EXHIBIT 7.1
WARRANT AGREEMENT
BETWEEN
DOMTAR INC.
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
(AS WARRANT AGENT)
----------------------------------------
PROVIDING FOR THE ISSUE OF 18,170,249
COMMON SHARE PURCHASE WARRANTS
----------------------------------------
-----------------------------------
DATED AS OF DECEMBER [23], 2002
-----------------------------------
TABLE OF CONTENTS
1. INTERPRETATION......................................... 2
1.1 Definitions..................................... 2
1.2 Interpretation Not Affected by Headings......... 8
1.3 Currency........................................ 8
1.4 Day Not a Business Day.......................... 8
1.5 Applicable Law.................................. 8
1.6 Agent for Service; Submission to Jurisdiction;
Waiver of Immunities............................... 9
1.7 Severability.................................... 9
2. ISSUE OF WARRANTS...................................... 9
2.1 Issue and Terms of Warrants..................... 9
2.2 Form of Warrant................................. 11
2.3 Signing of Warrants............................. 11
2.4 Countersignature by Warrant Agent............... 11
2.5 Warrantholder not a Shareholder................. 12
2.6 Issue in Substitution for Mutilated, Lost,
Destroyed or Stolen Warrants....................... 12
2.7 Exchange of Warrants............................ 12
2.8 Distribution of Warrant on Separation Date...... 14
2.9 Book-Based System............................... 14
2.10 Transfer of Warrants held in Book-Based
System............................................. 15
2.11 Termination of Book-Based System................ 15
2.12 Dealings with the Depository.................... 16
3. EXERCISE OF WARRANTS................................... 17
3.1 Method of Exercise of Warrants.................. 17
3.2 Effect of Exercise of Warrants.................. 19
3.3 Subscription for Less than Entitlement;
Fractions.......................................... 19
3.4 Expiration of Warrants.......................... 20
3.5 Cancellation of Surrendered Warrants............ 20
3.6 Accounting and Recording........................ 20
4. ADJUSTMENT OF PURCHASE RIGHTS AND EXERCISE PRICE....... 21
4.1 Adjustment of Exercise Rights................... 21
4.2 Adjustment Rules................................ 24
4.3 Postponement of Subscription.................... 25
4.4 Notice of Adjustment of Exercise Rights......... 25
4.5 No action after Notice.......................... 26
4.6 No Duty to Inquire.............................. 26
5. NOTICE AND EVIDENCE OF OWNERSHIP....................... 26
5.1 Notice to Warrantholders........................ 26
5.2 Ownership and Transfer of Warrants.............. 27
6. COVENANTS.............................................. 27
6.1 General Covenants of Corporation................ 27
6.2 Remuneration and Expenses of Warrant Agent...... 29
6.3 Performance of Covenants by Warrant Agent....... 29
7. ENFORCEMENT............................................ 29
7.1 Suits by Warrantholders......................... 29
7.2 Immunity of Shareholders, etc................... 29
7.3 Limitation of Liability......................... 30
8. MEETINGS OF WARRANTHOLDERS............................. 30
-i-
8.1 Right to Convene Meetings....................... 30
8.2 Notice.......................................... 30
8.3 Chairperson..................................... 30
8.4 Quorum.......................................... 31
8.5 Power to Adjourn................................ 31
8.6 Show of Hands................................... 31
8.7 Poll and Voting................................. 31
8.8 Regulations..................................... 32
8.9 Corporation and Warrant Agent May Be
Represented........................................ 32
8.10 Powers Exercisable by Extraordinary
Resolution......................................... 33
8.11 Meaning of Extraordinary Resolution............. 34
8.12 Minutes......................................... 35
8.13 Instruments in Writing.......................... 35
8.14 Binding Effect of Resolutions................... 35
8.15 Corporation, Warrant Agent and Counsel May be
Represented........................................ 35
9. SUPPLEMENTAL AGREEMENTS AND SUCCESSOR CORPORATIONS..... 36
9.1 Provision for Supplemental Agreements for
Certain Purposes................................... 36
9.2 Successor Corporations.......................... 37
10. CONCERNING THE WARRANT AGENT............................ 37
10.1 Applicable Legislation.......................... 37
10.2 Rights and Duties of Warrant Agent.............. 37
10.3 Evidence, Experts and Advisors.................. 39
10.4 Documents, Monies, etc., Held by Warrant
Agent.............................................. 40
10.5 Actions by Warrant Agent to Protect Interest.... 40
10.6 Warrant Agent not Required to Give Security..... 40
10.7 Protection of Warrant Agent..................... 40
10.8 Replacement of Warrant Agent; Successor by
Amalgamation....................................... 41
10.9 Dealing with Corporation........................ 42
10.10 Warrant Agent not to be Appointed Receiver....... 42
11. FORM OF WARRANT......................................... 42
12. GENERAL................................................. 42
12.1 Notice to Corporation and Warrant Agent......... 42
12.2 Rights, Powers and Remedies Cumulative.......... 44
12.3 Time of the Essence............................. 44
12.4 Counterparts and Formal Date.................... 44
12.5 Satisfaction and Discharge of Agreement......... 44
12.6 Provisions of Agreement and Warrants for the
Sole Benefit of Parties and Warrantholders......... 44
12.7 Trust Provisions................................ 44
12.8 Purchase of Warrants by the Corporation......... 45
12.9 Language........................................ 45
12.10 Assignment..................................... 45
-ii-
WARRANT AGREEMENT dated as of December [23], 2002:
BETWEEN: DOMTAR INC. (the
"Corporation"), a corporation
continued under the laws of
Canada;
AND: COMPUTERSHARE TRUST
COMPANY OF CANADA (in its
capacity as warrant agent,
the "Warrant Agent", and
in its capacity as agent,
the "Agent"), a trust
company duly incorporated
under the laws of Canada,
in favour of each of the
persons (each, a
"Warrantholder") who
acquires from time to time
Warrants issued in the
offering of 18,170,249
Units (as defined);
WHEREAS, the Selling Shareholder (as defined) proposes to offer and sell in
Canada and in the United States of America, by way of a secondary offering to
the public, of 18,170,249 Units, each Unit consisting of one Common Share (as
defined) of the share capital of the Corporation sold by the Selling Shareholder
and one Warrant (as defined) to purchase one Common Share of the Corporation;
WHEREAS, the Corporation is not entitled to any proceeds from the Secondary
Distribution (as defined), including the sale of the Units and the exercise of
the Warrants, it has determined that it is in the best interest of its
shareholders as a whole that, in order to facilitate the Offering and, subject
to the provisions and indemnities provided for in the Delivery Agreement (as
defined), to create and issue the Warrants;
WHEREAS, each Warrant shall entitle the Warrantholder to purchase from the
Corporation, one Common Share, at the price and on the terms and conditions as
herein provided;
WHEREAS, the Selling Shareholder has agreed with the Corporation, under the
Delivery Agreement, to deliver Common Shares from its holding of Common Shares
for delivery upon exercise of the Warrants, either directly to the
Warrantholders or for cancellation upon issuance and delivery by the Corporation
of Common Shares to same Warrantholders;
WHEREAS, as security for its delivery obligations under the Delivery
Agreement, the Selling Shareholder has agreed to pledge in favour of the
Corporation an aggregate of 18,170,249 Common Shares and to deliver the
certificates evidencing such shares to the Agent for the benefit of the
Warrantholders and the Corporation, the whole as set forth in the Delivery
Agreement;
WHEREAS, in the event the Selling Shareholder is unable to deliver, or
cause to be delivered, Common Shares to the Warrant Agent upon due exercise of a
Warrant, the Corporation shall issue, or cause to be delivered, Common Shares to
the Warrant Agent for delivery to the Warrantholders as herein provided;
WHEREAS, the Corporation has reserved a sufficient number of Common Shares
to meet its delivery obligations upon exercise of the Warrants in the event that
the Selling Shareholder is unable to deliver, or cause to be delivered, Common
Shares upon the due exercise of the Warrants;
WHEREAS, the Units shall be separated into Common Shares and Warrants upon
the Separation Date (as defined);
WHEREAS, the Corporation is duly authorized to create and issue the
Warrants constituted and issued as herein provided and to deliver Common Shares
to the Warrant Agent upon due exercise of the Warrants; and
WHEREAS, all things necessary have been done and performed to make the
Warrants when issued and countersigned by the Warrant Agent as provided herein,
legal, valid and binding obligations of the Corporation.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, the parties hereto agree as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the terms defined in this Section or elsewhere
herein shall have the respective meanings specified in this Section or elsewhere
herein:
1.1.1 "Agent" means Computershare Trust Company of Canada in its
capacity as agent under the Delivery Agreement, and its lawful successors
from time to time;
1.1.2 "Agent for Service" has the meaning set out in Section 1.6;
1.1.3 "Applicable Legislation" has the meaning ascribed thereto in
Section 10.1;
1.1.4 "Beneficial Owner" means any person holding a beneficial
interest in the Warrants issued in "Book-Entry Only Form";
1.1.5 "Book-Based System" means the record entry and securities
transfer and pledge system, which is administered by the Depository in
accordance with the operating rules and procedures of its securities
settlement service for book-entry only securities in force from time to
time, or any successor system;
1.1.6 "Book-Entry Only Form" when used with respect to securities,
means securities certified and delivered under the Book-Based System, other
than Physical Warrants issued pursuant to Section 2.2;
1.1.7 "Business Day" means, in respect of any city in Canada and the
city of New York, a day which is not a Saturday or Sunday or a civic or
statutory holiday in such city;
1.1.8 "Capital Reorganization" has the meaning set out in Subsection
4.1.4;
1.1.9 "Closing Date" means the date of sale of the Units under the
Secondary Distribution, which is expected to occur on or about December
[23], 2002 or such later date, but not later than December [31], 2002;
1.1.10 "Common Share Reorganization" has the meaning set out in
Subsection 4.1.1;
1.1.11 "Common Shares" means the Common Shares of the share capital of
the Corporation as such shares exist at the close of business as of the
date of this Agreement and, in the event of any adjustment under this
Agreement, shall mean thereafter the shares, other securities or other
property which a Warrantholder is entitled to purchase after any such
adjustment;
1.1.12 "Corporation" means Domtar Inc. and its lawful successors from
time to time;
1.1.13 "Corporation's auditors" means the firm of chartered
accountants duly appointed as auditors of the Corporation from time to
time;
1.1.14 "counsel" means an advocate, a barrister or solicitor or a firm
of advocates, barristers or solicitors (who may be counsel to the
Corporation or the Selling Shareholder) acceptable to the Warrant Agent;
1.1.15 "Current Market Price" means, with respect to the Common Shares
at any date, the price per Common Share equal to the Weighted Average Price
at which the Common Shares have traded on a stock exchange or, if not
listed on any stock exchange, in the over-the-counter market (provided
that, in each case, if such average price is not in Canadian dollars, such
price will be translated into Canadian dollars using the then applicable
Exchange Rate), during a period of 20 consecutive Trading Days ending
immediately preceding such date, provided that, if there is no market for
the Common Shares during all or part of such period during which the
Current Market Price per Common Share would otherwise be determined, the
Current Market Price per Common Share shall in respect of all or such part
of the period be determined by a nationally-recognized firm of chartered
accountants appointed by the Corporation (who may be the Corporation's
auditors), in each case appropriately adjusted to take into account the
occurrence during such 20-Trading Day period of any event that would result
in an adjustment of the Exercise Price pursuant to Article 4; for the
purpose of this paragraph 1.1.15, "stock
2
exchange" means the stock exchange where the greatest volume of trading in
Common Shares shall have been registered during the relevant period;
1.1.16 "Delivery Agreement" means the agreement among the Selling
Shareholder, SGF Rexfor Inc., Societe generale de financement du
Quebec,
the Corporation and the Agent dated December [23], 2002 relating to the
obligation of the Selling Shareholder to deliver, or cause to be delivered,
Common Shares on exercise of the Warrants;
1.1.17 "Depository" means The Canadian Depository for Securities
Limited, or a successor depository or any other depository offering a
similar Book-Based System which the Corporation, with the consent of the
Warrant Agent, acting reasonably, may designate;
1.1.18 "director" means a director of the Corporation for the time
being and, unless otherwise specified herein, 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;
1.1.19 "Eligible Institution" means a Canadian chartered bank, a major
trust company in Canada, a firm which is a member of a recognized stock
exchange in Canada, a member of the Investment Dealers Association of
Canada, a national securities exchange in the United States or the National
Association of Securities Dealers, Inc., or a participant in the Securities
Transfer Agents Medallion (STAMP) Program;
1.1.20 "Equity Shares" means any shares of any class or series of the
share capital of the Corporation (other than Common Shares) which may from
time to time be authorized for issue if the rights of the holders thereof
to participate in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation are
not restricted to a fixed sum or to a fixed sum plus accrued dividends;
1.1.21 "Exchange Rate" means, on any date for determination, the rate
at which United States dollars may be exchanged into Canadian dollars
calculated using the Bank of Canada noon rate; provided that in the event
that such rate is not quoted or published by the Bank of Canada, the
Exchange Rate shall be determined by reference to such other publicly
available service for displaying exchange rates as may be determined by the
Corporation;
1.1.22 "Exercise Basis" means one Common Share for one whole Warrant,
unless such basis shall have been adjusted in accordance with the
provisions of Article 4, in which case, "Exercise Basis" shall mean the
adjusted basis in effect at such time;
1.1.23 "Exercise Date" with respect to any Warrant means the date on
which the Warrant is surrendered for exercise in accordance with the
provisions of Article 3;
1.1.24 "Exercise Price" means $17.55 per Common Share purchasable upon
exercise of a Warrant, unless such price shall have been adjusted in
accordance with the provisions of Article 4, in which case, "Exercise
Price" shall mean the adjusted price in effect at such time;
1.1.25 "Extraordinary Dividends" means such dividends paid in cash on
the Common Shares or such dividends paid in Common Shares (or securities
exchangeable for or convertible into Common Shares) in any fiscal year of
the Corporation to the extent that such dividends in the aggregate exceed
in amount or value the greatest of:
1.1.25.1 200% of the aggregate amount or value of the dividends
paid by the Corporation on its Common Shares in the 12 consecutive
months ended immediately prior to the first day of such fiscal year;
1.1.25.2 45% of the consolidated net earnings of the Corporation
before extraordinary items and after dividends paid on any and all
preferred shares of the Corporation for the most recently completed
fiscal year (such consolidated net earnings to be shown in the audited
financial statements of the Corporation prepared in accordance with
Canadian generally accepted accounting principles).
