursuant to Subsection y3.1(g) hereof, if such transfer would
constitute a violation of the securities laws of any jurisdiction or
the rules, regulations or policies of any regulatory authority having
jurisdiction.
(e) NO NOTICE OF TRUSTS. Subject to applicable law, neither the
Corporation nor the Warrant Agent will be bound to take notice of or
see to the execution of any trust, whether express, implied or
constructive, in respect of any Warrant, and may transfer any Warrant
on the direction of the person registered as the holder thereof,
whether named as trustee or otherwise, as though that person were the
beneficial owner thereof.
(f) INSPECTION. The registers referred to in Subsection y3.1(a) hereof,
and any branch registers maintained pursuant to Subsection y3.1(g)
hereof, will at all reasonable times be open for inspection by the
Corporation and any Warrantholder. The Warrant Agent will from time to
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time when requested to do so in writing by the Corporation or any
Warrantholder (upon payment of the Warrant Agent's reasonable charges),
furnish the Corporation or such Warrantholder, as the case may be, with
a list of the names and addresses of holders of Warrants entered on
such registers and showing the number of Warrants held by each such
holder.
(g) LOCATION OF REGISTERS. The Corporation may at any time and from
time to time change the place at which the registers referred to in
Subsection y3.1(a) hereof are kept, cause branch registers of holders
or transfers to be kept at other places and close such branch registers
or change the place at which such branch registers are kept, in each
case subject to the approval of the Warrant Agent. Notice of all such
changes or closures shall be given by the Corporation to the Warrant
Agent and to holders of Warrants in accordance with Section y10.2
hereof.
3.2 EXCHANGE OF WARRANT CERTIFICATES.
(a) EXCHANGE. One or more Warrant Certificates may, on compliance with
the reasonable requirements of the Warrant Agent, be exchanged for one
or more Warrant Certificates of different denominations evidencing in
the aggregate the same number of Warrants as the Warrant Certificate or
Warrant Certificates being exchanged.
(b) PLACE OF EXCHANGE. Warrant Certificates may be exchanged only at
the office in Toronto, Ontario of the Warrant Agent or at any other
place designated by the Corporation with the approval of the Warrant
Agent.
(c) CANCELLATION. Any Warrant Certificate tendered for exchange
pursuant to this Section shall be surrendered to the Warrant Agent and
cancelled.
(d) EXECUTION. The Corporation will sign all Warrant Certificates
necessary to carry out exchanges pursuant to this Section y3.2 and such
Warrant Certificates will be certified by the Warrant Agent.
3.3 NO CHARGES FOR TRANSFER OR EXCHANGE.
No charge will be levied on a presenter of a Warrant Certificate pursuant to
this Warrant Indenture for the transfer of any Warrant or the exchange of any
Warrant Certificate.
3.4 OWNERSHIP OF WARRANTS.
(a) OWNER. The Corporation and the Warrant Agent may deem and treat the
person in whose name any Warrant is registered as the absolute owner of
such Warrant for all purposes, and such person will for all purposes of
this Indenture be and be deemed to be the absolute owner thereof, and
the Corporation and the Warrant Agent will not be affected by any
notice or knowledge to the contrary except as required by statute or by
order of a court of competent jurisdiction.
(b) RIGHTS OF REGISTERED HOLDER. The registered holder of any Warrant
will be entitled to the rights evidenced thereby free from all equities
and rights of set-off or counterclaim between the Corporation and the
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original or any intermediate holder thereof and all persons may act
accordingly, and the issue and delivery to any such registered holder
of the Warrant Shares issuable pursuant thereto will be a good
discharge to the Corporation and the Warrant Agent therefor and neither
the Corporation nor the Warrant Agent will be bound to inquire into the
title of any such registered holder.
ARTICLE 4 EXERCISE OF WARRANTS
4.1 EXERCISE.
(a) EXERCISE. Subject to the limitations set forth in Subsection
y4.1(b), and Section y4.7 hereof, the holder of any Warrant may at any
time commencing on the Closing Date and terminating at the Expiry Time
exercise the right thereby conferred, to be issued Warrant Shares by
surrendering to the Warrant Agent at the office in ? of the Warrant
Agent, or to any other person or at any other place designated by the
Corporation with the approval of the Warrant Agent, during normal
business hours on a Business Day, the Warrant Certificate evidencing
such Warrant, with a duly completed and executed notice of exercise
substantially in the form set out in such Warrant Certificate
specifying the number of Warrant Shares subscribed for together with a
certified cheque, bank draft or money order in lawful money of the
United States, payable to or to the order of the Corporation in an
amount equal to the Exercise Price multiplied by the number of Warrant
Shares subscribed for. The Corporation shall pay all taxes and other
expenses and charges payable in connection with the preparation,
execution and delivery of certificates representing the Warrant Shares
subscribed for pursuant to this subsection y4.1(a), except that, if
such certificates are to be registered in the name or names other than
the holder of the Warrants being so exercised or its nominee, funds
sufficient to pay all stock transfer taxes which shall be payable in
connection with the execution and delivery of such certificates shall
be paid by the holder of the Warrants to the Corporation at the time of
delivery of such certificates as set out above.
(b) RESTRICTIONS. The exercise of the Warrants pursuant to Subsection
y4.1(b) shall be subject to compliance with, and may be restricted by,
applicable securities legislation and the resale of the Warrant Shares
may be restricted by such securities legislation.
(c) SURRENDER OF WARRANT CERTIFICATES. Any Warrant Certificate with a
duly completed and executed notice of exercise referred to in
Subsection y4.1(a) hereof will be deemed to have been surrendered to
the Warrant Agent only on actual receipt thereof by the Warrant Agent
or one of the other persons at the office or one of the other places
specified in Subsection y4.1(a) hereof.
(d) NOTICE OF EXERCISE. Any notice of exercise referred to in
Subsection y4.1(a) hereof must be signed by the Warrantholder, or his
executors, administrators or other legal representatives or his or
their attorney duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Warrant Agent, acting
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reasonably, and, if any Warrant Shares thereby issuable are to be
issued to a person or persons other than the Warrantholder, must
specify the name or names and the address or addresses of each such
person or persons and the number of Warrant Shares to be issued to each
such person if more than one is so specified.
(e) EXERCISE OF LESS THAN ALL. The holder of any Warrant Certificate
who wishes to exercise the Warrants evidenced by such Warrant
Certificate may exercise less than all of such Warrants and in the case
of any such partial exercise shall be entitled to receive a Warrant
Certificate, in form, signed and certified in accordance with the
provisions of yArticle 2 hereof, evidencing the number of Warrants held
by the Warrantholder which remain unexercised.
4.2 EFFECT OF EXERCISE.
(a) EFFECT OF EXERCISE. Upon the exercise of any Warrants in accordance
with Section y4.1 hereof, the Warrant Shares thereby issuable shall be
deemed to have been issued, and the person or persons to whom such
Warrant Shares are to be issued shall be deemed to have become the
holder or holders of record thereof, on the Exercise Date, unless the
transfer registers for the Warrant Shares are closed on that date, in
which case such Warrant Shares shall be deemed to have been issued and
such person or persons shall be deemed to have become the holder or
holders of record thereof on the date on which such transfer registers
are reopened, but such Warrant Shares shall be issued on the basis of
the number of Warrant Shares to which such person or persons were
entitled on the Exercise Date.
(b) MAILING OF CERTIFICATES. Within five (5) Business Days following
the surrender to the Warrant Agent of the Warrant Certificates in
accordance with Subsection y4.1(c), the Corporation shall, subject to
the provisions of Section y4.6, cause the Warrant Agent to mail by way
of first class mail to the person or persons in whose name or names the
Warrant Shares thereby issued have been issued, at his or their
respective addresses set forth on the notice of exercise, or, if so
specified, cause to be delivered to such person or persons at the place
where the Warrant Certificates evidencing such Warrants were
surrendered, certificates representing the Warrant Shares so issued.
(c) ISSUE TO OTHER THAN HOLDER. If any Warrant Shares issuable pursuant
to any Warrants are to be issued to a person or persons other than the
Warrantholder, (i) the signature of the holder on the Notice of
Exercise in connection with the exercise of such Warrants must be
guaranteed by a member of a recognized Medallion Signature Guarantee
program or a Canadian Schedule I Chartered Bank; and (ii) the
Warrantholder must pay to the Corporation or to the Warrant Agent on
its behalf an amount equal to all eligible transfer taxes or other
government charges, and neither the Corporation nor the Warrant Agent
will be required to issue or deliver any certificates representing any
such Warrant Shares unless or until such amount has been so paid or the
Warrantholder has established to the satisfaction of the Corporation
that such taxes and charges have been paid or that no such taxes or
charges are owing.
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4.3 NO FRACTIONAL WARRANT SHARES.
