DATED as of this 22
nd
day of October, 2007.
[NAME OF UNDERWRITER]
By:
Authorized Signing Officer
|
[NAME OF U.S. AFFILIATE]
By:
Authorized Signing Officer
|
EXHIBIT 2
GLENCAIRN GOLD CORPORATION
- and -
ORION SECURITIES INC.
- and -
EQUITY TRANSFER & TRUST COMPANY
SUBSCRIPTION RECEIPT AGREEMENT
Providing for the Issue of
133,670,000 Subscription Receipts
October 22, 2007
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION
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2
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1.2
Words Importing the Singular
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8
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1.3
Interpretation not Affected by Headings
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8
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1.4
Day not a Business Day
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8
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1.5
Time of the Essence
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8
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1.7
Meaning of "outstanding" for Certain Purposes
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8
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ARTICLE 2 ISSUE OF SUBSCRIPTION RECEIPTS
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10
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2.1
Issue of Subscription Receipts
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10
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2.2
Terms of Subscription Receipts
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10
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2.3
Subscription Receipt Certificates
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10
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2.4
Issue in Substitution for Lost Subscription Receipts
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11
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2.5
Subscription Receiptholder not a Shareholder or Warrantholder
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11
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2.6
Subscription Receipts to Rank Pari Passu
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11
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2.7
Signing of Subscription Receipts
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12
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2.8
Certification by the Subscription Receipt Agent
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12
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2.9
Legended Certificates
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12
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ARTICLE 3 EXCHANGE AND OWNERSHIP OF SUBSCRIPTION RECEIPTS
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14
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3.1
Exchange of Subscription Receipts
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14
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3.2
Charges for Exchange
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14
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3.3
Ownership of Subscription Receipts
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15
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3.4
Registration and Transfer of Subscription Receipts
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15
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ARTICLE 4 EXERCISE OF SUBSCRIPTION RECEIPTS
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16
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4.1
Notice of Satisfaction of Release Conditions
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16
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4.2
Notice of Deemed Exercise to Subscription Receiptholders
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16
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4.3
Exercise of Subscription Receipts by Subscription Receipt Agent on Behalf of Subscription Receiptholders
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17
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4.4
Effect of Exercise of Subscription Receipts
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17
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4.5
No Fractional Common Shares or Warrants
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19
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4.6
Expiration of Subscription Receipts
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19
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ARTICLE 5 ADJUSTMENT OF EXCHANGE NUMBER
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19
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5.2
Adjustment of Exchange Number
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19
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5.3
Exercise Number Adjustment Rules
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23
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5.4
Postponement of Subscription
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25
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5.5
Notice of Certain Events
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25
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5.6
Protection of Subscription Receipt Agent
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25
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ARTICLE 6 RIGHTS AND COVENANTS
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26
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6.1
General Covenants of the Company
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26
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6.2
Subscription Receipt Agent's Remuneration and Expenses
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27
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- ii -
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6.3
Rights to Dividends and Distributions
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27
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6.4
Performance of Covenants by the Subscription Receipt Agent
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28
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ARTICLE 7 ESCROWED FUNDS
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28
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7.1
Initial Escrowed Funds and Distribution Amounts
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28
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7.2
Qualified Investments
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28
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7.3
Release of Escrowed Funds to the Company Upon Receipt of Release Certificate
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29
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7.4
Release of Escrowed Funds on Default
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29
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7.5
Release of Escrowed Funds Following the Default Deadline
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30
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7.7
Early Termination of any Investment of the Escrowed Funds
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30
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7.8
Method of Disbursement and Delivery
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30
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8.1
Suits by Subscription Receiptholders
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32
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8.2
Limitation of Liability
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33
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ARTICLE 9 MEETINGS OF SUBSCRIPTION RECEIPTHOLDERS
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33
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9.1
Right to Convene Meetings
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33
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9.10
Company and Subscription Receipt Agent may be Represented
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36
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9.11
Powers Exercisable by Extraordinary Resolution
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36
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9.12
Meaning of "Extraordinary Resolution"
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38
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9.13
Powers Cumulative
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38
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9.15
Instruments in Writing
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39
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9.16
Binding Effect of Resolutions
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39
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9.17
Holdings by Company Disregarded
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39
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ARTICLE 10 SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES
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40
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10.1
Provision for Supplemental Agreements for Certain Purposes
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40
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10.2
Successor Companies
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41
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ARTICLE 11 CONCERNING THE SUBSCRIPTION RECEIPT AGENT
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41
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11.1
Rights and Duties of Subscription Receipt Agent
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41
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11.2
Evidence, Experts and Advisers
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42
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11.3
Securities, Documents and Monies Held by Subscription Receipt Agent
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43
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11.4
Action by Subscription Receipt Agent to Protect Interests
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44
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11.5
Subscription Receipt Agent not Required to Give Security
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44
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11.6
Protection of Subscription Receipt Agent
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44
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11.7
Replacement of Subscription Receipt Agent
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45
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- iii -
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11.8
Conflict of Interest
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46
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11.9
Appointment of Escrow Agent
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46
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11.10
Subscription Receipt Agent Not to be Appointed Receiver
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46
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11.11
Authorization to Carry on Business
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47
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12.1
Notice to the Company and the Subscription Receipt Agent
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47
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12.2
Notice to the Subscription Receiptholders
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48
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12.3
Discretion of Directors
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49
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12.4
Satisfaction and Discharge of Agreement
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49
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12.5
Provisions of Agreement and Subscription Receipts for the Sole Benefit of Parties and Subscription Receiptholders
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49
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12.6
Counterparts and Formal Date
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50
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SCHEDULE A FORM OF SUBSCRIPTION RECEIPT CERTIFICATE
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A-1
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SCHEDULE B RELEASE CERTIFICATE
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B-1
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SCHEDULE C FORM OF DECLARATION FOR REMOVAL OF LEGEND.
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C-1
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THIS
SUBSCRIPTION RECEIPT AGREEMENT
dated as of October 22, 2007.
A M O N G:
GLENCAIRN GOLD CORPORATION
,
a company continued under the laws of Canada
(hereinafter called the
Company
)
A N D
ORION SECURITIES INC.
,
(hereinafter called the
Orion
)
A N D
EQUITY TRANSFER & TRUST COMPANY
,
a trust company governed by the laws of Canada
(hereinafter called the
Subscription Receipt Agent
)
RECITALS
WHEREAS:
A. The Company proposes to issue 133,670,000 Subscription Receipts exercisable by the holder into Common Shares and Warrants, all upon the terms and conditions herein set forth;
B. For such purpose the Company deems it necessary to create and issue Subscription Receipts to be constituted and issued in the manner hereinafter set forth;
C. The Company is duly authorized to create and issue the Subscription Receipts to be issued as herein provided;
D. All things necessary have been done and performed to make the Subscription Receipts, when certified by the Subscription Receipt Agent and issued as provided in this Agreement, legal, valid and binding upon the Company with the benefits of and subject to the terms in this Agreement;
E. The foregoing recitals are made as statements of fact by the Company and not by the Subscription Receipt Agent;
F. The
Subscription Receipt Agent has agreed to enter into this Agreement and to hold
in escrow the Escrowed Funds for and on behalf of the Company and those persons
who become holders of Subscription Receipts issued pursuant to this Agreement
from time to time;
- 2 -
NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable consideration mutually given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed and declared as follows:
ARTICLE 1
INTERPRETATION
In this Agreement, unless there is something in the subject matter or context inconsistent therewith:
Business Day
means a day that is not a Saturday, Sunday, a day on which banks are closed in the City of Toronto, Ontario or civic or statutory holiday in the City of Toronto, Ontario;
Capital Reorganization
has the meaning ascribed thereto in subsection 5.2(4);
Closing Date
means October 22, 2007 or such earlier or later date as the Company and the Underwriters may agree;
Commission
means the amount equal to (i) 6.0% of the gross proceeds derived from the sale of the Subscription Receipts for which the Underwriters arranged Purchasers; and (ii) 3% of the gross proceeds derived from the sale of the Subscription Receipts for which the Underwriters did not arrange Purchasers, payable to the Underwriters pursuant to the Underwriting Agreement;
Common Shares
means the common shares in the capital of the Company; provided that if the exercise rights are subsequently adjusted or altered pursuant to Article 5,
Common Shares
shall thereafter mean the shares or other securities or property that a Subscription Receiptholder is entitled to on an exchange after the adjustment;
Companys Auditors
means the chartered accountant or firm of chartered accountants duly appointed as auditor or auditors of the Company from time to time;
Company
means Glencairn Gold Corporation, a corporation continued under the laws of Canada, and its lawful successors from time to time;
counsel
means a barrister, solicitor or attorney (who may be an employee of the Company) or a firm of barristers and solicitors or attorneys (who may be counsel to the Company), in both cases acceptable to the Subscription Receipt Agent;
- 3 -
Current Market Price
means, at any date, the weighted average price per share at which the Common Shares have traded:
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(ii)
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if the Common Shares are not listed on the TSX, on any stock exchange upon which the Common Shares are listed as may be selected for this purpose by the directors, acting reasonably; or
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(iii)
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if the Common Shares are not listed on any stock exchange, on any over-the-counter market;
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during the 20 consecutive trading days (on each of which at least 500 Common Shares are traded in board lots) ending the third trading day before such date and the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold in board lots on the exchange or market, as the case may be, during the 20 consecutive trading days by the number of Common Shares sold, or if not traded on any recognized market or exchange, as determined by the directors of the Company acting reasonably;
Default
means the failure of the Company to satisfy the Release Conditions on or before the Release Deadline;
Default Deadline
means 5:00 p.m. (Toronto time) on the third Business Day following the date of the Default Notice;
Default Notice
means the notice to be provided to the Subscription Receipt Agent and each Subscription Receiptholder by the Company forthwith following a Default pursuant to section 7.4;
director
means a member of the board of directors of the Company for the time being, and unless otherwise specified herein, reference to action by the board of directors means action by the board of directors of the Company as a board or, whenever duly empowered, action by a committee of the board;
Dividends
means dividends (payable in cash or in securities, property or assets of equivalent value) declared payable on the Common Shares;
Earnings
means any income (including interest or gains) derived from investing the Initial Escrowed Funds less any losses suffered;
Escrow Agent
means the role of the Subscription Receipt Agent to,
inter alia,
hold and disburse the Escrowed Funds on behalf of the Company and Subscription Receiptholders pursuant to the terms and conditions of this Agreement;
- 4 -
Escrowed Funds
at any time means the aggregate of: (i) the Initial Escrowed Funds, and (ii) any Earnings derived directly or indirectly from time to time from holding the Initial Escrowed Funds; less (iii) any Losses derived from time to time from holding the Initial Escrowed Funds or from holding Earnings derived directly or indirectly from the Escrowed Funds; and (iv) any amounts released from escrow pursuant to the terms and conditions hereof;
Exchange Number
at any time means that number of Common Shares that Subscription Receiptholders are entitled to receive for each Subscription Receipt held upon deemed exercise of the Subscription Receipts in accordance with the terms and conditions of this Agreement as such number may be adjusted pursuant to Article 5 hereof and such number, as at the date hereof, is equal to one Common Share per Subscription Receipt;
Exercise Date
with respect to any Subscription Receipt means the date of deemed exercise of the Subscription Receipts pursuant to section 4.3;
extraordinary resolution
has the meaning ascribed thereto in sections 9.12 and 9.15;
Initial Escrowed Funds
means the amount of $19,659,818.15;
Losses
means any losses suffered derived from investing the Initial Escrowed Funds less any income (including interest or gains);
Offered Shares
has the meaning ascribed thereto in subsection 5.2(2);
person
means an individual, a corporation, a partnership, a syndicate, a trustee or any unincorporated organization and words importing persons are intended to have a similarly extended meaning;
Purchase Price
means $0.15 per Subscription Receipt;
Purchaser
means a purchaser of Subscription Receipts;
Qualified Investments
means short term interest bearing or discount debt obligations issued or guaranteed by the U.S. Government, the Government of Canada or a Province or a Schedule 1 Canadian chartered bank provided that each such obligation is rated at least R1 (middle) by Dominion Bond Rating Service Limited or an equivalent rating by an equivalent rating service;
Regulation S
means Regulation S under the U.S. Securities Act;
Release Certificate
means the certificate executed by the Company and Orion in the form attached as Schedule B hereto and addressed to the Subscription Receipt Agent confirming that the Release Conditions have been satisfied;
- 5 -
Release Conditions
means (a) receipt by the Company of the requisite shareholder approval for the issuance of the Common Shares and Warrants upon the automatic exercise of the Subscription Receipts, and (b) satisfaction by the Corporation of the conditions contained in subsections 6(h) and (k) of the Underwriting Agreement;
Release Deadline
means December 31, 2007 or such later date as the Subscription Receiptholders shall determine in accordance with the terms of this Agreement;
Rights Offering
has the meaning ascribed thereto in subsection 5.2(2);
Securities Commissions
means the securities commissions or similar regulatory authorities in each of the provinces of Canada;
Securities Laws
means, collectively, the applicable securities laws of each of the provinces of Canada and the respective regulations made and forms prescribed thereunder together with all applicable published rules, policy statements, notices and blanket orders and rulings of the securities commissions or similar regulatory authorities in each of the provinces of Canada;
Share Reorganization
has the meaning ascribed thereto in subsection 5.2(1);
Special Distribution
has the meaning ascribed thereto in subsection 5.2(3);
shareholder
means an owner of record of one or more Common Shares or shares of any other class or series in the capital of the Company;
Subscription Receipt Agent
means Equity Transfer & Trust Company, a trust company governed by the laws of Canada, or any lawful successor thereto including through the operation of section 11.7;
Subscription Receipt Certificates
means the certificates representing the Subscription Receipts substantially in the form attached as Schedule A hereto or such other form as may be approved under subsection 2.3(1) evidencing Subscription Receipts with such appropriate insertions, deletions, substitutions and variations as may be required or permitted by the terms of this Agreement or as may be required to comply with any law or the rules of any securities exchange or as may be not inconsistent with the terms of this Agreement and as the Company may deem necessary or desirable;
Subscription Receiptholders Escrowed Funds
means at any time that portion of the Escrowed Funds equal to the number of Subscription Receipts held by the Subscription Receiptholder at that time divided by the aggregate number of Subscription Receipts outstanding at that time;
- 6 -
Subscription Receiptholders Funds
means at
any time the sum of (i) the Subscription Receiptholders Escrowed Funds;
and the pro rata shortfall in the Escrowed Funds resulting from the release of
50% of the Commission payable to the Underwriters (being approximately $0.003)
multiplied by the number of Subscription Receipts held by the Subscription
Receiptholder at that time;
Subscription Receiptholders Request
means an instrument, signed in one or more counterparts by Subscription Receiptholders representing not less than 10% of the aggregate number of all Subscription Receipts then outstanding, requesting the Subscription Receipt Agent to take some action or proceeding specified therein;
Subscription Receiptholders
or
holders
means the holders of Subscription Receipts for the time being entered in the register maintained pursuant to section 3.4;
Subscription Receipts
means the Subscription Receipts authorized to be created by the Company under section 2.1 and issued and certified under this Agreement, entitling the holders thereof to acquire Common Shares and Warrants subject to the terms and conditions of this Agreement and the Subscription Receipt Certificates and evidenced by Subscription Receipt Certificates;
Subsidiary
means a corporation, a majority of the outstanding voting shares of which are owned, directly or indirectly, by the Company or by one or more subsidiaries of the Company and, as used in this definition, voting shares means shares of a class or classes ordinarily entitled to vote for the election of the majority of the directors of a corporation irrespective of whether or not shares of any other class or classes shall have or might have the right to vote for directors by reason of the happening of any contingency;
this Agreement
,
herein
,
hereby
and similar expressions mean or refer to this Subscription Receipt Agreement and any agreement, deed or instrument supplemental or ancillary hereto; and the expressions
Article
,
section
or
subsection
followed by a number or letter mean and refer to the specified Article, section or subsection of this Agreement;
Time of Expiry
means, in respect of the Subscription Receipts, 5:00 p.m. (Toronto time) on the earlier of: (i) the fifth Business Day following the satisfaction of the Release Conditions; and (ii) the third Business Day following the Release Deadline; unless the Release Conditions are satisfied on or before the Closing Date, in which case the Time of Expiry shall be immediately following the issuance of the Common Shares and Warrants upon deemed exercise of the Subscription Receipts on the Closing Date;
trading day
means a day on which the TSX (or such
other exchange on which the Common Shares are listed and which forms the primary
trading market for such shares) is open for trading, and if the Common Shares
are not listed on a stock exchange, a day on which an over-the-counter market where such shares are traded is open for business;
- 7 -
Transfer Agent
means the transfer agent or agents for the time being of the Common Shares and the Warrants, as applicable;
TSX
means the Toronto Stock Exchange;
Underwriting Agreement
means the underwriting agreement dated the date hereof between the Company and the Underwriters relating to, among other things, the issue and sale of the Subscription Receipts;
Underwriters
means, collectively, Orion Securities Inc., Dundee Securities Corporation, Blackmont Capital Inc. and Wellington West Capital Markets Inc.;
U.S. Person
means a U.S. person as that term is defined in Regulation S;
U.S. Securities Act
means the United States Securities Act of 1933, as amended, of the United States;
United States
means the United States as that term is defined in Regulation S;
Warrant Indenture
means an indenture between the Company and the Subscription Receipt Agent dated the date hereof providing for, among other things, the issuance of the Warrants;
Warrant Shares
means the Common Shares issuable upon the due exercise of the Warrants;
Warrants
means the common share purchase warrants of the Company issuable in accordance with the terms and conditions of the Warrant Indenture upon exercise of the Subscription Receipts in accordance with the terms and conditions of this Agreement, each whole Warrant entitling the holder to purchase one Common Share at a price of $0.18 at any time prior to 5:00 p.m. (Toronto time) on October 22, 2010; and
written order of the Company
,
written request of the Company
,
written consent of the Company
and
certificate of the Company
and any other document required to be signed by the Company, means, respectively, a written order, request, consent, certificate or other document signed in the name of the Company by any officer or director and may consist of one or more instruments so executed.
- 8 -
1.2
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Words Importing the Singular
|
Unless elsewhere otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.
1.3
|
Interpretation not Affected by Headings
|
The division of this Agreement into Articles, sections, subsections and paragraphs, the provision of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
1.4
|
Day not a Business Day
|
In the event that any day on or before which any action is required or permitted to be taken hereunder is not a Business Day, then such action shall be required or permitted to be taken on or before the requisite time on the next succeeding day that is a Business Day.
Time shall be of the essence in all respects in this Agreement, the Subscription Receipts and the Subscription Receipt Certificates.
This Agreement, the Subscription Receipts and the Subscription Receipt Certificates shall be construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts.
1.7
|
Meaning of outstanding for Certain Purposes
|
Except as provided in section 4.3, every Subscription Receipt Certificate countersigned and delivered by the Subscription Receipt Agent hereunder shall be deemed to be outstanding until it has been surrendered to the Subscription Receipt Agent pursuant to this Agreement, provided however that:
|
(a)
|
a Subscription Receipt Certificate that has been partially exercised shall be deemed to be outstanding only to the extent of the unexercised part of the Subscription Receipts evidenced thereby;
|
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(b)
|
where a Subscription Receipt Certificate has been issued in substitution for a Subscription Receipt Certificate that has been lost, stolen or
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- 9 -
destroyed, only the Subscription Receipt Certificate so issued in substitution shall be counted for the purpose of determining the Subscription Receipts outstanding; and
|
(c)
|
for the purpose of any provision of this Agreement entitling holders of outstanding Subscription Receipts to vote, sign consents, requests or other instruments or take any other action under this Agreement, Subscription Receipts owned legally or equitably by the Company or any Subsidiary or any partnership to which the Company may be directly or indirectly a party shall be disregarded, except that:
|
|
(i)
|
for the purpose of determining whether the Subscription Receipt Agent shall be protected in relying on any vote, consent, request or other instrument or other action, only the Subscription Receipts of which the Subscription Receipt Agent has notice that they are so owned shall be disregarded; and
|
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(ii)
|
Subscription Receipts so owned that have been pledged in good faith other than to the Company or any Subsidiary or any partnership to which the Company may be directly or indirectly a party shall not be so disregarded if the pledgee establishes to the satisfaction of the Subscription Receipt Agent, by providing the Subscription Receipt Agent with a legal opinion of counsel, the pledgees right to vote the Subscription Receipts in the pledgees discretion free from the control of the Company or any Subsidiary or any partnership to which the Company may be directly or indirectly a party to pursuant to the terms of the pledge.
|
Unless otherwise stated, all dollar amounts referred to in this Agreement are in Canadian dollars.
This Agreement shall continue in full force and effect until the earlier of: (a) the Time of Expiry; and (b) the date that no Subscription Receipts are outstanding hereunder; provided that this Agreement shall continue in effect thereafter, if applicable, until the Company and the Subscription Receipt Agent have fulfilled all of their respective obligations under this Agreement.
- 10 -
ARTICLE 2
ISSUE OF SUBSCRIPTION RECEIPTS
2.1
|
Issue of Subscription Receipts
|
A total of 133,670,000 Subscription Receipts entitling the registered holders thereof to acquire an aggregate of 133,670,000 Common Shares and 66,835,000 Warrants are hereby created and authorized to be issued hereunder at the Purchase Price upon the terms and conditions herein set forth. To the extent that the Release Certificate has not been provided to the Subscription Receipt Agent on or before the Closing Date, Subscription Receipt Certificates evidencing Subscription Receipts shall be executed by the Company, certified by or on behalf of the Subscription Receipt Agent and delivered by the Subscription Receipt Agent to the Company in accordance with a written direction of the Company, all in accordance with sections 2.7 and 2.8.
2.2
|
Terms of Subscription Receipts
|
(1) Subject to the provisions of Articles 4 and 5, each of the Subscription Receipts issued under section 2.1 shall entitle the holder thereof to receive from the Company, without further payment therefor:
|
(a)
|
the number of Common Shares equal to the Exchange Number in effect at the Exercise Date; and
|
|
(b)
|
one-half of one Warrant.
|
(2) Fractional Subscription Receipts shall not be issued or otherwise provided for.
2.3
|
Subscription Receipt Certificates
|
(1) Subscription Receipts shall be issued in registered form only and shall be evidenced only by Subscription Receipt Certificates with appropriate insertions, omissions, substitutions and variations as may be required or permitted by the terms of this Agreement and certification of the Subscription Receipt Certificates by the Subscription Receipt Agent shall be conclusive evidence of approval by the Company and the Subscription Receipt Agent of any such insertion, omission, substitution and variation. The Subscription Receipt Certificates shall be dated as of the date hereof, shall bear such legends, distinguishing letters and numbers as the Company shall, with the approval of the Subscription Receipt Agent, prescribe.
(2) The Subscription Receipt Agent
shall maintain and make available to the Company a register, in accordance with
section 3.4, of the names and addresses of all persons to whom Subscription
Receipt Certificates have been issued and the Subscription Receipt Agent shall
mail or deliver Subscription Receipt Certificates evidencing the Subscription Receipts to those persons or as directed by the
Company.
- 11 -
2.4
|
Issue in Substitution for Lost Subscription Receipts
|
(1) In case any of the Subscription Receipt Certificates issued and certified in this Agreement shall become mutilated or be lost, destroyed or stolen, the Company, subject to applicable law and to subsection 2.4(2), shall issue and thereupon the Subscription Receipt Agent shall certify and deliver a new Subscription Receipt Certificate of like date and tenor as the one mutilated, lost, destroyed or stolen upon surrender of, in place of and upon cancellation of the mutilated Subscription Receipt Certificate or in lieu of and in substitution for the lost, destroyed or stolen Subscription Receipt Certificate and the substituted Subscription Receipt Certificate shall be in a form approved by the Subscription Receipt Agent and the Subscription Receipts evidenced by it will entitle the holder to the benefit hereof and will rank equally in accordance
with its terms with all other Subscription Receipt Certificates issued or to be issued hereunder.