1.1.26 "extraordinary resolution" has the meaning ascribed thereto in
Section 8.11;
1.1.27 "Global Certificates" has the meaning ascribed thereto in
Subsection 2.9.1;
3
1.1.28 "Governmental Authority" means any domestic or foreign
government, including any federal, provincial, state, territorial or
municipal government, and any government agency, tribunal, commission or
other authority exercising or purporting to exercise executive,
legislative, judicial, regulatory or administrative functions of, or
pertaining to, government;
1.1.29 "Participant" means a participant in the Book-Based System;
1.1.30 "Participants' List" has the meaning ascribed thereto in
Subsection 2.12.2;
1.1.31 "person" means, without limitation, an individual, sole
proprietorship, corporation, partnership, trust, joint venture,
Governmental Authority or any incorporated or unincorporated entity or
association of any nature;
1.1.32 "Physical Warrants" means the warrants in the form of
individual certificates in definitive fully registered form issued pursuant
to Sections 2.1 and 2.2 and in the form of Schedule A;
1.1.33 "Pledged Shares" means the 18,170,249 Common Shares of the
Selling Shareholder from its holding of Common Shares of the Corporation
pledged by the Selling Shareholder in favour of the Corporation under the
Delivery Agreement, together with all rights pertaining thereto as well as
all fruits and revenues they may produce and all shares, other securities
or other property which a Warrantholder is entitled to purchase after any
Capital Reorganization;
1.1.34 "register" means the registers, books or other records which
are kept by the Warrant Agent or which the Warrant Agent causes to be kept
under Section 10.2;
1.1.35 "Registration Statement" means the Corporation's shelf
registration statement on Form F-10 (File No. 333-101874) filed with the
United States Securities and Exchange Commission under the 1933 Act,
relating to the Common Shares issuable or deliverable, as the case may be,
on exercise of the Warrants;
1.1.36 "Rights Offering" has the meaning setout in Subsection 4.1.2;
1.1.37 "Rights Period" has the meaning setout in Subsection 4.1.2;
1.1.38 "Secondary Distribution" means the offer and sale of the Units
by the Selling Shareholder;
1.1.39 "Selling Shareholder" means Dofor Inc. and its lawful
successors from time to time;
1.1.40 "Separation Date" means the date on or after the Closing Date,
but, in any event not later than 60 days after the Closing Date as may be
agreed upon by the Selling Shareholder and the Underwriters in respect of
the Secondary Distribution;
1.1.41 "Shareholder" means a holder of record of one or more Common
Shares;
1.1.42 "Shareholders' Equity" means the aggregate of all classes of
share capital, other paid-in capital, retained earnings/deficit and any and
all surplus accounts and reserves as shown on the audited financial
statements of the Corporation for the most recently ended fiscal year
prepared in accordance with Canadian generally accepted accounting
principles;
1.1.43 "Special Distribution" has the meaning set out in Subsection
4.1.3;
1.1.44 "Successor Corporation" has the meaning ascribed thereto in
Section 9.2;
1.1.45 "Subsidiary" means a corporation of which voting securities
carrying a majority of the outstanding votes attaching to all voting
securities are held, directly or indirectly, by, or for the benefit of, a
corporation, a corporation and one or more subsidiaries thereof, or one or
more subsidiaries of a corporation; and, as used in this definition,
"voting securities" means securities of a class or series or classes or
series carrying voting rights to elect directors under all circumstances,
provided, however, that, for the purposes hereof, securities which only
carry the right to vote conditionally on the happening of an event shall
not be considered voting securities whether or not such event shall have
happened, nor shall any securities be deemed to cease to be voting
securities solely by reason of a right to vote accruing to securities of
another class or series or classes or series by reason of the happening of
such event;
4
1.1.46 "this
Warrant Agreement", "this Agreement", "herein", "hereby"
and similar expressions mean and refer to this Agreement and any agreement,
deed or instrument supplemental or ancillary hereto; and the words
"Article", "Section" and "Subsection" followed by a number mean and refer
to the specified Article, Section or Subsection of this Agreement;
1.1.47 "Time of Expiry" means 5:00 p.m. (Montreal time) on December
[23], 2003;
1.1.48 "Trading Day" with respect to a stock exchange means a day on
which such stock exchange is open for business and, with respect to the
over-the-counter market, means a day on which the New York Stock Exchange
and the Toronto Stock Exchange are open for business;
1.1.49 "Transfer Agent" means the transfer agent from time to time for
the Common Shares;
1.1.50 "Underlying Securities" means the Common Shares issuable or
deliverable, as the case may be, upon the exercise of the Warrants,
including the shares or other securities or property issuable upon the
exercise of the Warrants as a result of any adjustment of exercise rights
pursuant to Article 4;
1.1.51 "Underwriters" means National Bank Financial Inc., CIBC World
Markets Inc., Xxxxxxx Xxxxx Canada Inc., BMO Xxxxxxx Xxxxx Inc., Scotia
Capital Inc., UBS Warburg Inc., Desjardins Securities Inc. and TD
Securities Inc.
1.1.52 "Unit" means one Common Share and one Warrant initially
distributed pursuant to the Secondary Distribution;
1.1.53 "U.S. Person" has the meaning set out in Section 3.1.4;
1.1.54 "Warrant Agency" shall have the meaning ascribed thereto in
Subsection 3.1.3;
1.1.55 "Warrant Agent" means Computershare Trust Company of Canada in
its capacity as warrant agent, and its lawful successors from time to time;
1.1.56 "Warrantholders" or "holders" means the persons for the time
being who are registered holders of Warrants and, for greater certainty, in
respect of any action to be taken by a holder in respect of his Warrants,
means the holder or his successors, executors, administrators or other
legal representatives or his or their attorney duly appointed by instrument
in writing in form, substance and execution satisfactory to the Warrant
Agent with signatures guaranteed by an Eligible Institution;
1.1.57 "Warrantholders' Request" means an instrument signed in one or
more counterparts by Warrantholders entitled to purchase in the aggregate
not less than 25% of the aggregate number of Common Shares which could be
purchased pursuant to all Warrants then unexercised and outstanding,
requesting the Warrant Agent to take some action or proceeding specified
therein;
1.1.58 "Warrants" means the common share purchase warrants issued
hereunder whereby Warrantholders have the right to purchase, after the
Separation Date, Common Shares at the Exercise Price and on the terms and
conditions herein set forth;
1.1.59 "Weighted Average Price" means, with respect to the Common
Shares, for any period, the amount obtained by dividing the aggregate sale
price of all Common Shares sold on the relevant stock exchange or market
during the period in question by the total number of Common Shares so sold;
1.1.60 "written order of the Corporation", "written request of the
Corporation", "written consent of the Corporation" and "certificate of the
Corporation" mean, respectively, a written order, request, consent and
certificate signed in the name of the Corporation by either one of the
chairman of the board, the president and chief executive officer or senior
vice-president, the secretary, the treasurer, an assistant secretary or an
assistant treasurer of the Corporation, and may consist of one or more
instruments so executed; and
1.1.61 "1933 Act" means the United States Securities Act of 1933, as
amended.
Unless otherwise expressly provided elsewhere herein or unless the context
otherwise requires, words importing the singular include the plural and vice
versa and words importing gender include the masculine, feminine and neuter
genders.
5
1.2 Interpretation Not Affected by Headings
The division of this Agreement into Articles, Sections and Subsections, 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 Agreement.
1.3 Currency
All dollar amounts herein are expressed in Canadian dollars, except as
otherwise provided for herein.
1.4 Day Not a Business Day
In the event that any day on or before which any action is required to be
taken under this Agreement is not a Business Day, then such 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 Applicable Law
This Agreement and the Warrants shall be governed by and construed in
accordance with the laws of the Province of
Quebec and the laws of Canada
applicable therein.
1.6 Agent for Service; Submission to Jurisdiction; Waiver of Immunities
By the execution and delivery of this Agreement, the Corporation (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System (or any successor) (together with any
successor, the "Agent for Service"), as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to this
Agreement or Warrants or the Underlying Securities, that may be instituted in
any federal or state court in the State of New York, or brought under federal or
state securities laws, and acknowledges that the Agent for Service has accepted
such designation, (ii) submits to the jurisdiction of any such court in any such
suit or proceeding and waives any other requirements of, or objections to
personal jurisdiction with respect thereto, and (iii) agrees that service of
process upon the Agent for Service (or any successor) and written notice of said
service to the Corporation (addressed to its Chief Financial Officer at its
principal office in Xxxxxxxx, Xxxxxx, Xxxxxx), shall be deemed in every respect
effective service of process upon the Corporation in any such suit or
proceeding. The Corporation further agrees to take any and all action, including
the execution and filing of any and all such documents and instruments, as may
be necessary to continue such designation and appointment of the Agent for
Service in full force and effect so long as any of the Warrants shall be
outstanding.
To the extent that the Corporation has or hereafter may acquire any
immunity from the jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of its obligations under the
above-referenced documents, to the extent permitted by law.
1.7 Severability
If any provision of this Agreement shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Agreement and such
remaining provisions, or part thereof, shall remain enforceable and binding
2. ISSUE OF WARRANTS
2.1 Issue and Terms of Warrants
2.1.1 Warrants, entitling the holders thereof to purchase up to an
aggregate of 18,170,249 Common Shares (subject to any adjustment in
accordance with Article 4), are hereby created and authorized to be issued
by the Corporation.
2.1.2 Subject to Subsection 2.1.3, upon due exercise of one whole
Warrant issued hereunder, the Corporation shall deliver, or cause to be
delivered, one Common Share to the Warrantholder (subject to
6
adjustment in accordance with Article 4) at any time after the Separation
Date until the Time of Expiry, at a price equal to the Exercise Price in
effect on the Exercise Date. The Warrant Agent acknowledges that, pursuant
to the Delivery Agreement, the Corporation has caused the Selling
Shareholder, and the Selling Shareholder has irrevocably agreed to deliver
the Pledged Shares upon exercise of Warrants against payment of the
Exercise Price in effect on the Exercise Date.
2.1.3 Neither the Warrant Agent nor the Corporation shall have any
obligation to deliver any Common Share upon the exercise of any Warrant if
the person to whom such shares are to be delivered is a resident of a
country or political subdivision thereof (except Canada or any province
thereof and the United States of America) in which the Corporation is not
qualified, under securities legislation or other applicable legislation, to
distribute the Common Shares or such Common Shares are not registered for
sale to the public upon the exercise of Warrants. The Warrant Agent may
require any person to provide proof of residence satisfactory to the
Warrant Agent before Common Shares are delivered pursuant to the exercise
of any Warrant.
2.1.4 No fractional Warrants shall be delivered or otherwise provided
for, and a purchaser or holder of any Warrant shall not be entitled to any
cash or other consideration in lieu of any fractional interest in a Warrant
or claim thereto. After the Separation Date, Warrants may be split up,
combined, exchanged or transferred by delivery and all necessary
endorsements separate from the Common Shares with which they were
originally distributed.
2.1.5 The Exercise Price and the number of Common Shares which may be
purchased pursuant to the Warrants shall be adjusted in the events and in
the manner specified in Article 4.
2.1.6 Failure to Deliver Common Shares to Warrantholders
2.1.6.1 In the event that the Selling Shareholder is unable to
deliver, or cause to be delivered, Common Shares to the Warrant Agent,
upon due exercise of Warrants as herein provided, the Corporation shall
deliver, or cause to be delivered, to the Warrant Agent such number of
Common Shares as are required to be delivered to Warrantholders upon due
exercise of Warrants, and the Warrant Agent shall deliver such Common
Shares to the Warrantholders.
2.1.6.2 Notwithstanding any other provision of this Agreement, the
Warrant Agent shall remit to the Agent, for the benefit of the
Corporation, not later than the second Business Day following the date
of receipt, all monies received in payment of the Exercise Price in
respect of Warrants for which the Corporation shall have delivered
Common Shares under Subsection 2.1.6.1.