The Corporation shall not be required to issue fractional Warrant Shares in
satisfaction of its obligations hereunder. To the extent that a holder of
Warrants would otherwise have been entitled to receive on the exercise of the
Warrants a fraction of a Warrant Share, the number of Warrant Shares received
shall be rounded down to the next whole Warrant Share and the Corporation will
not, in lieu of delivering the fractional Warrant Share, make any payment to the
holder or satisfy the right to receive such fractional interest by payment to
the Warrantholder of an amount in cash.
4.4 WARRANTS VOID AFTER EXPIRY TIME.
After the Expiry Time, no holder of a Warrant Certificate representing a Warrant
which has not been validly exercised as set forth herein has any rights either
under this Warrant Indenture or the Warrant Certificate, and the Warrants are
void and of no value or effect. All provisions of this Warrant Indenture are
subject to this Section.
4.5 RECORDING.
The Warrant Agent shall record particulars of each Warrant exercised which
particulars shall include the name and address of each person to whom Warrant
Shares are thereby issued, the number of Warrant Shares so issued and the
Exercise Date in respect thereof. Within three (3) Business Days after each
Exercise Date, the Warrant Agent shall provide such particulars in writing to
the Corporation.
4.6 POSTPONEMENT OF DELIVERY OF CERTIFICATES.
The Corporation shall not be required to deliver certificates for Warrant Shares
during the period when the transfer books of the Corporation are closed by law
and, in the event that the Exercise Date occurs during such period, the delivery
of certificates may be postponed for a period not exceeding five (5) days after
the date of the re-opening of the transfer books.
4.7 SECURITIES RESTRICTIONS.
(a) LEGENDED CERTIFICATES FOR THE WARRANT SHARES. No Warrant Shares
will be issued pursuant to the exercise of any Warrant if the issue of
such Warrant Shares would constitute a violation of the securities laws
of any applicable jurisdiction, and, without limiting the generality of
the foregoing, if the Warrants are exercised prior to the expiration of
the applicable hold period in respect of the Warrants, the certificates
representing the Warrant Shares thereby issued will bear such legends
as may, in the opinion of counsel to the Corporation, be necessary or
advisable in order to avoid a violation of any securities laws of any
applicable jurisdiction or to comply with the requirements of any stock
exchange on which the Warrant Shares are listed, provided that if, at
any time, in the opinion of counsel to the Corporation, such legends
are no longer necessary or advisable in order to avoid a violation of
any such laws or requirements, or the holder of any such legended
certificate provides the Corporation with evidence satisfactory in form
and substance to the Corporation to the effect that such holder is
entitled to sell or otherwise transfer such Warrant Shares in a
transaction in which such legends are not required, such legended
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certificate may thereafter be surrendered to the Corporation in
exchange without charge for a certificate which does not bear such
legend.
(b) RESALE RESTRICTIONS. Upon the issuance of the Warrant Shares prior
to the expiration of the applicable hold period in respect of the
Warrants, the certificates representing such Warrant Shares shall bear
the following legends, or such other legends as may be required under
applicable securities laws, until the expiration of the applicable hold
period in respect of the Warrants, in addition to any other legends
required by any stock exchange on which the Warrant Shares are listed:
"The securities represented hereby have not been registered
under the United States Securities Act of 1933, as amended
(the "US Securities Act"), or any state securities laws in
reliance on Regulation S and may be offered, sold, pledged,
transferred or otherwise disposed of only (A) pursuant to a
registration statement with respect to such securities which
has been declared effective under the US Securities Act; (B)
in an offshore transaction meeting the requirements of Rule
904 of Regulation S under the US Securities Act and in
compliance with any applicable securities laws; (C) for so
long as the securities represented hereby or underlying
securities are eligible for resale pursuant to Rule 144; or
(D) pursuant to any other available exemption from the
registration requirements under the US Securities Act."
4.8 ADJUSTMENTS.
(a) DEFINITIONS. For the purposes of this Section y4.8 unless there is
something in the subject matter or context inconsistent therewith, the
words and terms defined below shall have the respective meanings
specified therefor in this Section:
(i) "Current Market Price" of the Common Shares at any date
means the price per share equal to the weighted average price
at which the Common Shares have traded on the OTCBB or, if the
Common Shares are not then listed on the OTCBB, on such other
Canadian or United States stock exchange or market as may be
selected by the directors of the Corporation for such purpose
during the period of any twenty consecutive trading days
ending not more than five business days before such date;
provided that the weighted average price will be determined by
dividing the aggregate sale price of all Common Shares sold on
the said exchange or market, as the case may be, during the
said twenty consecutive trading days by the total number of
Common Shares so sold; and provided further that if the Common
Shares are not then listed on any Canadian stock exchange or
traded in the over-the counter market, then the Current Market
Price will be determined by such firm of independent chartered
accountants as may be selected by the directors; and
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(ii) "trading day" with respect to a stock exchange or
over-the-counter market means a day on which such stock
exchange or market is open for business.
(b) COMMON SHARE REORGANIZATION. If and whenever at any time after the
date hereof and prior to the Expiry Time the Corporation shall (i)
subdivide, redivide or change its then outstanding Common Shares into a
greater number of Common Shares, (ii) reduce, combine or consolidate
its then outstanding Common Shares into a lesser number of Common
Shares or (iii) issue Common Shares (or securities exchangeable for or
convertible into Common Shares) to the holders of all or substantially
all of its then outstanding Common Shares by way of a stock dividend or
other distribution (any of such events herein called a "Common Share
Reorganization"), then the Exercise Price shall be adjusted effective
immediately after the record date established in connection with any
such event or, in the event that no such record date has been
established, immediately after the effective date of any such event, as
the case may be, by multiplying the then applicable Exercise Price in
effect on such effective date or record date, as the case may be, by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such effective date or record date, as the case may be,
before giving effect to such Common Share Reorganization and the
denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such Common Share Reorganization
including, in the case where securities exchangeable for or convertible
into Common Shares are distributed, the number of additional Common
Shares that would be outstanding if such securities were exchanged for
or converted into Common Shares after giving effect to such Common
Share Reorganization. To the extent that any adjustment in the Exercise
Price occurs pursuant to this Subsection y4.7(b) as a result of the
fixing by the Corporation of a record date for the distribution of
securities exchangeable for or convertible into Common Shares, the
Exercise Price will be readjusted immediately after the expiry of any
relevant exchange or conversion right to the Exercise Price that would
then be in effect based upon the number of Common Shares actually
issued and remaining issuable after such expiry and will be further
readjusted in such manner upon the expiry of any further such rights.
(c) RIGHTS OFFERING. If and whenever at any time after the date hereof
and prior to the Expiry Time, the Corporation fixes a record date for
the issue or distribution to the holders of all or substantially all of
the outstanding Common Shares of rights, options or warrants pursuant
to which such holders are entitled, during a period expiring not more
than 45 days after the record date for such issue (such period being
the "Rights Period"), to subscribe for or purchase Common Shares or
securities exchangeable for or convertible into Common Shares at a
price per Common Share (or in the case of securities exchangeable for
or convertible into Common Shares at an exchange or conversion price
per Common Share at the date of issue of such securities) which is less
than 95% of the Current Market Price of the Common Shares on such
record date for such issue (any of such events being herein called a
"Rights Offering"), the Exercise Price will be adjusted effective
immediately after the Rights Period for the Rights Offering to the
amount determined by multiplying the applicable Exercise Price in
effect at the end of the Rights Period by a fraction:
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(i) the numerator of which will be the sum of:
(1) the number of Common Shares outstanding on the
record date for the Rights Offering; and
(2) the number determined by dividing:
(A) either (a) the product of the number of
Common Shares offered for issue during the
Rights Period pursuant to the exercise of
the rights, warrants or options under the
Rights Offering and the price at which such
Common Shares are offered; or, (b) the
product of the exchange or conversion price
of the securities so offered and the number
of Common Shares for or into which the
securities offered pursuant to the Rights
Offering may be exchanged or converted, as
the case may be; by
(B) the Current Market Price of the Common
Shares as of the record date for the Rights
Offering; and
(ii) the denominator of which will be the aggregate of the
number of Common Shares outstanding on such record date and
the number of Common Shares actually issued or subscribed for
during the Rights Period upon exercise of the rights, warrants
or options pursuant to the Rights Offering (including in the
case of the issue or distribution of securities exchangeable
for or convertible into Common Shares the number of Common
Shares for or into which such securities may be exchanged or
converted).
If by the terms of the rights, options, or warrants referred to in this
Subsection y4.8(c), there is more than one purchase, conversion or
exchange price per Common Share, the aggregate price of the total
number of additional Common Shares offered for subscription or
purchase, or the aggregate conversion or exchange price of the
convertible or exchangeable securities so offered, will be calculated
for purposes of the adjustment on the basis of the lowest purchase,
conversion or exchange price per Common Share, as the case may be. Any
Common Shares owned by or held for the account of the Corporation will
be deemed not to be outstanding for the purpose of any such
calculation. To the extent that any adjustment in the Exercise Price
occurs pursuant to this Subsection y4.8(c) as a result of the fixing by
the Corporation of a record date for the issue or distribution of
rights, options or warrants referred to in this Subsection y4.8(c), the
Exercise Price will be readjusted immediately after the expiry of any
relevant exchange, conversion or exercise right to the Exercise Price
that would then be in effect based upon the number of Common Shares
actually issued and remaining issuable after such expiry and will be
further readjusted in such manner upon the expiry of any further such
rights.