(2) The applicant for the issue of a new Subscription Receipt Certificate pursuant to this section 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 Company and to the Subscription Receipt Agent such evidence of ownership and of the loss, destruction or theft of the Subscription Receipt Certificate so lost, destroyed or stolen as shall be satisfactory to the Company and to the Subscription Receipt Agent in their discretion and the applicant shall also be required to furnish an indemnity or surety bond in amount and form satisfactory to the Company and the Subscription Receipt Agent in their discretion and shall pay the reasonable charges of the Company and the Subscription Receipt Agent in connection therewith.
2.5
|
Subscription Receiptholder not a Shareholder or Warrantholder
|
Nothing in this Agreement or in the holding of a Subscription Receipt evidenced by a Subscription Receipt Certificate or otherwise shall be construed as conferring upon a Subscription Receiptholder any right or interest whatsoever as a shareholder or warrantholder, including but not limited to the right to vote at, to receive notice of, or to attend meetings of shareholders or any other proceedings of the Company or the right to receive any dividends or other distributions or the right to vote at, to receive notice of, or to attend meetings of warrantholders or any other proceeding of the Company pursuant to the terms and conditions of the Warrant Indenture.
2.6
|
Subscription Receipts to Rank Pari Passu
|
A Subscription Receipt shall rank pari passu with all other Subscription Receipts, whatever may be the actual date of issue of the Subscription Receipt Certificates that evidence them.
- 12 -
2.7
|
Signing of Subscription Receipts
|
The Subscription Receipt Certificates shall be signed by any one of the directors or officers of the Company and may, but need not be under a corporate seal of the Company or a reproduction thereof. The signature of any such director or officer may be mechanically reproduced in facsimile, engraved, printed or lithographed and Subscription Receipt Certificates bearing those facsimile signatures shall be binding upon the Company as if they had been manually signed by the director or officer. Notwithstanding that the person whose manual or facsimile signature appears on any Subscription Receipt Certificate as a director or officer may no longer hold office at the date of the Subscription Receipt Certificate or at the date of certification or delivery thereof, any Subscription Receipt Certificate signed as aforesaid shall, subject to section 2.8, be valid and binding upon the Company and the
registered holder thereof will be entitled to the benefits of this Agreement.
2.8
|
Certification by the Subscription Receipt Agent
|
(1) No Subscription Receipt Certificate shall be issued or, if issued, shall be valid or entitle the holder to the benefit hereof until it has been certified by manual signature by or on behalf of the Subscription Receipt Agent in accordance with a written direction of the Company, substantially in the form approved by the Company and the Subscription Receipt Agent and the certification by the Subscription Receipt Agent upon any Subscription Receipt Certificate shall be conclusive evidence as against the Company that the Subscription Receipt Certificate so certified has been duly issued hereunder and that the holder is entitled to the benefit hereof.
(2) The certification of the Subscription Receipt Agent on Subscription Receipt Certificates issued hereunder shall not be construed as a representation or warranty by the Subscription Receipt Agent as to the validity of this Agreement or of the Subscription Receipt Certificates (except the due certification thereof) and the Subscription Receipt Agent shall in no respect be liable or answerable for the use made of the Subscription Receipts or any of them or of the consideration therefor, except as otherwise specified herein.
2.9
|
Legended Certificates
|
(1) (a) The Subscription Receipt Agent understands and acknowledges that the Subscription Receipts and the Common Shares and Warrants issuable upon exercise of the Subscription Receipts have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the United States.
(b) Each Subscription Receipt Certificate originally issued to a U.S. Person, a person in the United States or a person for the account or benefit of a U.S. Person or a person in the United States, all Common Shares and Warrants issued upon exercise of Subscription Receipts, and all certificates issued in exchange for or in substitution of Subscription Receipt Certificates, shall bear the following legend:
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THE SECURITIES REPRESENTED HEREBY
[AND THE SECURITIES ISSUED UPON THE EXERCISE OF THESE SECURITIES]
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF GLENCAIRN GOLD CORPORATION (THE CORPORATION) THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR
WRITTEN CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS.;
provided that, if such Subscription Receipts, Common Shares or Warrants are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with applicable Canadian securities laws and regulations, and the Company is a foreign issuer as such term is defined in Regulation S, the legend may be removed by providing a declaration to the Transfer Agent in the form of Schedule C hereto (or as the Company may reasonably prescribe from time to time); and provided further that, if any such Warrants or Common Shares are being sold other than to the Company or in accordance with Regulation S, the legend may be removed by delivery to the Transfer Agent of an opinion of counsel, of recognized standing reasonably satisfactory to the Company, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities
laws. The Transfer Agent shall, upon receipt of the executed form of Declaration for Removal of Legend as set forth in Schedule C hereto, issue a new certificate within three Business Days thereof.
(c) If a Subscription Receipt Certificate or Common Share or Warrant certificate issued with respect to an exercise of Subscription Receipts is tendered for transfer and bears the legend set forth in paragraph 2.9(1)(b) hereof and the holder thereof has not obtained the prior written consent of the Company, the Subscription Receipt Agent or the Transfer Agent, as the case may be, the Subscription Receipt Agent shall not register such transfer unless the holder complies with the requirements of the said paragraph 2.9(1)(b) hereof;
(2) Each Subscription Receipt
Certificate originally issued to every Purchaser, as well as all certificates
issued in exchange for or in substitution of the Subscription Receipt
Certificates, unless such exchange or substitution shall occur subsequent to
February 23, 2008, shall bear the following legend:
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UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 23, 2008.;
provided that if, at any time, in the opinion of counsel to the Company, such legend is no longer necessary or advisable under applicable Securities Laws, or the holder of any such legended certificate, at the holders expense, provides the Company with evidence satisfactory in form and substance to the Company (which may include an opinion of counsel satisfactory to the Company) to the effect that such legends are not required, such legended certificate may thereafter be surrendered to the Company in exchange for a certificate which does not bear such legend.
ARTICLE 3
EXCHANGE AND OWNERSHIP OF SUBSCRIPTION RECEIPTS
3.1
|
Exchange of Subscription Receipts
|
(1) One or more Subscription Receipt Certificates may, upon compliance with the requirements of the Subscription Receipt Agent, acting reasonably, be exchanged for one or more Subscription Receipt Certificates of different denomination(s) evidencing in the aggregate an equal number of Subscription Receipts as the number of Subscription Receipts represented by the Subscription Receipt Certificates being exchanged.
(2) Subscription Receipt Certificates may be exchanged only at the principal transfer offices of the Subscription Receipt Agent in the City of Toronto, Ontario or at any other place that is designated by the Company in writing with the approval of the Subscription Receipt Agent. Any Subscription Receipt Certificates tendered for exchange shall be surrendered to the Subscription Receipt Agent or to its agent and cancelled. The Company shall sign all Subscription Receipt Certificates necessary to carry out exchanges as aforesaid and those Subscription Receipt Certificates shall be certified by or on behalf of the Subscription Receipt Agent.
For each Subscription Receipt Certificate exchanged, the Subscription Receipt Agent, except as otherwise herein provided, shall charge, if required by the Company, a reasonable sum for each new Subscription Receipt Certificate issued. The party requesting the exchange, as a condition precedent thereto, shall pay such charges and shall pay or reimburse the Subscription Receipt Agent or the Company for all exigible transfer taxes or governmental or other similar transfer charges required to be paid in connection therewith.
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3.3
|
Ownership of Subscription Receipts
|
The Company and the Subscription Receipt Agent and their respective agents may deem and treat the holder of any Subscription Receipt Certificate as the absolute owner of that Subscription Receipts represented thereby for all purposes and the Company and the Subscription Receipt Agent and their respective agents shall not be affected by any knowledge to the contrary. The holder of any Subscription Receipt shall be entitled to the rights evidenced by that Subscription Receipt free from all equities or rights of set-off or counterclaim between the Company and the original or any intermediate holder thereof and all persons may act accordingly and the receipt from any holder for the Common Shares, Warrants or monies obtainable pursuant thereto shall be a good discharge to the Company and the Subscription Receipt Agent for the same and neither the Company nor the Subscription Receipt Agent shall
be bound to inquire into the title of any holder.
3.4
|
Registration and Transfer of Subscription Receipts
|
(1) The Company hereby appoints the Subscription Receipt Agent as registrar of the Subscription Receipts. The Company may hereafter, with the consent of the Subscription Receipt Agent, appoint one or more other additional registrars of the Subscription Receipts.
(2) The Company shall cause a register to be kept by the Subscription Receipt Agent and the Subscription Receipt Agent agrees to maintain such a register at its principal stock transfer offices in the City of Toronto, Ontario in which shall be entered the names and addresses of the holders of Subscription Receipts and other particulars of the Subscription Receipts held by them respectively and of all transfers of Subscription Receipts, and the Subscription Receipt Agent shall be entitled to rely on such register in connection with the exchange, transfer, exercise or deemed exercise of any Subscription Receipt or Subscription Receipts pursuant to the terms of this Agreement or the terms thereof. The Company shall also cause transfer agencies (a
Transfer Agency
) to be maintained by the
Subscription Receipt Agent and the Subscription Receipt Agent shall maintain such Transfer Agencies at its principal stock transfer offices in the City of Toronto, Ontario and in such other place or places and by such other agent as the Company with the approval of the Subscription Receipt Agent may designate. No transfer of Subscription Receipts shall be valid unless: (i) made by the holder or the holders executors or administrators or other legal representatives or the holders or their attorney duly appointed by an instrument in writing, in form and executed in a manner satisfactory to the Subscription Receipt Agent; (ii) upon compliance with all applicable Securities Laws and such reasonable requirements as the Subscription Receipt Agent may prescribe; (iii) unless the transfer shall have been duly entered on the register by the Subscription Receipt Agent; and (iv) upon surrender of the Subscription Receipt Certificate evidencing the Subscription Receipts to be
transferred in accordance with this Article and a duly completed and executed Form of Transfer attached to the Subscription Receipt Certificate. The Subscription Receipt Agent is entitled to assume compliance with Securities Laws unless otherwise notified in writing by the Company.
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(3) The register referred to in this section shall at all reasonable times be open for inspection by the Company, by the Subscription Receipt Agent and by any Subscription Receiptholder upon receipt by the Subscription Receipt Agent of a written request to permit such an inspection during normal business hours.
(4) Subject to subsection 3.4(2) the holder of a Subscription Receipt may at any time and from time to time have the Subscription Receipt transferred at any Transfer Agency in accordance with such reasonable regulations as the Subscription Receipt Agent and the Company may prescribe.
(5) Except as required by law, neither the Subscription Receipt Agent nor any other registrar nor the Company shall be charged with notice of or be bound to see to the execution of any trust, whether express, implied or constructive, in respect of any Subscription Receipt and may transfer any Subscription Receipt on the written direction of the holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.
(6) The register required to be kept in the City of Toronto, Ontario shall not be closed at any time. In the event that any Transfer Agency in any place is closed, notice of the closing shall be given to the Subscription Receiptholders by the Company, in the manner provided in section 12.2.
(7) The Subscription Receipt Agent shall, when requested so to do in writing by the Company, furnish the Company with a list of names and addresses of the Subscription Receiptholders showing the number of Subscription Receipts held by each Subscription Receiptholder and the date and particulars of issue and transfer of each Subscription Receipt.
(8) No duty shall rest with the Subscription Receipt Agent to determine compliance of the transferor or transferee of the Subscription Receipts with applicable Securities Laws. The Subscription Receipt Agent shall be entitled to assume that all transfers are legal and proper.
ARTICLE 4
EXERCISE OF SUBSCRIPTION RECEIPTS
4.1
|
Notice of Satisfaction of Release Conditions
|
Upon the satisfaction of the Release Conditions, the Company and Orion shall forthwith deliver to the Subscription Receipt Agent by facsimile or courier to the address of the Subscription Receipt Agent set out in Article 12 the Release Certificate substantially in the form attached hereto as Schedule B.
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4.2
|
Notice of Deemed Exercise to Subscription Receiptholders
|
Upon receipt by the Subscription Receipt Agent of the Release Certificate
referred to in section 4.1, the Subscription Receipt Agent shall as soon as
practicable give notice to the Subscription Receiptholders (in the form provided
to the Subscription Receipt Agent by the Company) of satisfaction of the Release
Conditions and the deemed exercise of Subscription Receipts according to the
terms of this Agreement and the Subscription Receipt Certificates.
4.3
|
Exercise of Subscription Receipts by Subscription Receipt Agent on Behalf of Subscription Receiptholders
|
(1) In the event that the Release Conditions are satisfied on or before the Release Deadline, the Subscription Receipts shall be deemed to be exercised as of 4:59 p.m. (Toronto time) on the fifth Business Day following satisfaction of the Release Conditions without any further action on the part of the holders. The Subscription Receipt Agent shall mail, by prepaid first class mail, certificates for the Common Shares and Warrants issued upon such deemed exercise in the name of such holder to the address of such holder as specified in the register for the Subscription Receipts.
(2) In the event that the Release Conditions are satisfied on or before the Closing Date, Common Share and Warrant certificates shall be issued in lieu of Subscription Receipt Certificates, upon the written direction from the Company, without any further action on the part of the holders.
4.4
|
Effect of Exercise of Subscription Receipts
|
(1) Upon deemed exercise of the
Subscription Receipts, the holder of Subscription Receipts shall be entitled
without further payment therefor to receive from the Company for each
Subscription Receipt the number of Common Shares and Warrants determined in
accordance with section 2.2 and the Company shall cause the holder thereof to be
entered forthwith on its register of shareholders as the holder of the Common
Shares and on its register of Warrant holders as the holder of Warrants and the
Common Shares and Warrants so acquired shall be deemed to have been issued, and
the person or persons to whom those Common Shares and Warrants are to be issued
shall be deemed to have become the shareholder or shareholders or Warrant holder
or Warrant holders, as the case may be, of record of the Common Shares or
Warrants, as applicable, on the Exercise Date unless the registers of the
Company shall be closed on that date, in which case the Common Shares and
Warrants so acquired shall be deemed to be issued and the person or persons
shall be deemed to become the shareholder or shareholders or Warrant holder or
Warrant holders, as the case may be, of record of the Common Shares or Warrants,
as applicable, on the date on which the registers are reopened and the Common
Shares and Warrants shall be issued on the later date.
(2) If, in the opinion of 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 Common Shares and Warrants issuable upon
deemed exercise of the Subscription Receipts may be issued or delivered to a
Subscription Receiptholder, the Company covenants that it will use its best
efforts to file such instrument, obtain such permission, order or ruling or take
all such other actions, at its expense, as is required or appropriate in the
circumstances.
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(3) The Company or, if required by the Company, the Subscription Receipt Agent will give written notice of the issue of the Common Shares and Warrants issuable upon exercise of the Subscription Receipts in such detail as may be required, to each securities regulatory agency or government authority in Canada in each jurisdiction in which there is legislation requiring the giving of any such notice.
(4) Each certificate evidencing Common Shares and Warrants issued to every Purchaser upon deemed exercise of Subscription Receipts, as well as all certificates issued in exchange for or in substitution of the Subscription Receipt Certificates, shall bear the following legend:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 23, 2008.
provided that, if at any time, in the opinion of counsel to the Company, such legend is no longer necessary or advisable under applicable Securities Laws, or the holder of any such legended certificate, at the holders expense, provides the Company with evidence satisfactory in form and substance to the Company (which may include an opinion of counsel satisfactory to the Company) to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Company in exchange for a certificate which does not bear such legend.
(5) For any Subscription Receipts that are deemed to be exercised by a Subscription Receiptholder who is a U.S. Person, a person in the United States or a person for the account or benefit of a U.S. Person or a person in the United States, the certificates evidencing the Common Shares and Warrants shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY
[IF A WARRANT: AND THE SECURITIES ISSUED UPON THE EXERCISE OF THESE SECURITIES]
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF GLENCAIRN GOLD CORPORATION (THE CORPORATION) THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL
- 19 -
LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS.
4.5
|
No Fractional Common Shares or Warrants
|
Under no circumstances shall the Company be obliged to issue any fractional Common Shares or Warrants or any cash or other consideration in lieu thereof upon the exercise of one or more Subscription Receipts. To the extent that the holder of one or more Subscription Receipts would otherwise have been entitled to receive on the exercise or partial exercise thereof a fraction of a Common Share or Warrant, that holder may exercise that right in respect of the fraction only in combination with another Subscription Receipt or Subscription Receipts that in the aggregate entitle the holder to acquire a whole number of Common Shares or Warrants.
4.6
|
Expiration of Subscription Receipts
|
(1) In the event that the Release Conditions are satisfied on or before the Release Deadline, all rights under any Subscription Receipt shall wholly cease and terminate and the Subscription Receipts shall be void and of no effect as of 5:00 p.m. (Toronto time) on the fifth Business Day following satisfaction of the Release Conditions.
(2) In the event that the Release Conditions are satisfied on or before the Closing Date, all rights under any Subscription Receipt shall wholly cease and terminate and the Subscription Receipts shall be void and of no effect as of the issuance of the Common Shares and Warrants issuable upon exercise of the Subscription Receipts.
ARTICLE 5
ADJUSTMENT OF EXCHANGE NUMBER
In this Article, the terms
record date
and
effective date
where used herein shall mean the close of business on the relevant date.
5.2
|
Adjustment of Exchange Number
|
The Exchange Number (or the number and kind of shares or securities to be received upon exercise in the case of subsections 5.2(4) and (5) below) shall be subject to adjustment from time to time in the events and in the manner provided in section 5.3 and as follows:
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(1) If, prior to the deemed exercise of the Subscription Receipts hereunder the Company shall:
|
(a)
|
issue to all or substantially all the holders of the Common Shares, by way of a stock distribution, stock dividend or otherwise, Common Shares or Convertible Securities; or
|
|
(b)
|
subdivide its outstanding Common Shares into a greater number of shares; or
|
|
(c)
|
combine or consolidate its outstanding Common Shares into a smaller number of shares,
|
(any of these events being herein called a
Share Reorganization
),
the Exchange Number shall be adjusted effective immediately after the record date at which the holders of Common Shares are determined for the purposes of the Share Reorganization to a number that is the product of (1) the Exchange Number in effect on the record date and (2) a fraction:
|
(i)
|
the numerator of which shall be the number of Common Shares outstanding after giving effect to the Share Reorganization; and
|
|
(ii)
|
the denominator of which shall be the number of Common Shares outstanding on the record date before giving effect to the Share Reorganization.
|
For the purposes of determining the number of Common Shares outstanding at any particular time for the purpose of this subsection 5.2(1), there shall be included that number of Common Shares which would have resulted from the conversion at that time of all outstanding Convertible Securities.
(2) If prior to the deemed exercise of the Subscription Receipts hereunder the Company shall issue rights, options or warrants to all or substantially all the holders of the Common Shares pursuant to which those holders are entitled to subscribe for, purchase or otherwise acquire Common Shares or Convertible Securities within a period of 45 days from the date of issue thereof at a price, or at a conversion price, of less than 95% of the Current Market Price at the record date for such distribution (any such issuance being herein called a
Rights Offering
and Common Shares that may be acquired in exercise of the Rights Offering or upon conversion of the Convertible Securities offered by the Rights Offering being herein called the
Offered Shares
), the Exchange Number shall be adjusted effective immediately after the record date at which holders of Common Shares are determined for the purposes of the Rights Offering to an Exchange Number that is the product of (1) the Exchange Number in effect on the record date and (2) a fraction:
- 21 -
|
(a)
|
the numerator of which shall be the sum of (i) the number of Common Shares outstanding on the record date plus (ii) the number of Offered Shares offered pursuant to the Rights Offering or the maximum number of Offered Shares into which the Convertible Securities so offered pursuant to the Rights Offering may be converted, as the case may be; and
|
|
(b)
|
the denominator of which shall be the sum of:
|
|
(i)
|
the number of Common Shares outstanding on the record date for the Rights Offering; and
|
|
(ii)
|
the number arrived at when (A) either the product of (1) the number of Offered Shares so offered and (2) the price at which those Common Shares are offered, or the product of (3) the conversion price thereof and (4) the maximum number of Offered Shares for or into which the Convertible Securities so offered pursuant to the Rights Offering may be converted, as the case may be, is divided by (B) the Current Market Price of the Common Shares on the record date.
|
Any Offered Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any computation; if all the rights, options or warrants are not so issued or if all rights, options or warrants are not exercised prior to the expiration thereof, the Exchange Number shall be readjusted to the Exchange Number in effect immediately prior to the record date and the Exchange Number shall be further adjusted based upon the number of Offered Shares (or Convertible Securities into Offered Shares) actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after that record date.
(3) If prior to the deemed exercise of the Subscription Receipts hereunder the Company shall issue or distribute to all or substantially all the holders of the Common Shares (i) shares of any class other than Common Shares, or (ii) rights, options or warrants other than rights, options or warrants exercisable within 45 days from the date of issue thereof at a price, or at a conversion price, of at least 95% of the Current Market Price at the record date for such distribution, or (iii) evidences of indebtedness, or (iv) any other assets (excluding cash dividends that Subscription Receiptholders receive under section 6.3) and that issuance or distribution does not constitute a Share Reorganization or a Rights Offering (any of those events being herein called a
Special Distribution
), the
Exchange Number shall be adjusted effective immediately after the record date at which the holders of Common Shares are determined for purposes of the Special Distribution to an Exchange Number that is the product of (1) the Exchange Number in effect on the record date and (2) a fraction:
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|
(a)
|
the numerator of which shall be the product of (i) the sum of the number of Common Shares outstanding on the record date plus the number of Common Shares which the Subscription Receiptholders would be entitled to receive upon exercise of all their outstanding Subscription Receipts if they were exercised on the record date and (ii) the Current Market Price thereof on that date; and
|
|
(b)
|
the denominator of which shall be:
|
|
(i)
|
the product of (A) the sum of the number of Common Shares outstanding on the record date plus the number of Common Shares which the Subscription Receiptholders would be entitled to receive upon exercise of all their outstanding Subscription Receipts if they were exercised on the record date and (B) the Current Market Price thereof on that date;
|
less,
|
(ii)
|
the aggregate fair market value, as determined by the directors, whose determination shall, absent manifest error, be conclusive, of the shares, rights, options, warrants, evidences of indebtedness or other assets issued or distributed in the Special Distribution.
|
Any Common Shares owned by or held for the account of the Company shall be deemed not to be outstanding for the purpose of any such computation. To the extent that the distribution of shares, rights, options, warrants, evidences of indebtedness or assets if not so made or to the extent that any rights, options or warrants so distributed are not exercised, the Exchange Number shall be readjusted to the Exchange Number that would then be in effect based upon the shares, rights, options, warrants, evidences of indebtedness or assets actually distributed or based upon the number of Common Shares or Convertible Securities actually delivered upon the exercise of the rights, options or warrants, as the case may be, but subject to any other adjustment required hereunder by reason of any event arising after the record date.