2.1.6.3 The Warrant Agent shall promptly give the Corporation and
the Agent written notice of any default by the Selling Shareholder in
the performance of its obligations under the Delivery Agreement,
including failure by the Selling Shareholder to deliver, or cause to be
delivered, Common Shares upon due exercise of the Warrants.
2.2 Form of Warrant
2.2.1 Subject to Section 2.9, any certificates representing Warrants
in definitive form evidencing the Warrants issued pursuant to Section 2.1
shall be issued and shall be executed by the Corporation, shall be
countersigned by or on behalf of the Warrant Agent and shall be delivered
by the Warrant Agent to or upon the written order of the Corporation
without the Warrant Agent receiving consideration therefor.
2.2.2 Subject to Section 2.9, the Warrants shall be issuable in
registered form only, and any certificates representing such Warrants
shall, in their English and French versions, be substantially in the form
set out in Schedule A, shall be dated as of the Closing Date (including all
replacements issued in accordance with this Agreement), shall have such
distinguishing letters and numbers as the Corporation may, with the
approval of the Warrant Agent, prescribe and shall be issuable in any
denomination excluding fractions. Notwithstanding any adjustments pursuant
to Article 4, all replacement Warrants shall continue to express the number
of Common Shares purchasable upon the exercise of the Warrant(s) evidenced
thereby and the Exercise Price thereof as if such Warrants were initially
issued as of the Closing Date. Title to the Warrants shall pass by delivery
of the Warrant together with all necessary endorsements.
7
2.3 Signing of Warrants
The Warrants shall be signed by the president and chief executive officer
or a senior vice-president and by the corporate secretary or the treasurer or an
assistant corporate secretary or an assistant or any two officers of the
Corporation. The signatures of such officers may be printed or mechanically
reproduced in facsimile and Warrants bearing such facsimile signatures shall be
binding upon the Corporation as if it had been manually signed by such officers.
Notwithstanding that any of the persons whose manual or facsimile signature
appears on any Warrant as one of such officers may no longer hold office at the
date of issue of such Warrant or at the date of countersignature or delivery
thereof, any Warrant signed as aforesaid shall, subject to Section 2.4, be valid
and binding upon the Corporation, and the holder thereof shall be entitled to
the benefits of this Agreement.
2.4 Countersignature by Warrant Agent
2.4.1 No Warrant shall be issued or, if issued, shall be valid for any
purpose or entitle the holder to the benefit hereof until it shall have
been countersigned by or on behalf of the Warrant Agent by means of a
manual signature of one or more of its duly authorized officers, and such
countersignature by the Warrant Agent upon any Warrant shall be conclusive
evidence as against the Corporation that the Warrant so countersigned has
been duly issued hereunder and that the holder is entitled to the benefits
hereof. The signature of such officers may be printed or mechanically
reproduced in facsimile and Warrants bearing such facsimile signatures
shall be binding upon the Warrant Agent as if it had been manually signed
by such officers.
2.4.2 The countersignature of the Warrant Agent on Warrants issued
hereunder shall not be construed as a representation or warranty by the
Warrant Agent as to the validity of this Agreement or of the Warrants
(except the due countersignature thereof) and the Warrant Agent shall in no
respect be liable or responsible for the use made of the Warrants or any of
them or of the consideration therefor, except as otherwise specified
herein.
2.5 Warrantholder not a Shareholder
Nothing in this Agreement nor in the holding or in the ownership of a
Warrant or otherwise, shall be construed as conferring upon a Warrantholder any
right or interest whatsoever as a Shareholder or any other shareholder of the
Corporation, including, without limitation, the right to vote at, to receive
notice of, or to attend, meetings of Shareholders or any other proceedings of
the Corporation, or the right to receive dividends and other distributions.
2.6 Issue in Substitution for Mutilated, Lost, Destroyed or Stolen Warrants
2.6.1 In case any of the Warrants shall become mutilated or be lost,
destroyed or stolen, the Corporation, subject to applicable law, shall
issue, and thereupon the Warrant Agent shall countersign and deliver, a new
Warrant of like tenor as the one mutilated, lost, destroyed or stolen in
exchange for, and in place of, and upon cancellation of such mutilated
Warrant, or in lieu of, and in substitution for, such lost, destroyed or
stolen Warrant, and the substituted Warrant shall be in a form approved by
the Warrant Agent and shall be entitled to the benefits hereof and shall
rank equally in accordance with its terms with all other Warrants issued or
to be issued hereunder.
2.6.2 The applicant for the issue of a new Warrant pursuant to this
Section 2.6 shall bear the cost of the issue thereof and, in case of loss,
destruction or theft shall, as a condition precedent to the issue thereof,
furnish to the Corporation and to the Warrant Agent, such evidence of
ownership and of the loss, destruction or theft of the Warrant so lost,
destroyed or stolen as shall be satisfactory to the Corporation and to the
Warrant Agent in their sole discretion, and such applicant may also be
required to furnish indemnity or security in amount and form satisfactory
to the Corporation and the Warrant Agent, in their discretion, to save each
of them harmless and shall pay the expenses and charges of the Corporation
and the Warrant Agent in connection therewith.
2.6.3 Warrants may be replaced only at a Warrant Agency or at any
other place that is designated by the Corporation with the approval of the
Warrant Agent.
8
2.7 Exchange of Warrants
2.7.1 Warrants to purchase any specified number of Common Shares may,
upon compliance with the reasonable requirements of the Warrant Agent, be
exchanged for another Warrant, or Warrants, entitling the holder thereof to
purchase in the aggregate the same number of Common Shares as are
purchasable under the Warrant, or Warrants, so exchanged.
2.7.2 Warrants may be exchanged only at a Warrant Agency or at any
other place that is designated by the Corporation with the approval of the
Warrant Agent. Any Warrants tendered for exchange shall be surrendered to
the Warrant Agency and be cancelled.
2.7.3 No charge will be levied by the Corporation or the Warrant Agent
upon a presenter of a Warrant pursuant to this Agreement for the transfer
of any Warrant or for the exchange of any Warrant, but reimbursement to the
Warrant Agent or the Corporation for any taxes or other charges in
connection therewith shall be made by such holder as a condition precedent
to such exchange.
2.7.4 The Corporation hereby appoints the Warrant Agent as registrar
of the Warrants. The Corporation may hereafter, with the consent of the
Warrant Agent, appoint one or more additional registrars of the Warrants.
2.7.5 The Corporation shall cause to be kept by the Warrant Agent at
its principal office in the City of Montreal and Toronto.
2.7.5.1 a register of holders of Warrants in which shall be entered
the names and addresses of the holders of the Warrants and of the number
of Warrants held by them; and
2.7.5.2 a register of transfers of Warrants in which shall be
entered the date and other particulars of each transfer of Warrants.
2.7.6 No transfer of a Warrant shall be valid unless made by:
2.7.6.1 the holder or his successors, executors, administrators or
other legal representatives or his or their attorney duly appointed by
an instrument in writing in form and execution satisfactory to the
Warrant Agent with signatures guaranteed by an Eligible Institution; or
2.7.6.2 the liquidator of, or a trustee in bankruptcy for, a
Warrantholder,
and in compliance with such reasonable requirements as the Warrant Agent
and the Corporation may prescribe (including the requirement to provide
evidence of satisfactory compliance with applicable securities laws) and
recorded on the register of transfers maintained by the Warrant Agent
pursuant to Section 2.7.5, nor until all stamp taxes or governmental or
other charges arising by reason of such transfer have been paid by the
Warrantholder. Subject to the Warrant Agent complying with the
provisions of this Agreement, the Warrant Agent may assume compliance
with applicable securities laws unless otherwise notified in writing by
the Corporation.
2.7.7 The registers shall be open at all reasonable times during
business hours on a Business Day for inspection by the Corporation, the
Warrant Agent or any Warrantholder. The Warrant Agent shall, from time to
time when requested to do so by the Corporation, furnish the Corporation
with a list of the names and addresses of holders of Warrants entered in
the register of holders kept by the Warrant Agent and showing the number of
Underlying Securities that might then be acquired upon the exercise of the
Warrants held by each such holder.
2.8 Distribution of Warrant on Separation Date
2.8.1 Subject to Section 2.9, from the date of their issuance to the
Separation Date, the Warrants issued pursuant to Section 2.1 shall remain
part of the Units and the Warrants shall be evidenced by one or more
legended certificates for the Common Shares and the Warrants which comprise
the Units and, during such period, the Warrants shall neither be exercised
nor separated from their corresponding Common Shares.
9
2.8.2 Subject to Section 2.9, the Warrants, issuable in registered
form evidencing the Warrants issued pursuant to Section 2.1, shall be
issued to all registered holders of legended certificates for the Common
Shares and the Warrants at the close of business on the Separation Date.
2.8.3 Subject to Section 2.9, the Warrant shall be mailed by the
Warrant Agent to all registered holders of legended certificates for the
Common Shares and the Warrants, as soon as practicable, but in any event,
not later than the second Business Day after the Separation Date.
2.9 Book-Based System
2.9.1 Subject to Section 2.11, Warrants shall be issued in Book-Entry
Only Form and shall be represented by one or more fully-registered
permanent global Warrant certificates in the form of the certificate set
out in Schedule "A" hereto together with the legend provided for in
Subsection 2.9.2 (the "Global Certificates"). The Global Certificate(s)
shall be held by, or on behalf of, the Depository as depository for the
Participants and shall be registered in the name of "CDS & CO." (or such
other name as the Depository may use from time to time as its nominee for
the purposes of the Book-Based System).
2.9.2 The Global Certificate(s) shall bear a legend in substantially
the following form subject to modification as required by the Depository:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE CANADIAN DEPOSITORY FOR SECURITIES LIMITED ("CDS") TO THE
CORPORATION OR THE WARRANT AGENT, AND ANY CERTIFICATE ISSUED IN RESPECT
THEREOF IS REGISTERED IN THE NAME OF CDS & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS
MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE
REGISTERED HOLDER HEREOF, CDS & CO., HAS AN INTEREST HEREIN. THIS
CERTIFICATE IS SUBJECT TO AN ISSUE SPECIFIC LETTER OF REPRESENTATION OF
THE CORPORATION TO CDS, AS SUCH LETTER MAY BE REPLACED OR AMENDED FROM
TIME TO TIME."
2.10 Transfer of Warrants held in Book-Based System.
2.10.1 Subject to Section 2.11, transfers and registrations of
ownership of the Warrants represented by the Global Certificate(s) will
only be made to another nominee of the Depository or to a successor
Depository or a nominee of such successor Depository.
2.10.2 It is expressly acknowledged that transfers of beneficial
ownership in any Warrant represented by the Global Certificate(s) will be
effected only (i) with respect to the interest of Participants, through
records maintained by the Depository or its nominee for the Global
Certificate(s), and (ii) with respect to interest of persons other than
Participants, through records maintained by Participants. Beneficial Owners
who are not Participants but who desire to purchase, sell or otherwise
transfer ownership of or other interest in Warrants represented by the
Global Certificate(s) may do so only through a Participant.
2.10.3 The rights of Beneficial Owners shall be limited to those
established by applicable law and agreements between the Depository and the
Participants and between such Participants and Beneficial Owners and must
be exercised through a Participant in accordance with the rules and
procedures of the Depository.
2.10.4 Subject to Section 2.11, neither the Corporation nor the
Warrant Agent shall be under any obligation to deliver to Participants or
Beneficial Owners, nor shall the Participants or the Beneficial Owners have
any right to require the delivery of, a certificate or other instrument
evidencing an interest in the Warrants.
10
2.11 Termination of Book-Based System.
2.11.1 Upon the occurrence of any of the following events:
2.11.1.1 if required by applicable law;
2.11.1.2 if the Book-Based System ceases to exist;
2.11.1.3 if the Corporation or the Depository advises the Warrant
Agent that the Depository is no longer willing or able or qualified to
discharge properly its responsibilities as Holder of the Global
Certificate(s) and the Corporation is unable to locate a qualified
successor; or
2.11.1.4 if the Corporation at its option elects to terminate its
present arrangements with the Depository for any reason (including
without limitation, in circumstances where the Corporation considers it
impracticable or inefficient to effect any distribution or exchange in
respect of Warrants through the facilities of the Depository);
the Warrant Agent shall notify the Depository, unless the Warrant Agent
has so been notified by the Depository, for and on behalf of
Participants and Beneficial Owners, that the Book-Based System has
terminated and that the Warrants will be represented by Physical
Warrants; the Depository will then be required to surrender the Global
Certificate(s) along with written instructions to the Warrant Agent as
to the Participants in whose names the Physical Warrants are to be
registered and delivered and the authorized denominations of the
Physical Warrants to be registered in the name of each such Participant,
whereupon Physical Warrants shall be issued by the Corporation and
registered and delivered in accordance with the written instructions of
the Depository upon surrender of the Global Certificate(s);
2.11.2 Transfers and exchanges of the foregoing Physical Warrants will
thereafter be effected in accordance with Subsection 2.7.5 and Sections 2.6
and 2.7 of this Agreement, and a register for the Physical Warrant shall be
kept at the principal office of the Warrant Agent in the City of Montreal
and Toronto.