(d) SPECIAL DISTRIBUTION. If and whenever at any time after
the date hereof and prior to the Expiry Time, the Corporation
fixes a record date for the payment, issue or distribution to
the holders of all or substantially all of the Common Shares
of:
(i) Common Shares or other securities of the
Corporation;
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(ii) rights, options or warrants to acquire Common
Shares or securities exchangeable for or convertible
into Common Shares (other than rights, options or
warrants pursuant to which holders of Common Shares
are entitled, during a period expiring not more than
45 days after the record date for such issue, to
subscribe for or purchase Common Shares at a price
per share (or in the case of securities exchangeable
for or convertible into Common Shares at an exchange
or conversion price per share at the date of issue of
such securities) of at least 95% of the Current
Market Price of the Common Shares on such record
date);
(iii) evidences of indebtedness of the Corporation;
or
(iv) any property or assets (including evidences of
the Corporation's indebtedness) of the Corporation;
and if such issue or distribution does not constitute a Common Share
Reorganization or a Rights Offering (any of such non-excluded events
being herein called a "Special Distribution"), the Exercise Price will
be adjusted effective immediately after the record date for the Special
Distribution to the amount determined by multiplying the Exercise Price
in effect on the record date for the Special Distribution by a
fraction:
(v) the numerator of which will be the difference
between:
(1) the product of the number of Common
Shares outstanding on such record date and
the Current Market Price of the Common
Shares on such record date, and
(2) the fair value, as determined in good
faith by the directors of the Corporation,
to the holders of the Common Shares, of such
dividend, cash, securities, rights, options,
warrants, evidences of indebtedness or
property or assets to be issued or
distributed in the Special Distribution, and
(3) the denominator of which will be the
product obtained by multiplying the number
of Common Shares outstanding on such record
date by the Current Market Price of the
Common Shares on such record date.
Any Common Shares owned by or held for the account of the Corporation
will be deemed not to be outstanding for the purpose of such
calculation. To the extent that any adjustment in the Exercise Price
occurs pursuant to this Subsection y4.8(d) as a result of the fixing by
the Corporation of a record date for the issue or distribution of
rights, options or warrants to acquire Common Shares or securities
exchangeable for or convertible into Common Shares referred to in this
Subsection y4.8(d), the Exercise Price will be readjusted immediately
after the expiry of any relevant exercise, exchange or conversion right
to the amount that would then be in effect if the fair market value had
been determined on the basis of the number of Common Shares issued and
remaining issuable immediately after such expiry, and will be further
readjusted in such manner upon the expiry of any further such rights.
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(e) CAPITAL REORGANIZATION. If and whenever at any time after the date
hereof and prior to the Expiry Time there is a capital reorganization
of the Corporation or a reclassification, redesignation or other change
in the Common Shares or securities (other than a Common Share
Reorganization) or a consolidation, arrangement or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other than a consolidation, arrangement, merger or
amalgamation which does not result in any reclassification of the
outstanding Common Shares or a change of the Common Shares into other
securities), or a transfer, sale or conveyance of all or substantially
all of the Corporation's undertaking or assets to another corporation
or other entity in which the holders of Common Shares are entitled to
receive shares, other securities or other property (any of such events
being called a "Capital Reorganization"), the holder of Warrants issued
hereunder, where such holder has not exercised the right of
subscription and purchase under this Warrant certificate prior to the
effective date of such Capital Reorganization, shall be entitled to
receive and shall accept, upon the exercise of such right, on such date
or any time thereafter, for the same aggregate consideration in lieu of
the number of Common Shares to which such holder was theretofore
entitled to subscribe for and purchase upon the exercise of the
Warrants, the kind and aggregate number of shares and/or other
securities or property resulting from the Capital Reorganization which
such holder would have been entitled to receive as a result of such
Capital Reorganization if, on the effective date thereof, such holder
had been the registered holder of the number of Common Shares to which
such holder was theretofore entitled to subscribe for and purchase. If
necessary, as a result of any Capital Reorganization, appropriate
adjustments will be made in the application of the provisions of this
Warrant certificate with respect to the rights and interest thereafter
of such holder to the end that the provisions of this Warrant
certificate will thereafter correspondingly be made applicable as
nearly as may reasonably be possible in relation to any shares or other
securities and/or property thereafter deliverable upon the exercise of
the Warrants.
(f) ADJUSTMENT TO NUMBER OF WARRANT SHARES. If and whenever at any time
after the date hereof and prior to the Expiry Time, any of the events
set out in Subsections 4.8(b), (c), (d) or (e) shall occur and the
occurrence of such event results in an adjustment of the Exercise Price
pursuant to the provisions of this Section y4.8, then the number of
Warrant Shares purchasable pursuant to this Warrant upon exercise
thereof shall be adjusted contemporaneously with the adjustment of the
Exercise Price by multiplying the number of Warrant Shares then
otherwise purchasable on the exercise thereof by a fraction, the
numerator of which shall be the then applicable Exercise Price in
effect immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
(g) DEFERRAL OF ADJUSTMENT. In any case in which this Section shall
require that an adjustment shall become effective immediately after a
record date for or an effective date of an event referred to herein,
the Corporation may defer, until the occurrence and consummation of
such event, issuing to the holder of any Warrant exercised after such
record date or effective date and before the occurrence and
consummation of such event the additional Warrant Shares or other
shares, securities or property issuable upon such exercise by reason of
the adjustment required by such event, provided, however, that the
19
Corporation will deliver to such holder an appropriate instrument
evidencing such holder's right to receive such additional Warrant
Shares or other shares, securities or property upon the occurrence and
consummation of such event and the right to receive any dividend or
other distribution in respect of such additional Warrant Shares or
other shares, securities or property declared in favour of the holders
of record of Common Shares or of such other shares, securities or
property on or after the Exercise Date or such later date as such
holder would, but for the provisions of this Subsection, have become
the holder of record of such additional Warrant Shares or of such other
shares, securities or property pursuant hereto.
(h) ADJUSTMENTS CUMULATIVE. The adjustments provided for in this
Section are cumulative and shall, in the case of any adjustment to the
Exercise Price, be computed to the nearest one one-hundredth of a
Warrant Share and will apply (without duplication) to successive
subdivisions, consolidations, distributions, issuances or other events
resulting in any adjustment under the provisions of this Section,
provided that, notwithstanding any other provision of this Section, no
adjustment of the Exercise Price will be made which would result in an
increase in the Exercise Price (except in connection with an event set
forth in subsection 4.8(b)(ii) hereof or subsection 4.8(e) hereof) and
no adjustment of the Exercise Price will be required (i) unless such
adjustment would require a decrease of at least 1% in the Exercise
Price then in effect (provided, however, that any adjustment which by
reason of this Subsection is not required to be made will be carried
forward and taken into account in any subsequent adjustment), (ii) if,
in respect of any event described in this Section (other than the
events referred to in Subsection y4.8(b) and Subsection y4.8(c)), the
holders of Warrants are entitled to participate in such event, or are
entitled to participate within 45 days in a comparable event, on the
same terms, mutatis mutandis as if the Warrants had been exercised
prior to or on the effective date of or record date for such event,
(iii) in respect of any Common Shares issuable or issued pursuant to
any stock option or stock purchase plan in force from time to time for
directors, officers or employees of the Corporation or of a Subsidiary
of the Corporation or pursuant to the Warrants, or (iv) in respect of
any Common Shares issued on the exercise of any other stock options
issued by the Corporation and outstanding on the date hereof, or (v) in
respect of the issuance of any Common Shares issued as consideration of
the acquisition of mining rights, property or shares in the ordinary
course of business.
(i) No adjustment to the number of Warrant Shares purchasable upon the
exercise of the Warrants shall be made in respect of any event
described in Subsections y4.8y(b), y(c), y(d) or y(e) other than the
events referred to in paragraphs (i) and (ii) of subsection (b)
thereof, if Warrantholders are entitled to participate in such event on
the same terms, mutatis mutandis, as if Warrantholders had exercised
their Warrants prior to or on the effective date or record date of such
event, such participation being subject to the prior written consent of
theNASDAQ Bulletin Board.
(j) No adjustment to the number of Warrant Shares purchasable upon the
exercise of the Warrants shall be made pursuant to Subsections
y4.8y(b), y(c), y(d) or y(e) in respect of the issue from time to time
20
of Common Shares purchasable on exercise of the Warrants or in respect
of the issue from time to time of a dividend paid in the ordinary
course of Common Shares to holders of Common Shares who exercise an
option or election to receive substantially equivalent dividends in
Common Shares in lieu of receiving a cash dividend, and any such issue
shall be deemed not to be a Common Share Reorganization.