(4) If prior to the deemed exercise of the Subscription Receipts hereunder there is a reorganization of the Company not otherwise provided for in subsection 5.2(1) or a consolidation or merger or amalgamation of the Company with or into another body corporate including a transaction whereby all or substantially all of the Companys undertaking and assets become the property of any other corporation (any such event being herein called a
Capital Reorganization
) any holder of a Subscription Receipt who has not exercised his or her right to exchange his or her Subscription Receipt for Common Shares and Warrants prior to the effective date of the Capital Reorganization shall be entitled to receive and shall accept, upon the exercise of his or her right at any time after the effective date
of the Capital Reorganization, in lieu of the number of Common Shares (and any other securities or properties to which holders are entitled upon exercise of the Subscription Receipts) to which he or she was theretofore entitled
- 23 -
upon exercise of the Subscription Receipt, the aggregate number of Common Shares or other securities or property of the Company, or the continuing, successor or purchasing person, as the case may be, under the Capital Reorganization that the holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, he or she had been the holder of the number of Common Shares (and any other securities to which holders are entitled upon exercise of the Subscription Receipts) to which immediately before the transaction he or she was entitled upon exercise of the Subscription Receipts. No Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken so that the holders of Subscription Receipts shall thereafter be entitled to receive the number of Common Shares or other securities or property of the Company or of the continuing,
successor or purchasing person, as the case may be, under the Capital Reorganization, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this section and in section 5.3.
(5) If the Company shall reclassify or otherwise change the outstanding Common Shares, the exercise right shall be adjusted effective immediately upon the reclassification becoming effective so that holders of Subscription Receipts who exercise their rights thereafter shall be entitled to receive Common Shares as they would have received had the Subscription Receipts been exercised immediately prior to the effective date, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this section and in section 5.3.
5.3
|
Exercise Number Adjustment Rules
|
The following rules and procedures shall be applicable to adjustments made pursuant to section 5.2:
(1) The adjustments and readjustments provided for in this Article 5 are cumulative and, subject to subsection 5.3(2), shall apply (without duplication) to successive issues, subdivisions, combinations, consolidations, distributions and any other events that require adjustment of the Exchange Number or the number or kind of Common Shares or securities purchasable hereunder.
(2) No adjustment in the Exchange Number shall be required unless the adjustment would result in a change of at least 1/2 of 1% in the Exchange Number then in effect, provided, however, that any adjustments that, except for the provisions of this subsection would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment.
(3) No adjustment in the Exchange Number shall be made in respect of any event described in paragraph 5.2(1)(a) or subsections 5.2(2) or (3) if the holders of the Subscription Receipts are entitled to participate in the event on the same terms,
mutatis mutandis
, as if they had exercised their Subscription Receipts immediately prior to the effective date or record date of the event.
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(4) No adjustment in the Exchange Number shall be made pursuant to section 5.2 in respect of the issue of Common Shares pursuant to:
|
(b)
|
the issuance of Common Shares pursuant to the exercise of options granted pursuant to the Companys stock option plans or pursuant to the exercise of rights under currently outstanding warrants to acquire Common Shares,
|
and any such issue shall be deemed not to be a Share Reorganization, a Rights Offering or a Special Distribution.
(5) If a dispute shall at any time arise with respect to adjustments of the Exchange Number, the dispute shall be conclusively determined by the Companys Auditors or, if they are unable or unwilling to act, by such firm of independent chartered accountants as may be selected by the directors and any such determination shall, absent manifest error, be binding upon the Company, the Subscription Receipt Agent, the Transfer Agent and all Subscription Receiptholders.
(6) If the Company shall set a record date to determine the holders of Common Shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter, legally abandon its plans to pay or deliver the dividend or distribution or subscription or purchase rights, then no adjustment in the Exchange Number shall be required by reason of the setting of the record date.
(7) If and whenever at any time prior to the deemed exercise of the Subscription Receipts hereunder, the Company shall take any action affecting or relating to the Common Shares, other than any action described in this section, which in the opinion of the directors of the Company would prejudicially affect the rights of any holders of Subscription Receipts, the Exchange Number will be adjusted by the directors of the Company in such manner, if any, and at such time, as the directors of the Company, may in their sole discretion, subject to the approval of any stock exchange on which the Common Shares are listed and posted for trading, reasonably determine to be equitable in the circumstances to such holders.
(8) As a condition precedent to the taking of any action which would require an adjustment in any of the rights under the Subscription Receipts, the Company will take any action which, in the opinion of counsel to the Company, may be necessary in order that the Company, or any successor to the Company or successor to the undertaking or assets of the Company will be obligated to and may validly and legally issue all the Common Shares and Warrants which the holders of the Subscription Receipts would be entitled to receive thereafter and to exercise such Subscription Receipts in accordance with the provisions hereof.
(9) All adjustments in connection with
the Warrants to be issued upon exercise of the Subscription Receipts shall be made in accordance with the terms
and conditions of the Warrant Indenture, whether or not the Warrants have been
issued upon the exercise of the Subscription Receipts.
- 25 -
5.4
|
Postponement of Subscription
|
In any case where the application of section 5.2 results in an increase of the Exchange Number taking effect immediately after the record date for or occurrence of a specific event, if any Subscription Receipts are exercised after that record date or occurrence and prior to completion of the event or of the period for which a calculation is required to be made, the Company may postpone the issuance to the holder of the Subscription Receipts of the Common Shares to which the holder is entitled by reason of the increase of the Exchange Number but the Common Shares shall be so issued and delivered to that holder upon completion of that event or period, with the number of those Common Shares calculated on the basis of the Exchange Number on the Exercise Date adjusted for completion of that event or period, and the Company shall forthwith after the Exercise Date deliver to the person or persons
in whose name or names the Common Shares are to be issued an appropriate instrument evidencing the persons or persons right to receive the Common Shares.
5.5
|
Notice of Certain Events
|
(1) Promptly upon the occurrence of the earlier of the effective date of or the record date for any event referred to in sections 5.2 or 5.3 that requires an adjustment in the Exchange Number, the Company shall:
|
(a)
|
file with the Subscription Receipt Agent a certificate of the Company specifying the particulars of the event and, if determinable, the adjustment and computation of the adjustment and the Subscription Receipt Agent may act and rely absolutely on the certificate of the Company; and
|
|
(b)
|
give notice to the Subscription Receiptholders of the particulars of the event and, if determinable, the adjustment.
|
(2) If notice has been given under subsection 5.5(1) and the adjustment is not then determinable, the Company shall promptly, after the adjustment is determinable:
|
(a)
|
file with the Subscription Receipt Agent a computation of the adjustment; and
|
|
(b)
|
give notice to the Subscription Receiptholders of the adjustment.
|
5.6
|
Protection of Subscription Receipt Agent
|
Subject to the provisions of sections 11.2 and 11.3, the Subscription Receipt Agent:
- 26 -
|
(a)
|
shall not at any time be under any duty or responsibility to any Subscription Receiptholder to determine whether any facts exist which may require any adjustment when made, or with respect to the method employed in making the same;
|
|
(b)
|
shall not be accountable with respect to the validity or value (or kind or amount) of any Common Shares or Warrants or of any shares or other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Subscription Receipt;
|
|
(c)
|
shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver Common Shares or Warrants or certificates for the same upon the surrender of any Subscription Receipts for the purpose of the exercise of such rights or to comply with any of the covenants contained in Article 6;
|
|
(d)
|
shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Company of any of the representations, warranties or covenants herein contained or of any acts of the agents or servants of the Company; and
|
|
(e)
|
shall be entitled to act and rely on any adjustment calculation of the directors or the Companys Auditors.
|
ARTICLE 6
RIGHTS AND COVENANTS
6.1
|
General Covenants of the Company
|
The Company covenants with the Subscription Receipt Agent for the benefit of the Subscription Receipt Agent and the Subscription Receiptholders that so long as any Subscription Receipts remain outstanding and may be exchanged for Common Shares and Warrants:
(1) The Company will at all times maintain its existence and will carry on and conduct its business in a prudent manner in accordance with industry standards and good business practice, and will keep or cause to be kept proper books of account in accordance with applicable law.
(2) The Company will use its commercially reasonable best efforts to maintain the listing of the Common Shares on the TSX and to have the Common Shares issued pursuant to the exercise of the Subscription Receipts and upon exercise of the Warrants listed and posted for trading on the TSX as expeditiously as possible.
(3) The Company will reserve and keep available a sufficient number of Common Shares and Warrants for issuance upon the exercise of Subscription Receipts issued by the Company.
- 27 -
(4) The Company will cause the Common Shares and Warrants from time to time subscribed for pursuant to the Subscription Receipts issued by the Company hereunder, in the manner herein provided, to be duly issued in accordance with the Subscription Receipts and the terms hereof.
(5) The Company will cause the certificates representing the Common Shares and Warrants from time to time to be acquired, pursuant to the Subscription Receipts in the manner herein provided, to be duly issued and delivered in accordance with the Subscription Receipts and the terms hereof and in respect of the certificates evidencing Warrants, in accordance with the Warrant Indenture, as applicable.
(6) All Common Shares that shall be issued by the Company upon exercise of the rights provided for herein shall be issued as fully paid and non-assessable Common Shares.
(7) The Company will perform and carry out all of the acts or things to be done by it as provided in this Agreement.
(8) The Company will use its best efforts to maintain its status as a reporting issuer not in default of the requirements of each of the provinces of Canada until the Time of Expiry.
(9) The Company will promptly advise the Subscription Receipt Agent and the Subscription Receiptholders in writing of any default under the terms of this Agreement.
6.2
|
Subscription Receipt Agents Remuneration and Expenses
|
The Company covenants that it will pay to the Subscription Receipt Agent from time to time reasonable remuneration for its services hereunder and will pay or reimburse the Subscription Receipt Agent upon its request for all reasonable expenses and disbursements of the Subscription Receipt Agent incurred in connection with the performance of its duties as the Escrow Agent and the Subscription Receipt Agent (including the reasonable compensation and the disbursements of counsel and all other advisers, experts, accountants and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Subscription Receipt Agent hereunder shall be finally and fully performed, except any such expense or disbursement in connection with or related to or required to be made as a result of the gross negligence, wilful misconduct or bad faith of the Subscription Receipt Agent.
6.3
|
Rights to Dividends and Distributions
|
If prior to the deemed exercise of the Subscription Receipts hereunder the Company shall pay any dividend or make any distribution to all or substantially all of the holders of Common Shares or if the Company declares any dividend or provides for any distribution, payable to all or substantially all the holders of Common Shares of record during that period, Subscription Receiptholders who are deemed to have exercised their
- 28 -
Subscription Receipts shall be entitled to participate in the dividend or distribution on the same terms,
mutatis mutandis
, as if they exercised their Subscription Receipts immediately prior to the effective date or record date of the dividend or distribution. For cash dividends or distributions, this entitlement shall be satisfied by the payment of such amounts by the Company to the holders of the Subscription Receipts forthwith upon deemed exercise of the Subscription Receipts. For stock dividends or distributions or distributions in specie of which an adjustment can be made in the Exchange Number pursuant to paragraph 5.2(1)(a) or subsections 5.2(2) or (3), this entitlement shall be satisfied by such an adjustment. The Subscription Receipt Agent shall not be responsible for determining if any such payment should be made or to determine the sufficiency of such payment.
6.4
|
Performance of Covenants by the Subscription Receipt Agent
|
If the Company shall fail to perform any of its covenants contained in this Agreement, the Subscription Receipt Agent may notify the Subscription Receiptholders of the failure on the part of the Company or may itself perform any of the said covenants capable of being performed by it, but shall be under no obligation to do so or to notify the Subscription Receiptholders. All reasonable sums expended or advanced by the Subscription Receipt Agent in so doing shall be repayable as provided in section 6.2. No such performance, expenditure or advance by the Subscription Receipt Agent shall be deemed to relieve the Company of any default hereunder or of its continuing obligations under the covenants herein contained.
ARTICLE 7
ESCROWED FUNDS
7.1
|
Initial Escrowed Funds and Distribution Amounts
|
To the extent that the Release Certificate has not been provided to the Subscription Receipt Agent on or before the Closing Date, on the Closing Date, the Underwriters shall provide the Initial Escrowed Funds to the Subscription Receipt Agent and the Subscription Receipt Agent shall accept and hold the Escrowed Funds in escrow for and on behalf of the persons who have an interest therein pursuant hereto, shall disburse and deal with the Escrowed Funds in the manner contemplated by this Article and at all times shall keep the Escrowed Funds in a segregated account, all on the terms and subject to the conditions hereof.
7.2
|
Qualified Investments
|
(1) Upon receipt of a direction from
the Company, the Subscription Receipt Agent shall invest the Escrowed Funds in
Qualified Investments in its name in accordance with such direction. Any
direction from the Company to the Subscription Receipt Agent shall be in writing
and shall be provided to the Subscription Receipt Agent no later than 9:00 a.m.
(Toronto time) on the day on which the Qualified Investment is to be made. Any
such direction received by the Subscription Receipt Agent after 9:00 a.m.
(Toronto time) or received on a non-Business Day, shall be deemed to have been given prior to 9:00 a.m. (Toronto time) the next Business
Day.
- 29 -
(2) In the event that the Subscription Receipt Agent does not receive a direction or only a partial direction, the Subscription Receipt Agent may hold cash balances constituting part or all of the Escrowed Funds and may, but need not, invest same in its deposit department or the deposit department of one of its Affiliates (as hereinafter defined); but the Subscription Receipt Agent and its Affiliates shall not be liable to account for any profit to any parties to this Agreement or to any other person or entity other than at a rate, if any, established from time to time by the Subscription Receipt Agent or one of its Affiliates. For the purpose of this Section, Affiliate means affiliated companies within the meaning of the
Canada Business Corporations Act
.
7.3
|
Release of Escrowed Funds to the Company Upon Receipt of Release Certificate
|
Upon receipt of the Release Certificate on or before the Release Deadline, the Subscription Receipt Agent shall liquidate any Escrowed Funds in accordance with this Article and deliver all Escrowed Funds to the Company.
7.4
|
Release of Escrowed Funds on Default
|
In the event that the Release Conditions are not satisfied prior to the Release Deadline, the Company shall forthwith deliver a Default Notice to each of the Subscription Receiptholders and the Subscription Receipt Agent. The Subscription Receipt Agent shall return to each such holder the Subscription Receiptholders Funds. Each Subscription Receiptholders Funds shall be paid to such holder within three Business Days following the Default Deadline. In the event that the Escrowed Funds are not sufficient to fund the Subscription Receiptholders Funds payable to all Subscription Receiptholders, the Company shall fund any such shortfall. Payment made in accordance with this Article 7 shall be made in accordance with section 7.8 hereof and the Subscription Receipt Agent shall mail such payment to such Subscription Receiptholders at their address last appearing on the
register of the Subscription Receipts maintained by the Subscription Receipt Agent. All Subscription Receipt Certificates representing Subscription Receipts in respect of which the Subscription Receiptholders Funds have been paid to the Subscription Receiptholders shall be deemed to have been cancelled on the Default Deadline and the Subscription Receipt Agent shall record the deemed cancellation of such Subscription Receipt Certificates on the register of the Subscription Receipts. The Subscription Receipt Agent shall furnish the Company with a certificate identifying the Subscription Receipt Certificates deemed to have been cancelled. All Subscription Receipts represented by Subscription Receipt Certificates which have been deemed to have been cancelled pursuant to this section 7.4 shall be without further force and effect whatsoever.
7.5
|
Release of Escrowed Funds Following the Default Deadline
|
In the event that the Release Conditions are not satisfied prior to the Release
Deadline, the Subscription Receipt Agent shall, as soon as practicable, pay to the Company the balance of the Escrowed Funds, if any, after making all payments
of the Escrowed Funds to Subscription Receiptholders pursuant to section
7.4.
- 30 -
In order to permit the Subscription Receipt Agent to carry out its obligations under this Article 7, the Company hereby specifically authorizes and directs the Subscription Receipt Agent to make any stipulated payment or to take any stipulated action in accordance with the provisions of this Agreement.
7.7
|
Early Termination of any Investment of the Escrowed Funds
|
In making any payment pursuant to this Agreement, the Subscription Receipt Agent has the authority to liquidate any investments in order to make payments contemplated under this Article and shall not be liable for any loss sustained in the escrow account for early termination of any investment of the Escrowed Funds necessary to enable the Subscription Receipt Agent to make such payment.
7.8
|
Method of Disbursement and Delivery
|
(1) All disbursements of money made in accordance with the provisions of this Article 7 shall be made by cheque drawn upon a Canadian Schedule I chartered bank or by official cheque drawn upon the account of the Subscription Receipt Agent made payable to or to the order of the persons entitled to disbursement and in the correct amount (less all amounts required to be withheld by the Company by law, including without limitation, under the
Income Tax Act
(Canada)).
(2) If the Subscription Receipt Agent delivers any such cheque as required under subsection 7.8(1), the Subscription Receipt Agent shall have no further obligation or liability for the amount represented thereby, unless any such cheque is not paid on due presentation; provided that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Subscription Receipt Agent, upon being furnished with reasonable evidence of such non-receipt, loss or destruction and funding and indemnity reasonably satisfactory to it, shall issue to such payee a replacement cheque for the amount of such cheque.
(1) To the extent that the Release Certificate has not been provided to the Subscription Receipt Agent on or before the Closing Date, the Subscription Receipt Agent hereby acknowledges receipt from the Underwriters of a wire transfer in the aggregate amount of $19,659,818.15
and confirms that such funds will be deposited in a segregated account in the name of the Company designated as the Glencairn Gold Corporation Subscription Receipts or as otherwise directed by the Company and the Underwriters and, pending the satisfaction of the Release Conditions, will be used in accordance with section 7.2 hereof.
- 31 -
|
(a)
|
acknowledges that the amounts received by the Subscription Receipt Agent pursuant to paragraph 7.9(1) in accordance with the Companys direction to the Underwriters, represents the gross proceeds from the sale of 133,670,000 Subscription Receipts less 50% of the Commission payable to the Underwriters in connection therewith; and
|
|
(b)
|
irrevocably directs the Subscription Receipt Agent to retain such amounts in accordance with the terms of this Agreement pending payment of such amounts in accordance with the terms of this Agreement.
|
(1) The Subscription Receipt Agent will disburse monies according to this Agreement only to the extent that monies have been deposited with it. The Subscription Receipt Agent shall be protected in acting and relying upon any written notice, request, waiver, consent, certificates, receipts, statutory declaration or other paper or document furnished to it, not only as to its due execution and the validity and effectiveness of its provisions but also as to the truth and acceptability of any information therein contained which it in good faith believes to be genuine and what it purports to be. The Subscription Receipt Agent shall have no duties except those which are expressly set forth herein, and it shall not be bound by any notice of a claim or demand with respect to, or any waiver, modification, amendment, termination or rescission of this
Agreement, unless received by it in writing, and signed by the parties hereto and if its duties herein are affected, unless it shall have given its prior written consent thereto. The duties and obligations of the Subscription Receipt Agent shall be determined solely by the provisions hereof and, accordingly, the Subscription Receipt Agent shall not be responsible except for the performance of such duties and obligations as it has undertaken herein. The Subscription Receipt Agent shall retain the right not to act and shall not be held liable for refusing to act unless it has received clear and reasonable instructions which comply with the terms of this Agreement. Such documentation must not require the exercise of any discretion or independent judgment. The Subscription Receipt Agent is acting hereunder as Escrow Agent at the request of the Company and the Subscription Receiptholders and shall not be responsible as Escrow Agent except for its duties of receiving, holding and
disbursing the Escrowed Funds pursuant to the terms and conditions of this Agreement. Any certificate of a party referred to herein, unless otherwise specified, shall, in the case of the Company, refer to a certificate of the Chief Financial Officer of the Company, and, in the case of any other party, refer to a certificate of an authorized officer of such party. The Subscription Receipt Agent shall not be liable for any error in judgment or for any act done or step taken or omitted by it in good faith or for any mistake, in fact or law, or for anything which it may do or refrain from doing in connection therewith, except arising out of its own gross negligence or willful misconduct. In the event of any disagreement arising regarding the terms of this Agreement, the Subscription Receipt Agent shall be entitled, at its option, to refuse to comply with any or all demands whatsoever until the dispute is settled, either by agreement amongst the various parties or by a court of
competent jurisdiction. None of
- 32 -
the provisions of this Agreement shall require the Subscription Receipt Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. The Subscription Receipt Agent shall not be responsible for any losses which may occur as a result of the investment of the Escrowed Funds where the Escrowed Funds have been invested in accordance with the terms of this Agreement.
(2) The forwarding of a cheque by the Subscription Receipt Agent will satisfy and discharge the liability for any amounts due to the extent of the sum or sums represented thereby (plus the amount of any tax deducted or withheld as required by law) unless such cheque is not honoured on presentation that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Subscription Receipt Agent, upon being furnished with reasonable evidence of such non-receipt, loss or destruction and funding and indemnity reasonably satisfactory to it, will issue to such payee a replacement cheque for the amount of such cheque.
(3) In the event that the Subscription Receipt Agent shall hold any amount of interest or other distributable amount which is unclaimed or which cannot be paid for any reason other than the negligence or willful misconduct of the Subscription Receipt Agent, the Subscription Receipt Agent shall be under no obligation to invest or reinvest the same but shall only be obligated to hold the same on behalf of the person or persons entitled thereto in a current or other non-interest bearing account pending payment to the person or persons entitled thereto. The Subscription Receipt Agent shall, as and when required by law, and may at any time prior to such required time, pay all or part of such interest or other distributable amount so held to the Public Trustee of Ontario (or other appropriate official or agency), whose receipt shall be good discharge
and release of the Subscription Receipt Agent for such amounts.
(4) The Subscription Receipt Agent shall be entitled to act and rely absolutely on the Release Certificate and shall be entitled to release the Escrowed Funds upon the receipt of the Release Certificate as provided for in this Agreement.
(5) The parties agree that the Escrow Agent does not have any interest in the Escrowed Funds but is serving only as escrow agent hereunder. All taxes in respect of earnings on the Initial Escrowed Funds will be the obligation of and will be paid when due by the recipient of such earnings, who shall indemnify and hold the Escrow Agent harmless from and against any liability arising from such taxes, including the failure to pay such taxes. To the extent required by law, the Escrow Agent will perform its withholding, remittance and reporting obligations under the
Income Tax Act
(Canada), as amended, and the regulations promulgated thereunder and any relevant provincial legislation. The Company represents and warrants in favour of the Escrow Agent that it is not a non-resident of Canada for the
purposes of the
Income Tax Act
(Canada).
- 33 -
ARTICLE 8
ENFORCEMENT
8.1
|
Suits by Subscription Receiptholders
|
Subject to section 9.11, all or any of the rights conferred upon a Subscription Receiptholder by the terms of the Subscription Receipts held by such Subscription Receiptholder and/or this Agreement may be enforced by such Subscription Receiptholder by appropriate legal proceedings but without prejudice to the right that is hereby conferred upon the Subscription Receipt Agent to proceed in its own name to enforce each and all of the provisions herein contained for the benefit of the holders of the Subscription Receipts from time to time outstanding. The Subscription Receipt Agent shall also have the power at any time and from time to time to institute and to maintain such suits and proceedings as it may reasonably be advised shall be necessary or advisable to preserve and protect its interests and the interests of Subscription Receiptholders.
Subject to applicable law, the Subscription Receipt Agent and, by acceptance of the Subscription Receipt Certificates and as part of the consideration for the issue of the Subscription Receipts, the Subscription Receiptholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any person in its capacity as an incorporator or any past, present or future shareholder, director, officer, employee or agent of the Company for the creation and issue of the Subscription Receipts pursuant to any warrant or any covenant, agreement, representation or warranty by the Company herein or contained in the Subscription Receipt Certificates.
8.2
|
Limitation of Liability
|
The obligations hereunder (including without limitation under subsection 11.6(5)) are not personally binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future directors or shareholders of the Company or any of the past, present or future officers, employees or agents of the Company but only the property of the Company (or any successor person) shall be bound in respect hereof.