2.12 Dealings with the Depository.
2.12.1 The Corporation and the Warrant Agent acknowledge that subject
to and in accordance with the rules and procedures of the Depository as at
the date of this Agreement, each Participant must look solely to the
Depository through its paying agent service, for so long as the Depository
is the registered Holder of the Global Certificate(s), for the delivery of
any Common Shares made by the Warrant Agent or the Corporation, as the case
may be, to the registered holder of the Global Certificate(s), and each
Beneficial Owner must look solely to Participants for the Common Shares
beneficially owned by it. Provided that the Corporation has delivered, or
caused to be delivered, Common Shares to the Warrant Agent or, with the
consent of the Warrant Agent, to the Depository, as the case may be, in
respect of the Global Certificate(s) as for delivery to Warrantholders who
have exercised Warrants required by this Agreement, no person, including
any Participant, shall have any claim against the Corporation in respect of
any such Common Shares and the obligations of the Corporation shall be
discharged by delivery to the Warrant Agent or Depository, as the case may
be, in respect of such Common Shares;
2.12.2 The Corporation and the Warrant Agent understand that, if so
requested by the Warrant Agent or the Corporation, the Depository will
deliver to such requesting party a certified list of Participants (the
"Participants' List") as at the date requested by such party showing the
name and address of each Participant together with the Participant's
interest in the Warrants and that, for so long as interests in the Warrants
are represented by the Global Certificate(s), the Depository shall, upon
the reasonable request of the Warrant Agent or the Corporation from time to
time, deliver to such requesting party a copy of the then current
Participants' List and such additional information as the Warrant Agent or
Corporation may reasonably request. The Corporation and the Warrant Agent
shall be entitled to rely upon all such information provided by the
Depository;
2.12.3 The Corporation and the Warrant Agent understand that the
Depository acts as the agent and depository for the Participants and
neither the Corporation nor the Warrant Agent assume any liability or
responsibility for:
11
2.12.3.1 any aspect of the records relating to the beneficial
ownership of the Warrants held by the Depository or the payments
relating to such Warrants;
2.12.3.2 maintaining, supervising or reviewing any records relating
to the beneficial ownership of Warrants held by the Depository; or
2.12.3.3 any advice or representation made by or with respect to
the Depository and contained in this Agreement or any agreement
supplemental to this Agreement and relating to the rules governing the
Depository or any action to be taken by the Depository or at the
direction of the Participants;
3. EXERCISE OF WARRANTS
3.1 Method of Exercise of Warrants
3.1.1 Subject to Subsection 2.1.3 and 3.1.4, the holder of any
Warrants may exercise the right thereby conferred on such holder to
purchase Common Shares by surrendering, during usual business hours after
the Separation Date but prior to the Time of Expiry, to any of the Warrant
Agencies that is designated by the Corporation with the approval of the
Warrant Agent:
3.1.1.1 a duly completed and executed Exercise Form substantially
in the form set out in Schedule A, and
3.1.1.2 cash or a certified cheque, bank draft or money order in
lawful money of Canada payable to or to the order of the Warrant Agent
at par in the city where such Warrant is exercised in an amount equal to
the Exercise Price multiplied by the number of Common Shares being
purchased.
A duly completed and executed Exercise Form referred to in 3.1.1.1,
together with payment of the Exercise Price of the Common Shares being
purchased referred to in 3.1.1.2, shall be deemed to be surrendered only
upon personal delivery thereof or, if sent by mail or other means of
transmission, upon actual receipt thereof, in each case, by the Warrant
Agent at any Warrant Agency.
3.1.2 Subject to Subsections 2.1.3 and 3.1.4, any Exercise Form
referred to in Subsection 3.1.1 shall be signed by the Warrantholder and
shall specify the number of Common Shares which the holder desires to
purchase (being not more than those which the holder is entitled to
purchase pursuant to the Warrant(s) surrendered), the person or persons in
whose name or names such Common Shares are to be registered, the address or
addresses of such persons and the number of Common Shares to be registered
in the name of each such person if more than one is so specified. If any of
the Common Shares purchased are to be registered in the name or names of a
person or persons other than the Warrantholder, the Warrantholder shall pay
to the Corporation or the Warrant Agency on behalf of the Corporation, all
applicable transfer or similar taxes and the Corporation shall not be
required to deliver certificates evidencing Common Shares unless or until
such Warrantholder shall have paid to the Corporation or the Warrant Agency
on behalf of the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been
paid or that no tax is due. No such Common Shares shall be issued to any
U.S. Person at any time when the Registration Statement is not effective.
3.1.3 In connection with the exchange and exercise of Warrants and in
compliance with such other terms and conditions hereof as may be required,
the Corporation shall provide for one or more agencies (a "Warrant Agency")
in Montreal and Toronto, and at any other place or places in Canada or the
United States which may be designated by the Corporation and of which the
Corporation shall notify the Warrantholders, at which Warrants may be
surrendered for exchange or Warrants exercised. The Corporation has
initially appointed the principal offices of Computershare Trust Company of
Canada in Montreal and Toronto as Warrant Agencies. The Corporation shall
give notice to Warrantholders of any change of a Warrant Agency.
3.1.4 Notwithstanding any provision to the contrary contained in this
Agreement, no U.S. Person (a "U.S. Person") as defined in Rule 902(k) of
Regulation S under the 1933 Act, as amended, or person holding such Warrant
for the account of a U.S. Person shall exercise any Warrant at any time
when no
12
Registration Statement is effective. If no Registration Statement is
effective, all Warrants held by U.S. Persons or persons holding such
Warrants for the account of U.S. Persons shall immediately cease to be
exercisable for so long as the Registration Statement is not effective and
such Warrants are held by U.S. Persons or persons holding such Warrants for
the account of U.S. Persons. If no Registration Statement is effective at
any time when any Warrant is exercised, as a condition of the exercise of
such Warrant, the Corporation may require that the holder of such Warrant
provide such evidence that it is not a U.S. Person or person holding such
Warrant for the account of a U.S. Person as the Corporation shall
reasonably request; provided that if the Corporation, acting reasonably, is
not satisfied in such circumstance that the holder is not a U.S. Person or
person holding such Warrant for the account of a U.S. Person, such
Warrantholder shall be notified forthwith by the Warrant Agent.
3.1.5 Any Warrantholder may elect to make payment of the Exercise
Price pursuant to Subsection 3.1.1 in U.S. dollars. In such an event, the
Exercise Price payable by such Warrantholder shall be the U.S. dollar
equivalent of the Exercise Price payable in U.S. dollars based on the
Exchange Rate on the Business Day immediately preceding the date on which
the relevant Warrant is exercised, rounded to the nearest tenth of a cent.
At the request of the Warrant Agent, the Corporation shall provide a
certificate to the Warrant Agent setting out the applicable Exchange Rate.
3.2 Effect of Exercise of Warrants
3.2.1 Upon compliance by the holder of any Warrant with the provisions
of Section 3.1 and subject to Section 3.3, the number of Common Shares
purchased shall be deemed to have been sold and the person or persons in
whose name or names such Common Shares are to be registered shall be deemed
to have become the holder or holders of record of such Common Shares on the
Exercise Date unless the transfer registers of the Corporation shall be
closed on such date, in which case the Common Shares purchased shall be
deemed to have been sold, and such person or persons shall be deemed to
have become the holder or holders of record of such Common Shares, on the
date on which such transfer registers are reopened, but such Common Shares
shall be sold at the Exercise Price in effect on the Exercise Date.
3.2.2 Subject to Section 2.1.3 and 3.1.4, after due exercise of
Warrants as aforesaid, the Warrant Agent shall, within five Business Days
(i) cause to be mailed to the person or persons in whose name or names the
Common Shares so purchased are to be registered, as specified in the
Exercise Form completed, at the address(es) specified in such Exercise
Form, or (ii) if so specified in such Exercise Form, cause to be delivered
to such person or persons at the office of the Warrant Agency where such
Warrants were surrendered, a share certificate or certificates for the
appropriate number of Common Shares which the Warrantholder is entitled to
and has elected to purchase pursuant to the Warrants. In addition, if
required by law, the Corporation shall cause to be delivered to any U.S.
Person in whose name the Common Shares issuable or deliverable, as the case
may be, upon the exercise of the Warrants, a prospectus that complies with
Section 10 of the 1933 Act.
3.3 Subscription for Less than Entitlement; Fractions
3.3.1 The holder of any Warrant may elect to purchase a number of
Common Shares which is less than the number which the holder is entitled to
purchase pursuant to the Warrant, provided, however, that in no event shall
fractional Common Shares be delivered with regard to Warrants exercised. In
the event of the exercise of a number of Warrants which is less than the
number of Warrants held by a holder, the holder of the Warrant upon
exercise thereof shall, in addition, be entitled to receive, without charge
therefor, a new Warrant in respect of the balance of the Warrants which
such holder was entitled to exercise pursuant to the Warrant and which were
not then exercised.
3.3.2 Notwithstanding any other provision of this Agreement, including
any adjustment provided for in Article 4, neither the Corporation nor the
Warrant Agent shall be required, upon the exercise of any Warrants, to
issue fractions of Common Shares or to deliver certificates which evidence
fractional Common Shares. To the extent that a Warrant confers the right to
purchase a fraction of a Common Share, such right may be exercised in
respect of such fraction only in combination with another Warrant or
Warrants, which in the aggregate entitle the holder thereof to purchase a
whole number of Common
13
Shares and under no circumstances shall the Corporation be obligated to
deliver fractional Common Shares. In lieu of fractional Common Shares,
there shall be paid to the holder by the Corporation, upon surrender of
Warrants for exercise pursuant to Section 3.1, as soon as practicable after
surrender, an amount in lawful money of Canada or of the United States
pursuant to Subsection 3.1.5 equal to the then Current Market Price of such
fractional interest.
3.4 Expiration of Warrants
3.4.1 After the Time of Expiry, all rights under any Warrant in
respect of which the right of purchase herein and therein provided for
shall not theretofore have been exercised shall be extinguished and shall
cease and terminate and such Warrant shall become null and void.
3.4.2 The Warrant Agent shall give notice not less than 90, and not
more than 120, days prior to the Time of Expiry to the Warrantholders of
all then outstanding Warrants to the effect that the Warrants will
terminate and become void as of the Time of Expiry.
3.5 Cancellation of Surrendered Warrants
All Warrants surrendered to Warrant Agencies pursuant to Section 2.6, 2.7
or 3.1 shall be cancelled by the Warrant Agent and the Warrant Agent shall
record the cancellation of such Warrants on the register of holders maintained
by the Warrant Agent. The Warrant Agent shall, within three Business Days of the
cancellation, furnish the Corporation and the Selling Shareholder with a
cancellation certificate identifying the Warrants so cancelled and the number of
Common Shares purchased.
3.6 Accounting and Recording
3.6.1 The Warrant Agent shall promptly account to the Corporation and
the Selling Shareholder with respect to Warrants exercised and remit to the
Agent, not later than the second Business Day following the date of
receipt, all monies received by the Warrant Agent on the purchase of Common
Shares delivered by the Selling Shareholder or, in the event that the
Selling Shareholder is unable to deliver, or cause to be delivered, Common
Shares to the Warrant Agent, upon due exercise of Warrants as herein
provided, the Corporation through the exercise of Warrants. All such monies
and any securities or other instruments from time to time received by the
Warrant Agent shall be received in deposit for, and shall be segregated and
kept apart by the Warrant Agent in deposit for, the Agent, to be dealt with
in accordance with the provisions of the Delivery Agreement.
3.6.2 The Warrant Agent shall record the particulars of all Warrants
exercised which shall include the names and addresses of the persons who
became holders of Common Shares on exercise, the Exercise Date, the
Exercise Price and the number of Common Shares delivered from the Pledged
Shares. Within two Business Days of each Exercise Date, the Warrant Agent
shall provide such particulars in writing to the Selling Shareholder and
the Corporation.
4. ADJUSTMENT OF PURCHASE RIGHTS AND EXERCISE PRICE
4.1 Adjustment of Exercise Rights
The Exercise Price per Common Share and the number of Common Shares which
may be subscribed for upon exercise of a Warrant shall be subject to adjustment
from time to time upon the occurrence of any of the events and in the manner
provided as follows:
4.1.1 If and whenever at any time prior to the Time of Expiry the
Corporation shall:
4.1.1.1 Declare a dividend or make a distribution on its Common
Shares in each case payable in Common Shares (or securities exchangeable
for or convertible into Common Shares), which constitutes an
Extraordinary Dividend, or
4.1.1.2 Subdivide or change its outstanding Common Shares into a
greater number of Common Shares, or
4.1.1.3 Reduce, combine or consolidate its outstanding Common
Shares into a lesser number,
(any of such events in these Subsections 4.1.1.1, 4.1.1.2 and 4.1.1.3
being called a "Common Share Reorganization"), then effective
immediately after the record date or effective date, as
14
the case may be, at which the holders of Common Shares are determined
for the purposes of the Common Share Reorganization, the Exercise
Basis shall be adjusted by multiplying the applicable Exercise Basis
in effect on such effective date or record date by a fraction, the
numerator 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 have been outstanding had such
securities been exchanged for or converted into Common Shares
immediately after giving effect to such Common Share Reorganization)
and the denominator of which shall be the number of Common Shares
outstanding on such effective date or record date before giving
effect to such Common Share Reorganization.