(k) RESOLUTION OF QUESTIONS. In the event of any question arising with
respect to the adjustments provided for in this Section, such questions
shall be conclusively determined by the Corporation's Auditors or, if
they are unable or unwilling to act, by such firm of chartered
accountants as is appointed by the Corporation and acceptable to the
Warrant Agent. Such accountants shall have access to all necessary
records of the Corporation and such determination shall be binding upon
the Corporation, the Warrant Agent and the Warrantholders. If any such
determination is made, the Corporation shall forthwith deliver a
certificate to the Warrant Agent describing such determination and give
notice to the Warrantholders of such determination.
(l) OTHER ACTIONS. If and whenever at any time the Corporation shall
take any action affecting or relating to the Common Shares, other than
any action described in this Section, which in the opinion of the
directors would prejudicially affect the rights of any holders of
Warrants, the Exercise Price will be adjusted by the directors in such
manner, if any, and at such time, as the directors may in their sole
discretion determine to be equitable in the circumstances, subject to
the prior consent of the NASDAQ Bulletin Board or any other exchange on
which the Corporation's securities are then listed to such holders.
(m) RECORD DATE. In the absence of a resolution of the board of
directors of the Corporation fixing a record date for any dividend or
distribution referred to in Subsection y4.8(b) above, the Corporation
shall be deemed to have fixed as the record date therefor the date on
which such dividend or distribution is effected. If the Corporation
sets a record date to take any action and thereafter and before the
taking of such action abandons its plan to take such action, then no
adjustment to the Exercise Price will be required by reason of the
setting of such record date.
(n) ADDITIONAL ACTIONS. As a condition precedent to the taking of any
action which would require an adjustment in any of the rights under the
Warrants, the Corporation will take any action which may, in the
opinion of counsel to the Corporation be necessary in order that the
Corporation, or any successor to the Corporation or successor to the
undertaking or assets of the Corporation, will be obligated to and may
validly and legally issue all of the Warrant Shares or other shares,
securities or property which the holders of Warrants would be entitled
to receive thereafter on the exercise thereof in accordance with the
provisions hereof.
(o) NOTICE TO WARRANT AGENT. At least 10 days before the earlier of the
effective date of or record date for any event referred to in this
Section that requires or might require an adjustment in any of the
rights under the Warrants, the Corporation will:
21
(i) file with the Warrant Agent, a Certificate of the
Corporation specifying the particulars of such event and, to
the extent determinable, any adjustment required and the
computation of such adjustment; and
(ii) deliver a certificate to the Warrantholders specifying
the particulars of such event and, to the extent determinable,
any adjustment required.
Such notice need only set forth such particulars as have been
determined at the date such notice is given. If any adjustment for
which such notice is given is not then determinable, promptly after
such adjustment is determinable the Corporation will:
(i) file with the Warrant Agent a Certificate of the
Corporation showing the computation of such adjustment; and
(ii) deliver a certificate to the Warrantholders of such
adjustment.
The Warrant Agent may act and rely, for all purposes, upon the
certificate and any other documents filed by the Corporation pursuant
to this Section.
(p) CLOSING TRANSFER BOOKS, ETC. The Corporation will not close its
transfer books or take any other corporate action which might deprive
the holder of a Warrant of the opportunity of exercising its right of
acquisition pursuant thereto during the period of ten Business Days
after the giving of any notice required by Subsection y4.8(o).
(q) DUTY OF WARRANT AGENT. The Warrant Agent:
(i) shall not at any time be under any duty or responsibility
to any Warrantholder to determine whether any facts exist
which may require any adjustment in the Exercise Price, or
with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed in making
same;
(ii) shall not be accountable with respect to the validity or
value (or the kind or amount) of any Warrant Shares or of any
other shares, securities or property which may at any time be
issued or delivered upon the exercise of any Warrant; and
(iii) shall not be responsible for any failure of the
Corporation to make any cash payment or to issue, transfer or
deliver Warrant Shares or share or warrant certificates upon
the surrender of any Warrant for the purpose of exercise, or
to comply with any of the covenants contained in this Section.
(r) POST-ADJUSTMENT. After any adjustment pursuant to this Section, the
term "Warrant Shares" where used in this Indenture shall be interpreted
to mean securities of any class or classes which, as a result of such
adjustment and all prior adjustments pursuant to this Section, the
Warrantholder is entitled to receive upon the exercise of its Warrants,
and the number of Warrant Shares indicated in any exercise made
22
pursuant to a Warrant shall be interpreted to mean the number of
securities and other property and assets which, as a result of such
adjustment and all prior adjustments pursuant to this Section y4.8, a
Warrantholder is entitled to receive upon the exercise of a Warrant.
ARTICLE 5 COVENANTS OF THE CORPORATION
5.1 COVENANTS OF THE CORPORATION.
The Corporation covenants with the Warrant Agent, for the benefit of the Warrant
Agent and the Warrantholders, that until the Expiry Time:
(a) MAINTENANCE. The Corporation will at all times maintain its
corporate existence, carry on and conduct its business, and that of its
material Subsidiaries, in a proper, efficient and business-like manner
and keep or cause to be kept proper books of account in accordance with
generally accepted accounting practice.
(b) RESERVATION OF WARRANT SHARES. The Corporation will reserve for the
purpose and keep available sufficient unissued Common Shares to enable
it to satisfy its obligations on the exercise of the Warrants.
(c) WARRANTS AND ISSUE OF WARRANT SHARES. The Warrants shall, when
countersigned and registered as herein provided, be valid and
enforceable against the Corporation and, subject to the provisions of
this Indenture, the Corporation will cause the Warrant Shares from time
to time issued pursuant to the exercise of the Warrants, and the
certificates representing such Warrant Shares, to be issued and
delivered in accordance with the Warrants and the terms hereof and all
Warrant Shares that are issued on exercise of the Warrants will be
fully paid and non-assessable shares.
(d) OPEN REGISTERS. The Corporation will cause the Warrant Agent to
keep open the registers of holders and registers of transfers referred
to in Section y3.1 hereof as required by such Section and will not take
any action or omit to take any action which would have the effect of
preventing the Warrantholders from exercising any of the Warrants or
receiving any of the Warrant Shares upon such exercise.
(e) CARRYING ON OF BUSINESS. At all times while the Warrants are
outstanding, the Corporation will maintain its corporate existence and
carry on and conduct its business in a proper and business-like manner
and cause to be kept the proper books of account in accordance with
generally accepted accounting practices.
(f) FURTHER ASSURANCES. The Corporation will do, execute, acknowledge
and deliver or cause to be done, executed, acknowledged and delivered,
all other acts, deeds and assurances as the Warrant Agent may
reasonably require for better accomplishing and affecting the
provisions of this Indenture.
(g) WARRANT AGENT'S REMUNERATION. The Corporation shall pay (and shall
be responsible for the payment thereof) to the Warrant Agent reasonable
remuneration agreed to in writing for its services hereunder and will
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repay to the Warrant Agent the amount of all reasonable out-of-pocket
expenditures that the Warrant Agent reasonably incurs in the execution
of its duties hereunder with respect to the Warrants without
duplication of any amounts otherwise claimed or paid to the Warrant
Agent, including reasonable fees and disbursement reasonably incurred
by counsel and all other advisors reasonably retained by the Warrant
Agent in connection herewith.
(h) FILINGS. The Corporation will make all requisite filings required
of it, including filings with appropriate Securities Regulatory
Authorities, in connection with the exercise of the Warrants and the
issue of the Warrant Shares.
(i) ORDERS, RULINGS ETC. The Corporation covenants that if, in the
reasonable opinion of outside counsel, supported by legal analysis, if
requested, any instrument is required to be filed with, or any
permission, order or ruling is required to be obtained from any
securities administrator, regulatory agency or governmental authority
in the United States or Canada or any other step is required under any
applicable law before the Warrant Shares may be issued or delivered to
the Warrantholders, the Corporation will use its commercially
reasonable efforts to file such instrument, obtain such permission,
order or ruling or take all such other actions, at its expense, as are
required.
(j) GENERAL PERFORMANCE. Generally, the Corporation will well and truly
perform and carry out all acts and things to be done by it as provided
in this Indenture.
5.2 PERFORMANCE OF COVENANTS BY WARRANT AGENT.
If the Corporation fails to perform any of its obligations under this Indenture,
the Warrant Agent may notify the Warrantholders of such failure or may itself
perform any of such obligations capable of being performed by it, but will not
be bound to do so or to notify the Warrantholders that it is so doing. All
reasonable sums expended or advanced by the Warrant Agent in performance of the
Corporation's obligations as provided for in this Section y5.2 shall be
repayable by the Corporation. No such performance, expenditure or advance by the
Warrant Agent shall be deemed to relieve the Corporation of any default
hereunder or of its continuing obligations under this Indenture. 5.3
CERTIFICATES OF NO DEFAULT.