ARTICLE 9
MEETINGS OF SUBSCRIPTION RECEIPTHOLDERS
9.1
|
Right to Convene Meetings
|
The Subscription Receipt Agent may at any time and from time to time and shall on receipt of a written request of the Company or of a Subscription Receiptholders Request and upon being funded and indemnified to its reasonable satisfaction by the Company or by the Subscription Receiptholders signing the Subscription Receiptholders Request against the cost that may be incurred in connection with the calling and holding of the meeting, convene a meeting of the Subscription Receiptholders. In the event of the Subscription Receipt Agent failing within 15 days after receipt of the written request of the Company or Subscription Receiptholders Request and funding and indemnity given as aforesaid to give notice convening a meeting, the Company or the Subscription Receiptholders, as the case
- 34 -
may be, may call and convene the meeting. Every meeting shall be held in the City of Toronto, Ontario or at such other place as may be approved or determined by the Subscription Receipt Agent.
At least 14 days notice of any meeting shall be given to the Subscription Receiptholders in the manner provided by section 12.2 and a copy of the notice shall be sent by mail to the Subscription Receipt Agent unless the meeting has been called by it and to the Company unless the meeting has been called by it. Each notice shall state the time when and the place where the meeting is to be held and shall state briefly the general nature of the business to be transacted thereat and it shall not be necessary for the notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 9. The notice convening any such meeting shall be signed by an appropriate officer of the Subscription Receipt Agent or the Company or by a representative of the Subscription Receiptholders, as the case may be.
A person (who need not be a Subscription Receiptholder) nominated in writing by the Subscription Receipt Agent shall be chairman of the meeting and if no person is so nominated or if the person so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, the Subscription Receiptholders present in person or by proxy shall choose a person present to be chairman.
Subject to the provisions of section 9.12, at any meeting of the Subscription Receiptholders a quorum shall consist of Subscription Receiptholders present in person or by proxy and representing at least 20% of the aggregate number of then outstanding Subscription Receipts. If a quorum of the Subscription Receiptholders shall not be present within one-half hour from the time fixed for holding any meeting, the meeting, if summoned by the Subscription Receiptholders or on a Subscription Receiptholders Request, shall be dissolved; but, subject to section 9.12, in any other case the meeting shall stand adjourned to such day being not less than ten days later and to such place and time as may be designated by the chairman of the meeting and at least five days notice shall be given of such adjourned meeting. At the adjourned meeting, the Subscription Receiptholders present in person
or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not represent at least 20% of the aggregate number of then outstanding Subscription Receipts.
The chairman of any meeting at which a quorum of the Subscription Receiptholders
is present may, with the consent of the meeting, adjourn the meeting and no notice of the adjournment need be given except such notice, if any, as
the meeting may prescribe.
- 35 -
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 meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
On every extraordinary resolution and on any other question submitted to a meeting upon which a poll is directed by the chairman or requested by one or more of the Subscription Receiptholders acting in person or by proxy and representing at least 5% of the aggregate number of all the Subscription Receipts then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by an extraordinary resolution shall be decided by a majority of the votes cast on a poll.
On a show of hands, every person who is present and entitled to vote, whether as a Subscription Receiptholder or as proxy for one or more absent Subscription Receiptholders or both, shall have one vote. On a poll, each Subscription Receiptholder present in person or represented by proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Subscription Receipt then held by him. A proxy need not be a Subscription Receiptholder.
The Subscription Receipt Agent, or the Company with the approval of the Subscription Receipt Agent, from time to time, may make or vary such regulations as they shall think fit:
|
(a)
|
for the issue of voting certificates by any bank, trust company or other
depository satisfactory to the Subscription Receipt Agent stating that the
Subscription Receipts specified therein have been deposited with the depository
by a named person and will remain on deposit until after the meeting, which
voting certificates shall entitle the persons named therein to be present and
vote at the meeting and at any adjournment thereof or to appoint a proxy or
proxies to represent them and vote for them at that meeting and at any
adjournment thereof in the same manner and with the same effect as though the
persons so named in the voting certificates were the actual holders of the Subscription Receipts specified
therein;
|
- 36 -
|
(b)
|
for the deposit of voting certificates and/or instruments appointing proxies at such place and time as the Subscription Receipt Agent, the Company or the Subscription Receiptholders convening the meeting, as the case may be, may in the notice convening the meeting direct;
|
|
(c)
|
for the deposit of voting certificates and/or instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of the voting certificates and/or instruments appointing proxies to be sent by mail, telecopier, cable, telex or other means of prepaid, transmitted, recorded communication before the meeting to the Company or to the Subscription Receipt Agent at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting;
|
|
(d)
|
for the form of instrument appointing a proxy and the manner in which the form of proxy may be executed; and
|
|
(e)
|
generally for the calling of meetings of Subscription Receiptholders and the conduct of business thereat including setting a record date for Subscription Receiptholders entitled to receive notice of or to vote at such meeting.
|
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as the regulations may provide, the only persons who shall be recognized at any meeting as the holders of any Subscription Receipts, or as entitled to vote or, subject to section 9.10, be present at the meeting in respect thereof, shall be persons who are the registered holders of Subscription Receipts or their duly appointed proxies.
9.10
|
Company and Subscription Receipt Agent may be Represented
|
The Company and the Subscription Receipt Agent by their respective officers, employees, or directors, as applicable, and the counsel to the Company and the Subscription Receipt Agent may attend any meeting of the Subscription Receiptholders, but shall have no votes as such.
9.11
|
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 Subscription Receiptholders at a meeting shall have the following powers exercisable from time to time by extraordinary resolution:
- 37 -
|
(a)
|
to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Subscription Receiptholders and/or the Subscription
Receipt Agent in its capacity as Subscription Receipt Agent hereunder (subject
to the Subscription Receipt Agents approval) or on behalf of the
Subscription Receiptholders against the Company, whether those rights arise
under this Agreement or the Subscription Receipts or otherwise except that in
respect of a change in the Purchase Price the amendment shall not be binding
upon a Subscription Receiptholder who does not consent thereto;
|
|
(b)
|
to amend, alter or repeal any extraordinary resolution previously passed;
|
|
(c)
|
to direct or authorize the Subscription Receipt Agent (subject to the Subscription Receipt Agent receiving funding and indemnity) to enforce any of the covenants on the part of the Company contained in this Agreement or the Subscription Receipts or to enforce any of the rights of the Subscription Receiptholders in any manner specified in the extraordinary resolution or to refrain from enforcing any such covenant or right;
|
|
(d)
|
to waive, authorize and direct the Subscription Receipt Agent to waive any default on the part of the Company in complying with any provisions of this Agreement or the Subscription Receipts, either unconditionally or upon any conditions specified in the extraordinary resolution;
|
|
(e)
|
to restrain any Subscription Receiptholder from taking or instituting any suit, action or proceeding against the Company for the enforcement of any of the covenants on the part of the Company contained in this Agreement or the Subscription Receipts or to enforce any of the rights of the Subscription Receiptholders;
|
|
(f)
|
to direct any Subscription Receiptholder who, as such, has brought any suit, action or proceeding to stay or discontinue or otherwise deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by the Subscription Receiptholder in connection therewith;
|
|
(g)
|
to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with the holders of any shares or securities of the Company, wherever such assent may be required;
|
|
(h)
|
from time to time and at any time to remove the Subscription Receipt Agent and appoint a successor Subscription Receipt Agent; and
|
|
(i)
|
in the event that the Release Conditions are not satisfied on or prior to December 31, 2007, to extend the Release Deadline.
|
- 38 -
9.12
|
Meaning of Extraordinary Resolution
|
(1) The expression
extraordinary resolution
when used in this Agreement means, subject as hereinafter in this section and in sections 9.15 and 9.16 provided, a resolution proposed at a meeting of the Subscription Receiptholders duly convened for that purpose and held in accordance with the provisions of this Article 9 at which there are present in person or by proxy Subscription Receiptholders representing at least 25% of the aggregate number of then outstanding Subscription Receipts and passed by the affirmative votes of Subscription Receiptholders representing not less than two-thirds of the aggregate number of all the Subscription Receipts represented at the meeting and voted on the poll upon the resolution.
(2) If, at any meeting called for the purpose of passing an extraordinary resolution, Subscription Receiptholders representing at least 25% of the aggregate number of then outstanding Subscription Receipts are not present in person or by proxy within half an hour after the time appointed for the meeting, then the meeting, if convened by Subscription Receiptholders or on a Subscription Receiptholders Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being no less than 15 or more than 50 days later and to such place and time as may be appointed by the chairman. Not less than 10 days notice shall be given of the time and place of the adjourned meeting in the manner provided in section 12.2. The notice shall state that at the adjourned meeting the Subscription Receiptholders 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 Subscription Receiptholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened or any other particulars and a resolution proposed at the adjourned meeting and passed by the requisite vote as provided in subsection 9.12(1) shall be an extraordinary resolution within the meaning of this Agreement notwithstanding that Subscription Receiptholders representing at least 25% of the aggregate number of then outstanding Subscription Receipts are not present in person or by proxy at the adjourned meeting.
(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.
It is hereby declared and agreed that any one or more of the powers or any combination of the powers in this Agreement stated to be exercisable by the Subscription Receiptholders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of the powers or any combination of the powers from time to time shall not be deemed to exhaust the right of the Subscription Receiptholders to exercise that power or those powers or combination of powers then or any other power or powers or combination of powers thereafter from time to time.
- 39 -
Minutes of all resolutions and proceedings at every meeting of Subscription Receiptholders as aforesaid shall be made and duly entered in books to be provided for that purpose by the Subscription Receipt Agent at the expense of the Company and any minutes as aforesaid, if signed by the chairman of the meeting at which resolutions were passed or proceedings held, or by the chairman of the next succeeding meeting of the Subscription Receiptholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every 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, to have been duly passed and taken.
9.15
|
Instruments in Writing
|
All actions that may be taken and all powers that may be exercised by the Subscription Receiptholders at a meeting held as hereinbefore in this Article 9 provided may also be taken and exercised by Subscription Receiptholders representing at least two-thirds of the aggregate number of then outstanding Subscription Receipts by an instrument in writing signed in one or more counterparts by Subscription Receiptholders 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.
9.16
|
Binding Effect of Resolutions
|
Subject to subsection 9.11(a), every resolution and every extraordinary resolution passed in accordance with the provisions of this Article 9 at a meeting of Subscription Receiptholders shall be binding upon all the Subscription Receiptholders, whether present at or absent from the meeting, and every instrument in writing signed by Subscription Receiptholders in accordance with section 9.15 shall be binding upon all the Subscription Receiptholders, whether signatories thereto or not, and each and every Subscription Receiptholder and the Subscription Receipt Agent (subject to the provisions for its funding and indemnity herein contained) shall be bound to give effect accordingly to every resolution and instrument in writing passed or executed in accordance with these provisions.
9.17
|
Holdings by Company Disregarded
|
In determining whether the requisite number of Subscription Receiptholders are present at a meeting of Subscription Receiptholders for the purpose of obtaining a quorum or have voted or consented to any resolution, extraordinary resolution, consent, waiver, Subscription Receiptholders Request or other action under this Agreement, Subscription Receipts owned by the Company, its subsidiaries and any partnership of which the Company is directly or indirectly a party to shall be deemed to be not outstanding. The Company shall provide, upon the written request of the Subscription Receipt Agent, a certificate as to the registration particulars of any Subscription Receipts held by the Company.
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ARTICLE 10
SUPPLEMENTAL AGREEMENTS AND SUCCESSOR COMPANIES
10.1
|
Provision for Supplemental Agreements for Certain Purposes
|
From time to time the Company (if properly authorized by its directors) and the Subscription Receipt Agent may, subject to the provisions of this Agreement, and they shall, when so directed hereby, execute and deliver by their proper officers, agreements or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:
|
(a)
|
adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of counsel, are necessary or advisable, provided that the same are not in the opinion of the Subscription Receipt Agent, relying on the advice of counsel, prejudicial to the interests of the Subscription Receiptholders as a group;
|
|
(b)
|
giving effect to any extraordinary resolution passed as provided in Article 9;
|
|
(c)
|
making such provisions not inconsistent with this Agreement as may be necessary or desirable with respect to matters or questions arising hereunder provided that such provisions are not, in the opinion of the Subscription Receipt Agent, relying on the advice of counsel, prejudicial to the interests of the Subscription Receiptholders as a group;
|
|
(d)
|
adding to or amending the provisions hereof in respect of the transfer of Subscription Receipts, making provision for the exchange of Subscription Receipts and making any modification in the form of the Subscription Receipt Certificates which does not affect the substance thereof;
|
|
(e)
|
amending any of the provisions of this Agreement or relieving the Company from any of the obligations, conditions or restrictions herein contained, provided that no such amendment or relief shall be or become operative or effective if, in the opinion of the Subscription Receipt Agent, relying on the advice of counsel, such amendment or relief impairs any of the rights of the Subscription Receiptholders, as a group or of the Subscription Receipt Agent, and provided further that the Subscription Receipt Agent may in its sole discretion decline to enter into any supplemental agreement which in its opinion may not afford adequate protection to the Subscription Receipt Agent when the same shall become operative; and
|
|
(f)
|
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 Subscription Receipt Agent, relying on the advice of counsel, the
rights of the Subscription Receipt Agent and the Subscription Receiptholders as
a group are in no way prejudiced thereby.
|
- 41 -
In the case of the amalgamation, consolidation, merger or transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another person (a
successor company
), the successor company resulting from the amalgamation, consolidation, merger or transfer (if not the Company) shall be bound by the provisions hereof and all obligations for the due and punctual performance and observance of each and every covenant and obligation contained in this Agreement to be performed by the Company and the successor company shall by supplemental agreement satisfactory in form to the Subscription Receipt Agent and executed and delivered to the Subscription Receipt Agent, expressly assume those obligations.
ARTICLE 11
CONCERNING THE SUBSCRIPTION RECEIPT AGENT
11.1
|
Rights and Duties of Subscription Receipt Agent
|
(1) In the exercise of the rights and duties prescribed or conferred by the terms of this Agreement, the Subscription Receipt Agent shall act honestly and in good faith with a view to the best interests of the Subscription Receiptholders and shall exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in performing the duties of an escrow agent or subscription receipt agent in comparable circumstances. No provision of this Agreement shall be construed to relieve the Subscription Receipt Agent from, or require any other person to indemnify the Subscription Receipt Agent against liability for its own gross negligence, wilful misconduct or bad faith.
(2) The Subscription Receipt Agent shall not be bound to do or take any act, action or proceeding for the enforcement of any of the obligations of the Company under this Agreement unless and until it shall have received a Subscription Receiptholders Request specifying the act, action or proceeding which the Subscription Receipt Agent is requested to take. The obligation of the Subscription Receipt Agent to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Subscription Receipt Agent or the Subscription Receiptholders hereunder shall be conditional upon the Subscription Receiptholders furnishing, when required by notice in writing by the Subscription Receipt Agent, sufficient funds to commence or continue the act, action or proceeding and an indemnity reasonably satisfactory to the Subscription
Receipt Agent and its counsel to protect and hold harmless the Subscription Receipt Agent, its directors, officers, employees and agents against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Agreement shall require the Subscription Receipt Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid.
- 42 -
(3) The Subscription Receipt Agent may, before commencing any act, action or proceeding or at any time during the continuance thereof, require the Subscription Receiptholders at whose instance it is acting to deposit with the Subscription Receipt Agent the Subscription Receipt Certificates held by them, for which Subscription Receipt Certificates the Subscription Receipt Agent shall issue receipts.
(4) Every provision of this Agreement that, by its terms, relieves the Subscription Receipt Agent of liability or entitles it to rely upon any evidence submitted to it, is subject to the provisions of this section 11.2 and section 11.3.
(5) The Subscription Receipt Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereunder unless and until it shall have been required to do so under the terms hereof; nor shall the Subscription Receipt Agent be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall specifically set out the default desired to be brought to the attention of the Subscription Receipt Agent and in the absence of such notice the Subscription Receipt Agent may for all purposes of this Agreement conclusively assume that no default has occurred or been made in the performance or observance of the representations, warranties and covenants, agreements or conditions herein contained. Any such notice shall in no way limit any
discretion herein given to the Subscription Receipt Agent to determine whether or not the Subscription Receipt Agent shall take action with respect to any default.
(6) In this Agreement, whenever confirmations or instructions are required to be given to the Subscription Receipt Agent, in order to be valid, such confirmations and instructions shall be in writing.
11.2
|
Evidence, Experts and Advisers
|
(1) In addition to the reports, certificates, opinions and other evidence required by this Agreement, the Company shall furnish to the Subscription Receipt Agent such additional evidence of compliance with any provision hereof and in such form as the Subscription Receipt Agent may reasonably require by written notice to the Company.
(2) In the exercise of its rights and duties hereunder, the Subscription Receipt Agent may, if it is acting in good faith, act and rely absolutely as to the truth of the statements and the accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports, written requests, consents, or orders of the Company, certificates of the Company or other evidence furnished to the Subscription Receipt Agent pursuant to any provision hereof or pursuant to a request of the Subscription Receipt Agent. The Subscription Receipt Agent shall be under no responsibility in respect of the validity of this Agreement or the execution and delivery hereof by or on behalf of the Company or in respect of the validity or the execution of any Subscription Receipt Certificate by the Company and issued hereunder, nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
- 43 -
Agreement or in any such Subscription Receipt Certificate; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any securities to be issued upon the right to acquire provided for in this Agreement and/or in any Subscription Receipt Certificate or as to whether any securities will when issued be duly authorized or be validly issued and fully paid and non-assessable.
(3) Proof of the execution of an instrument in writing, including a Subscription Receiptholders Request, by any Subscription Receiptholder may be made by a certificate of a notary public or other person 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 Subscription Receipt Agent may consider adequate and in respect of a corporate Subscription Receiptholder, shall include a certificate of incumbency of such Subscription Receiptholder together with a certified resolution authorizing the person who signs such instrument to sign such instrument.
(4) The Subscription Receipt Agent may act and rely and shall be protected in acting and relying upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, telegram, cablegram or other paper document believed by it to be genuine and to have been signed, sent or presented by or on behalf of the proper party or parties.
(5) The Subscription Receipt Agent may employ or retain such counsel, accountants, engineers, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any counsel and shall not be responsible for any misconduct on the part of any of them who has been selected with due care by the Subscription Receipt Agent. Any reasonable remuneration paid by the Subscription Receipt Agent shall be paid by the Company in accordance with section 6.2.
(6) The Subscription Receipt Agent may, as a condition precedent to any action to be taken by it under this Agreement, require such opinions, statutory declarations, reports, certificates or other evidence as it, acting reasonably, considers necessary or advisable in the circumstances.
11.3
|
Securities, Documents and Monies Held by Subscription Receipt Agent
|
Any securities, documents of title, monies or other instruments that may at any time be held by the Subscription Receipt Agent on behalf of the Company and the Subscription Receiptholders may be placed in the deposit vaults of the Subscription Receipt Agent or of any Schedule 1 Canadian chartered bank or deposited for safekeeping with any such bank or the Subscription Receipt Agent. All interest or other income received by the Subscription Receipt Agent in respect of such deposits and investments shall, subject to section 6.4, belong to the Company and shall be paid to the Company upon discharge of this Agreement.
- 44 -
11.4
|
Action by Subscription Receipt Agent to Protect Interests
|
Subject to the provisions of this Agreement, the Subscription Receipt 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 Subscription Receiptholders.
11.5
|
Subscription Receipt Agent not Required to Give Security
|
The Subscription Receipt Agent shall not be required to give any bond or security in respect of the performance of its duties as Escrow Agent pursuant to this Agreement or otherwise;
11.6
|
Protection of Subscription Receipt Agent
|
By way of supplement to the provisions of any law for the time being relating to the performance of the duties of the Subscription Receipt Agent pursuant to this Agreement, it is expressly declared and agreed as follows:
(1) The Subscription Receipt Agent shall not be liable for or by reason of any representations, statements of fact or recitals in this Agreement or in the Subscription Receipts (except the representation contained in section 11.8 or in the certificate of the Subscription Receipt Agent on the Subscription Receipts) or be required to verify the same and all such statements of fact or recitals are and shall be deemed to be made by the Company (except the representation contained in section 11.8 or in the certificate of the Subscription Receipt Agent on the Subscription Receipts).
(2) Nothing herein contained shall impose any obligation on the Subscription Receipt 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.
(3) The Subscription Receipt Agent shall not be bound to give notice to any person or persons of the execution hereof.
(4) The Subscription Receipt Agent shall not incur any liability or responsibility whatsoever or be in any way responsible for the consequence of any breach on the part of the Company of any of the covenants or warranties herein contained or of any acts of any directors, officers, employees, agents or servants of the Company.
(5) Without limiting any protection or indemnity of the Subscription Receipt Agent under any other provision hereof, or otherwise at law, the Company hereby agrees to indemnify and hold harmless the Subscription Receipt Agent and its directors, officers, agents and employees from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including reasonable legal or advisor fees and disbursements, of whatever kind and nature which may at any time be imposed on, incurred by or asserted against the
- 45 -
Subscription Receipt Agent in connection with the performance of its duties and obligations hereunder, other than such liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements arising by reason of the gross negligence, fraud or wilful misconduct of the Subscription Receipt Agent. This provision shall survive the resignation or removal of the Subscription Receipt Agent, or the termination of this Agreement. The Subscription Receipt Agent shall not be under any obligation to prosecute or defend any action or suit in respect of this Agreement which, in the opinion of its counsel, may involve it in expense or liability, unless the Company shall, so often as required, furnish the Subscription Receipt Agent with satisfactory indemnity and funding against such expense or liability.
11.7
|
Replacement of Subscription Receipt Agent
|
(1) The Subscription Receipt Agent may resign as the Escrow Agent and be discharged from all further duties and liabilities hereunder by giving to the Company not less than 60 days notice in writing or such shorter notice as the Company may accept as sufficient. The Subscription Receiptholders by extraordinary resolution shall have the power at any time to remove the Subscription Receipt Agent and to appoint a new Subscription Receipt Agent. In the event of the Subscription Receipt Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Company shall forthwith appoint a new Subscription Receipt Agent unless a new Subscription Receipt Agent has already been appointed by the Subscription Receiptholders; failing that appointment by the
Company, the retiring Subscription Receipt Agent (at the Companys expense) or any Subscription Receiptholder may apply to a justice of the Ontario Superior Court of Justice, on such notice as the justice may direct, for the appointment of a new Subscription Receipt Agent; but any new Subscription Receipt Agent so appointed by the Company or by the Court shall be subject to removal as aforesaid by the Subscription Receiptholders. Any new Subscription Receipt Agent appointed under any provision of this section shall be a corporation authorized to carry on the business of a trust company in the provinces of Ontario and British Columbia. On any such appointment the new Subscription Receipt Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Subscription Receipt Agent without any further assurance, conveyance, act or deed; but there shall be immediately executed, at the expense of the Company, all such
conveyances or other instruments as may, in the opinion of counsel, be necessary or advisable for the purpose of assuring the same to the new Subscription Receipt Agent, provided that any resignation or removal of the Subscription Receipt Agent and appointment of a successor Subscription Receipt Agent shall not become effective until the successor Subscription Receipt Agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Company, the predecessor Subscription Receipt Agent, upon payment of its outstanding remuneration and expenses, shall execute and deliver to the successor Subscription Receipt Agent an appropriate instrument transferring to such successor Subscription Receipt Agent all rights and powers of the Subscription Receipt Agent hereunder and all securities, documents of title and other instruments and all monies and properties held by the Subscription Receipt Agent hereunder.