4.1.2 If and whenever at any time prior to the Expiry Time the
Corporation shall fix a record date for the issuing of rights, options or
warrants to all or substantially all of the holders of the Common Shares
entitling them for a period expiring not more than 45 days after such
record date (the "Rights Period") to subscribe for or purchase Common
Shares (or securities convertible into or exchangeable for Common Shares)
at a price per share (or having a conversion or exchange price per share)
which is less than 95% of the Current Market Price per Common Share on the
record date for such issue (any of such events being called a "Rights
Offering"), then effective immediately after the end of the Rights Period
the Exercise Price shall be adjusted to a price determined by multiplying
the applicable Exercise Price in effect at the end of the Rights Period by
a fraction the numerator of which shall be the sum of:
4.1.2.1 The number of Common Shares outstanding as of the record
date for the Rights Offering, and
4.1.2.2 A number determined by dividing (A) either the product of
(i) the number of Common Shares issued during the Rights Period upon
exercise of the rights, warrants or options under the Rights Offering
and (ii) the price at which such Common Shares are issued, or, as the
case may be, the product of (iii) the number of Common Shares for or
into which the convertible or exchangeable securities issued during the
Rights Period upon exercise of the rights, warrants or options under the
Rights Offering are exchangeable or convertible and (iv) the exchange or
conversion price of the convertible or exchangeable securities so
issued, by (B) the Current Market Price per Common Share as of the
record date of the Rights Offering, and
The denominator of which shall be the number of Common Shares
outstanding (including the number of Common Shares actually issued or
subscribed for during the Rights Period upon exercise of the rights,
warrants or options under the rights Offering) or which would be
outstanding upon the conversion or exchange of all convertible or
exchangeable securities issued during the Rights Period upon exercise of
the rights, warrants or options under the Rights Offering, as
applicable, in each case after giving effect to the Rights Offering.
Common Shares owned by or held (otherwise than as security) for the
account of the Corporation or any Subsidiary of the Corporation shall be
deemed not to be outstanding for the purpose of any such computation.
4.1.3 If and whenever at any time prior to the Time of Expiry the
Corporation shall fix a record date for the payment, issue or distribution
to all or substantially all of the holders of the Common Shares of (i) a
cash dividend, (ii) cash or assets (including evidences of the
Corporation's indebtedness), or (iii) rights, options, warrants or other
securities (including securities convertible into or exchangeable for
Common Shares), and such payment, issue or distribution constitutes an
Extraordinary Dividend and 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 shall be
adjusted effective immediately after such record date to a price determined
by multiplying the applicable Exercise Price in effect on such record date
by a fraction:
4.1.3.1 the numerator of which shall be:
15
(A) the product of the number of Common Shares outstanding on
such record date and the Current Market Price per Common Share on
such record date; less
(B) the fair market value, as determined in good faith by action
of the directors (whose determination shall be conclusive), to the
holders of the Common Shares of such dividend, cash, assets, rights
or securities so paid, issued or distributed less the fair market
value, as determined in good faith by action of the directors (whose
determination shall be conclusive), of the consideration, if any,
received therefor by the Corporation, and
4.1.3.2 the denominator of which shall be the number of Common
Shares outstanding on such record date multiplied by the Current Market
Price per Common Share on such record date.
Such adjustment shall be made successively whenever such a record date
is fixed. To the extent that such payment, issuance or distribution is
not so made, the Exercise Price shall be readjusted effective
immediately to the Exercise Price which would then be in effect based
upon such payment, issuance or distribution actually made.
4.1.4 If and whenever at any time prior to Time of Expiry there shall
be a reorganization, reclassification or other change of Common Shares
outstanding at such time or change of the Common Shares into other shares
or into other securities (other than a Common Share Reorganization), or a
consolidation, amalgamation, arrangement or merger of the Corporation with
or into any other corporation or other entity (other than a consolidation,
amalgamation, arrangement or merger which does not result in any
reclassification of the outstanding Common Shares or a change of the Common
Shares into other shares), or a sale, conveyance or transfer of the
undertaking or assets of the Corporation as an entirety or substantially as
an entirety to another corporation or entity in which the holders of Common
Shares are entitled to receive shares, other securities or property,
including cash (any of such events being herein called a "Capital
Reorganization"), any holder who exercises his right to subscribe for and
purchase Common Shares pursuant to the exercise of Warrants after the
effective date of such Capital Reorganization shall be entitled to receive,
and shall accept for the same aggregate consideration in lieu of the number
of Common Shares to which such holder was theretofore entitled upon such
exercise, the aggregate number of shares, other securities or other
property which such holder would have received as a result of such Capital
Reorganization had he exercised his right to acquire Underlying Securities
immediately prior to the effective date or record date, as the case may be,
of the Capital Reorganization and had he been the registered holder of such
Underlying Securities on such effective date or record date, as the case
may be, subject to adjustment thereafter in accordance with provisions the
same, as nearly as may be possible, as those contained in Subsections 4.1.2
and 4.1.3 hereof. If determined appropriate by the directors, acting in
good faith, appropriate adjustments shall be made as a result of any such
Capital Reorganization in the application of the provisions set forth in
this Section 4.1, with respect to the rights and interests thereafter of
the holder of a Warrant to the end that the provisions set forth in this
Section 4.1 shall thereafter correspondingly be made applicable as nearly
as may be reasonably possible in relation to any shares, other securities
or other property thereafter deliverable upon the exercise of the Warrant.
Any such adjustment shall be made by and set forth in an agreement
supplemental hereto approved by action of the directors, acting in good
faith, and shall for all purposes be conclusively deemed to be an
appropriate adjustment.
4.1.5 In case the Corporation after the date of issue of the Warrants
shall take any action affecting the Common Shares, other than action
described in this Section 4.1, which in the opinion of the directors,
acting reasonably, would materially adversely affect the rights of the
Warrantholders, the Exercise Price or the number of Common Shares
purchasable upon the exercise of each Warrant shall be adjusted in such
manner, if any, and at such time, by action of the directors, acting
reasonably, as they may determine to be equitable in the circumstances, but
subject in all cases to any necessary regulatory approvals.
4.2 Adjustment Rules
For the purposes of Section 4.1, any adjustment shall be made successively
whenever an event referred to therein shall occur, subject to the following
provisions:
16
4.2.1 All calculations shall be made to the nearest 1/100th of a
Common Share;
4.2.2 No adjustment to an Exercise Price shall be required unless such
adjustment would result in a change of at least one per cent in the
prevailing Exercise Price and no adjustment shall be made in the number of
Common Shares which may be subscribed for upon exercise of the Warrant
unless it would require a change of at least 1/100th of a Common Share;
provided, however, that any adjustments which, except for the provisions of
this Subsection 4.2.2 would otherwise have been required to be made shall
be carried forward and taken into account in any subsequent adjustment;
4.2.3 If any question shall arise with respect to adjustments provided
for in this Article 4, such question shall, absent manifest error, be
conclusively determined by a firm of chartered accountants appointed by the
Corporation (who may be the Corporation's auditors) and acceptable to the
Warrant Agent, acting reasonably; such chartered accountants shall have
access to all necessary records of the Corporation and such determination
shall be binding on the Corporation, the Warrant Agent and the
Warrantholders, absent manifest error. In the event that any such
determination is made, the Corporation shall deliver a certificate to the
Warrant Agent describing such determination and confirming such consent;
4.2.4 If the Corporation shall set a record date to determine the
holders of its Common Shares for the purpose of entitling them to receive
any dividend or distribution or any subscription or purchase rights,
options or warrants and shall thereafter and before the distribution to
such Shareholders of any such dividend, distribution or subscription or
purchase rights legally abandon its plan to pay or deliver such dividend,
distribution or subscription or purchase rights, then no adjustment in the
Exercise Price or the number of Common Shares purchasable upon exercise of
the warrant shall be required by reason of the setting of such record date;
and
4.2.5 As a condition precedent to the taking of any action which would
require any adjustment in any of the subscription rights pursuant to any of
the Warrants, the Corporation shall take any corporate action which may, in
the opinion of counsel, be necessary in order that the Corporation have
unissued and reserved in its authorized capital, and may validly and
legally issue as fully paid and non-assessable, all of the Underlying
Securities that the Warrantholders are entitled to receive on full exercise
thereof in accordance with the provisions hereof.
4.3 Postponement of Subscription
In any case where the application of Section 4.1 results in an increase in
the number of Common Shares issuable upon the exercise of the Warrants taking
effect immediately after the record date for a specific event, if any Warrant is
exercised after that record date and prior to completion of the event, the
Corporation may postpone the issuance to the holder of the Warrant of the Common
Shares to which such Warrantholder is entitled by reason of such adjustment but
such Common Shares shall be so issued and delivered to that holder upon
completion of that event, with the number of such Common Shares calculated on
the basis of the number of Common Shares on the date that the Warrant was
adjusted for completion of that event and the Corporation shall deliver to the
person or persons in whose name or names the Common Shares are to be issued an
appropriate instrument evidencing the right of such person or persons to receive
such Common Shares and the right to receive any dividends or other distributions
which, but for the provisions of this Section 4.3, such person or persons would
have been entitled to receive in respect of such Common Shares from and after
the date that the Warrant was exercised in respect thereof.
4.4 Notice of Adjustment of Exercise Rights
4.4.1 At least 10 days prior to the effective date or record date, as
the case may be, of any event that requires or that may require an
adjustment in any of the exercise rights pursuant to any of the Warrants,
including the number of Underlying Securities that may be acquired upon the
exercise thereof, the Corporation shall:
4.4.1.1 file with the Warrant Agent a certificate of the
Corporation specifying the particulars of such event (including the
record date or the effective date for such event) and, if determinable,
the required adjustment and the computation of such adjustment; and
17
4.4.1.2 give notice to the Warrantholders of the particulars of
such event (including the record date or the effective date for such
event) and, if determinable, the required adjustment, in accordance with
the provisions set out in Section 12.1.
4.4.2 In case any adjustment for which a notice in Subsection 4.4.1
has been given is not then determinable, the Corporation shall promptly
after such adjustment is determinable:
4.4.2.1 file a certificate of the Corporation with the Warrant
Agent showing how such adjustment was computed; and
4.4.2.2 give notice to the Warrantholders of the adjustment, in
accordance with the provisions set out in Section 12.1.
4.4.3 The Warrant Agent may act and rely for all purposes upon any
certificates and any other documents filed by the Corporation pursuant to
this Section 4.4.
4.5 No action after Notice
The Corporation shall not take any other corporate action that might
deprive any Warrantholder of the opportunity to exercise Warrants during the
10-day period after the giving of the notice set forth in Subsection 4.4.1.
4.6 No Duty to Inquire
Except as provided in Section 10.2, the Warrant Agent shall not at any time
be under any duty or responsibility to any Warrantholder to determine whether
any facts exist which may require any adjustment contemplated by Sections 4.1
and 4.2, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making the same. The Warrant
Agent shall not be accountable with respect to the validity or value (or the
kind or amount) of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant.
5. NOTICE AND EVIDENCE OF OWNERSHIP
5.1 Notice to Warrantholders
Unless herein otherwise expressly provided, any notice to be given under
this Agreement to Warrantholders shall be deemed to be validly and sufficiently
given if such notice is sent by mail, postage prepaid, by letter or circular
addressed to all Warrantholders at their address appearing in the register of
Warrantholders kept by the Warrant Agent at the principal offices of the Warrant
Agent in Montreal and Toronto or in any such other place or places as the
Corporation with the approval of the Warrant Agent may designate.
Any notice so given shall be deemed to have been effectively given on the
fifth Business Day following the date of the postmark on such notice. In
determining under any provision hereof the date when notice of any meeting or
other event must be given, the date of giving notice shall be included and the
date of the meeting or other event shall be excluded.
5.2 Ownership and Transfer of Warrants
Except as ordered by a court of competent jurisdiction or as required by
law, the Corporation and the Warrant Agent shall treat the registered holder of
any Warrant as the absolute owner of the Warrants represented thereby
(notwithstanding any notice of ownership or writing thereon of previous loss or
theft or trust or other interest therein) for the purpose of purchasing Common
Shares thereunder and for all other purposes. A Warrantholder may transfer his
Warrants in the manner and subject to the terms set forth in this Section 5.2
and in Article 11. Except as provided in Section 2.10, title to Warrants shall
be transferable by delivery of the Warrant relating thereto when properly
endorsed or accompanied by proper instruments of transfer in suitable form for
transfer by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that registration of transfer shall be necessary
to become a Warrantholder. Warrants may be transferred only at a Warrant Agency
by the Warrantholder or his executors, administrators or other legal
representatives or his attorney duly appointed by an instrument in writing in
form and execution satisfactory to the Warrant Agent by completing the form of
transfer on the reverse side of the
18
Warrant and upon compliance with such reasonable requirements as the Warrant
Agent may prescribe. All persons may act accordingly and the receipt by any such
Warrantholder of the Common Shares purchasable pursuant thereto shall be a good
discharge to the Corporation and the Warrant Agent for the same and neither the
Corporation nor the Warrant Agent shall be bound to inquire into the title of
any such holder, except where the Corporation or the Warrant Agent is required
to take notice by law or by order of a court of competent jurisdiction.