If at any time requested by the Warrant Agent, the Corporation shall deliver to
the Warrant Agent an officer's certificate stating that the Corporation has
complied with all covenants, conditions or other requirements contained in this
indenture or if such is not the case, specifying the covenant, condition or
other requirement which has not been complied with and giving particulars of
such non-compliance.
ARTICLE 6 ENFORCEMENT
6.1 SUITS BY WARRANTHOLDERS.
All or any of the rights conferred on the holder of any Warrant by the terms of
the Warrant Certificate evidencing such Warrant or of this Indenture may be
enforced by such holder by appropriate legal proceedings but without prejudice
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to the right which is hereby conferred on the Warrant Agent to proceed in its
own name or on behalf of the holders of Warrants to enforce each and every
provision herein contained for the benefit of the Warrantholders.
ARTICLE 7 MEETINGS OF WARRANTHOLDERS
7.1 RIGHT TO CONVENE MEETINGS.
(a) CONVENING OF MEETING. The Warrant Agent may at any time and from
time to time convene a meeting of the Warrantholders, and will do so on
receipt of a Written Request of the Corporation or a Warrantholders'
Request and on being funded and indemnified to its reasonable
satisfaction by the Corporation or by one or more of the Warrantholders
signing such Warrantholders' Request against the costs which it may
incur in connection with calling and holding such meeting.
(b) FAILURE TO CONVENE. If the Warrant Agent fails, within fifteen (15)
Business Days after receipt of such Written Request of the Corporation
or Warrantholders' Request, funding and indemnification, to give notice
convening a meeting, the Corporation or any of such Warrantholders, as
the case may be, may convene such meeting.
(c) PLACE OF MEETING. Every such meeting shall be held in the City of
Toronto, Ontario or such other place in Ontario as is approved or
determined by the Warrant Agent and the Corporation.
7.2 NOTICE.
(a) NOTICE. At least ten (10) Business Days' notice of any meeting must
be given to the Warrantholders, to the Warrant Agent (unless the
meeting has been called by it) and to the Corporation (unless the
meeting has been called by it).
(b) CONTENTS. The notice of the meeting must state the time when and
the place where the meeting is to be held and must state briefly the
general nature of the business to be transacted thereat, but it shall
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.
7.3 CHAIRMAN.
Some person (who need not be a Warrantholder) designated in writing by the
Warrant Agent shall be chairman of the meeting or, if no person is so designated
or the person so designated is not present within 30 minutes after the time
fixed for the holding of the meeting, the Warrantholders present in person or by
proxy may choose some person present to be chairman.
7.4 QUORUM.
(a) QUORUM. Subject to the provisions of Section y7.12 hereof, at any
meeting of Warrantholders a quorum shall consist of two or more
Warrantholders present either in person or by proxy at the commencement
of the meeting holding in the aggregate not less than 20% of the total
number of Warrants then outstanding.
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(b) NO QUORUM. If a quorum of Warrantholders is not present within 30
minutes after the time fixed for holding a meeting, the meeting, if
summoned by Warrantholders or on a Warrantholders' Request, shall be
dissolved, but, subject to Section y7.12 hereof, in any other case
shall be adjourned to the fifth following Business Day at the same time
and place and no notice of the adjournment need be given.
(c) ADJOURNED MEETING. At the adjourned meeting two Warrantholders
present in person or by proxy shall form a quorum and may transact any
business for which the meeting was originally convened notwithstanding
the number of Warrants that they hold.
7.5 POWER TO ADJOURN.
The chairman of a meeting at which a quorum of the Warrantholders is present
may, with the consent of the meeting, adjourn the meeting, and no notice of such
adjournment need be given except as the meeting prescribes.
7.6 SHOW OF HANDS.
Every question submitted to a meeting, other than an Extraordinary Resolution,
shall be decided in the first place by a majority of the votes given on a show
of hands and, unless a poll is duly demanded as herein provided, a declaration
by the chairman that a resolution has been carried or carried unanimously or by
a particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact. In the case of an equality of votes on a show
of hands, the chairman shall not have a casting vote.
7.7 POLL.
(a) EXTRAORDINARY RESOLUTION. On every Extraordinary Resolution, and on
every other question submitted to a meeting on which a poll is directed
by the chairman or requested by one or more Warrantholders acting in
person or by proxy, a poll shall be taken in such manner as the
chairman directs.
(b) OTHER. Questions other than those required to be determined by
Extraordinary Resolution shall be decided by a majority of the votes
cast on the poll.
7.8 VOTING.
On a show of hands each person present and entitled to vote, whether as a
Warrantholder or as proxy for one or more absent Warrantholders, or both, shall
have one vote, and on a poll each Warrantholder present in person or represented
by a proxy duly appointed by instrument in writing shall be entitled to one vote
in respect of each Warrant held by such holder. A proxy need not be a
Warrantholder. The chairman of any meeting shall be entitled to vote in respect
of any Warrants and proxies held by him.
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7.9 REGULATIONS.
(a) ABILITY TO MAKE. The Warrant Agent, or the Corporation with the
approval of the Warrant Agent, may from time to time make or vary such
regulations not contrary to the provisions of this Indenture, as it
thinks fit:
(i) for the form of instrument appointing a proxy, the manner
in which it must be executed and verification of the authority
of a person who executes it on behalf of a Warrantholder;
(ii) governing the places at which and the times by which
voting certificates or instruments appointing proxies must be
deposited;
(iii) generally for the calling of meetings of Warrantholders
and the conduct of business thereat; and
(iv) for the deposit of instruments appointing proxies at some
approved place or places other than the place at which the
meeting is to be held and enabling particulars of such
instruments appointing proxies to be sent by mail, telecopier
or other means of prepaid, transmitted or recorded
communication before the meeting to the Corporation or to the
Warrant Agent at the place where the meeting is to be held and
for voting pursuant to instruments appointing proxies so
deposited as though the instruments themselves were produced
at the meeting.
Any regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted.
(b) RECOGNITION. Except as such regulations provide, the only persons
who shall be recognized at a meeting as the holders of any Warrants, or
as entitled to vote or, subject to Section y7.10 hereof, to be present
at the meeting in respect thereof, shall be the registered holders of
Warrants or persons holding proxies on their behalf.
7.10 THE CORPORATION AND WARRANT AGENT MAY BE REPRESENTED.
The Corporation and the Warrant Agent by their respective employees, officers or
directors, and the counsel of the Corporation and the Warrant Agent, may attend
any meeting of Warrantholders, but shall have no vote as such.
7.11 POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION.
In addition to all other powers conferred on them by the other provisions of
this Warrant Indenture or by law, the Warrantholders at a meeting shall have the
power, exercisable from time to time by Extraordinary Resolution:
(a) to assent to or sanction any amendment, modification, abrogation,
alteration, compromise or arrangement of any right of the
Warrantholders or, with the reasonable consent of the Warrant Agent, of
the Warrant Agent in its capacity as Warrant Agent hereunder or on
behalf of the Warrantholders against the Corporation, whether such
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right arises under this Warrant Indenture or otherwise, which shall be
agreed to by the Corporation, and to authorize the Warrant Agent to
concur in and execute any indenture supplemental hereto in connection
therewith;
(b) to amend, alter or repeal any Extraordinary Resolution previously
passed;
(c) subject to arrangements as to financing and indemnity satisfactory
to the Warrant Agent, to direct or authorize the Warrant Agent to
enforce any obligation of the Corporation under this Warrant Indenture
or to enforce any right of the Warrantholders in any manner specified
in the Extraordinary Resolution;
(d) to direct or authorize the Warrant Agent to refrain from enforcing
any obligation or right referred to in Subsection y7.11(c);
(e) to waive and direct the Warrant Agent to waive any default by the
Corporation in complying with any provision of this Warrant Indenture,
either unconditionally or on any condition specified in the
Extraordinary Resolution;
(f) to appoint a committee with power and authority to exercise, and to
direct the Warrant Agent to exercise, on behalf of the Warrantholders,
such of the powers of the Warrantholders as are exercisable by
Extraordinary Resolution;
(g) to restrain any Warrantholder from taking or instituting any suit,
action or proceeding against the Corporation for the enforcement of any
obligation of the Corporation under this Warrant Indenture or to
enforce any right of the Warrantholders;
(h) to direct any Warrantholder who, as such, has brought any suit,
action or proceeding, to stay or discontinue or otherwise deal
therewith on payment of the costs, charges and expenses reasonably and
properly incurred by him in connection therewith;
(i) to assent to any change in or omission from the provisions
contained in the Warrant Certificates and this Warrant Indenture or any
ancillary or supplemental instrument which may be agreed to by the
Corporation, and to authorize the Warrantholders to concur in and
execute any ancillary or supplemental indenture embodying the change or
omission;
(j) to assent to any compromise or arrangement made by the Corporation
with all or substantially all of its creditors or any class or classes
of creditors, whether secured or otherwise, and with all or
substantially all of the holders of any shares or other securities of
the Corporation; and
(k) from time to time and at any time to remove the Warrant Agent and
appoint a successor Warrant Agent.