- 46 -
(2) Upon the appointment of a successor Subscription Receipt Agent, the Company shall promptly notify the Subscription Receiptholders thereof in the manner provided for in section 12.2.
(3) Any corporation into or with which the Subscription Receipt Agent may be merged or consolidated or amalgamated, or any corporation succeeding to the stock transfer business of the Subscription Receipt Agent, shall be the successor to the Subscription Receipt Agent hereunder without any further act on its part or of any of the parties hereto, provided that such corporation would be eligible for appointment as a new Subscription Receipt Agent under subsection 11.8(1).
(4) Any Subscription Receipts certified but not delivered by a predecessor Subscription Receipt Agent may be certified by the new or successor Subscription Receipt Agent in the name of the predecessor or the new or successor Subscription Receipt Agent.
11.8
|
Conflict of Interest
|
(1) The Subscription Receipt Agent represents to the Company that at the time of the execution and delivery hereof no material conflict of interest exists which it is aware of in the Subscription Receipt Agents role hereunder and agrees that in the event of a material conflict of interest arising which it becomes aware of hereafter it will, within 90 days after ascertaining that it has a material conflict of interest, either eliminate the same or resign as the Subscription Receipt Agent hereunder.
(2) Subject to subsection 11.8(1), the Subscription Receipt Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Company, may act as registrar and transfer agent for the Common Shares and Warrants and generally may contract and enter into financial transactions with the Company, all without being liable to account for any profit made thereby.
11.9
|
Appointment of Escrow Agent
|
The Subscription Receipt Agent hereby agrees to act as the Escrow Agent and to perform the duties of an escrow agent pursuant to the terms and conditions set forth herein and agrees to hold the Escrowed Funds for and on behalf of the Company and those persons who become holders of Subscription Receipts from time to time issued pursuant to this Agreement.
11.10
|
Subscription Receipt Agent Not to be Appointed Receiver
|
The Subscription Receipt Agent and any person related to the Subscription Receipt 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 Company or any Subsidiary or any partnership of which the Company is directly or indirectly involved.
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11.11
|
Authorization to Carry on Business
|
The Subscription Receipt Agent represents to the Company that it is registered to carry on the business of a trust company in the Province of Ontario.
ARTICLE 12
GENERAL
12.1
|
Notice to the Company and the Subscription Receipt Agent
|
(1) Unless herein otherwise expressly provided, any notice to be given hereunder to the Company or the Subscription Receipt Agent shall be deemed to be validly given if delivered, if sent by registered mail, postage prepaid or if transmitted by telecopier:
|
(a)
|
If to the Company, to:
|
Glencairn Gold Corporation
6 Adelaide Street East, Suite 500
Toronto, Ontario M5C 1H6
Attention: President
Telefax No.: (416) 367-0182
with a copy to:
Cassels Brock & Blackwell LLP
40 King Street West, Suite 2100
Toronto, Ontario M5H 3C2
Attention: Mark T. Bennett
Telefax No.: (416) 350-6933
|
(b)
|
If to the Underwriters, to:
|
Orion Securities Inc.
Brookfield Place
181 Bay Street, Suite 3100
Toronto, Ontario M5J 2T3
Attention: Douglas Bell
Telefax No.: (416) 848-3699
- 48 -
|
(c)
|
If to the Subscription Receipt Agent, to:
|
Equity Transfer & Trust Company
200 University Ave., Suite 400
Toronto, Ontario M5H 4H1
Attention: Corporate Trust Department
Telefax No.: (416) 361-0470
and any notice given in accordance with the foregoing shall be deemed to have been received on the date of delivery if that date is a Business Day or, if mailed, on the fifth Business Day following the date of the postmark on such notice or, if transmitted by telecopier, on the day following the transmission.
(2) The Company or the Subscription Receipt Agent, as the case may be, may from time to time notify the other 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 like notice, shall be the address of the Company or the Subscription Receipt Agent, as the case may be, for all purposes of this Agreement. A copy of any notice of change of address given pursuant to this subsection 12.1(2) shall be available for inspection at the principal stock transfer offices of the Subscription Receipt Agent in the City of Toronto, Ontario by Subscription Receiptholders during normal business hours.
(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 Subscription Receipt Agent or to the Company hereunder could reasonably be considered unlikely to reach its destination, the 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 that party at the appropriate address provided in subsection 12.1(1) by cable, telegram, telecopier or other means of prepaid, transmitted or recorded communication and any notice delivered in accordance with the foregoing shall be deemed to have been received on the date of delivery to the officer or if delivered by cable, telegram, telecopier or other means of prepaid, transmitted, recorded communication on the third Business Day following the date
of the sending of the notice by the person giving the notice.
12.2
|
Notice to the Subscription Receiptholders
|
(1) Unless herein otherwise expressly provided, any notice to be given hereunder to Subscription Receiptholders shall be deemed to be validly given if the notice is sent by first class mail, postage prepaid, addressed to the holder or delivered by hand (or so mailed to certain holders and so delivered to other holders) at their respective addresses appearing on the register maintained by the Subscription Receipt Agent and if in the case of joint holders of any Subscription Receipts more than one address appears on the register in respect of that joint holding, the notice shall be addressed or delivered, as the case may be, only to the first address, as the case may be, so appearing. Any notice so given shall be deemed to have been given on the day of delivery by hand or on the next Business Day if delivered by mail.
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(2) If, by reason of strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Subscription Receiptholders could reasonably be considered unlikely to reach its destination, the notice may be published or distributed once in the Report on Business section of the national edition of The Globe and Mail newspaper or, in the event of a disruption in the circulation of that newspaper, once in a daily newspaper in the English language of general circulation in the City of Toronto, Ontario; provided that in the case of a notice convening a meeting of the holders of Subscription Receipts, the Subscription Receipt Agent may require such additional publications of that notice, in the same or in other cities or both, as it may deem necessary for the reasonable protection of the holders of
Subscription Receipts or to comply with any applicable requirement of law or any stock exchange. Any notice so given shall be deemed to have been given on the day on which it has been published in all of the cities in which publication was required (or first published in a city if more than one publication in that city is required). In determining under any provision 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.
12.3
|
Discretion of Directors
|
Any matter provided herein to be determined by the directors of the Company in their sole discretion and determination so made will be conclusive.
12.4
|
Satisfaction and Discharge of Agreement
|
Upon the date by which Common Shares and Warrants shall have been delivered to Subscription Receiptholders to the full extent of the rights attached to all Subscription Receipts theretofore certified hereunder and the monies to be paid hereunder have been paid, this Agreement shall cease to be of further effect and the Subscription Receipt Agent, on demand of and at the cost and expense of the Company and upon delivery to the Subscription Receipt Agent of a certificate of the Company stating that all conditions precedent to the satisfaction and discharge of this Agreement have been complied with and upon payment to the Subscription Receipt Agent of the fees and other remuneration payable to the Subscription Receipt Agent, the parties hereto shall execute proper instruments acknowledging satisfaction of and discharging this Agreement.
12.5
|
Provisions of Agreement and Subscription Receipts for the Sole Benefit of Parties and Subscription Receiptholders
|
Nothing in this Agreement or in the Subscription Receipts, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the Subscription Receiptholders any legal or equitable right, remedy or claim under this Agreement, or under any covenant or provision therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Subscription Receiptholders.
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12.6
|
Counterparts and Formal Date
|
This Agreement may be simultaneously 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 bear the date set out at the top of the first page of this Agreement.
- 51 -
IN WITNESS WHEREOF
the parties hereto have executed this Agreement under the hands of their proper officers in that behalf.
GLENCAIRN GOLD CORPORATION
By:
Lorna MacGillivray
Authorized Signing Officer
ORION SECURITIES INC.
By:
Ron DAmbrosio
Authorized Signing Officer
EQUITY TRANSFER & TRUST COMPANY
By:
Shelley Martin
c/s
Authorized Signing Officer
By:
Derrice Richards
c/s
Authorized Signing Officer
SCHEDULE A
FORM OF SUBSCRIPTION RECEIPT CERTIFICATE
SCHEDULE B
RELEASE CERTIFICATE
TO:
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Equity Transfer & Trust Company
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RE:
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Subscription Receipt Agreement (the
Subscription Receipt Agreement
) dated October 22, 2007 among Glencairn Gold Corporation, Orion Securities Inc. and Equity Transfer & Trust Company
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Pursuant to Section 7.3 of the Subscription Receipt Agreement, the undersigned hereby certifies that the Release Conditions have been satisfied.
Unless otherwise indicated, capitalized terms shall have the meanings ascribed to them in the Subscription Receipt Agreement.
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DATED
this
day of
,
2007.
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GLENCAIRN GOLD CORPORATION
By:_____________________________
Authorized Signing Officer
ORION SECURITIES INC.
By:_____________________________
Authorized Signing Officer
SCHEDULE C
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO:
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Equity Transfer & Trust Company
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as subscription receipt agent for the
Subscription Receipts of Glencairn Gold Corporation
The undersigned (a) acknowledges that the sale of the securities of Glencairn Gold Corporation (the
Company
) to which this declaration relates is being made in reliance on Rule 904 of Regulation S (
Regulation S
) under the United States Securities Act of 1933, as amended (the
U.S. Securities Act
) and (b) certifies that (1) the undersigned is not an affiliate of the Company as that term is defined in Rule 405 under the U.S. Securities Act, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United
States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purposes of washing off the resale restrictions imposed because the securities are restricted securities (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act), and (5) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S.
Securities Act. Terms used herein have the meanings given to them by Regulation S.
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Signature Guaranteed
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Name of Subscription Receiptholder
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Name of Authorized Representative
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Signature of Subscription Receiptholder or Authorized Representative
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Title or Capacity of Authorized Representative
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Daytime Phone Number of Subscription Receiptholder or Authorized Representative
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EXHIBIT 3
GLENCAIRN GOLD CORPORATION
- and -
EQUITY TRANSFER & TRUST COMPANY
COMMON SHARE PURCHASE WARRANT INDENTURE
Providing for the Issue of
up to 90,259,875
Common Share Purchase Warrants
October 22, 2007
TABLE OF CONTENTS
ARTICLE 1
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2
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INTERPRETATION
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2
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1.1
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Definitions
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2
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1.2
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Words Importing the Singular
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6
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1.3
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Interpretation not Affected by Headings
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6
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1.4
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Day not a Business Day
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6
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1.5
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Time of the Essence
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7
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1.6
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Governing Law
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7
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1.7
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Meaning of outstanding for Certain Purposes
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7
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1.8
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Currency
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7
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1.9
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Termination
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7
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ARTICLE 2
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7
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ISSUE OF WARRANTS
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7
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2.1
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Issue of Warrants
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7
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2.2
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Form and Terms of Warrants
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8
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2.3
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Signing of Warrant Certificates
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8
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2.4
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Certification by the Warrant Agent
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8
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2.5
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Warrantholder not a Shareholder, etc.
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9
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2.6
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Issue in Substitution for Lost Warrant Certificates
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9
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2.7
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Warrants to Rank
Pari Passu
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10
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2.8
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Registration and Transfer of Warrants
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10
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2.9
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Registers Open for Inspection
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11
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2.10
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Exchange of Warrants
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11
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2.11
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Ownership of Warrants
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11
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2.12
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Adjustment of Exchange Basis
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12
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2.13
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Rules Regarding Calculation of Adjustment of Exchange Basis
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16
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2.14
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Postponement of Subscription
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18
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2.15
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Notice of Adjustment
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18
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2.16
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No Action after Notice
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19
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2.17
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Purchase of Warrants for Cancellation
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19
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2.18
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Optional Purchases by the Company
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19
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2.19
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Protection of Warrant Agent
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19
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2.20
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Legended Warrant Certificates
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20
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ARTICLE 3
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22
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EXERCISE OF WARRANTS
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22
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3.1
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Method of Exercise of Warrants
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22
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3.2
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No Fractional Shares
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23
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3.3
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Effect of Exercise of Warrants
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23
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3.4
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Cancellation of Warrant Certificates
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24
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3.5
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Subscription for less than Entitlement
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24
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3.6
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Expiration of Warrant
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24
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3.7
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Prohibition on Exercise by U.S. Persons; Exception
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25
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ARTICLE 4
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25
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COVENANTS FOR WARRANTHOLDERS BENEFIT
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25
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4.1
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General Covenants of the Company
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26
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- ii -
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4.2
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Securities Qualification Requirements
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27
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4.3
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Warrant Agents Remuneration and Expenses
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27
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4.4
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Performance of Covenants by Warrant Agent
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27
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ARTICLE 5
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27
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ENFORCEMENT
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27
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5.1
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Suits by Warrantholders
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28
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5.2
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Limitation of Liability
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28
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ARTICLE 6
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28
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MEETINGS OF WARRANTHOLDERS
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28
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6.1
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Right to Convene Meetings
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28
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6.2
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Notice
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29
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6.3
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Chairman
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29
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6.4
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Quorum
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29
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6.5
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Power to Adjourn
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30
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6.6
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Show of Hands
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30
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6.7
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Poll and Voting
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30
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6.8
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Regulations
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30
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6.9
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Company, Warrant Agent and Counsel may be Represented
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31
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6.10
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Powers Exercisable by Extraordinary Resolution
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31
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6.11
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Meaning of Extraordinary Resolution
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32
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6.12
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Powers Cumulative
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33
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6.13
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Minutes
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33
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6.14
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Instruments in Writing
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33
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6.15
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Binding Effect of Resolutions
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34
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6.16
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Holdings by the Company or Subsidiaries of the Company Disregarded
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34
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ARTICLE 7
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34
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SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES
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34
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7.1
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Provision for Supplemental Indentures for Certain Purposes
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34
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7.2
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Successor Companies
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35
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ARTICLE 8
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36
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CONCERNING THE WARRANT AGENT
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36
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8.1
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Trust Indenture Legislation
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36
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8.2
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Rights and Duties of Warrant Agent
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36
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8.3
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Evidence, Experts and Advisers
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37
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8.4
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Securities, Documents and Monies Held by Warrant Agent
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39
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8.5
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Actions by Warrant Agent to Protect Interests
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39
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8.6
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Warrant Agent not Required to Give Security
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39
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8.7
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Protection of Warrant Agent
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39
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8.8
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Replacement of Warrant Agent
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40
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8.9
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Conflict of Interest
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41
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8.10
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Acceptance of Duties and Obligations
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41
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8.11
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Warrant Agent not to be Appointed Receiver
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42
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8.12
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Authorization to Carry on Business
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42
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ARTICLE 9
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42
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GENERAL
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42
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9.1
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Notice to the Company and the Warrant Agent
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42
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- iii -
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9.2
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Notice to the Warrantholders
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43
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9.3
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Discretion of Directors
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44
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9.4
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Satisfaction and Discharge of Indenture
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44
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9.5
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Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders
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44
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9.6
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Counterparts and Formal Date
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44
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SCHEDULE A - FORM OF WARRANT CERTIFICATE
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A-1
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SCHEDULE B - FORM OF DECLARATION FOR REMOVAL OF LEGEND
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B-1
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THIS WARRANT INDENTURE
dated as of October 22, 2007
B E T W E E N:
GLENCAIRN GOLD CORPORATION
,
a company continued under the laws of Canada
(hereinafter called the
Company
)
A N D
EQUITY TRANSFER & TRUST COMPANY
,
a trust company governed by the laws of Canada
(hereinafter called the
Warrant Agent
)
RECITALS
WHEREAS:
A.
The Company proposes to issue up to
90,259,875
Warrants, 20,000,000 of which will be issued on the date hereof, 66,835,000 of which will be issued upon the automatic exercise of 133,670,000 Subscription Receipts and 3,424,875 of which will be issued upon the exercise of 6,849,750 Compensation Warrants;
B.
Each whole Warrant entitles the holder thereof to purchase, subject to adjustment in certain events, one Common Share at a price of $0.18 at any time prior to 5:00 p.m. (Toronto time) on October 22, 2010;
C.
For such purpose the Company deems it necessary to create and issue Warrants to be constituted and issued in the manner hereinafter set forth;
D.
The Company is duly authorized to create and issue the Warrants to be issued as herein provided;
E.
All things necessary have been done and performed to make the Warrants, when certified by the Warrant Agent and issued as provided in this Indenture, legal, valid and binding upon the Company with the benefits of and subject to the terms of this Indenture;
F.
The foregoing recitals are made as statements of fact by the Company and not by the Warrant Agent;
G.
The Warrant Agent has agreed to enter into this Indenture and to hold all rights, interests and benefits contained herein for and on behalf of those persons who become holders of Warrants issued pursuant to this Indenture from time to time;
- 2 -
NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable consideration mutually given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed and declared as follows:
ARTICLE 1
INTERPRETATION
In this Indenture, unless there is something in the subject matter or context inconsistent therewith:
Accredited Investor
means an accredited investor as defined in Rule 501(a) of Regulation D;
Applicable Legislation
means the provisions of the statutes of Canada and its provinces and the regulations under those statutes relating to warrant indentures and/or the rights, duties or obligations of issuers and warrant agents under warrant agreements as are from time to time in force and applicable to this Indenture;
Business Day
means a day that is not a Saturday, Sunday, a day on which banks are closed in the City of Toronto, Ontario or civic or statutory holiday in the City of Toronto, Ontario;
Capital Reorganization
has the meaning ascribed to that term in subsection 2.12(4);
Closing Date
means October 22, 2007 or such earlier or later date as the Company and the Underwriters may agree;
Common Shares
means the common shares in the capital of the Company;
Common Share Reorganization
has the meaning ascribed to that term in subsection 2.12(1);
Company
means Glencairn Gold Corporation, a corporation continued under the laws of Canada, and its lawful successors from time to time;
Companys Auditors
means the chartered accountant or firm of chartered accountants duly appointed as auditor or auditors of the Company from time to time;
Compensation Warrants
means the compensation warrants to be issued to the Underwriters on the Closing Date, each Compensation Warrant exercisable to acquire, at an exercise price of $0.15 at any time prior to 5:00 p.m. (Toronto time) on October 22, 2009, one Unit;
- 3 -
counsel
means a barrister or solicitor (who may be an employee of the Company) or a firm of barristers and solicitors (who may be counsel to the Company), in both cases acceptable to the Warrant Agent;
Current Market Price
means, at any date, the weighted average price per share at which the Common Shares have traded:
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(ii)
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if the Common Shares are not listed on the TSX, on any stock exchange upon which the Common Shares are listed as may be selected for this purpose by the directors, acting reasonably; or
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(iii)
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if the Common Shares are not listed on any stock exchange, on any over-the-counter market;
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during the 20 consecutive trading days (on each of which at least 500 Common Shares are traded in board lots) ending the third trading day before such date and the weighted average price shall be determined by dividing the aggregate sale price of all Common Shares sold in board lots on the exchange or market, as the case may be, during the 20 consecutive trading days by the number of Common Shares sold or, if not traded on any recognized market or exchange, as determined by the directors of the Company acting reasonably;
director
means a member of the board of directors of the Company for the time being, and unless otherwise specified herein, reference to action by the board of directors means action by the board of directors of the Company as a board or, whenever duly empowered, action by a committee of the board;
Dividends Paid in Ordinary Course
means cash dividends declared payable on the Common Shares in any fiscal year of the Company to the extent that such cash dividends do not exceed 5% of the Exercise Price and for such purpose the amount of any dividend paid in shares shall be the aggregate stated capital of such shares and the amount of any dividend paid in other than cash or shares shall be the fair market value of such dividend as determined by resolution passed by the board of directors of the Company, subject, if applicable, to the prior consent of any stock exchange or any other over-the-counter market on which the Common Shares are traded and for such purpose the amount of any dividends paid in other than cash or shares shall be the fair market value of such dividend as determined by the directors;
Exchange Basis
means, at any time, the number of Common Shares or other classes of shares or securities which a Warrantholder is entitled to receive upon the exercise of the rights attached to the Warrants pursuant to the terms of this Indenture, as the number may be adjusted pursuant to Article 2 hereof, such number being equal to one Common Share per Warrant as of the date hereof;
- 4 -
Exercise Date
with respect to any Warrant means the date on which such Warrant is duly surrendered for exercise in accordance with the provisions of Article 3 hereof;
Exercise Price
means $0.18 for each Common Share, subject to adjustment in accordance with the provisions of this Indenture;
extraordinary resolution
has the meaning ascribed to that term in sections 6.11 and 6.14;
person
means an individual, a corporation, a partnership, a syndicate, a trustee or any unincorporated organization and words importing persons are intended to have a similarly extended meaning;
Purchaser
means a purchaser of Units and Subscription Receipts;
Regulation D
means Regulation D under the U.S. Securities Act;
Regulation S
means Regulation S under the U.S. Securities Act;
Rights Offering
has the meaning ascribed to that term in subsection 2.12(2);
Rights Offering Price
has the meaning ascribed to that term in subsection 2.13(2);
Securities Laws
means, collectively, the applicable securities laws of each of the provinces of Canada and the respective regulations made and forms prescribed thereunder together with all applicable published rules, policy statements, notices and blanket orders and rulings of the securities commissions or similar regulatory authorities in each of the provinces of Canada;
shareholder
means an owner of record of one or more Common Shares or shares of any other class or series of the Company;
Special Distribution
has the meaning ascribed to that term in subsection 2.12(3);
Subject Securities
means the Common Shares or other securities or property issuable upon the exercise of the Warrants as a result of any adjustment to the subscription rights pursuant to Article 2 hereof;
Subscription Receipts
means the 133,670,000 subscription receipts of the Company issued pursuant to the Subscription Receipt Agreement, each Subscription Receipt entitling the holder to receive one Common Share and one-half of one Warrant, subject to adjustment in certain circumstances;
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Subscription Receipt Agreement
means an agreement among the Company, Orion Securities Inc. and the Warrant Agent dated the date hereof providing for, among other things, the issuance of the Subscription Receipts;
Subsidiary
means a corporation, a majority of the outstanding voting shares of which are owned, directly or indirectly, by the Company or by one or more subsidiaries of the Company and, as used in this definition, voting shares means shares of a class or classes ordinarily entitled to vote for the election of the majority of the directors of a corporation irrespective of whether or not shares of any other class or classes shall have or might have the right to vote for directors by reason of the happening of any contingency;
this Indenture
,
herein
,
hereby
and similar expressions mean or refer to this common share purchase warrant indenture and any indenture, deed or instrument supplemental or ancillary hereto; and the expressions
Article
,
section
or
subsection
followed by a number or letter mean and refer to the specified Article, section or subsection of this Indenture;
Time of Expiry
means 5:00 p.m. (Toronto time) on October 22, 2010;
trading day
means a day on which the TSX (or such other exchange on which the Common Shares are listed and which forms the primary trading market for such shares) is open for trading, and if the Common Shares are not listed on a stock exchange, a day on which an over-the-counter market where such shares are traded is open for business;
Transfer Agent
means the transfer agent or agents for the time being of the Common Shares;
TSX
means the Toronto Stock Exchange;
Underwriters
means, collectively, Orion Securities Inc., Dundee Securities Corporation, Blackmont Capital Inc. and Wellington West Capital Markets Inc.;
Units
means the units of the Company issued on the date hereof, each Unit being comprised of one Common Share and one-half of one Warrant;
U.S. Person
means a U.S. person as that term is defined in Regulation S;
U.S. Securities Act
means the United States
Securities Act of 1933, as amended;
United States
means the United States as that term is defined in Regulation S;
Warrants
means the common share purchase warrants of the Company issued hereunder entitling the holders thereof to purchase Common Shares on the basis of one Common Share for each whole Warrant upon payment of the Exercise
- 6 -
Price; provided that in each case the number and/or class of shares or securities receivable on the exercise of the Warrants may be subject to increase or decrease or change in accordance with the terms and provisions hereof;
Warrant Agent
means Equity Transfer & Trust Company, a trust company governed by the laws of Canada, or any lawful successor thereto including through the operation of section 8.8;
Warrant Certificates
means the certificates representing the Warrants substantially in the form attached as Schedule A hereto or such other form as may be approved by the Company, the Underwriters and the Warrant Agent;
Warrantholders
or
holders
means the persons whose names are entered for the time being in the register maintained pursuant to section 2.8;
Warrantholders Request
means an instrument, signed in one or more counterparts by Warrantholders representing, in the aggregate, at least 25% of the aggregate number of Warrants then outstanding, which requests the Warrant Agent to take some action or proceeding specified therein; and
written direction of the Company
,
written request of the Company
,
written consent of the Company
and
certificate of the Company
and any other document required to be signed by the Company, means, respectively, a written direction, request, consent, certificate or other document signed in the name of the Company by any officer or director and may consist of one or more instruments so executed.