Execution and transfer of Warrants shall occur at any of the Warrant Agencies.
No Warrants may be accepted for registration of transfer after the Time of
Expiry. The Corporation hereby acknowledges and agrees that the assignment of
any rights or claims under this Agreement, shall have full effect upon
registration of any Warrant as provided in this Agreement.
6. COVENANTS
6.1 General Covenants of Corporation
The Corporation hereby covenants with the Warrant Agent that, so long as
any Warrants remain outstanding and may be exercised:
6.1.1 subject to Section 9.2, the Corporation shall maintain its
corporate existence;
6.1.2 the Corporation shall not close its securities registers or take
any other action which would deprive the Warrantholders of the opportunity
of exercising their right of purchase pursuant to the Warrants held by such
persons during the period of 10 days after the giving of the notice
required by Section 4.4;
6.1.3 all Common Shares which shall be deliverable upon the due
exercise of the Warrants shall be duly and validly issued and fully paid
and non-assessable;
6.1.4 the Corporation shall use its best efforts to maintain the
Common Shares and the Warrants listed and posted for trading on the Toronto
Stock Exchange and the Common Shares listed and posted for trading on the
New York Stock Exchange;
6.1.5 the Corporation shall at all times have a Warrant Agency in
Montreal and Toronto;
6.1.6 the Corporation will use its reasonable efforts to maintain its
status as a reporting issuer or equivalent not in default, and not be in
default in any material respect of the applicable requirements of, the
applicable securities laws of each of the provinces of Canada and the
federal securities laws of the United States;
6.1.7 if at any time no Registration Statement is effective, the
Corporation will give notice to the Warrant Agent forthwith and the Warrant
Agent will give notice, in accordance with the provisions set out in
Section 12.1, to each Warrantholder having an address in the United States
shown on the register of Warrantholders kept by the Warrant Agent pursuant
to Section 2.7.5 of such fact as soon as reasonably practicable, but in any
event within five Business Days after learning that no Registration
Statement is effective. Such notice must be sent by fax, if possible, to
any securities depositary that is a registered holder;
6.1.8 the Corporation will use its reasonable best efforts to maintain
the Registration Statement continuously effective under the 1933 Act;
6.1.9 if, in the opinion of the Corporation's outside counsel, 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 Canada or the United States or any
other step is required under any federal or provincial law of Canada or any
federal or state law of the United States before the Underlying Securities
may be issued or delivered to a Warrantholder, the Corporation will use its
reasonable best efforts to file such instrument, obtain such permission,
order or ruling or take all such other actions, as its expense, as are
required;
6.1.10 the Corporation will not agree to any amendment to the Delivery
Agreement that would prejudice the rights of Warrantholders; and
6.1.11 the Corporation shall duly and punctually observe or perform
all of the covenants and obligations contained in this Agreement and the
Warrants on its part to be observed or performed.
19
6.2 Remuneration and Expenses of Warrant Agent
The Corporation shall pay to the Warrant Agent from time to time its pro
rata share of reasonable remuneration for its services under this Agreement and
shall pay or reimburse the Warrant Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Warrant Agent in
the administration or execution of its duties under this Agreement (including
the reasonable compensation and the disbursements of its counsel and all other
advisors and assistants not regularly in its employ) both before any default
under this Agreement and thereafter until all duties of the Warrant Agent
hereunder shall be finally and fully performed, except any such expense,
disbursement or advance as may arise out of or result from the negligence,
intentional or gross fault or bad faith of the Warrant Agent. The Corporation
shall pay the costs and expenses of any independent valuer appointed by the
Corporation in accordance with the provisions of this Agreement.
6.3 Performance of Covenants by Warrant Agent
If the Corporation shall fail to perform any of its covenants contained in
this Agreement on its part to be performed and has not remedied such failure
within 10 Business Days after receiving notice from the Warrant Agent of such
failure, the Warrant Agent may notify the Warrantholders of such failure on the
part of the Corporation or may itself perform any of the said covenants capable
of being performed by the Warrant Agent, but shall be under no obligation to
perform such covenant or to notify the Warrantholders of such performance by it.
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 Agreement.
7. ENFORCEMENT
7.1 Suits by Warrantholders
All or any of the rights conferred upon any Warrantholder by any of the
terms of one or more of the Warrants or of this Agreement may be enforced by the
Warrantholder by appropriate legal proceedings, but without prejudice to the
right which is hereby conferred upon the Warrant Agent to proceed in its own
name to enforce each and all of the provisions herein contained for the benefit
of the Warrantholders and subject to the provisions of Section 8.10.
7.2 Immunity of Shareholders, etc.
The Warrant Agent and, by the acceptance of the Warrants and as part of the
consideration for the issue of the Warrants, the Warrantholders hereby waive and
release any right, cause of action, remedy or recourse, now or hereafter
existing, in any jurisdiction against any person in his capacity as an
incorporator or as a past, present or future shareholder, director, officer,
employee or agent of the Corporation for the sale of the Common Shares pursuant
to any Warrant or on any obligation, covenant, agreement, representation or
warranty by the Corporation contained in this Agreement or in the Warrants. For
greater certainty, the obligations, covenants, agreements, representations and
warranties of the Corporation contained in this Agreement shall constitute
solely the obligations, covenants, agreements, representations and warranties of
the Corporation, and not those of any such incorporator, shareholder, director,
officer, employee or agent of the Corporation.
7.3 Limitation of Liability
Notwithstanding any other provision of this Agreement, the obligations
under this Agreement are not personally binding upon, nor shall resort under
this Agreement be had to, the private property of any of the past, present or
future shareholders, directors, officers, employees or agents of the
Corporation, but only the property of the Corporation shall be bound in respect
thereof.
8. MEETINGS OF WARRANTHOLDERS
8.1 Right to Convene Meetings
The Warrant Agent may at any time and from time to time and shall, on
receipt of a written request of the Corporation or of a Warrantholders' Request,
convene a meeting of the Warrantholders, provided that the Warrant Agent is
indemnified to its reasonable satisfaction by the Corporation which signed the
written
20
request, or by the Warrantholders who signed the Warrantholders' Request against
the expenses that may be incurred in connection with the calling and holding of
the meeting. If the Warrant Agent fails to so call a meeting within 15 days
after receipt of such written request of the Corporation, or Warrantholders'
Request, and indemnity given as aforesaid, the Corporation or such
Warrantholders, as the case may be, may call a meeting. All meetings of
Warrantholders shall be held in Montreal, or at such other place in Canada, as
may be approved or determined by the Warrant Agent.
8.2 Notice
At least 21 days' prior notice of any meeting of Warrantholders shall be
given to the Warrantholders in the manner provided for in Section 5.1 and a copy
of such notice shall be sent by mail or delivered to the Warrant Agent and the
Corporation, provided, however, that a notice of meeting shall not be required
to be sent to any of the Warrant Agent or the Corporation which called the
meeting. The notice of meeting shall state the time and place of the meeting and
the general nature of the business to be transacted thereat, provided, however,
that it shall not be necessary for any such notice to contain the text of any
resolution to be submitted to the meeting or any of the provisions of this
Article 8. The notice of meeting may be signed by a duly authorized officer of
the Warrant Agent or of the Corporation or the person or persons designated by
such Warrantholders, as the case may be.
8.3 Chairperson
The Warrant Agent may appoint an individual to be chairperson of the
meeting and, if no individual is so appointed, or if the individual so appointed
is not present within 15 minutes from the time fixed for the holding of the
meeting, the Warrantholders present in person or by proxy shall appoint an
individual present to be chairperson.
8.4 Quorum
Subject to Section 8.11, at any meeting of the Warrantholders, a quorum of
Warrantholders shall consist of at least two Warrantholders present in person or
by proxy and entitled to purchase at least 10% of the aggregate number of Common
Shares which could be purchased pursuant to all the then outstanding Warrants.
If a quorum of the Warrantholders shall not be present within one half-hour from
the time fixed for holding any meeting, the meeting, if called by the
Warrantholders or on a Warrantholders' Request, shall be dissolved; but in any
other case, the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day, in which case it shall be adjourned to
the next following Business Day) at the same time and place to the extent
possible and, subject to the provisions of Section 8.11, no notice of the
adjournment need be given. Any business may be brought before or dealt with at
an adjourned meeting which might have been dealt with at the original meeting in
accordance with the notice calling the original meeting. If a quorum is present
at the opening of the meeting, or an adjournment thereof, the Warrantholders
present may proceed with the business of the meeting, notwithstanding that a
quorum is not present throughout the meeting, or an adjournment thereof. At the
adjourned meeting, the Warrantholders present in person or by proxy shall form a
quorum and may transact the business for which the meeting was originally
called, notwithstanding that such Warrantholders may not be entitled to purchase
at least 10% of the aggregate number of Common Shares which may be purchased
pursuant to all the then outstanding Warrants.
8.5 Power to Adjourn
The chairperson of any meeting at which a quorum of the Warrantholders is
present may, with the consent of the meeting, adjourn any such meeting, and no
notice of such adjournment need be given except such notice, if any, as the
meeting may prescribe.
8.6 Show of Hands
Every question submitted to a meeting shall be decided in the first place
by a majority of the votes given on a show of hands, except that votes on an
extraordinary resolution shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairperson 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.
21
8.7 Poll and Voting
On every extraordinary resolution, and on any other question submitted to a
meeting and after a vote by show of hands when demanded by the chairperson or by
one or more of the Warrantholders acting in person or by proxy, a poll shall be
taken in such manner as the chairperson shall direct. Questions other than those
required to be determined by extraordinary resolution shall be decided by a
majority of the votes cast on the poll. On a show of hands, every person who is
present and entitled to vote, whether as a Warrantholder or as proxy for one or
more absent Warrantholders, or both, shall have one vote. On a poll, each
Warrantholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each whole
Common Share which he is entitled to purchase pursuant to the Warrant or
Warrants then held or represented by him. A proxy need not be a Warrantholder.
The chairperson of any meeting shall be entitled, both on a show of hands and on
a poll, to vote in respect of the Warrants, if any, held or represented by him.
8.8 Regulations
The Warrant Agent, or the Corporation with the approval of the Warrant
Agent, may from time to time make and from time to time vary such regulations as
it or they shall consider appropriate for
8.8.1 the issue of voting instruments by any bank, trust company or
other depositary satisfactory to the Warrant Agent stating that the
Warrants specified therein have been deposited with it by a named person
and shall remain on deposit until after the meeting, which voting
instrument shall entitle the persons named therein to be present and vote
at any such meeting and at any adjournment thereof or to appoint a proxy or
proxies to represent them and vote for them at any such meeting and at any
adjournment thereof in the same manner and with the same effect as though
the persons so named in such voting instruments were the actual holder of
the Warrants specified therein;
8.8.2 the deposit of voting instruments and proxy forms at such place
and time as the Warrant Agent, the Corporation or the Warrantholders
convening the meeting, as the case may be, may in the notice convening the
meeting direct;
8.8.3 the deposit of voting instruments and proxy forms at some
approved place or places other than the place at which the meeting is to be
held and enabling particulars of such proxy forms to be mailed or
telecopied before the meeting to the Corporation or to the Warrant Agent at
the place where the same is to be held and for the voting of proxies so
deposited as though the proxy forms themselves were produced at the
meeting;
8.8.4 the form of proxy; and
8.8.5 generally for the calling of meetings of Warrantholders and the
conduct of business thereat.
Any regulations so made shall be binding and effective and the votes given
in accordance therewith shall be valid and shall be counted. Except as such
regulations may provide, the only persons who shall be recognized at any meeting
as a Warrantholder, or be entitled to vote or be present at the meeting in
respect thereof (subject to Section 8.9), shall be Warrantholders or persons
holding proxies of Warrantholders.
8.9 Corporation and Warrant Agent May Be Represented
The Corporation and the Warrant Agent, by their respective directors and
officers, and the counsel for the Corporation and for the Warrant Agent,
respectively, may attend any meeting of the Warrantholders, but shall not have
the right to vote as such thereat.