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7.12 MEANING OF "EXTRAORDINARY RESOLUTION".
(a) MEANING. The expression "Extraordinary Resolution" when used in
this Warrant Indenture means, subject to the provisions of this Section
and of Sections 7.15 and 7.16 hereof, a motion proposed at a meeting of
Warrantholders duly convened for that purpose and held in accordance
with the provisions of this Article at which there are present in
person or by proxy Warrantholders holding in the aggregate more than
50% of the total number of Warrants then outstanding and passed by the
affirmative votes of Warrantholders who hold in the aggregate not less
than 66 2/3% of the total number of Warrants represented at the meeting
and voted on the motion.
(b) QUORUM. If, at a meeting called for the purpose of passing an
Extraordinary Resolution, the quorum required by Subsection y7.12(b)
hereof is not present within 30 minutes after the time appointed for
the meeting, the meeting, if convened by Warrantholders or on a
Warrantholders' Request, shall be dissolved, but in any other case
shall stand adjourned to such day, being not less than five Business
Days or more than ten Business Days later, and to such place and time,
as is appointed by the chairman.
(c) NOTICE. Not less than three Business Days' notice must be given to
the Warrantholders of the time and place of such adjourned meeting.
(d) FORM OF NOTICE. The notice must state that at the adjourned meeting
two Warrantholders present in person or by proxy shall form a quorum
but it shall not be necessary to set forth the purposes for which the
meeting was originally called or any other particulars.
(e) QUORUM AT ADJOURNED MEETING. At the adjourned meeting two
Warrantholders present in person or by proxy shall form a quorum and
may transact any business for which the meeting was originally
convened, and a motion proposed at such adjourned meeting and passed by
the requisite vote as provided in Subsection y7.12(b)hereof shall be an
Extraordinary Resolution within the meaning of this Indenture.
(f) POLL. Votes on an Extraordinary Resolution must always be given on
a poll and no demand for a poll on an Extraordinary Resolution shall be
necessary.
7.13 POWERS CUMULATIVE.
Any one or more of the powers, and any combination of the powers, in this
Indenture stated to be exercisable by the Warrantholders by Extraordinary
Resolution or otherwise, may be exercised from time to time, and the exercise of
any one or more of such powers or any combination of such powers from time to
time shall not prevent the Warrantholders from exercising such power or powers
or combination of powers thereafter from time to time.
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7.14 MINUTES.
Minutes of all resolutions passed and proceedings taken at every meeting of the
Warrantholders shall be made and duly entered in books from time to time
provided for such purpose by the Warrant Agent at the expense of the
Corporation, and any such minutes, if signed by the chairman of the meeting at
which such resolutions were passed or such proceedings were taken, shall be
prima facie evidence of the matters therein stated, and, until the contrary is
proved, every such meeting in respect of the proceedings of which minutes have
been so made, entered and signed shall be deemed to have been duly convened and
held, and all resolutions passed and proceedings taken thereat to have been duly
passed and taken.
7.15 INSTRUMENTS IN WRITING.
Any action that may be taken and any power that may be exercised by
Warrantholders at a meeting held as provided in this Article may also be taken
and exercised by Warrantholders who hold in the aggregate not less than 50% of
the total number of Warrants at the time outstanding or in the case of an
Extraordinary Resolution, Warrantholders who hold in the aggregate not less than
66 2/3% of the total number of Warrants at the time outstanding, by their
signing, each in person or by attorney duly appointed in writing, an instrument
in writing in one or more counterparts, and the expression "Extraordinary
Resolution" when used in this Warrant Indenture includes a resolution embodied
in an instrument so signed.
7.16 BINDING EFFECT OF RESOLUTIONS.
Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this Article at a meeting of Warrantholders shall be binding
on all Warrantholders, whether present at or absent from the meeting and whether
voting for or against the resolution or abstaining, and every instrument in
writing signed by Warrantholders in accordance with Section y7.15 hereof shall
be binding on all Warrantholders, whether signatories thereto or not, and every
Warrantholder and the Warrant Agent (subject to the provisions for its indemnity
herein contained) shall be bound to give effect accordingly to every such
resolution and instrument in writing.
7.17 HOLDINGS BY THE CORPORATION AND SUBSIDIARIES DISREGARDED.
In determining whether Warrantholders holding the required total number of
Warrants are present in person or by proxy for the purpose of constituting a
quorum, or have voted or consented to a resolution, Extraordinary Resolution,
consent, waiver, Warrantholders' Request or other action under this Warrant
Indenture, a Warrant held by the Corporation or by a Subsidiary of the
Corporation shall be deemed to be not outstanding. The Corporation shall provide
the Warrant Agent with a Certificate of the Corporation providing details of any
Warrants held by the Corporation or by a Subsidiary of the Corporation upon the
written request of the Warrant Agent.
ARTICLE 8 SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS
8.1 PROVISION FOR SUPPLEMENTAL INDENTURES FOR CERTAIN PURPOSES.
From time to time the Corporation (when authorized by the directors) and the
Warrant Agent may, subject to the provisions hereof, and shall when so directed
hereby, execute and deliver by their proper officers indentures or instruments
30
supplemental hereto, which thereafter shall form part hereof, for any or all of
the following purposes:
(a) adding to the provisions hereof such additional covenants and
enforcement provisions as, in the opinion of counsel acceptable to the
Warrant Agent, are necessary or advisable in the premises, provided
that the same are not, in the reasonable opinion of the Warrant Agent,
prejudicial to the interests of the Warrantholders;
(b) giving effect to any Extraordinary Resolution;
(c) making such provisions not inconsistent with this Indenture as may
be necessary or desirable in the opinion of counsel acceptable to the
Warrant Agent with respect to matters or questions arising hereunder,
provided that such provisions are not, in the reasonable opinion of the
Warrant Agent, prejudicial to the interests of the Warrantholders;
(d) adding to or altering the provisions hereof in respect of the
transfer of Warrants, making provision for the exchange of Warrants and
making any modification in the form of the Warrants that does not
affect the substance thereof;
(e) evidencing any succession, or successive successions, to the
Corporation and the assumption by any successor of the covenants of the
Corporation, herein and in the Warrants contained as provided hereafter
in this Article; and
(f) for any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective provisions, errors or omissions herein in
accordance with advice of counsel acceptable to the Warrant Agent,
provided that, in the reasonable opinion of counsel to the Warrant
Agent, the rights of the Warrant Agent and of the Warrantholders are
not prejudiced thereby.
8.2 SUCCESSOR CORPORATIONS.
In the case of the consolidation, amalgamation, arrangement, merger or transfer
of the undertaking or assets of the Corporation as an entirety, or substantially
as an entirety, to another corporation, the successor corporation resulting from
such consolidation, amalgamation, arrangement, merger or transfer (if not the
Corporation) shall be bound by the provisions hereof and for the due and
punctual performance and observance of each and every covenant and obligation
contained in this Warrant Indenture to be performed by the Corporation and will
execute and deliver to the Warrant Agent a supplemental indenture and such other
instruments as are satisfactory in form to the Warrant Agent and in the opinion
of counsel are necessary or advisable to evidence the express assumption by the
successor corporation of such obligations.
8.3 HOLDINGS BY CORPORATIONS AND SUBSIDIARIES DISREGARDED.
For the purposes of Section y8.1, the term, "Warrantholders" does not include
the Corporation or any Subsidiary of the Corporation to the extent that they
hold any Warrants.
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ARTICLE 9 CONCERNING THE WARRANT AGENT
9.1 TRUST INDENTURE LEGISLATION.
If and to the extent that any provision of this Warrant Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable Legislation,
the mandatory requirement shall prevail. The Corporation and the Warrant Agent
each shall at all times in relation to this Warrant Indenture and any action to
be taken hereunder observe and comply with and be entitled to the benefits of
Applicable Legislation.
9.2 RIGHTS AND DUTIES OF WARRANT AGENT.
(a) WARRANT AGENT NOT A TRUSTEE. The Warrant Agent accepts the powers,
rights, duties and responsibilities conferred on it by the terms of
this Indenture. No trust is intended to be, or is or will be, created
hereby and the Warrant Agent shall owe no duties hereunder as a
trustee.
(b) DUTY OF WARRANT AGENT. In the exercise of the powers, rights,
duties and responsibilities conferred on it by the terms of this
Warrant Indenture, the Warrant Agent shall act honestly and in good
faith with a view to the best interests of the Warrantholders, and
shall exercise that degree of care, diligence and skill that a
reasonably prudent warrant agent would exercise in comparable
circumstances. The Warrant Agent shall not be bound to give any notice
or do or take any act, action or proceeding by virtue of the powers,
rights, duties and responsibilities conferred on it hereby unless and
until it shall have been required so to do under the terms hereof; nor
shall the Warrant Agent 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 Warrant Agent and in the absence of any such
notice the Warrant Agent may for all purposes of this Warrant Indenture
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 Warrant Agent to determine
whether or not the Warrant Agent shall take action with respect to any
default.