1.2
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Words Importing the Singular
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Unless elsewhere otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.
1.3
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Interpretation not Affected by Headings
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The division of this Indenture into Articles, sections, subsections and paragraphs, the provision of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture.
1.4
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Day not a Business Day
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In the event that any day on or before which any action is required or permitted to be taken hereunder is not a Business Day, then such action shall be required or permitted to be taken on or before the requisite time on the next succeeding day that is a Business Day.
- 7 -
Time shall be of the essence in all respects of this Indenture, the Warrants and the Warrant Certificates.
This Indenture, the Warrants and the Warrant Certificates shall be construed and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and shall be treated in all respects as Ontario contracts.
1.7
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Meaning of outstanding for Certain Purposes
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Every Warrant represented by a Warrant Certificate certified and delivered by the Warrant Agent hereunder shall be deemed to be outstanding until it shall be cancelled or delivered to the Warrant Agent for cancellation or until the Time of Expiry; provided that where a new Warrant Certificate has been issued pursuant to section 2.6 hereof to replace one which is lost, mutilated, stolen or destroyed, the Warrants represented by only one of such Warrant Certificates shall be counted for the purpose of determining the aggregate number of Warrants outstanding.
Unless otherwise stated, all dollar amounts referred to in this Indenture are in Canadian dollars.
This Indenture shall continue in full force and effect until the earlier of: (a) the Time of Expiry; and (b) the date that no Warrants are outstanding hereunder; provided that this Indenture shall continue in effect thereafter, if applicable, until the Company and the Warrant Agent have fulfilled all of their respective obligations under this Indenture.
ARTICLE 2
ISSUE OF WARRANTS
A total of up to 90,259,875 Warrants entitling the registered holders thereof to acquire an aggregate of up to 90,259,875 Common Shares are hereby created and authorized to be issued hereunder at the Exercise Price upon the terms and conditions herein set forth. Warrant Certificates evidencing Warrants shall be executed by the Company, certified by or on behalf of the Warrant Agent and delivered by the Warrant Agent to the Company in accordance with a written direction of the Company, all in accordance with sections 2.3 and 2.4. Subject to adjustment in
- 8 -
accordance with the provisions of section 2.12, each of the Warrants issued hereunder shall entitle the holder thereof to receive from the Company, at the Exercise Price, the number of Common Shares equal to the Exchange Basis in effect at the Exercise Date.
2.2
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Form and Terms of Warrants
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(1)
The Warrant Certificates for the Warrants shall be substantially in the form attached as Schedule A hereto, subject to the provisions of this Indenture, with such additions, variations and changes as may be required or permitted by the terms of this Indenture, and which may from time to time be agreed upon by the Warrant Agent and the Company, and shall have such legends, distinguishing letters and numbers as the Company may, with the approval of the Warrant Agent, prescribe. Except as hereinafter provided in this Article 2, all Warrants shall, save as to denominations, be of like tenor and effect. The Warrant Certificates may be engraved, printed, lithographed, photocopied or be partially in one form or another, as the Company may determine. No change in the form of the Warrant
Certificate shall be required by reason of any adjustment made pursuant to this Article 2 in the number and/or class of securities or type of securities that may be acquired pursuant to the Warrants.
(2)
Each Warrant authorized to be issued hereunder shall entitle the registered holder thereof to acquire (subject to sections 2.12 and 2.13) upon due exercise and upon the due execution of the subscription form endorsed on the Warrant Certificate or other instrument of subscription in such form as the Warrant Agent and/or the Company may from time to time prescribe and upon payment of the Exercise Price, one Common Share or such other kind and amount of shares or securities or property, calculated pursuant to the provisions of sections 2.12 and 2.13, as the case may be, at any time after the date of issuance of such Warrants and prior to the Time of Expiry, in accordance with the provisions of this Indenture.
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(3)
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Fractional Warrants shall not be issued or otherwise provided for.
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2.3
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Signing of Warrant Certificates
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The Warrant Certificates shall be signed by any one of the directors or officers
of the Company and may, but need not, be under the corporate seal of the Company
or a reproduction thereof. The signature of any such director or officer may be
mechanically reproduced in facsimile and Warrant Certificates bearing such
facsimile signatures shall be binding upon the Company as if they had been
manually signed by such director or officer. Notwithstanding that the person
whose manual or facsimile signature appears on any Warrant Certificate as a
director or officer may no longer hold office at the date of issue of the
Warrant Certificate or at the date of certification or delivery thereof, any
Warrant Certificate signed as aforesaid shall, subject to section 2.4, be valid
and binding upon the Company and the registered holder thereof will be entitled
to the benefits of this Indenture.
- 9 -
2.4
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Certification by the Warrant Agent
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(1)
No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the registered holder to the benefit hereof or thereof until it has been certified by manual signature by or on behalf of the Warrant Agent and such certification by the Warrant Agent upon any Warrant Certificate shall be conclusive evidence as against the Company that the Warrant Certificate so certified has been duly issued hereunder and the holder is entitled to the benefits hereof.
(2)
The certification of the Warrant Agent on the Warrant Certificates issued hereunder shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or the Warrants (except the due certification thereof) and the Warrant Agent shall in no respect be liable or answerable for the use made of the Warrants or any of them or of the consideration therefor except as otherwise specified herein.
2.5
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Warrantholder not a Shareholder, etc.
|
Nothing in this Indenture or the holding of a Warrant evidenced by a Warrant Certificate shall be construed as conferring upon a Warrantholder any right or interest whatsoever as a shareholder, including but not limited to the right to vote at, to receive notice of, or to attend meetings of shareholders or any other proceedings of the Company, nor entitle the holder to any right or interest in respect thereof except as herein and in the Warrants expressly provided.
2.6
|
Issue in Substitution for Lost Warrant Certificates
|
(1)
In the event that any Warrant Certificates issued and certified under this Indenture shall become mutilated or be lost, destroyed or stolen, the Company, subject to applicable law, and subsection 2.6(2), shall issue and thereupon the Warrant Agent shall certify and deliver a new Warrant Certificate of like denomination, date and tenor as the one mutilated, lost, destroyed or stolen in exchange for, in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and Warrants evidenced by it will entitle the holder thereof to the benefits hereof and shall rank equally in accordance with its terms with all other
Warrant Certificates issued or to be issued hereunder.
(2)
The applicant for the issue of a new Warrant Certificate pursuant to this section 2.6 shall bear the cost of the issue thereof and in the case of mutilation shall, as a condition precedent to the issue thereof, deliver to the Warrant Agent the mutilated Warrant Certificate, and in the case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Company and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Company and to the Warrant Agent in their sole discretion, and such applicant shall be required to furnish an indemnity or security in amount and form satisfactory to the Company and the Warrant
- 10 -
Agent in their sole discretion and shall pay the reasonable charges of the Company and the Warrant Agent in connection therewith.
2.7
|
Warrants to Rank
Pari Passu
|
All Warrants shall rank
pari passu
, whatever may be the actual date of issue or the class of same.
2.8
|
Registration and Transfer of Warrants
|
(1)
The Company will cause to be kept by the Warrant Agent at the principal stock transfer offices of the Warrant Agent in the City of Toronto, Ontario:
|
(a)
|
a register of holders in which shall be entered in alphabetical order the names and addresses of the holders of Warrants and particulars of the Warrants held by them and the Warrant Agent shall be entitled to rely on such register in connection with the exchange, transfer, exercise or deemed exercise of any Warrant(s) pursuant to the terms of this Indenture or the terms thereof; and
|
|
(b)
|
a register of transfers in which all transfers of Warrants and the date and other particulars of each such transfer shall be entered.
|
(2)
No transfer of any Warrant will be valid unless entered on the register of transfers referred to in subsection 2.8(1), upon surrender to the Warrant Agent of the Warrant Certificate evidencing such Warrant, and a duly completed and executed Transfer of Warrants form as attached to the Warrant Certificate executed by the registered holder or his executors, administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Warrant Agent, and, upon compliance with such requirements and such other reasonable requirements as the Warrant Agent may prescribe, such transfer will be recorded on the register of transfers by the Warrant Agent.
(3)
The transferee of any Warrant will, after surrender to the Warrant Agent of the Warrant Certificate evidencing such Warrant as required by subsection 2.8(2) and upon compliance with all other conditions in respect thereof required by this Indenture or by law, be entitled to be entered on the register of holders referred to in subsection 2.8(1) as the owner of such Warrant free from all equities or rights of set-off or counterclaim between the Company and the transferor or any previous holder of such Warrant, except in respect of equities of which the Company is required to take notice by statute or by order of a court of competent jurisdiction.
(4)
The Company will be entitled, and may direct the Warrant Agent, to refuse to recognize any transfer, or enter the name of any transferee, of any Warrant on the registers referred to in subsection 2.8(1), if such transfer would constitute a violation of the securities laws of any applicable jurisdiction or the rules, regulations or policies of any regulatory authority having jurisdiction. The Warrant Agent is entitled to assume
- 11 -
compliance with all applicable securities legislation unless otherwise notified in writing by the Company. No duty shall rest with the Warrant Agent to determine compliance of the transferee or transferor of any Warrant with applicable securities legislation.
(5)
Any Warrant Certificate issued to a transferee upon transfers contemplated by this section 2.8 shall bear the appropriate legends as set forth in subsections 2.20(1) and (2).
(6)
If a Warrant Certificate tendered for transfer bears the legend set forth in paragraph 2.20(1)(b), the Warrant Agent shall not register such transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and complies with the requirements of the said paragraph 2.20(1)(b).
2.9
|
Registers Open for Inspection
|
The registers referred to in subsection 2.8(1) shall be open at all reasonable times during business hours on a Business Day for inspection by the Company or any Warrantholder. The Warrant Agent shall, from time to time when requested to do so in writing by the Company, furnish the Company 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 Warrants held by each such holder.
2.10
|
Exchange of Warrants
|
(1)
Warrant Certificates may, upon compliance with the reasonable requirements of the Warrant Agent, be exchanged for Warrant Certificates in any other authorized denomination representing in the aggregate an equal number of Warrants as the number of Warrants represented by the Warrant Certificates being exchanged. The Company shall sign and the Warrant Agent shall certify, in accordance with sections 2.3 and 2.4, all Warrant Certificates necessary to carry out the exchanges contemplated herein.
(2)
Warrant Certificates may be exchanged only at the principal stock transfer offices of the Warrant Agent in the City of Toronto, Ontario or at any other place that is designated by the Company with the approval of the Warrant Agent. Any Warrant Certificates tendered for exchange shall be surrendered to the Warrant Agent and cancelled.
(3)
Except as otherwise herein provided, the Warrant Agent may charge Warrantholders requesting an exchange a reasonable sum for each Warrant Certificate issued; and payment of such charges and reimbursement of the Warrant Agent or the Company for any and all taxes or governmental or other charges required to be paid shall be made by the party requesting such exchange as a condition precedent to such exchange.
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2.11
|
Ownership of Warrants
|
The Company and the Warrant Agent and their respective agents may deem and treat the holder of any Warrant Certificate as the absolute owner of that Warrant represented thereby for all purposes and the Company and the Warrant Agent and their respective agents shall not be affected by any notice or knowledge to the contrary except as required by statute or order of a court of competent jurisdiction. The holder of any Warrant shall be entitled to the rights evidenced by that Warrant free from all equities or rights of set-off or counterclaim between the Company and the original or any intermediate holder thereof and all persons may act accordingly and the receipt by any holder of the Common Shares or monies obtainable pursuant to the exercise of the Warrant shall be a good discharge to the Company and the Warrant Agent for the same and neither the Company nor the Warrant Agent shall be bound
to inquire into the title of any holder.
2.12
|
Adjustment of Exchange Basis
|
Subject to section 2.13, the Exchange Basis shall be subject to adjustment from time to time in the events and in the manner provided as follows:
(1)
If and whenever, at any time after the date hereof and prior to the Time of Expiry, the Company shall:
|
(i)
|
issue Common Shares or securities exchangeable for or convertible into Common Shares to all or substantially all the holders of the Common Shares as a stock dividend or other distribution (other than as a Dividend Paid in the Ordinary Course or a distribution of Common Shares upon exercise of the Warrants or pursuant to the exercise of directors, officers or employee stock options granted under stock option plans of the Company), or
|
|
(ii)
|
subdivide, redivide or change its then outstanding Common Shares into a greater number of shares, or
|
|
(iii)
|
reduce, combine or consolidate its then outstanding Common Shares into a lesser number of shares,
|
(any of such events in these paragraphs (i), (ii) or (iii) being called a
Common Share Reorganization
), then the Exchange Basis in effect on the effective date of such subdivision or consolidation, or on the record date of such stock dividend or other distribution, as the case may be, shall be adjusted by multiplying the Exchange Basis in effect immediately prior to such effective or record date by a fraction:
|
(a)
|
the numerator of which shall be the total number of Common Shares outstanding on such date 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 Common Shares that would have been
|
- 13 -
outstanding had such securities been exchanged for or converted into Common Shares on such record date, assuming in any case where such securities are not then convertible or exchangeable but subsequently become so, that they were convertible or exchangeable on the record date on the basis upon which they first become convertible or exchangeable), and
|
(b)
|
the denominator of which shall be the total number of Common Shares outstanding on such date before giving effect to such Common Share Reorganization. The resulting product, adjusted to the nearest 1/100th, shall thereafter be the Exchange Basis until further adjusted as provided in this Article 2.
|
(2)
If and whenever, at any time after the date hereof and prior to the Time of Expiry, the Company shall fix a record date for the distribution to all or substantially all of the holders of its outstanding Common Shares of rights, options or warrants entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares, or securities exchangeable for or convertible into Common Shares, at a price per share to the holder (or at an exchange or conversion price per share) of less than 95% of the Current Market Price on such record date (any of such events being called a
Rights Offering
), then the Exchange Basis shall be adjusted effective immediately after such record date for the Rights
Offering by multiplying the Exchange Basis in effect immediately prior to such record date by a fraction:
|
(a)
|
the numerator of which shall be the number of Common Shares which would be outstanding after giving effect to the Rights Offering (assuming the exercise of all of the rights, options or warrants under the Rights Offering and assuming the exchange or conversion into Common Shares of all exchangeable or convertible securities issued upon exercise of such rights, options or warrants, if any), and
|
|
(b)
|
the denominator of which shall be the aggregate of:
|
|
(i)
|
the total number of Common Shares outstanding as of the record date for the Rights Offering, and
|
|
(ii)
|
a number of Common Shares arrived at by dividing
|
|
(A)
|
the amount equal to the aggregate consideration payable on the exercise of all of the rights, options and warrants under the Rights Offering plus the aggregate consideration, if any, payable on the exchange or conversion of the exchangeable or convertible securities issued upon exercise of such rights, options or warrants (assuming the exercise of
|
- 14 -
all rights, options and warrants under the Rights Offering and assuming the exchange or conversion of all exchangeable or convertible securities issued upon exercise of such rights, options and warrants);
by
|
(B)
|
the Current Market Price as of the record date for the Rights Offering.
|
The resulting product, adjusted to the nearest 1/100th, shall thereafter be the Exchange Basis until further adjusted as provided in this Article 2. Any Common Shares owned by or held for the account of the Company or any of its Subsidiaries or a partnership in which the Company is directly or indirectly a party to will be deemed not to be outstanding for the purpose of any computation. If, at the date of expiry of the rights, options or warrants subject to the Rights Offering, less than all the rights, options or warrants have been exercised, then the Exchange Basis shall be readjusted effective immediately after the date of expiry to the Exchange Basis which would have been in effect on the date of expiry if only the rights, options or warrants issued had been those exercised. If at the date of expiry of the rights of exchange or conversion of any securities issued pursuant to the Rights Offering less
than all of such securities have been exchanged or converted into Common Shares, then the Exchange Basis shall be readjusted effective immediately after the date of expiry to the Exchange Basis which would have been in effect on the date of expiry if only the exchangeable or convertible securities issued had been those securities actually exchanged for or converted into Common Shares.
(3)
If and whenever, at any time after the date hereof and prior to the Time of Expiry, the Company shall fix a record date for the issue or distribution to all or substantially all the holders of its outstanding Common Shares of:
|
(i)
|
shares of the Company of any class other than Common Shares; or
|
|
(ii)
|
rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares; or
|
|
(iii)
|
evidences of indebtedness; or
|
|
(iv)
|
cash, securities or any property or other assets,
|
and if such issuance or distribution does not constitute a Dividend Paid in the Ordinary Course, a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a
Special Distribution
), the Exchange Basis shall be adjusted effective immediately after the record date for the Special Distribution by multiplying the Exchange Basis in effect on such record date by a fraction:
- 15 -
|
(a)
|
the numerator of which shall be the number of Common Shares outstanding on such record date multiplied by the Current Market Price on such record date, and
|
|
(b)
|
the denominator of which shall be:
|
|
(A)
|
the product of the number of Common Shares outstanding on such record date and the Current Market Price on such record date, less
|
|
(B)
|
the fair market value, as determined by action by the board of directors acting reasonably and in good faith (whose determination shall be conclusive), to the holders of the Common Shares of the shares, rights, options, warrants, evidences of indebtedness or property or other assets issued or distributed in the Special Distribution,
|
provided that no such adjustment shall be made if the result of such adjustment would be to decrease the Exchange Basis in effect immediately before such record date. The resulting product, adjusted to the nearest 1/100th, shall thereafter be the Exchange Basis until further adjusted as provided in this Article 2. Any shares owned by or held for the account of the Company or its Subsidiaries or a partnership of which the Company is directly or indirectly a party to shall be deemed not to be outstanding for the purpose of any such computation.
(4)
If and whenever, at any time after the date hereof and prior to the Time of Expiry, there shall be a reclassification of the Common Shares at any time outstanding or change of the Common Shares into other shares or into other securities (other than a Common Share Reorganization), or a consolidation, amalgamation or merger of the Company with or into any other corporation or other entity (other than a consolidation, amalgamation 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 transfer (other than to a Subsidiary) of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or other entity (any of such events being herein called a
Capital Reorganization
), any Warrantholder who thereafter shall exercise his right to receive Common Shares pursuant to Warrant(s) shall be entitled to receive, and shall accept in lieu of the number of Subject Securities to which such holder was theretofore entitled upon such exercise, the aggregate number of shares, other securities or other property resulting from the Capital Reorganization which such holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date or record date thereof, as the case may be, the Warrantholder had been the registered holder of the number of Subject Securities to which such holder was theretofore entitled upon exercise. If appropriate, adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Article 2 with respect to the rights and interests thereafter of Warrantholders to the end that the
provisions set forth in this Article 2 shall thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any
- 16 -
shares, other securities or other property thereafter deliverable upon the exercise of any Warrant. Any such adjustment shall be made by and set forth in an indenture supplemental hereto approved by the directors and by the Warrant Agent and entered into pursuant to the provisions of this Indenture and shall for all purposes be conclusively deemed to be an appropriate adjustment.
(5)
Forthwith upon the occurrence of any of the events referred to in the preceding subsections above, the Company shall:
|
(a)
|
file with the Warrant Agent a certificate of the Company specifying the required adjustment; and
|
|
(b)
|
give notice to the Warrantholders of the required adjustment.
|
(6)
Any adjustment to the Exchange Basis as set forth herein shall also include a corresponding adjustment to the Exercise Price which shall be calculated by multiplying the Exercise Price by a fraction: (a) the numerator of which shall be the Exchange Basis prior to the adjustment, and (b) the denominator of which shall be the Exchange Basis after the adjustment.
2.13
|
Rules Regarding Calculation of Adjustment of Exchange Basis
|
For the purposes of section 2.12:
(1)
The adjustments provided for in section 2.12 shall be cumulative and such adjustments shall be made successively whenever an event referred to in section 2.12 shall occur, subject to the following subsections of this section 2.13.
(2)
If the purchase price provided for in any Rights Offering (the
Rights Offering Price
) is decreased, the Exchange Basis shall forthwith be changed so as to increase the Exchange Basis to such Exchange Basis as would have been obtained had the adjustment to the Exchange Basis made pursuant to subsection 2.12(2) upon the issuance of such Rights Offering been made upon the basis of the Rights Offering Price as so decreased, provided that the provisions of this subsection shall not apply to any decrease in the Rights Offering Price resulting from provisions in any such Rights Offering designed to prevent dilution if the event giving rise to such decrease in the Rights Offering Price itself requires an adjustment to the Exchange Basis pursuant to
the provisions of section 2.12.
(3)
No adjustment in the Exchange Basis shall be required unless such adjustment would result in a change of at least 0.01 of a Common Share based on the prevailing Exchange Basis, provided that any adjustments which, except for the provisions of this subsection, would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment.
(4)
No adjustment in the Exchange Basis shall be made in respect of any event described in section 2.12, other than the events referred to in paragraphs (ii) and
- 17 -
(iii) of subsection (1) thereof, if Warrantholders are entitled to participate in such event on the same terms,
mutatis mutandis
, as if Warrantholders had exercised their Warrants prior to or on the effective date or record date of such event, any such participation being subject to regulatory approval.
(5)
No adjustment in the Exchange Basis shall be made pursuant to section 2.12 in respect of the issue from time to time of Common Shares purchasable on exercise of the Warrants or in respect of the issue from time to time of a Dividend Paid in the Ordinary Course to holders of Common Shares who exercise an option or election to receive substantially equivalent dividends in Common Shares in lieu of receiving a cash dividend, and any such issue shall be deemed not to be a Common Share Reorganization.
(6)
If a dispute shall at any time arise with respect to adjustments provided for in section 2.12, such dispute shall, absent manifest error, be conclusively determined by the Companys Auditors, or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by the directors and any further determination, absent manifest error, shall be binding upon the Company, the Warrant Agent and the Warrantholders.
(7)
If the Company shall set a record date to determine the holders of the Common Shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights 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 Exchange Basis shall be required by reason of the setting of such record date.
(8)
In the absence of a resolution of the directors fixing a record date for a Rights Offering or Special Distribution, the Company shall be deemed to have fixed as the record date therefor the date on which the Rights Offering or Special Distribution is effected.
(9)
As a condition precedent to the taking of any action that would require any adjustment in any of the subscription rights pursuant to any of the Warrants, including the Exchange Basis, the Company shall take any corporate action which may, in the opinion of counsel, be necessary in order that the Company have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities that all the holders of such Warrants are entitled to receive on the exercise of all the subscription rights attaching thereto in accordance with the provisions thereof.
