1.1 Definitions

1.2 Headings

1.3 Gender

1.4 Business Day

1.5 Meaning of “Outstanding“

1.6 Time

1.7 Applicable Law

 

 

2.1 Creation and Issue of Warrants

2.2 Book Entry System

2.3 Global Warrant Certificates

2.4 Form and Terms of Warrants

2.5 Registration and Transfer of Warrants

2.6 List of Warrantholders

2.7 Transfer and Ownership of Warrants

2.8 Legends

2.9 Warrantholders Not Shareholders

2.10 Signing of Warrants

2.11 Countersigning

2.12 Loss, Mutilation, Destruction or Theft of Warrants

2.13 Issue of Warrants

2.14 Fractions

2.15 Warrants to Rank Pari Passu

2.16 Exchange of Warrants

2.17 Recognition of Registered Holder

2.18 Cancellation of Surrendered Warrants

 

 

3.1 Covenants of the Company

3.2 Suits by Warrantholder

3.3 Warrant Agent May Institute Proceedings

 

 

4.1 Adjustment of Subscription Rights

4.2 Proceedings Prior to any Action Requiring Adjustment

4.3 Certificate of Adjustment

4.4 Adjustment Rules

4.5 Notice of Special Matters

4.6 No Action after Notice

4.7 Protection of Warrant Agent

 

 

5.1 Exercise of Warrants

5.2 Effect of Exercise of Warrants

5.3 Postponement of Delivery of Certificates

5.4 Warrants Void after Expiry Time

5.5 Fractions

5.6 Partial Exercise of Warrants

5.7 Accounting and Recording

5.8 Warrant Exercise Proceeds

 

 

6.1 Convening of Meeting

6.2 Notice

6.3 Chairman

6.4 Quorum

6.5 Show of Hands

6.6 Poll

6.7 Regulations

6.8 Minutes

6.9 Powers Exercisable by Extraordinary Resolution

6.10 Meaning of “Extraordinary Resolution”

6.11 Powers Cumulative

6.12 Company, Warrantholders and Warrant Agent May be Represented

6.13 Instruments in Writing

6.14 Binding Effect of Resolutions

6.15 Holdings by the Company or Subsidiaries of the Company Disregarded

 

 

7.1 Provision for Supplemental Agreements for Certain Purposes

7.2 Company May Consolidate, etc. on Certain Terms

7.3 Successor Body Corporate Substituted

 

 

8.1 No Conflict of Interest

8.2 Replacement of Warrant Agent

8.3 Duty of Warrant Agent

8.4 Experts, Advisors and Agents

8.5 Warrant Agent Not Required to Give Security

8.6 Warrant Agent Not Ordinarily Bound

8.7 Warrant Agent may Rely on Certificates

8.8 Warrant Agent’s Liability

8.9 Indemnification

8.10 No Representation as to Validity

8.11 Acceptance of Duties

8.12 Contracting with Company

8.13 Warrant Agent’s Authority to Carry on Business

8.14 Monetary Distributions

8.15 Trust Indenture Legislation

8.16 Limitations on Warrant Agent

 

 

9.1 Notice to Company or Agent

9.2 Notice to Warrantholders

9.3 Notice to Warrant Agent

9.4 Mail Service Interruption

9.5 General Provisions as to Certificates

 

 

10.1 Power of Board of Directors

10.2 Formal Date and Execution Date

10.3 Further Assurances

10.4 Unenforceable Terms

10.5 Entire Agreement

10.6 Amendments

10.7 Counterparts

10.8 No Waiver

10.9 Enurement

10.10 Conflicts

10.11 Assignment

terms used in these recitals which are not otherwise defined have the meanings assigned to them in Article 1;

pursuant to the terms of the Agency Agreement and the Special Warrants, the Company proposes to create and issue the Warrants to be constituted and issued in the manner set forth herein;

the Company is authorized to create and issue the Warrants;

each one (1) Warrant will entitle the holder to acquire upon exercise thereof one (1) Common Share, subject to adjustment and on the terms and conditions as set forth herein;