(c) NO RELIEF FROM LIABILITY. No provision of this Warrant Indenture
shall be construed to relieve the Warrant Agent from liability for its
own negligent act, negligent failure to act, willful misconduct or bad
faith.
(d) ACTIONS. The obligation of the Warrant Agent to commence or
continue any act, action or proceeding in connection herewith,
including without limitation, for the purpose of enforcing any right of
the Warrant Agent or the Warrantholders hereunder is on the conditions
that the Warrant Agent shall have received a Warrantholders' Request
specifying the act, action or proceeding which the Warrant Agent is
requested to take and, when required by notice to the Warrantholders by
the Warrant Agent, the Warrant Agent is furnished by one or more
Warrantholders with sufficient funds to commence or continue such act,
action or proceeding and an indemnity reasonably satisfactory to the
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Warrant Agent to protect and hold it harmless against the costs,
charges, expenses and liabilities to be incurred thereby and any loss
and damage it may suffer by reason thereof.
(e) FUNDING. No provision of this Warrant Indenture shall require the
Warrant Agent 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 it is so indemnified.
(f) DEPOSIT OF WARRANTS. The Warrant Agent may, before commencing or at
any time during the continuance of any act, action or proceeding,
require the Warrantholders at whose instance it is acting to deposit
with the Warrant Agent the Warrant Certificates held by them, for which
certificates the Warrant Agent shall issue receipts.
(g) RESTRICTION. Every provision of this Warrant Indenture that
relieves the Warrant Agent of liability or entitles it to rely on any
evidence submitted to it is subject to the provisions of Applicable
Legislation, this Section and Section y9.3 hereof.
(h) RIGHT OF OFFSET. The Warrant Agent has the right to offset any
unpaid amounts due to it pursuant to its duties and obligations under
this Indenture against amounts received by the Warrant Agent upon the
exercise of Warrant Certificates.
9.3 EVIDENCE, EXPERTS AND ADVISERS.
(a) EVIDENCE. In addition to the reports, certificates, opinions and
other evidence required by this Indenture, the Corporation shall
furnish to the Warrant Agent such additional evidence of compliance
with any provision hereof, and in such form, as is prescribed by
Applicable Legislation or as the Warrant Agent reasonably requires by
written notice to the Corporation.
(b) RELIANCE BY WARRANT AGENT. In the exercise of any right or duty
hereunder the Warrant Agent, if it is acting in good faith, may act and
rely, as to the truth of any statement or the accuracy of any opinion
expressed therein, on any statutory declaration, opinion, report,
certificate or other evidence furnished to the Warrant Agent pursuant
to a provision hereof or of Applicable Legislation or pursuant to a
request of the Warrant Agent, if such evidence complies with Applicable
Legislation and the Warrant Agent examines such evidence and determines
that it complies with the applicable requirements of this Warrant
Indenture.
(c) STATUTORY DECLARATION. Whenever Applicable Legislation requires
that evidence referred to in Subsection y9.3(a) hereof be in the form
of a statutory declaration, the Warrant Agent may accept such statutory
declaration in lieu of a Certificate of the Corporation required by any
provision hereof. Any such statutory declaration may be made by any one
or more of the Chairman, President, Vice-President, Finance or
Secretary of the Corporation or by any other officer(s) or director(s)
of the Corporation to whom such authority is delegated by the directors
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from time to time. In addition, the Warrant Agent may act and rely and
shall be protected in acting and relying upon any resolution,
certificate, direction, instruction, statement, instrument, opinion,
report, notice, request, consent, order, letter, telecopier
transmission or other paper or document believed by it to be genuine
and to have been signed, sent or presented by or on behalf of the
proper party or parties.
(d) PROOF OF EXECUTION. Proof of the execution of any document or
instrument in writing, including a Warrantholders' Request, by a
Warrantholder may be made by the certificate of a notary public, or
other officer with similar powers, that the person signing such
instrument acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution, or in any other manner that
the Warrant Agent considers adequate.
(e) EXPERTS. The Warrant Agent may employ or retain such counsel,
accountants, engineers, appraisers, or other experts or advisers as it
reasonably requires for the purpose of determining and discharging its
rights and duties hereunder and may pay the reasonable remuneration and
disbursements for all services so performed by any of them, without
taxation of costs of any counsel, and shall not be responsible for any
misconduct or negligence on the part of any of them who has been
selected with due care by the Warrant Agent. Any remuneration so paid
by the Warrant Agent shall be repaid to the Warrant Agent by the
Corporation in accordance with Subsection y5.1(g) hereof. The Warrant
Agent may act and rely and shall be protected in acting and relying in
good faith on the opinion or advice of or information obtained from any
counsel, accountant, engineers, appraisers or other expert or advisor,
whether retained or employed by the Corporation or by the Warrant
Agent, in relation to any matter arising in the administration of the
trusts hereof.
9.4 DOCUMENTS, MONEY ETC. HELD BY WARRANT AGENT.
Any securities, documents of title or other instruments that may at any time be
held by the Warrant Agent hereunder may be placed in the deposit vaults of the
Warrant Agent or of any Schedule I Canadian chartered bank. Unless herein
otherwise expressly provided, any moneys held by the Warrant Agent hereunder,
pending the application or withdrawal thereof under any provisions of this
Indenture, shall be deposited in a trust account in the name of the Warrant
Agent (which may be held with the Warrant Agent or an Affiliate of the Warrant
Agent), which account shall be non-interest bearing. Upon the written direction
of the Corporation, the Warrant Agent shall invest in its name such moneys in
Authorized Investments in accordance with such direction. Any direction by the
Corporation to the Warrant Agent as to the investment of the moneys shall be in
writing and shall be provided to the Warrant Agent no later than 9:00 a.m. on
the day on which the investment is to be made. Any such direction received by
the Warrant Agent after 9:00 a.m. on a Business Day or received on a
non-Business Day, shall be deemed to have been given prior to 9:00 a.m. the next
Business Day. Except as otherwise provided in this Indenture, all interest or
other income received by the Warrant Agent in respect of such deposits and
investments shall belong to the Corporation and shall be paid to the Corporation
forthwith upon receipt thereof by the Warrant Agent.
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9.5 ACTION BY WARRANT AGENT TO PROTECT INTERESTS.
The Warrant Agent shall have power to institute and to maintain such actions and
proceedings as it considers necessary or expedient to protect or enforce its
interests and the interests of the Warrantholders.
9.6 WARRANT AGENT NOT REQUIRED TO GIVE SECURITY.
The Warrant Agent shall not be required to give any bond or security in respect
of the execution of the trusts and powers of this Warrant Indenture.
9.7 WARRANT AGENT NOT APPOINTED RECEIVER
The Warrant Agent will not be appointed a receiver and manager or liquidator of
all or any part of the assets or undertaking of the Corporation.
9.8 PROTECTION OF WARRANT AGENT.
(a) PROTECTION. By way of supplement to the provisions of any law for
the time being relating to Warrant Agents, it is expressly declared and
agreed that:
(i) the Warrant Agent shall not be liable for or by reason of,
or required to substantiate, any statement of fact,
representation or recital in this Warrant Indenture or in the
Warrant Certificates (except the representation contained in
Section y9.10 or in the certificate of the Warrant Agent on
the Warrant Certificates), but all such statements or recitals
are and shall be deemed to be made by the Corporation;
(ii) nothing herein contained shall impose on the Warrant
Agent any obligation to see to, or to require evidence of, the
registration or filing (or renewal thereof) of this Indenture
or any instrument ancillary or supplemental hereto;
(iii) the Warrant Agent shall not be bound to give notice to
any person of the execution hereof;
(iv) the Warrant Agent shall not incur any liability or
responsibility whatever or be in any way responsible for the
consequence of any breach by the Corporation of any obligation
or warranty herein contained or of any act of any director,
officer, employee or Warrant Agent of the Corporation;
(v) the Warrant Agent, in its personal or any other capacity,
may buy, lend upon and deal in securities of the Corporation
and in the Warrants and generally may contract and enter into
financial transactions with the Corporation or any related
corporation without being liable to account for any profit
made thereby; and
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(vi) the Warrant Agent shall incur no liability with respect
to the delivery or non-delivery of any certificate or
certificates whether delivered by mail, or any other means.
(b) INDEMNITY. In addition to and without limiting any protection of
the Warrant Agent hereunder or otherwise by law, the Corporation hereby
indemnifies the Warrant Agent and saves it and its officers, directors,
employees and agents harmless from all liabilities, suits, damages,
costs, expenses and actions which may be brought against or suffered by
it arising out of or connected with the performance by it of its duties
hereunder except to the extent that such liabilities, suits, damages,
costs and actions are attributable to the negligence, fraud or willful
misconduct of the Warrant Agent. Notwithstanding any other provision
hereof, this indemnity shall survive any removal or resignation of the
Warrant Agent, discharge of this Indenture and termination of any
trusts hereunder.