(10)
In case the Company, after the date hereof, shall take any action affecting any Common Shares, other than action described in section 2.12, which in the opinion of the directors acting reasonably and in good faith would materially affect the rights of Warrantholders, the Exchange Basis shall be adjusted in such manner, if any, and at such time, as the directors, in their sole discretion acting in good faith, may determine to
- 18 -
be equitable in the circumstances. Failure of the taking of action by the directors so as to provide for an adjustment in the Exchange Basis prior to the effective date of any action by the Company affecting the Common Shares shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances.
(11)
The Warrant Agent shall be entitled to act and rely on any adjustment calculations by the Company or the Companys Auditors.
2.14
|
Postponement of Subscription
|
In any case where the application of section 2.12 results in an increase in the number of Subject Securities that are issuable upon 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 such specific event, the Company may postpone the issuance to the Warrantholder of the Subject Securities to which he is entitled by reason of such adjustment, but such Subject Securities shall be so issued and delivered to that holder upon completion of that event, with the number of such Subject Securities calculated on the basis of the number of Subject Securities on the date that the Warrant was exercised, adjusted for completion of that event and the Company shall deliver to the person or persons in whose name or names the Subject Securities are to be issued an appropriate instrument
evidencing the right of such person or persons to receive such Subject Securities and the right to receive any dividends or other distributions which, but for the provisions of this section, such person or persons would have been entitled to receive in respect of such Subject Securities from and after the date that the Warrant was exercised in respect thereof.
2.15
|
Notice of Adjustment
|
(1)
At least 10 days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment pursuant to section 2.12, the Company shall:
|
(a)
|
file with the Warrant Agent a certificate of the Company 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
|
|
(b)
|
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.
|
(2)
In case any adjustment for which a notice in subsection 2.15(1) has been given is not then determinable, the Company shall promptly after such adjustment is determinable:
|
(a)
|
file with the Warrant Agent a computation of such adjustment; and
|
- 19 -
|
(b)
|
give notice to the Warrantholders of the adjustment.
|
(3)
The Warrant Agent may, absent manifest error, act and rely upon certificates and other documents filed by the Company pursuant to this section for all purposes of the adjustment.
2.16
|
No Action after Notice
|
The Company covenants with the Warrant Agent that it will not take any other corporate action which might deprive a Warrantholder of the opportunity of exercising the rights of acquisition pursuant thereto during the period of 10 days after the giving of the notice set forth in paragraph (b) of subsections 2.15(1) and (2).
2.17
|
Purchase of Warrants for Cancellation
|
The Company may, at any time and from time to time, purchase Warrants by invitation for tender, by private contract or otherwise (which shall include a purchase through an investment dealer or firm holding membership on a Canadian stock exchange) on such terms as the Company may determine. All Warrants purchased pursuant to the provisions of this section 2.17 shall be forthwith delivered to, cancelled and destroyed by the Warrant Agent and shall not be reissued. If required by the Company, the Warrant Agent shall furnish the Company with a certificate as to such destruction.
2.18
|
Optional Purchases by the Company
|
Subject to applicable law, the Company may from time to time, purchase on any stock exchange (if then listed), in the open market, by private agreement or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the board of directors of the Company, such Warrants are then obtainable, plus reasonable costs of purchase, and may be made in such manner, from such persons, and on such other terms as the Company in its sole discretion may determine. The Warrant Certificates representing the Warrants purchased pursuant to this section 2.18 shall forthwith be delivered to and cancelled by the Warrant Agent.
2.19
|
Protection of Warrant Agent
|
Subject to Article 8, the Warrant Agent shall not:
|
(a)
|
at any time be under any duty or responsibility to any registered holder of Warrants to determine whether any facts exist that may require any adjustment contemplated by this Article 2, nor to verify the nature and extent of any such adjustment when made or the method employed in making the same;
|
- 20 -
|
(b)
|
be accountable with respect to the validity or value or the kind or amount of any Subject Securities that may at any time be issued or delivered upon the exercise of the Warrants;
|
|
(c)
|
be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver the Subject Securities or certificates evidencing the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article 2; or
|
|
(d)
|
incur any liability or responsibility whatsoever or be in any way responsible for the consequence of any breach on the part of the Company of any of the representations, warranties or covenants of the Company or any acts or deeds of the agents or servants of the Company.
|
2.20
|
Legended Warrant Certificates
|
|
(1)
|
(a) The Warrant Agent understands and acknowledges that the Warrants and the Common Shares issuable upon exercise of the Warrants have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the United States.
|
|
(b)
|
Each Warrant Certificate originally issued to a U.S. Person, a person in the United States or a person for the account or benefit of a U.S. Person or a person in the United States, all Common Shares issued upon exercise of such Warrants, and all certificates issued in exchange or in substitution thereof, shall bear the following legend:
|
THE SECURITIES REPRESENTED HEREBY
[IF A WARRANT: AND THE SECURITIES ISSUED UPON THE EXERCISE OF THESE SECURITIES]
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE U.S. SECURITIES ACT) OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THESE SECURITIES, AGREES FOR THE BENEFIT OF GLENCAIRN GOLD CORPORATION (THE CORPORATION) THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH THE
- 21 -
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION, PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS.
provided that, if such Warrants or Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with applicable Canadian securities laws and regulations, and the Company is a foreign issuer as such term is defined in Regulation S, the legend may be removed by providing a declaration to the Transfer Agent in the form of Schedule B hereto (or as the Company may reasonably prescribe from time to time); and provided further that, if any such Warrants or Common Shares are being sold other than to the Company or in accordance with Regulation S, the legend may be removed by delivery to the Transfer Agent of an opinion of counsel, of recognized standing reasonably satisfactory to the Company, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act or state securities
laws. The Transfer Agent shall, upon receipt of the executed form of Declaration for Removal of Legend as set forth in Schedule B hereto, issue a new certificate within three Business Days thereof.
|
(c)
|
If a Warrant Certificate or Common Share certificate issued with respect to an exercise of Warrants is tendered for transfer and bears the legend set forth in paragraph 2.20(1)(b) hereof and the holder thereof has not obtained the prior written consent of the Company, the Warrant Agent or the Transfer Agent, as the case may be, shall not register such transfer unless the holder complies with the requirements of the said paragraph 2.20(1)(b) hereof.
|
(2)
Each Warrant Certificate originally issued to every Purchaser, as well as all certificates issued in exchange for or in substitution of the Warrant Certificates, unless such exchange or substitution shall occur subsequent to the date that is four months and one day from the Closing Date, shall bear the following legend:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 23, 2008.
provided that, if at any time, in the opinion of counsel to the Company, such legend is no longer necessary or advisable under applicable Securities Laws, or the holder of any such legended certificate, at the holders expense, provides the Company with evidence satisfactory in form and substance to the Company (which may include an opinion of
- 22 -
counsel satisfactory to the Company) to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Company in exchange for a certificate which does not bear such legend.
ARTICLE 3
EXERCISE OF WARRANTS
3.1
|
Method of Exercise of Warrants
|
(1)
The registered holder of any Warrant may exercise the rights thereby conferred on him to acquire all or any part of the Subject Securities to which such Warrant entitles the holder, by surrendering the Warrant Certificate representing such Warrants to the Warrant Agent at any time prior to the Time of Expiry at its principal stock transfer offices in the City of Toronto, Ontario (or at such additional place or places as may be decided by the Company from time to time with the approval of the Warrant Agent), with a duly completed and executed subscription of the registered holder or his executors, administrators or other legal representative or his attorney duly appointed by an instrument in writing in the form and manner satisfactory to the Warrant Agent, substantially in the form attached to the
Warrant Certificate specifying the number of Common Shares subscribed for together with a certified cheque, bank draft or money order in lawful money of Canada, payable to or to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Subject Securities subscribed for. A Warrant Certificate with the duly completed and executed subscription and payment of the Exercise Price shall be deemed to be surrendered only upon personal delivery thereof to or, if sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent.
(2)
Any subscription referred to in subsection 3.1(1) shall be signed by the Warrantholder, shall specify the person(s) in whose name such Subject Securities are to be issued, the address(es) of such person(s) and the number of Subject Securities to be issued to each person, if more than one is so specified. If any of the Subject Securities subscribed for are to be issued to (a) person(s) other than the Warrantholder, the signatures set out in the subscription referred to in subsection 3.1(1) shall be guaranteed by a Canadian chartered bank, a Canadian trust company or by a medallion signature guaranteed from a member of a recognized Signature Medallion Guarantee Program and the Warrantholder shall pay to the Company or the Warrant Agent all applicable transfer or similar taxes and the Company
shall not be required to issue or deliver certificates evidencing Subject Securities unless or until such Warrantholder shall have paid to the Company or the Warrant Agent on behalf of the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or that no tax is due.
(3)
If, at the time of exercise of the Warrants, in accordance with the provisions of subsection 3.1(1), there are any trading restrictions on the Subject Securities pursuant to applicable securities legislation or stock exchange requirements, the Company shall, on the advice of counsel, endorse any certificates representing the Subject Securities to such effect. The Warrant Agent is entitled to assume compliance
- 23 -
with all applicable securities legislation unless otherwise notified in writing by the Company.
Under no circumstances shall the Company be obliged to issue any fractional Common Shares or any cash or other consideration in lieu thereof upon the exercise of one or more Warrants. To the extent that the holder of one or more Warrants would otherwise have been entitled to receive on the exercise or partial exercise thereof a fraction of a Common Share, that holder may exercise that right in respect of the fraction only in combination with another Warrant or Warrants that in the aggregate entitle the holder to purchase a whole number of Common Shares.
3.3
|
Effect of Exercise of Warrants
|
(1)
Upon compliance by the Warrantholder with the provisions of section 3.1, the Subject Securities subscribed for shall be deemed to have been issued and the person to whom such Subject Securities are to be issued shall be deemed to have become the holder of record of such Subject Securities on the Exercise Date unless the transfer registers of the Company for the Common Shares shall be closed on such date, in which case the Subject Securities subscribed for shall be deemed to have been issued and such person shall be deemed to have become the holder of record of such Subject Securities on the date on which such transfer registers are reopened.
(2)
Within three Business Days following the due exercise of a Warrant pursuant to section 3.1 and forthwith after the Time of Expiry, the Warrant Agent shall deliver to the Company a notice setting forth the particulars of all Warrants exercised, if any, and the persons in whose names the Subject Securities are to be issued (as applicable) and the addresses of such holders of the Subject Securities.
(3)
Within five Business Days of the due exercise of a Warrant pursuant to section 3.1, the Company shall cause the Transfer Agent to mail to the person in whose name the Subject Securities so subscribed for are to be issued, as specified in the subscription completed on the Warrant Certificate, at the address specified in such subscription, a certificate or certificates for the Subject Securities to which the Warrantholder is entitled and, if applicable, shall cause the Warrant Agent to mail a Warrant Certificate representing any Warrants not then exercised.
(4)
In the event that the Warrants are exercised by any Warrantholder prior to the date that is four months and one day following the Closing Date, the certificates evidencing the Common Shares shall bear the following legend:
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE FEBRUARY 23, 2008.
- 24 -
provided that, if at any time, in the opinion of counsel to the Company, such legend is no longer necessary or advisable under applicable Securities Laws, or the holder of any such legended certificate, at the holders expense, provides the Company with evidence satisfactory in form and substance to the Company (which may include an opinion of counsel satisfactory to the Company) to the effect that such legend is not required, such legended certificate may thereafter be surrendered to the Company in exchange for a certificate that does not bear such legend.
3.4
|
Cancellation of Warrant Certificates
|
All Warrant Certificates surrendered to the Warrant Agent pursuant to sections 2.6, 2.8(2), 2.10 or 3.1 shall be cancelled by the Warrant Agent and the Warrant Agent shall record the cancellation of such Warrant Certificates on the register of holders maintained by the Warrant Agent pursuant to subsection 2.8(1). The Warrant Agent shall, if required by the Company, furnish the Company with a certificate identifying the Warrant Certificates so cancelled. All Warrants represented by Warrant Certificates that have been duly cancelled shall be without further force or effect whatsoever.
3.5
|
Subscription for less than Entitlement
|
The holder of any Warrant may subscribe for and purchase a whole number of Subject Securities that is less than the number that the holder is entitled to purchase pursuant to a surrendered Warrant Certificate. In such event, the holder thereof shall be entitled to receive a new Warrant Certificate in respect of the balance of Subject Securities that such holder was entitled to purchase pursuant to the surrendered Warrant Certificate and that were not then purchased, such new Warrant Certificate to contain the same legend(s) as provided for in section 2.20, if applicable.
3.6
|
Expiration of Warrant
|
After the Time of Expiry, all rights under any Warrant or this Indenture in respect of which the right of subscription and purchase herein and therein provided for shall not theretofore have been exercised shall wholly cease and terminate and such Warrant shall be void and of no effect.
- 25 -
3.7
|
Prohibition on Exercise by U.S. Persons; Exception
|
(1)
Warrants may not be exercised within the United States or by or on behalf of any U.S. Person unless an exemption is available from the registration requirements of the U.S. Securities Act and applicable state securities laws and the holder of the Warrants has furnished an opinion of counsel of recognized standing in form and substance satisfactory to the Company to such effect; provided that an Accredited Investor that purchased the Units or Subscription Receipts in the Companys private placement of Units and Subscription Receipts in the United States will not be required to deliver an opinion of counsel in connection with the exercise of Warrants forming part of the Units or those that are issued on exercise of Subscription Receipts, as applicable, provided it provides the certification
required in paragraph 3.7(2)(b) below. The Warrant Agent shall be entitled to rely upon the registered address of the Warrantholder as set forth in such Warrantholders subscription agreement for the purchase of Units and Subscription Receipts in determining whether the address is in the United States or the Warrantholder is a U.S. Person.
|
(2)
|
Any holder which exercises any Warrants shall provide to the Company either:
|
|
(a)
|
a written certification that such holder (a) at the time of exercise of the Warrants is not in the United States; (b) is not a U.S. Person and is not exercising the Warrants on behalf of a U.S. Person; and (c) did not execute or deliver the subscription form for the Warrants in the United States;
|
|
(b)
|
a written certification that the holder (a) purchased the Warrants directly from the Company pursuant to a written subscription agreement for the purchase of Units and Subscription Receipts; (b) is exercising the Warrants solely for its own account or for the benefit of a U.S. Person or a person in the United States; and (c) was an Accredited Investor, both on the date the Units and Subscription Receipts were purchased from the Company and on the date of exercise of the Warrants; or
|
|
(c)
|
a written opinion of counsel of recognized standing in form and substance satisfactory to the Company to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable on exercise of the Warrants.
|
(3)
No certificates representing Common Shares will be registered or delivered to an address in the United States unless the holder of Warrants complies with the requirements of paragraphs (b) or (c) of subsection 3.7(2).
- 26 -
ARTICLE 4
COVENANTS FOR WARRANTHOLDERS BENEFIT
4.1
|
General Covenants of the Company
|
The Company covenants with the Warrant Agent for the benefit of the Warrant Agent and the Warrantholders that so long as any Warrants remain outstanding:
(1)
The Company will at all times maintain its existence and will carry on and conduct its business in a prudent manner in accordance with industry standards and good business practice, and will keep or cause to be kept proper books of account in accordance with applicable law.
(2)
The Company will use its commercially reasonable best efforts to maintain the listing of the Common Shares on the TSX and to have the Common Shares issued pursuant to the exercise of the Warrants listed and posted for trading on the TSX as expeditiously as possible.
(3)
The Company will reserve and keep available a sufficient number of Subject Securities for issuance upon the exercise of Warrants issued by the Company.
(4)
The Company will cause the Subject Securities from time to time subscribed for pursuant to the Warrants issued by the Company hereunder, in the manner herein provided, to be duly issued in accordance with the Warrants and the terms hereof.
(5)
The Company will cause the certificates representing the Subject Securities from time to time to be acquired, pursuant to the Warrants in the manner herein provided, to be duly issued and delivered in accordance with the Warrants and the terms hereof.
(6)
All Subject Securities that shall be issued by the Company upon exercise of the rights provided for herein shall be issued as fully paid and non-assessable.
(7)
The Company will perform and carry out all of the acts or things to be done by it as provided in this Indenture.
(8)
The Company will use its best efforts to maintain its status as a reporting issuer not in default of the requirements of each of the provinces of Canada until the Time of Expiry.
(9)
The Company will promptly advise the Warrant Agent and the Warrantholders in writing of any default under the terms of this Indenture.
- 27 -
4.2
|
Securities Qualification Requirements
|
(1)
If, in the opinion of counsel, any instrument is required to be filed with, or any permission, order or ruling is required to be obtained from, any securities administrator or any other step is required under any federal or provincial law of Canada before the Subject Securities may be issued or delivered to a Warrantholder, the Company covenants that it will use its best efforts to file such instrument, obtain such permission, order or ruling or take all such other actions, at its expense, as is required or appropriate in the circumstances.
(2)
The Company will give written notice of the issue of Subject Securities pursuant to the exercise of Warrants, in such detail as may be required, to each securities administrator in each jurisdiction in which there is legislation requiring the giving of any such notice.
4.3
|
Warrant Agents Remuneration and Expenses
|
The Company covenants that it will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and will pay or reimburse the Warrant Agent upon its request for all reasonable expenses and disbursements of the Warrant Agent in the administration or execution of the duties and obligations hereby created, provided that the Warrant Agent shall receive prior written approval for any expense in excess of $1,000 that it intends to incur in connection with the services it provides to the Company pursuant to this Indenture (including the reasonable compensation and the disbursements of its counsel and all other advisers, experts, accountants and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed, except any such expense or disbursement in
connection with or related to or required to be made as a result of the gross negligence, wilful misconduct or bad faith of the Warrant Agent.
4.4
|
Performance of Covenants by Warrant Agent
|
Subject to section 8.7, if the Company shall fail to perform any of its covenants contained in this Indenture and the Company has not rectified such failure within 25 Business Days after either giving notice of such default pursuant to subsection 4.1(9) or receiving written notice from the Warrant Agent of such failure, the Warrant Agent may notify the Warrantholders of such failure on the part of the Company or may itself perform any of the said covenants capable of being performed by it, but shall be under no obligation to perform said covenants or to notify the Warrantholders. All reasonable sums expended or disbursed by the Warrant Agent in so doing shall be repayable as provided in section 4.3. No such performance, expenditure or advance by the Warrant Agent shall be deemed to relieve the Company of any default hereunder or of its continuing obligations under the covenants herein contained.
- 28 -
ARTICLE 5
ENFORCEMENT
5.1
|
Suits by Warrantholders
|
Subject to section 6.10, all or any of the rights conferred upon a Warrantholder by the terms of the Warrants held by him and/or this Indenture may be enforced by such Warrantholder by appropriate legal proceedings but without prejudice to the right that 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 holders of the Warrants from time to time outstanding. The Warrant Agent shall also have the power at any time and from time to time to institute and to maintain such suits and proceedings as it may reasonably be advised shall be necessary or advisable to preserve and protect its interests and the interests of the Warrantholders.
Subject to applicable law, the Warrant Agent and, by acceptance of the Warrant Certificate and as part of the consideration for the issue of the Warrants, the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any person in its capacity as an incorporator or any past, present or future shareholder, director, officer, employee or agent of the Company for the creation and issue of the shares pursuant to any warrant or any covenant, agreement, representation or warranty by the Company herein or in the Warrant Certificates contained.
5.2
|
Limitation of Liability
|
The obligations hereunder (including without limitation under subsection 8.7(5)) are not personally binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future directors or shareholders of the Company or any of the past, present or future officers, employees or agents of the Company, but only the property of the Company (or any successor person) shall be bound in respect hereof.
ARTICLE 6
MEETINGS OF WARRANTHOLDERS
6.1
|
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 Company or of a Warrantholders Request, convene a meeting of the Warrantholders provided that the Warrant Agent has been provided with sufficient funds and is indemnified to its reasonable satisfaction by the Company or by the Warrantholders signing such Warrantholders Request against the costs, charges, expenses and liabilities that may be incurred in connection with the calling and holding of such meeting. If within 15 Business Days after the receipt of a written request of the Company or a Warrantholders Request, funding and indemnity given as aforesaid the Warrant Agent fails to give the requisite notice specified in section 6.2 to convene a meeting, the Company or such Warrantholders, as the case may be, may convene such
- 29 -
meeting. Every such meeting shall be held in the City of Toronto, Ontario or at such other place as may be approved or determined by the Warrant Agent.
At least 14 days prior notice of any meeting of Warrantholders shall be given to the Warrantholders at the expense of the Company in the manner provided for in section 9.2 and a copy of such notice shall be delivered to the Warrant Agent unless the meeting has been called by it, and to the Company unless the meeting has been called by it. Such notice shall state the date, time and place of the meeting, the general nature of the business to be transacted and shall contain such information as is reasonably necessary to enable the Warrantholders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 6. The notice convening any such meeting may be signed by an appropriate officer of the Warrant Agent or of the Company or the person designated by such
Warrantholders, as the case may be.
The Warrant Agent may nominate in writing an individual (who need not be a Warrantholder) to be chairman of the meeting and if no individual is so nominated, or if the individual so nominated is not present within 15 minutes after the time fixed for the holding of the meeting, the Warrantholders present in person or by proxy shall appoint an individual present to be chairman of the meeting. The chairman of the meeting need not be a Warrantholder.
Subject to the provisions of section 6.11, at any meeting of the Warrantholders
a quorum shall consist of two Warrantholders present in person or represented by
proxy and representing at least 10% of the aggregate number of Warrants then
outstanding. 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
summoned by the Warrantholders or on a Warrantholders Request, shall be
dissolved; but in any other case the meeting shall be adjourned to the same day
in the next week (unless such day is not a Business Day in which case it shall
be adjourned to the next following Business Day) at the same time and place to
the extent possible and, subject to the provisions of section 6.11, no notice of
the adjournment need be given. Any business may be brought before or dealt with
at an adjourned meeting that might have been dealt with at the original meeting
in accordance with the notice calling the same. At the adjourned meeting the
Warrantholders present in person or represented by proxy shall form a quorum and
may transact the business for which the meeting was originally convened,
notwithstanding that they may not represent at least 10% of the aggregate number
of Warrants then unexercised and outstanding. No business shall be transacted at
any meeting unless a quorum is present at the commencement of
business.
- 30 -
The chairman of any meeting at which a quorum of the Warrantholders is present may, with the consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.
Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an extraordinary resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.
On every extraordinary resolution, and when demanded by the chairman or by one or more of the Warrantholders acting in person or by proxy on any other question submitted to a meeting and after a vote by show of hands, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by extraordinary resolution shall be decided by a majority of the votes cast on the poll. On a show of hands, every person who is present and entitled to vote, whether as a Warrantholder or as proxy for one or more absent Warrantholders, or both, shall have one vote. On a poll, each Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each whole Warrant then held by him. A proxy need not be a Warrantholder. The chairman of any meeting shall be entitled, both on a show of
hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.
Subject to the provisions of this Indenture, the Warrant Agent or the Company with the approval of the Warrant Agent may from time to time make and from time to time vary such regulations as it shall consider necessary or appropriate:
|
(a)
|
for the deposit of instruments appointing proxies at such place and time as the Warrant Agent, the Company or the Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting direct;
|
|
(b)
|
for the deposit of instruments appointing proxies at some approved place other
than the place at which the meeting is to be held and enabling particulars of
such instruments appointing proxies to be
|
- 31 -
mailed, cabled or telegraphed before
the meeting to the Company 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 instruments themselves
were produced at the meeting;
|
(c)
|
for the form of instrument appointing a proxy and the manner in which the form of proxy may be executed; and
|
|
(d)
|
generally for the calling of meetings of Warrantholders and the conduct of business thereat including setting a record date for Warrantholders entitled to receive notice of or to vote at such meeting.
|
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to section 6.9), shall be Warrantholders or persons holding proxies of Warrantholders.