8.10 Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred upon them by any other provisions
of this Agreement or by law, the Warrantholders at a meeting shall have the
power, exercisable from time to time by extraordinary resolution:
8.10.1 to agree with the Corporation to any modification, abrogation,
alteration, compromise or arrangement of the rights of Warrantholders or
the Warrant Agent in its capacity hereunder or on behalf
22
of the Warrantholders against the Corporation, whether such rights arise
under this Agreement or the Warrants or otherwise;
8.10.2 to amend, alter or repeal any extraordinary resolution
previously passed or adopted by the Warrantholders;
8.10.3 to direct or authorize the Warrant Agent to enforce any of the
covenants on the part of the Corporation contained in this Agreement or the
Warrants or to enforce any of the rights of the Warrantholders in any
manner specified in such extraordinary resolution or to refrain from
enforcing any such covenant or right;
8.10.4 to waive, and direct the Warrant Agent to waive, any default on
the part of the Corporation in complying with any provisions of this
Agreement or the Warrants either unconditionally or upon any conditions
specified in such extraordinary resolution;
8.10.5 to assent to any change in or omission from the provisions
contained herein or in the Warrants or any ancillary or supplemental
instrument which is agreed to by the Corporation and to authorize the
Warrant Agent to concur in and execute any ancillary or supplemental
Warrant Agreement embodying the change or omission;
8.10.6 to assent to a compromise or arrangement with a creditor or
creditors or a class or classes of creditors, whether secured or otherwise,
and with holders of any shares or other securities of the Corporation;
8.10.7 to remove the Warrant Agent and appoint a warrant agent;
8.10.8 to restrain any Warrantholder, as such, from taking or
instituting any suit, action or proceeding against the Corporation for the
enforcement of any of the covenants on the part of the Corporation
contained in this Agreement or the Warrants or to enforce any of the rights
of the Warrantholders under this Agreement or the Warrants; and
8.10.9 to direct any Warrantholder who, as such, has brought any suit,
action or proceeding to stay or discontinue or otherwise deal with the same
upon payment of the costs, charges and expenses reasonably and properly
incurred by such Warrantholder in connection therewith.
8.11 Meaning of Extraordinary Resolution
8.11.1 In this Agreement, the expression "extraordinary resolution"
shall mean, subject as hereinafter in this Section 8.11 and in Section 8.13
provided, a resolution submitted at a meeting of Warrantholders duly
convened for that purpose and held in accordance with the provisions of
this Article 8 at which there are present in person or by proxy
Warrantholders entitled to purchase at least 25% (50% for any extraordinary
resolution that would increase the Exercise Price, reduce the number of
securities issuable on exercise of the Warrants (other than pursuant to
adjustments provided for herein) or shorten the period of time prior to the
Time of Expiry) of the aggregate number of Common Shares which may be
purchased pursuant to all the then outstanding Warrants and adopted by the
affirmative votes of Warrantholders entitled to purchase not less than 66?%
of the aggregate number of Common Shares which may be purchased pursuant to
all the then outstanding Warrants represented at the meeting and voted on
the poll upon such resolution.
8.11.2 If, at any meeting called for the purpose of adopting an
extraordinary resolution, Warrantholders entitled to purchase at least 25%
(50% for any extraordinary resolution that would increase the Exercise
Price, reduce the number of securities issuable on exercise of the Warrants
(other than pursuant to adjustments provided for herein) or shorten the
period of time prior to the Time of Expiry) of the aggregate number of
Common Shares which may be purchased pursuant to all the then outstanding
Warrants are not present in person or by proxy within one-half hour after
the time appointed for the meeting, then the meeting, if convened by
Warrantholders or on a Warrantholders' Request, shall be dissolved; but in
any other case, it shall stand adjourned to such day, being not less than
seven or more than 21 Business Days later, and to such place and time, as
may be fixed by the chairperson. Not less than 5 days' prior notice shall
be given of the time and place of such adjourned meeting in the manner
provided in Section 5.1. Such notice shall state that at the adjourned
meeting the Warrantholders
23
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. At the adjourned meeting, the
Warrantholders present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally convened and a
resolution proposed at such adjourned meeting and passed by the requisite
vote as provided in Subsection 8.11.1 shall be an extraordinary resolution
within the meaning of this Agreement notwithstanding that Warrantholders
entitled to purchase at least 25% or 50%, as the case may be, of the
aggregate number of Common Shares which may be purchased pursuant to all
the then outstanding Warrants are not present in person or by proxy at such
adjourned meeting and notwithstanding that a quorum is not present
throughout such adjourned meeting.
8.11.3 Votes on an extraordinary resolution shall always be given on a
poll and no demand for a poll on an extraordinary resolution shall be
necessary.
8.12 Minutes
Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be from time to time
provided for that purpose by the Warrant Agent at the expense of the Corporation
and any such minutes as aforesaid, if signed by the chairperson of the meeting
at which such resolutions were passed or proceedings had, or by the chairperson
of the next succeeding meeting of the Warrantholders, shall be prima facie
evidence of the matters therein stated and, until the contrary is proved, every
such meeting in respect of the proceedings of which minutes shall have been made
shall be deemed to have been duly convened and held, and all resolutions passed
thereat or proceedings taken shall be deemed to have been duly passed and taken.
8.13 Instruments in Writing
All actions which may be taken and all powers or rights that may be
exercised by the Warrantholders at a meeting held as provided in this Article 8
may also be taken and exercised by Warrantholders (who are entitled to vote at
such meeting) entitled to purchase at least 66 2/3% of the aggregate number of
Common Shares which may be purchased pursuant to all the then outstanding
Warrants by an instrument in writing signed in one or more counterparts by such
Warrantholders in person or by attorney duly appointed in writing, and the
expression "extraordinary resolution" when used in this Agreement shall include
an instrument so signed.
8.14 Binding Effect of Resolutions
Every resolution and every extraordinary resolution adopted in accordance
with the provisions of this Article 8 at a meeting of Warrantholders shall be
binding upon all the Warrantholders, whether present at, or absent from, such
meeting, and every instrument in writing signed by Warrantholders in accordance
with Section 8.13 shall be binding upon all the Warrantholders, whether
signatories thereto or not, and each and every Warrantholder and the Warrant
Agent (subject to the provisions for indemnity herein contained) shall be bound
to give effect accordingly to every such resolution and instrument in writing.
In the case of an instrument in writing, the Warrant Agent shall give notice in
the manner contemplated in Sections 5.1 and 12.1 of the effect of the instrument
in writing to all Warrantholders, the Corporation as soon as reasonably
practicable.
8.15 Corporation, Warrant Agent and Counsel May be Represented
The Corporation and the Warrant Agent, by their respective employees,
directors and officers, and the counsel for each of the Corporation, the
Warrantholders and the Warrant Agent may attend any meeting of the
Warrantholders and speak thereto but shall have no vote as such.
9. SUPPLEMENTAL AGREEMENTS AND SUCCESSOR CORPORATIONS
9.1 Provision for Supplemental Agreements for Certain Purposes
From time to time the Corporation and the Warrant Agent may, subject to the
provisions of this Agreement and to the prior approval of the Toronto Stock
Exchange, and the Corporation and the Warrant Agent shall, when so directed by
this Agreement, execute and deliver by their proper officers, agreements or
24
instruments supplemental hereto, which thereafter shall form part of this
Agreement, for any one or more or all of the following purposes:
9.1.1 setting forth adjustments in the application of the provisions
of Article 4;
9.1.2 if and whenever required by any provisions of this Agreement,
adding to the provisions hereof such additional covenants and enforcement
provisions as, in the opinion of counsel, are necessary or advisable in the
circumstances, provided, however, that the same are not, in the opinion of
the Warrant Agent, prejudicial to the interests of the Warrantholders;
9.1.3 giving effect to any extraordinary resolution adopted as
provided in Article 8;
9.1.4 making such provisions not inconsistent with this Agreement as
may be necessary or desirable with respect to matters or questions arising
hereunder or for the purpose of obtaining a listing or quotation of the
Warrants on any stock exchange, provided, however, that such provisions are
not, in the opinion of the Warrant Agent, prejudicial to the interests of
the Warrantholders;
9.1.5 adding to or amending 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 which, in the opinion
of the Warrant Agent, does not affect the substance thereof;
9.1.6 modifying any of the provisions of this Agreement or relieving
the Corporation from any of the obligations, covenants, conditions or
restrictions herein contained, provided, however, that no such modification
or relief shall be or become operative or effective if, in the opinion of
the Warrant Agent, such modification or relief impairs any of the rights of
the Warrantholders or of the Warrant Agent, and provided further that the
Warrant Agent may in its sole discretion decline to enter into any such
supplemental agreement which in its opinion may not afford adequate
protection to the Warrant Agent when the same shall become operative or
effective; and
9.1.7 for any other purpose not inconsistent with the terms of this
Agreement, including the correction or rectification of any ambiguities,
defective or inconsistent provisions, errors or omissions herein, provided
that, in the opinion of the Warrant Agent, the rights of the Warrant Agent
and of the Warrantholders are in no way prejudiced thereby.
9.2 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"), the successor corporation resulting from such consolidation,
amalgamation, arrangement, merger or transfer (if not the Corporation,) shall
expressly assume, by supplemental agreement satisfactory in form to the Warrant
Agent, and executed and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every obligation, covenant and condition
of this Agreement to be performed and observed by the Corporation.
10. CONCERNING THE WARRANT AGENT
10.1 Applicable Legislation
10.1.1 In this Article 10, the expression "Applicable Legislation"
means the provisions, if any, of the Canada Business Corporations Act and
any other statute of Canada or a province thereof, and of regulations under
any such Act or other statute, relating to
warrant agreements or to the
rights, duties and obligations of trustees, or warrant agents, and of
corporations under
warrant agreements, to the extent that such provisions
are at the time in force and applicable to this Agreement.
10.1.2 If and to the extent that any provision of this Agreement
limits, qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail to the extent of the
inconsistency.
10.1.3 Each of the Corporation and the Warrant Agent shall at all
times, in respect to this Agreement and any action to be taken hereunder,
observe and comply with and be entitled to the benefits of Applicable
Legislation.
25
10.2 Rights and Duties of Warrant Agent
10.2.1 The Warrant Agent shall also act as the transfer agent and
registrar of the Warrants and shall cause the central register to be kept
in Montreal, and shall ensure that the following particulars are entered
therein:
10.2.1.1 the names and addresses of the Warrantholders, a statement
of each holding of Warrants (for which purpose separate holdings by the
same Warrantholder need only be aggregated if the Warrantholder's name
and address in respect of each holding are identical);
10.2.1.2 the date at which the person was entered in the register
as a Warrantholder in respect of each holding; and
10.2.1.3 the date at which any person ceases to be a Warrantholder
in respect of each holding.
The Warrant Agent shall also retain until the third anniversary of the
Time of Expiry all instruments of transfer of Warrants which are lodged for
registration (or copies thereof), including the details shown thereon of
the persons by or through whom they are lodged, all cancelled Warrants (or
copies thereof) and all other related documents.
10.2.2 Unless the register kept pursuant to this Section 10.2 is in
such a form as to constitute an index of Warrantholders, a separate index
thereof shall be kept in respect of the register and within 14 days after
the date on which any alteration is made in the register the Warrant Agent
shall ensure that any necessary alteration in the accompanying index shall
have been made. In other respects, the register shall be kept in such a
form as to facilitate the conversion of the register into the register of
holders of Common Shares after the Time of Expiry.
10.2.3 The Warrant Agent shall cause facilities to be maintained for
the surrender, delivery, exchange and exercise of Warrants and for the
registration of transfers of Warrants in accordance with the provisions of
this Agreement at the Warrant Agencies.
10.2.4 As soon as practicable following the third anniversary of the
Time of Expiry the Warrant Agent shall deliver to the Corporation a
certificate of destruction for all of those documents referred to in this
Section 10.2.
10.2.5 In the exercise of the rights and duties prescribed or
conferred by the terms of this Agreement, 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. No provision of this Agreement shall be construed to relieve
the Warrant Agent from, or require any other person to indemnify the
Warrant Agent against, liability for its own negligence, intentional or
gross fault or bad faith.
10.2.6 The obligation of the Warrant Agent to commence or continue any
act, action or proceeding for the purpose of enforcing any rights of the
Warrant Agent or the Warrantholders hereunder shall be conditional upon the
Warrantholders furnishing, when required by notice in writing by the
Warrant Agent, sufficient funds to commence or continue such act, action or
proceeding and indemnity reasonably satisfactory to the Warrant Agent to
protect and hold harmless the Warrant Agent against the costs, charges,
expenses and liabilities to be incurred thereby and any loss and damage the
Warrant Agent may suffer by reason thereof. None of the provisions
contained in this Agreement 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 obligations or in the exercise of any
of its rights or powers unless indemnified as aforesaid.
10.2.7 The Warrant Agent may, before commencing or at any time during
the continuance of any such act, action or proceeding, require the
Warrantholders, at whose instance it is acting, to deposit with the Warrant
Agent the Warrants held by them, for which Warrants the Warrant Agent shall
issue receipts.
10.2.8 Every provision of this Agreement that by its terms relieves
the Warrant Agent of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable Legislation, of
this Section 10.2 and of Section 10.3.
26
10.3 Evidence, Experts and Advisors
10.3.1 In addition to the reports, certificates, opinions and other
evidence required by this Agreement, the Corporation shall furnish to the
Warrant Agent such additional evidence of compliance with any provision
hereof, and in such form, as may be prescribed by Applicable Legislation or
as the Warrant Agent may reasonably require by written notice to the
Corporation.
10.3.2 In the exercise of its rights and duties under this Agreement,
the Warrant Agent may, if it is acting in good faith, rely as to the truth
of the statements and the accuracy of the opinions expressed in statutory
declarations, opinions, reports, written requests, consents, orders of the
Corporation certificates of the Corporation, or other evidence furnished to
the Warrant Agent pursuant to any provision hereof or of Applicable
Legislation or pursuant to a request of the Warrant Agent, provided,
however, that such evidence complies with Applicable Legislation and that
the Warrant Agent examines the same and determines that such evidence
complies with the applicable requirements of this Agreement.