9.9 REPLACEMENT OF WARRANT AGENT.
(a) RESIGNATION. The Warrant Agent may resign its duties and
obligations and be discharged from all further duties and liabilities
hereunder, except as provided in this Section, by giving to the
Corporation and the Warrantholders not less than 30 days notice in
writing or, if a new Warrant Agent has been appointed, such shorter
notice as the Corporation accepts as sufficient.
(b) REMOVAL. The Warrantholders by Extraordinary Resolution may at any
time remove the Warrant Agent and appoint a new Warrant Agent.
(c) APPOINTMENT OF NEW WARRANT AGENT. If the Warrant Agent so resigns
or is so removed or is dissolved, becomes bankrupt, goes into
liquidation or otherwise becomes incapable of acting hereunder, the
Corporation shall forthwith appoint a new Warrant Agent unless a new
Warrant Agent has already been appointed by the Warrantholders.
(d) FAILURE TO APPOINT. Failing such appointment by the Corporation,
the retiring Warrant Agent or any Warrantholder may apply at the
expense of the Corporation to the Ontario Superior Court of Justice, on
such notice as the Court directs, for the appointment of a new Warrant
Agent.
(e) NEW WARRANT AGENT. Any new Warrant Agent appointed under this
Section must be a corporation authorized to carry on the business of a
transfer agent or trust company in Ontario and, if required by the
Applicable Legislation of any other province, in such other province.
On any such appointment the new Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named herein as Warrant Agent without any further assurance,
conveyance, act or deed, but there shall be immediately executed, at
the expense of the Corporation, all such conveyances or other
instruments as, in the opinion of counsel, are necessary or advisable
for the purpose of assuring the transfer of such powers, rights, duties
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and responsibilities to the new Warrant Agent. Any new Warrant Agent so
appointed by the Corporation or by the Court shall be subject to
removal as aforesaid by the Warrantholders and by the Corporation.
(f) NOTICE OF NEW WARRANT AGENT. On the appointment of a new Warrant
Agent, the Corporation shall promptly give notice thereof to the
Warrantholders in accordance with Subsection y10.2(a) hereof.
(g) SUCCESSOR WARRANT AGENT. A corporation into or with which the
Warrant Agent is merged or consolidated or amalgamated, or a
corporation succeeding to the trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without any
further act on its part or on the part of any party hereto if such
corporation would be eligible for appointment as a new Warrant Agent
under Subsection y9.9(e) hereof.
(h) CERTIFICATES. A Warrant Certificate certified but not delivered by
a predecessor Warrant Agent may be delivered by the new or successor
Warrant Agent in the name of the predecessor Warrant Agent or successor
Warrant Agent.
9.10 CONFLICT OF INTEREST.
The Warrant Agent represents to the Corporation that at the time of the
execution and delivery hereof no material conflict of interest exists between
its role as a fiduciary hereunder and its role in any other capacity and if a
material conflict of interest arises hereafter it shall, within ten days after
ascertaining that it has such material conflict of interest, either eliminate
the conflict of interest or resign its trust hereunder. If any such material
conflict of interest exists or hereafter shall exist, the validity and
enforceability of this Indenture and the Warrants shall not be affected in any
manner whatsoever by reason thereof.
9.11 WARRANT AGENT'S AUTHORITY TO CARRY ON BUSINESS.
The Warrant Agent represents to the Corporation that at the date hereof it is
authorized to carry on business in Ontario. If, notwithstanding the provisions
of this Section y9.11, the Warrant Agent ceases to be authorized to carry on
such business, the validity and enforceability of this Indenture and the
interest of the Warrantholders in the Warrants registered hereunder shall not be
affected in any manner whatsoever by reason only of such event provided that the
Warrant Agent, within 30 days after ceasing to be authorized to carry on
business, either becomes so authorized or resigns in the manner and with the
effects specified in Section y9.9.
9.12 ACCEPTANCE OF RIGHTS, DUTIES AND OBLIGATIONS.
The Warrant Agent xxxxxx accepts the powers, rights, duties and responsibilities
in this Warrant Indenture declared and provided for and agrees to perform them
on the terms and conditions herein set forth.
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ARTICLE 10 GENERAL
10.1 NOTICE TO THE CORPORATION AND WARRANT AGENT.
(a) Subject to the terms and provisions of this Indenture, any notice,
direction or other communication hereunder shall be in writing and
shall be given by delivery or by facsimile transmission (if receipt of
such transmission is confirmed):
(i) if to the Corporation at:
Adsero Corp.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX
X0X 0X0
Attention: President
Xxxxxxxxx: (000) 000-0000
(ii) if to the Warrant Agent at:
Xxxxx Winter LLP
Barristers and Solicitors
000 Xxxxxxxx Xx. X., Xxxxx 000
Xxxxxxx, XX
X0X 0X0
Attention: Xxxxxx X. Xxxxx
Xxxxxxxxx: (000) 000-0000
Any such notice shall be deemed to have been given if delivered by
courier during normal business hours of the recipient on a Business
Day, on the day following the date of delivery and if sent by facsimile
transmission, on the Business Day so sent provided that any delivery
made or sent by facsimile after 4:00 p.m. (Toronto time) on a Business
Day, shall be deemed to be received on the next following Business Day.
(b) CHANGE OF ADDRESS. The Corporation or the Warrant Agent, as the
case may be, may from time to time notify the other in the manner
provided in Subsection y10.1(a) hereof of a change of address which,
from the effective date of such notice and until changed by like
notice, shall be the address of the Corporation or the Warrant Agent,
as the case may be, for all purposes of this Warrant Indenture.
10.2 NOTICE TO WARRANTHOLDERS.
(a) NOTICE. Unless otherwise expressly provided herein, a notice to be
given hereunder to Warrantholders will be deemed to be validly given if
the notice is sent by ordinary surface or air mail, postage prepaid,
addressed to the Warrantholders or delivered (or so mailed to certain
Warrantholders and so delivered to the other Warrantholders) at their
respective addresses appearing on any of the registers of holders
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described in Section y3.1 hereof, provided, however, that if, by reason
of a strike, lockout or other work stoppage, actual or threatened,
involving postal employees, the notice could reasonably be considered
unlikely to reach or likely to be delayed in reaching its destination,
the notice will be valid and effective only if it is so delivered or is
given by publication twice in the a national newspaper or in any other
paper of national circulation in Canada.
(b) DATE OF NOTICE. A notice so given by mail or so delivered will be
deemed to have been given on the first Business Day after it has been
mailed or on the day on which it has been delivered, as the case may
be, and a notice so given by publication will be deemed to have been
given on the day on which it has been published as required. In
determining under any provision hereof the date when notice of a
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.
Accidental error or omission in giving notice or accidental failure to
mail notice to any Warrantholder will not invalidate any action or
proceeding founded thereon.
10.3 SATISFACTION AND DISCHARGE OF WARRANT INDENTURE.
On the earlier of:
(a) the date by which there has been delivered to the Warrant Agent for
exercise, exchange or surrender for cancellation all Warrant
Certificates theretofore certified hereunder; or
(b) the Expiry Date;
and if all certificates representing Warrant Shares required to be issued in
compliance with the provisions hereof have been issued and delivered hereunder
in accordance with such provisions, if all payments required to be made in
compliance with the provisions of this Warrant Indenture have been made in
accordance with such provisions and payment to the Warrant Agent of the fees and
other remuneration payable to the Warrant Agent, this Warrant Indenture shall
cease to be of further effect and, on demand of and at the cost and expense of
the Corporation and on delivery to the Warrant Agent of a Certificate of the
Corporation stating that all conditions precedent to the satisfaction and
discharge of this Warrant Indenture have been complied with and on payment to
the Warrant Agent of the fees and other remuneration payable to the Warrant
Agent, the Warrant Agent shall execute proper instruments acknowledging
satisfaction of and discharging this Warrant Indenture.
10.4 SOLE BENEFIT OF PARTIES AND WARRANTHOLDERS.
Nothing in this Warrant Indenture or the Warrant Certificates, expressed or
implied, shall give or be construed to give to any person other than the parties
hereto and the Warrantholders, as the case may be, any legal or equitable right,
remedy or claim under this Indenture or the Warrant Certificates, or under any
covenant or provision herein or therein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and the
Warrantholders.
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10.5 DISCRETION OF DIRECTORS.
Any matter provided herein to be determined by the directors shall be determined
by the directors in their sole discretion, and a determination so made shall be
conclusive.
10.6 COUNTERPARTS.
This Warrant Indenture may be executed by facsimile and in any number of
counterparts, which taken together shall form one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Warrant Indenture as of
the day and year first above written.
ADSERO CORP.
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx, CFO
XXXXX WINTER LLP, as Warrant Agent
By: /s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, Partner
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