6.9
|
Company, Warrant Agent and Counsel may be Represented
|
The Company and the Warrant Agent, by their respective directors, officers and employees and the counsel for each of the Company, the Warrantholders and the Warrant Agent may attend any meeting of the Warrantholders and speak thereat but shall not be entitled to vote unless in their capacities as Warrantholders.
6.10
|
Powers Exercisable by Extraordinary Resolution
|
In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Warrantholders at a meeting shall have the power, exercisable from time to time by extraordinary resolution:
|
(a)
|
to agree with the Company to any modification, alteration, compromise or arrangement of the rights of Warrantholders and/or the Warrant Agent in its capacity as Warrant Agent hereunder (subject to the Warrant Agents approval) or on behalf of the Warrantholders against the Company, whether such rights arise under this Indenture or the Warrants or otherwise;
|
|
(b)
|
to amend or repeal any extraordinary resolution previously passed or sanctioned by the Warrantholders;
|
|
(c)
|
to direct or authorize the Warrant Agent (subject to the Warrant Agent receiving
funding and indemnity) to enforce any of the covenants on the part of the
Company contained in this Indenture 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;
|
- 32 -
|
(d)
|
to waive, authorize and direct the Warrant Agent to waive any default on the part of the Company in complying with any provisions of this Indenture or the Warrants either unconditionally or upon any conditions specified in such extraordinary resolution;
|
|
(e)
|
to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Company for the enforcement of any of the covenants on the part of the Company contained in this Indenture or the Warrants or to enforce any of the rights of the Warrantholders; and
|
|
(f)
|
to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or discontinue or otherwise deal with any such suit, action or proceeding, upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith.
|
6.11
|
Meaning of Extraordinary Resolution
|
(1)
The expression extraordinary resolution when used in this Indenture means, subject as hereinafter in this section 6.11 and in section 6.14 provided, a resolution proposed at a meeting of Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 6 at which there are present in person or by proxy Warrantholders representing at least 10% of the aggregate number of all the then outstanding Warrants and passed by the affirmative votes of Warrantholders representing not less than 66 2/3% of the aggregate number of all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution.
(2)
If, at any meeting called for the purpose of passing an extraordinary resolution, Warrantholders representing at least 10% of the aggregate number of 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 10 Business Days later, and to such place and time as may be appointed by the chairman. Not less than three Business Days prior notice shall be given of the time and place of such adjourned meeting in the manner provided in sections 9.1, 9.2 and 9.3. Such notice shall state that at the adjourned meeting the Warrantholders present in
person or represented 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 represented 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
- 33 -
as provided in subsection
6.11(1) shall be an extraordinary resolution within the meaning of this
Indenture notwithstanding that Warrantholders representing at least 10% of all
the then
outstanding Warrants are not present in person or represented by proxy at such
adjourned meeting.
(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.
It is hereby declared and agreed that any one or more of the powers or any combination of the powers in this Indenture stated to be exercisable by the Warrantholders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Warrantholders to exercise such powers or combination of powers then or thereafter from time to time.
Minutes of all resolutions and proceedings at every meeting of Warrantholders as aforesaid shall be made and duly entered in books to be provided for that purpose by the Warrant Agent at the expense of the Company and any minutes as aforesaid, if signed by the chairman of the meeting at which resolutions were passed or proceedings had, or by the chairman of the next succeeding meeting of the Warrantholders, shall be prima facie evidence of the matters therein stated and, until the contrary is proved, every 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, to have been duly passed and taken.
6.14
|
Instruments in Writing
|
All actions that may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as provided in this Article 6 also may be taken
and exercised by Warrantholders representing at least 66 2/3% of the aggregate
number of 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 Indenture shall include an instrument so signed.
- 34 -
6.15
|
Binding Effect of Resolutions
|
Every resolution and every extraordinary resolution passed in accordance with the provisions of this Article 6 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 6.14 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 9.1 and 9.2 of the effect of the instrument in writing to all Warrantholders and the Company as soon as is reasonably practicable.
6.16
|
Holdings by the Company or Subsidiaries of the Company Disregarded
|
In determining whether Warrantholders are present at a meeting of Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, extraordinary resolution, Warrantholders Request or other action under this Indenture, Warrants owned legally or beneficially by the Company or its Subsidiaries or in partnership of which the Company is directly or indirectly a party to shall be disregarded. The Company shall provide, upon the written request of the Warrant Agent, a certificate as to the registration particulars of any Warrants held by the Company.
ARTICLE 7
SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES
7.1
|
Provision for Supplemental Indentures for Certain Purposes
|
From time to time the Company (if properly authorized by its directors) and the Warrant Agent may, subject to the provisions hereof, and they shall, when so directed hereby, execute and deliver by their proper officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:
|
(a)
|
providing for the issuance of additional Warrants hereunder and any consequential amendments hereto as may be required by the Warrant Agent, relying on the advice of counsel;
|
|
(b)
|
setting forth adjustments in the application of Article 2;
|
|
(c)
|
adding to the provisions hereof such additional covenants and enforcement
provisions as, in the opinion of counsel are necessary or advisable, provided
that the same are not in the opinion of the Warrant Agent, relying on the advice
of counsel, prejudicial to the interests of the Warrantholders as a
group;
|
- 35 -
|
(d)
|
giving effect to any extraordinary resolution passed as provided in Article 6;
|
|
(e)
|
making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder provided that such provisions are not, in the opinion of the Warrant Agent, relying on the advice of counsel, prejudicial to the interests of the Warrantholders as a group;
|
|
(f)
|
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 Warrant Certificate that does not affect the substance thereof;
|
|
(g)
|
amending any of the provisions of this Indenture or relieving the Company from any of the obligations, conditions or restrictions herein contained, provided that no such amendment or relief shall be or become operative or effective if, in the opinion of the Warrant Agent, relying on the advice of counsel, such amendment or relief impairs any of the rights of the Warrantholders as a group or of the Warrant Agent, and provided further that the Warrant Agent may in its sole discretion decline to enter into any supplemental indenture that in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative; and
|
|
(h)
|
for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors or omissions herein, provided that, in the opinion of the Warrant Agent, relying on the advice of counsel, the rights of the Warrant Agent and the Warrantholders as a group are in no way prejudiced thereby.
|
In the case of the amalgamation, consolidation, merger or transfer of the
undertaking or assets of the Company as an entirety or substantially as an
entirety to another person (a
successor
company
), the successor company resulting from the
amalgamation, consolidation, merger or transfer (if not the Company) shall be
bound by the provisions hereof and all obligations for the due and punctual
performance and observance of each and every covenant and obligation contained
in this Indenture to be performed by the Company and the successor company shall
by supplemental indenture satisfactory in form to the Warrant Agent and executed
and delivered to the Warrant Agent, expressly assume those
obligations.
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ARTICLE 8
CONCERNING THE WARRANT AGENT
8.1
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Trust Indenture Legislation
|
(1)
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail.
(2)
The Company and the Warrant Agent agree that each will at all times in relation to this Indenture and any action to be taken hereunder observe and comply with and be entitled to the benefit of Applicable Legislation.
8.2
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Rights and Duties of Warrant Agent
|
(1)
The Warrant Agent accepts the duties and responsibilities under this Indenture, solely as custodian, bailee and agent. No trust is intended to be, or is or will be, created hereby and the Warrant Agent shall owe no duties hereunder as a trustee.
(2)
In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall act honestly and in good faith with a view to the best interests of the Warrantholders and shall exercise the degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from, or require any other person to indemnify the Warrant Agent against liability for its own gross negligence, wilful misconduct or bad faith.
(3)
The Warrant Agent shall not be bound to do or take any act, action or proceeding for the enforcement of any of the obligations of the Company under this Indenture unless and until it shall have received a Warrantholders Request specifying the act, action or proceeding that the Warrant Agent is requested to take. 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 an indemnity reasonably satisfactory to the Warrant Agent and its counsel to protect and hold harmless the Warrant
Agent, its officers, directors, employees and agents against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Warrant Agent to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid.
(4)
The Warrant Agent may, before commencing any act, action or proceeding, or at any time during the continuance thereof require the Warrantholders at
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whose instance it is acting to deposit with the Warrant Agent the Warrant Certificates held by them, for which Warrant Certificates the Warrant Agent shall issue receipts.
(5)
Every provision of this Indenture 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, this section 8.2 and section 8.3.
(6)
The Warrant Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereunder unless and until it shall have been required to do so under the terms hereof; nor shall the Warrant Agent be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall specifically set out the default desired to be brought to the attention of the Warrant Agent and in the absence of such notice the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has occurred or been made in the performance or observance of the representations, warranties and covenants, agreements or conditions herein contained. Any such notice shall in no way limit any discretion
herein given to the Warrant Agent to determine whether or not the Warrant Agent shall take action with respect to any default.
(7)
In this Indenture, whenever confirmations or instructions are required to be given to the Warrant Agent, in order to be valid, such confirmations and instructions shall be in writing.
8.3
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Evidence, Experts and Advisers
|
(1)
In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Company 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 Company.
(2)
In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, act and rely absolutely as to the truth of the statements and the accuracy of the opinions expressed therein, upon statutory declarations, opinions, reports, written requests, consents, or orders of the Company, certificates of the Company 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. The Warrant Agent shall be under no responsibility in respect of the validity of this Indenture or the execution and delivery hereof by or on behalf of the Company or in respect of the validity or the execution of any Warrant Certificate by the Company and issued hereunder, nor shall it be responsible for
any breach by the Company of any covenant or condition contained in this Indenture or in any such Warrant Certificate; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any securities to be issued upon the right to acquire provided for in this Indenture and/or in any Warrant Certificate or as to whether any
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securities will when issued be duly authorized or be validly issued and fully paid and non-assessable.
(3)
Whenever Applicable Legislation requires that evidence referred to in subsection 8.3(1) be in the form of a statutory declaration, the Warrant Agent may accept the statutory declaration in lieu of a certificate of the Company required by any provision hereof. Any such statutory declaration may be made by one or more of the directors or officers of the Company and may be relied upon by the Warrant Agent in good faith without further inquiry.
(4)
Proof of the execution of an instrument in writing, including a Warrantholders Request, by any Warrantholder may be made by a certificate of a notary public or other person 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 and in respect of a corporate Warrantholder, shall include a certificate of incumbency of such Warrantholder together with a certified resolution authorizing the person who signs such instrument to sign such instrument.
(5)
The Warrant Agent may act and rely and shall be protected in acting and relying upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, telegram, cablegram or other paper document believed by it to be genuine and to have been signed, sent or presented by or on behalf of the proper party or parties. The Warrant Agent has sole discretion and shall be protected in acting and relying upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, telegram, cablegram or other paper document received in facsimile or e-mail form.
(6)
The Warrant Agent may employ or retain such counsel, accountants, engineers, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any counsel and shall not be responsible for any misconduct on the part of any of them who has been selected with due care by the Warrant Agent. Any reasonable remuneration paid by the Warrant Agent shall be paid by the Company in accordance with section 4.3.
(7)
The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any counsel, accountant, appraiser, engineer or other expert or advisor, whether retained or employed by the Company or the Warrant Agent, in relation to any matter arising in fulfilling its duties and obligations hereof.
(8)
The Warrant Agent may, as a condition precedent to any action to be taken by it under this Indenture, require such opinions, statutory declarations, reports, certificates or other evidence as it, acting reasonably, considers necessary or advisable in the circumstances.
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(9)
The Warrant Agent is not required to expend or place its own funds at risk in executing its duties and obligations.
8.4
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Securities, Documents and Monies Held by Warrant Agent
|
Any securities, documents of title, monies or other instruments that may at any time be held by the Warrant Agent subject to the duties and obligations hereof, for the benefit of the Company, may be placed in the deposit vaults of the Warrant Agent or of any Schedule 1 Canadian chartered bank for safekeeping with any such bank or the Warrant Agent. All interest or other income received by the Warrant Agent in respect of such deposits and investments shall, subject to section 4.4, belong to the Company and shall be paid to the Company upon discharge of this Indenture.
8.5
|
Actions by Warrant Agent to Protect Interests
|
Subject to the provisions of this Indenture and Applicable Legislation, the Warrant Agent shall have the 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.
8.6
|
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 duties and obligations of this Indenture or otherwise.
8.7
|
Protection of Warrant Agent
|
By way of supplement to the provisions of any law for the time being relating to warrant agents, it is expressly declared and agreed as follows:
(1)
The Warrant Agent shall not be liable for or by reason of any representations, statements of fact or recitals in this Indenture or in the Warrants (except the representation contained in section 8.9 or in the certificate of the Warrant Agent on the Warrants) or be required to verify the same and all such statements of fact or recitals are and shall be deemed to be made by the Company (except the representation contained in section 8.9 or in the certificate of the Warrant Agent on the Warrants).
(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 Indenture or any instrument ancillary or supplemental hereto.
(3)
The Warrant Agent shall not be bound to give notice to any person or persons of the execution hereof.
- 40 -
(4)
The Warrant Agent shall not incur any liability or responsibility whatsoever or be in any way responsible for the consequence of any breach on the part of the Company of any of the covenants or warranties herein contained or of any acts of any directors, officers, employees, agents or servants of the Company.
(5)
Without limiting any protection or indemnity of the Warrant Agent under any other provision hereof, or otherwise at law, the Company hereby agrees to indemnify and hold harmless the Warrant Agent and its directors, officers, agents and employees from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including reasonable legal or advisor fees and disbursements, of whatever kind and nature which may at any time be imposed on, incurred by or asserted against the Warrant Agent in connection with the performance of its duties and obligations hereunder, other than such liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements arising by reason of the gross negligence, fraud or wilful
misconduct of the Warrant Agent. This provision shall survive the resignation or removal of the Warrant Agent, or the termination of this Indenture. The Warrant Agent shall not be under any obligation to prosecute or defend any action or suit in respect of this Indenture which, in the opinion of its counsel, may involve it in expense or liability, unless the Company shall, so often as required, furnish the Warrant Agent with satisfactory indemnity and funding against such expense or liability.
8.8
|
Replacement of Warrant Agent
|
(1)
The Warrant Agent may resign its appointment and be discharged from all further duties and liabilities hereunder by giving to the Company not less than 60 days prior notice in writing or such shorter prior notice as the Company may accept as sufficient. The Warrantholders by extraordinary resolution shall have the 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 Company shall forthwith appoint a new Warrant Agent unless a new Warrant Agent has already been appointed by the Warrantholders; failing such appointment by the Company, the retiring Warrant Agent or any
Warrantholder may apply to a justice of the Ontario Superior Court of Justice at the Companys expense, on such notice as such justice may direct, for the appointment of a new Warrant Agent; but any new Warrant Agent so appointed by the Company or by the Court shall be subject to removal as aforesaid by the Warrantholders. Any new Warrant Agent appointed under any provision of this section 8.8 shall be a corporation authorized to carry on the business of a transfer agent or a trust company in the Province of Ontario and, if required by Applicable Legislation of any other province, in such other province. On any such appointment the new Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Warrant Agent without any further assurance, conveyance, act or deed; but there shall be immediately executed, at the expense of the Company, all such conveyances or other instruments as may, in the opinion of
counsel, be necessary or advisable for the purpose of assuring the same to the new Warrant Agent, provided that any resignation or removal of the
- 41 -
Warrant Agent and appointment of a successor Warrant Agent shall not become effective until the successor Warrant Agent shall have executed an appropriate instrument accepting such appointment and, at the request of the Company, the predecessor Warrant Agent, upon payment of its outstanding remuneration and expenses, shall execute and deliver to the successor Warrant Agent an appropriate instrument transferring to such successor Warrant Agent all rights and powers of the Warrant Agent hereunder and all securities, documents of title and other instruments and all monies and properties held by the Warrant Agent hereunder.
(2)
Upon the appointment of a successor warrant agent, the Company shall promptly notify the Warrantholders thereof in the manner provided for in section 9.1.
(3)
Any corporation into or with which the Warrant Agent may be merged or consolidated or amalgamated, or any corporation succeeding to the stock transfer business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without any further act on its part or of any of the parties hereto, provided that such corporation would be eligible for appointment as a new warrant agent under subsection 8.8(1).
(4)
Any Warrants certified but not delivered by a predecessor Warrant Agent may be certified by the new or successor warrant agent in the name of the predecessor or the new or successor warrant agent.
(1)
The Warrant Agent represents to the Company that at the time of execution and delivery hereof no material conflict of interest exists which is it aware of in the Warrant Agents role hereunder and agrees that in the event of a material conflict of interest arising which it becomes aware of hereafter it will, within 90 days after ascertaining that it has such a material conflict of interest, either eliminate the same or resign its appointment hereunder. If any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Warrants shall not be affected in any manner whatsoever by reason thereof.
(2)
Subject to subsection 8.9(1), the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Company and generally may contract and enter into financial transactions with the Company or any Subsidiary without being liable to account for any profit made thereby.
8.10
|
Acceptance of Duties and Obligations
|
The Warrant Agent hereby accepts the duties and obligations in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth and agrees to hold all rights, interests and benefits contained herein on behalf of those persons who become holders of Warrants from time to time issued under this Indenture.
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8.11
|
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 Company or any Subsidiary or any partnership of which the Company is directly or indirectly involved.
8.12
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Authorization to Carry on Business
|
The Warrant Agent represents to the Company that it is registered to carry on the business of a transfer agent in the Province of Ontario.
ARTICLE 9
GENERAL
9.1
|
Notice to the Company and the Warrant Agent
|
(1)
Unless herein otherwise expressly provided, any notice to be given hereunder to the Company or the Warrant Agent shall be deemed to be validly given if delivered, if sent by registered letter, postage prepaid or if transmitted by telecopier:
|
(a)
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If to the Company, to:
|
Glencairn Gold Corporation
6 Adelaide Street East, Suite 500
Toronto, Ontario M5C 1H6
|
Attention:
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President
|
|
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Telefax No.:
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(416) 367-0182
|
with a copy to:
Cassels Brock & Blackwell LLP
40 King Street West, Suite 2100
Toronto, Ontario M5H 3C2
|
Attention:
|
Mark T. Bennett
|
|
Telefax No.:
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(416) 350-6933
|
|
|
(b)
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If to the Warrant Agent, to:
|
Equity Transfer & Trust Company
200 University Avenue, Suite 400
Toronto, Ontario M5H 4H1
- 43 -
|
Attention:
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Corporate Trust Department
|
|
Telefax No.:
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(416) 361-0470
|
|
and any notice given in accordance with the foregoing shall be deemed to have been received on the date of delivery if that date is a Business Day or, if mailed, on the fifth Business Day following the date of the postmark on such notice or, if transmitted by telecopier, on the day following the transmission.
(2)
The Company or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in subsection 9.1(1) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Company or the Warrant Agent, as the case may be, for all purposes of this Indenture. A copy of any notice of change of address given pursuant to this subsection 9.1(2) shall be available for inspection at the principal stock transfer offices of the Warrant Agent in the City of Toronto, Ontario by Warrantholders during normal business hours.
(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 to the Company hereunder could reasonably be considered unlikely to reach its destination, the 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 that party at the appropriate address provided in subsection 9.1(1) by cable, telegram, telecopier or other means of prepaid, transmitted or recorded communication and any notice delivered in accordance with the foregoing shall be deemed to have been received on the date of delivery to the officer or if delivered by cable, telegram, telecopier or other means of prepaid, transmitted, recorded communication on the third
Business Day following the date of the sending of the notice by the person giving the notice.
9.2
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Notice to the Warrantholders
|
(1)
Any notice to the Warrantholders under the provisions of this Indenture shall be deemed to be validly given if the notice is sent by prepaid mail or, if delivered by hand, to the holders at their addresses appearing in the register of holders. Any notice so delivered shall be deemed to have been received on the date of delivery if that date is a Business Day or the Business Day following the date of delivery if such date is not a Business Day or on the next Business Day if delivered by mail. All notices may be given to whichever one of the Warrantholders (if more than one) is named first in the appropriate register hereinbefore mentioned, and any notice so given shall be sufficient notice to all Warrantholders and any other persons (if any) interested in such Warrants.
(2)
If, by reason of strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrantholders could reasonably be considered unlikely to reach its destination, the notice may be published or distributed once in the Report on Business section of the national edition of The Globe and Mail newspaper or, in the event of a disruption in the circulation of that newspaper, once in a daily newspaper in the English language of general circulation in
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the City of Toronto, Ontario; provided that in the case of a notice convening a meeting of the holders of Warrants, the Warrant Agent may require such additional publications of that notice, in the same or in other cities or both, as it may deem necessary for the reasonable notification of the holders of Warrants or to comply with any applicable requirement of law or any stock exchange. Any notice so given shall be deemed to have been given on the day on which it has been published in all of the cities in which publication was required.
9.3
|
Discretion of Directors
|
Any matter provided herein to be determined by the directors in their sole discretion and determination so made will be conclusive.
9.4
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Satisfaction and Discharge of Indenture
|
Upon the earlier of the Time of Expiry or the date by which there shall have been delivered to the Warrant Agent for exercise or destruction in accordance with the provisions hereof all Warrants theretofore certified hereunder, this Indenture, except to the extent that Common Shares and certificates therefor have not been issued and delivered hereunder or the Company has not performed any of its obligations hereunder, shall cease to be of further effect in respect of the Company, and the Warrant Agent, on written demand of and at the cost and expense of the Company, and upon delivery to the Warrant Agent of a certificate of the Company stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with and upon payment to the Warrant Agent of the expenses, fees and other remuneration payable to the Warrant Agent, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; provided that if the Warrant Agent has not then performed any of its obligations hereunder any such satisfaction and discharge of the Companys obligations hereunder shall not affect or diminish the rights of any Warrantholder or the Company against the Warrant Agent.
9.5
|
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders
|
Nothing in this Indenture or the Warrants, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the holders from time to time of the Warrants any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Warrantholders.
9.6
|
Counterparts and Formal Date
|
This Indenture may be simultaneously 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 bear the date set out at the top of the first page of this Indenture.
- 45 -
IN WITNESS WHEREOF
the parties hereto have executed this Indenture under the hands of their proper officers in that behalf.
GLENCAIRN GOLD CORPORATION
Per:
Lorna MacGillivray
|
Authorized Signing Officer
|
EQUITY TRANSFER & TRUST COMPANY
Per:
Shelley Martin
|
Authorized Signing Officer
|
Per:
Derrice Richards
|
Authorized Signing Officer
|
SCHEDULE A
FORM OF WARRANT CERTIFICATE
SCHEDULE B
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO:
|
Equity Transfer & Trust Company
|
as registrar and transfer agent for the
securities of Glencairn Gold Corporation
The undersigned (a) acknowledges that the sale of the securities of Glencairn Gold Corporation (the
Company
) to which this declaration relates is being made in reliance on Rule 904 of Regulation S (
Regulation S
) under the United States
Securities Act of 1933
, as amended (the
U.S. Securities Act
) and (b) certifies that (1) the undersigned is not an affiliate of the Company as that term is defined in Rule 405 under the U.S. Securities Act, (2) the offer of such securities was not made to a person in the United States and either (A) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably
believed that the buyer was outside the United States, or (B) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purposes of washing off the resale restrictions imposed because the securities are restricted securities (as such term is defined in Rule 144(a)(3) under the U.S. Securities Act), and (5) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to
evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S.
Dated:
|
|
|
Signature Guaranteed
|
|
Name of Securityholder
|
|
|
|
|
|
|
Name of Authorized Representative
|
|
Signature of Securityholder or Authorized Representative
|
|
|
|
|
|
|
Title or Capacity of Authorized Representative
|
|
Daytime Phone Number of Securityholder or Authorized Representative
|