10.3.3 Whenever it is provided in this Agreement or under Applicable
Legislation that the Corporation shall deposit with the Warrant Agent
resolutions, certificates, reports, opinions, requests, orders or other
documents, it is intended that the truth, accuracy and good faith on the
effective date thereof and the facts and opinions stated in all such
documents so deposited shall, in each and every such case, be conditions
precedent to the right of the Corporation to have the Warrant Agent take
the action to be based thereon.
10.3.4 Proof of the execution of any instrument in writing, including
a Warrantholders' Request, by any 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 which the Warrant Agent may consider adequate.
10.3.5 The Warrant Agent may employ or retain such counsel,
accountants, appraisers or other experts or advisors as it may reasonably
require for the purpose of discharging its duties under this Agreement and
may pay reasonable remuneration for all services so performed by any of
them, without taxation of costs of any counsel, and shall not be
responsible for any misconduct, intentional or gross fault or negligence on
the part of any such experts or advisors who have been appointed with due
care by the Warrant Agent.
10.4 Documents, Monies, etc., Held by Warrant Agent
Any securities, documents of title or other instruments that may at any
time be held by the Warrant Agent may be placed in the deposit vaults of the
Warrant Agent or of any bank or trust company governed by the laws of Canada or
deposited for safekeeping with any such bank or trust company. Unless herein
otherwise expressly provided, any monies so held pending the application or
withdrawal thereof under any provisions of this Agreement may be deposited in
the name of the Warrant Agent in any bank or trust company governed by the laws
of Canada at the rate of interest (if any) then current on similar deposits or,
with the consent or instructions of the Corporation, may or shall be (i)
deposited in the deposit department of the Warrant Agent or any other trust
company authorized to accept deposits under the laws of Canada, or (ii) invested
in securities issued or guaranteed by the Government of Canada or in
obligations, maturing not more than one year from the date of investment, of any
bank or trust company governed by the laws of Canada. All interest or other
income received by the Warrant Agent in respect of such deposits and investments
shall be remitted to the Agent to be dealt with in accordance with the Delivery
Agreement.
10.5 Actions by Warrant Agent to Protect Interest
The Warrant Agent shall have power to institute and to maintain such
actions and proceedings as it may consider necessary or expedient to preserve,
protect or enforce its interests and the interests of the Warrantholders under
this Agreement.
27
10.6 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 agency and powers of this Agreement or otherwise
in respect of this Agreement.
10.7 Protection of Warrant Agent
10.7.1 The Warrant Agent shall not be liable for or by reason of any
statements of fact or recitals in this Agreement or the Warrants or be
required to verify the same and all such statements or recitals are and
shall be deemed to be made by the Corporation.
10.7.2 Nothing herein contained shall impose any obligation on the
Warrant Agent to see to or to require evidence of the registration or
filing (or renewal thereof) of this Agreement or any instrument ancillary
or supplemental hereto.
10.7.3 The Warrant Agent shall not be bound to give notice to any
person or persons of the execution hereof.
10.7.4 The Warrant Agent shall not incur any liability or
responsibility or be in any way responsible for the consequence of any
breach or non-performance on the part of the Corporation of any of its
obligations or covenants herein contained or of any acts of any directors,
officers, employees or agents of the Corporation.
10.8 Replacement of Warrant Agent; Successor by Amalgamation
10.8.1 The Warrant Agent may resign and be discharged from all further
duties and obligations under this Agreement, subject to this Subsection
10.8.1, by giving to the Corporation not less than 90 Business Days' prior
notice in writing, or such shorter prior notice as the Corporation may
accept as sufficient. The Warrantholders by extraordinary resolution shall
have power at any time to remove the existing Warrant Agent and to appoint
a new warrant agent. In the event of the Warrant Agent resigning or being
removed as aforesaid or being dissolved, becoming bankrupt, going into
liquidation or otherwise becoming incapable of acting hereunder, the
Corporation shall forthwith appoint a new warrant agent unless a new
warrant agent has already been appointed by the Warrantholders; failing
such appointment by the Corporation, the retiring Warrant Agent or any
Warrantholder may apply to a court of competent jurisdiction (on such
notice as such court may direct), for the appointment of a new warrant
agent; but any new warrant agent so appointed by the Corporation or by the
Court shall be subject to removal by the Warrantholders. Any new warrant
agent appointed under any provision of this Section 10.8 shall be a
corporation authorized to carry on business as warrant agent in the
Province of
Quebec or elsewhere in Canada as may be agreed by the
Corporation and, if required by the Applicable Legislation for any other
province, in such province. On any such appointment, the new warrant agent
shall be vested with the same powers, rights, duties, obligations and
responsibilities as if it had been originally appointed as Warrant Agent
without any further transfer, assurance, conveyance, act or deed; but there
shall be immediately executed, at the expense of the Corporation all such
transfer, conveyances or other instruments as may, in the opinion of
counsel, be necessary or advisable for the purpose of assuring the same to
the new warrant agent, provided, however, that any resignation or removal
of the Warrant Agent and appointment of a successor warrant agent shall not
become effective until the successor warrant agent shall have executed an
appropriate document or instrument accepting such appointment and, at the
request of the Corporation, the predecessor Warrant Agent shall execute and
deliver to the successor warrant agent an appropriate document or
instrument transferring to such successor warrant agent all rights and
powers of the Warrant Agent hereunder so ceasing to act.
10.8.2 Upon the appointment of a successor warrant agent, the
Corporation shall promptly notify the Warrantholders thereof in the manner
provided for in Section 5.1.
10.8.3 Any corporation into or with which the Warrant Agent may be
amalgamated or any corporation resulting from any amalgamation to which the
Warrant Agent shall be a party, or any corporation succeeding to the
business of the Warrant Agent, shall be the successor to the Warrant Agent
under this Agreement without any further act on its part or of any of the
parties hereto, provided,
28
however, that such corporation would be eligible for appointment as a
successor warrant agent under this Subsection 10.8.1.
10.8.4 Any Warrants certified but not delivered by a predecessor
Warrant Agent may be certified by the successor warrant agent in the name
of the predecessor or successor Warrant Agent.
10.9 Dealing with Corporation
10.9.1 The Warrant Agent represents and warrants to the Corporation
that, at the time of execution and delivery of this Agreement, no material
conflict of interest exists in the Warrant Agent's capacity as a warrant
agent hereunder and agrees that, in the event of a material conflict of
interest arising hereafter, it shall, within 90 days after ascertaining
that it has such a material conflict of interest, either eliminate the same
or resign its appointment hereunder to a successor warrant agent approved
by the Corporation, provided that such corporation would be eligible as a
successor warrant agent under Subsection 10.8.1. Notwithstanding the
foregoing provisions of this Subsection 10.9.1, if any such material
conflict of interest exists or hereafter shall exist, the validity and
enforceability of this Agreement and the Warrants shall not be affected in
any manner whatsoever by reason of a material conflict of interest of the
Warrant Agent.
10.9.2 The Warrant Agent, in its personal or any other capacity, may
buy, lend upon and deal in securities of the Corporation, including,
without limitation, the Warrants and Common Shares and generally may
contract and enter into financial transactions with the Corporation or any
Subsidiary of the Corporation without being liable to account for any
profit made thereby.
10.10 Warrant Agent not to be Appointed Receiver
The Warrant Agent and any person related to the Warrant Agent shall not be
appointed a receiver or receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation, other than the Pledged Shares.
11. FORM OF WARRANT
The Warrant referred to in Section 2.2 shall be substantially in the form
set out in Schedule A to this Agreement.
12. GENERAL
12.1 Notice to Corporation and Warrant Agent
12.1.1 Unless herein otherwise expressly provided, any notice or
written instructions to be given hereunder to the Corporation or the
Warrant Agent, as the case may be, shall be deemed to be validly given if
delivered in person and acknowledged by written receipt of the person
receiving such notice or if sent by telecopier (provided the original is
sent by registered mail, postage prepaid) or if sent by registered mail,
postage prepaid:
12.1.1.1 If to the Corporation:
Domtar Inc.
000 Xx Xxxxxxxxxxx Xxxx. Xxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Senior Vice-President, Corporate Affairs
General Counsel and Secretary
Telecopier N(LOGO): (000) 000-0000
12.1.1.2 If to the Warrant Agent:
Computershare Trust Company of Canada
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx
29
H3A 2S8
Attention: Corporate Trust Services
Telecopier N(LOGO): (000) 000-0000
and any such notice delivered in accordance with the foregoing shall be
deemed to have been received on the first Business Day following the date
of delivery or transmission or, if mailed, on the fifth Business Day
following the date of the postmark on such notice.
12.1.2 The Corporation or the Warrant Agent, as the case may be, may
from time to time notify the other parties hereof in the manner provided in
Subsection 12.1.1 of a change of address which, from the effective date of
such notice and until changed by notice, shall be the address of the
Corporation or the Warrant Agent, as the case may be, for all purposes of
this Agreement.
12.1.3 If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving postal employees, any notice to be given to
the Warrant Agent or the Corporation hereunder could reasonably be
considered unlikely to reach its destination, such notice shall be valid
and effective only if it is delivered to an officer of the party to which
it is addressed or, if it is delivered to such party at the appropriate
address provided in Subsection 12, by telecopier or other means of prepaid,
transmitted, recorded communication and any such notice delivered in
accordance with the foregoing shall be deemed to have been received on the
date of delivery to such officer or if delivered by other means of prepaid,
transmitted, recorded communication, on the first Business Day following
the date of the sending of such notice by the person giving such notice.
12.2 Rights, Powers and Remedies Cumulative
No right, power or remedy herein conferred upon or reserved to the Warrant
Agent, to the Warrantholders or to the Corporation is intended to be exclusive
of any other right, power or remedy, and every right, power and remedy shall, to
the extent permitted by applicable law, be cumulative and in addition to every
other right, power and remedy given under this Agreement or now or hereafter
existing. The assertion or employment of any right, power or remedy under this
Agreement, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right, power or remedy.
12.3 Time of the Essence
Time shall be of the essence in this Agreement.
12.4 Counterparts and Formal Date
This Agreement may be executed in several counterparts, each of which when
so executed shall be deemed to be an original and such counterparts together
shall constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of [DECEMBER 23, 2002].
12.5 Satisfaction and Discharge of Agreement
Upon the earlier of (i) the date by which there shall have been delivered
to the Warrant Agencies for exercise or destruction all Warrants theretofore
certified under this Agreement, or (ii) the Time of Expiry, this Agreement,
except to the extent that Common Shares and certificates therefor have not been
issued and delivered hereunder, provided further that the Corporation shall not
be in default under this Agreement, shall cease to be of further effect and the
Warrant Agent, on demand of the Corporation, but at the cost and expense of the
Corporation, and upon delivery to the Warrant Agent of a certificate of the
Corporation stating that all conditions precedent to the satisfaction and
discharge of this Agreement have been complied with and upon payment to the
Warrant Agent of the fees and other remuneration payable to the Warrant Agent,
shall execute proper instruments acknowledging satisfaction of and discharging
this Agreement.
12.6 Provisions of Agreement and Warrants for the Sole Benefit of Parties and
Warrantholders
Nothing in this Agreement or in the Warrants, express or implied, shall
give or be construed to give to any person other than the parties hereto and the
holders of the Warrants any right, remedy or claim under
30
this Agreement, or under any obligations, covenant or provision therein
contained, all such obligations, covenants and provisions being for the sole
benefit of the parties hereto and the Warrantholders.
12.7 Trust Provisions
For greater certainty, notwithstanding any other provisions of this
Agreement or any references in this Agreement, or in any Warrant, to the Warrant
Agent, in its capacity as warrant agent or acting as warrant agent, no trust
within the meaning of Chapter II of Title Six of Book Four of the Civil Code of
Quebec is intended to be or is established by this Agreement. In addition, the
provisions of this Agreement in respect of the administration of the property of
others, including, without limitation, in the case of the Warrant Agent, shall
apply in lieu of the provisions of Title Seven of Book Four of the Civil Code of
Quebec.
12.8 Purchase of Warrants by the Corporation
The Corporation shall not from time to time purchase on any stock exchange,
in the open market, by invitation for tender, by private contract or otherwise,
any of the Warrants.
12.9 Language
The parties hereto have declared that they have required that this
Agreement and all other documents related thereto, be drawn up in the English
language. Les parties aux presentes ont declare qu'elles ont exige que la
presente convention ainsi que les autres documents s'y rapportant, soient
rediges en anglais.
12.10 Assignment
This
Warrant Agreement may not be assigned by either party hereto without
the consent in writing of the other party. This
Warrant Agreement shall enure to
and bind the parties and their lawful successors and permitted assigns.
31
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first abovewritten.
DOMTAR INC.
By:
------------------------------------
Xxxxxx Xxxxxxx
Title: Senior Vice President --
Corporate Affairs, General
Counsel and Secretary
COMPUTERSHARE TRUST COMPANY OF CANADA,
AS WARRANT AGENT
By:
------------------------------------
Xxxxx Xxxxxxx
Title: Manager, Corporate Trust
By:
------------------------------------
Xxxx Xxxxxxxx
Title: Senior Relationship Manager,
Stock Transfer Services
32
SCHEDULE A
FORM OF WARRANT
33