the Company represents to the Warrant Agent that all necessary resolutions of the directors of the Company have been duly enacted, passed or confirmed and all other proceedings taken and conditions complied with to authorize the execution and delivery of this Indenture and the execution and issue of the Warrants and to make the same legal and valid and binding on the Company in accordance with the laws relating to the Company;

the foregoing recitals are made as representations and statements of fact by the Company and not by the Warrant Agent and the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture and all such statements are and shall be deemed to be made by the Company;

the Warrant Agent has agreed to act as Warrant Agent for the Warrantholders on the terms and conditions herein set forth; and

all things necessary have been done and performed to make the Warrants, when certified by the Warrant Agent and issued as in this Indenture provided, legal, valid and binding upon the Company with the benefits of and subject to the terms of this Indenture.

“Agency Agreement” means the agency agreement dated as of January 12, 2010 between the Company and the Agent;

“Agent’s Option Warrants” means any Common Share purchase warrants underlying the Option Special Warrants issued pursuant to the exercise of the Option, such warrants to have substantially the same terms and conditions as the Warrants;

“Applicable Legislation” has the meaning set forth in Section 8.15 hereof;

“Applicable Securities Laws” means, collectively, the applicable securities laws of the Qualifying Provinces, the securities laws of the United States and the states thereof, the regulations, rules, rulings and orders made thereunder, the applicable policy statements issued by the securities regulatory authorities in the Qualifying Provinces, the United States Securities and Exchange Commission and the securities legislation and policies of each other relevant jurisdiction;

“Beneficial Owners” means any person who holds a beneficial interest in a Global Warrant Certificate as shown on the books of the Depository or a Participant;

“Book Entry Only System” means the book-based securities transfer system administered by a Depository in accordance with its operating procedures;

“Business Day” means any day except Saturday, Sunday or a statutory or banking holiday in Vancouver, British Columbia;

“Certificate of the Company” means a certificate signed by any one of the President, Vice-President, Secretary or Chief Financial Officer of the Company in accordance with Section 9.5;

“Common Shares” means, collectively, the fully paid and non-assessable common shares in the capital of the Company as presently constituted and, except where the context hereof otherwise requires, includes common shares issued or to be issued in accordance with the exercise of Warrants hereunder;

“Company’s auditors” means the firm of accountants appointed by the shareholders of the Company as the auditors of the Company from time to time;

“counsel” means a barrister and solicitor or a firm of barristers and solicitors retained by the Warrant Agent or retained by the Company and acceptable to the Warrant Agent;

“Current Market Price” of a Common Share at any date means the price per share equal to the volume weighted average price at which the Common Shares have traded on the TSX for any 20 consecutive Trading Days immediately preceding such date or, if the Common Shares are not listed on the TSX, on any other stock exchange or securities market on which the Common Shares are then listed as may be selected by the directors, or, if the Common Shares are not listed on any stock exchange, then on the over-the-counter market, with the weighted average price per Common Share being determined by dividing the aggregate sale price of all Common Shares sold on such stock exchange or market, as the case may be, during such 20 consecutive Trading Day period by the aggregate number of Common Shares so sold or, if not traded on any recognized market or exchange, as determined by the directors, acting reasonably;

“Depository” means CDS Clearing and Depository Services Inc. (“CDS”), or its successor, or any other depository offering a book based securities registration and transfer system similar to that administered by CDS which the Company, with the consent of the Trustee, acting reasonably, may designate;

“director” means a director of the Company for the time being and reference without more to action by the directors means action by the directors of the Company as a board or, whenever duly empowered, action by a committee of the board;

“Document” shall have the meaning ascribed to such term in Section 9.5 hereof;

“Exercise Date” has the meaning set forth in Section 5.2 hereof;

“Exercise Consideration” means the sum of Cdn.$3.16, being the amount payable in connection with the exercise of one (1) Warrant in order to purchase one (1) Common Share, subject to adjustment under Article 4;

“Expiry Date” means January 25, 2011, representing the first anniversary of the closing date of the issue of the Special Warrants;

“Expiry Time” means 5:00 p.m. (Vancouver time) on the Expiry Date;

“Extraordinary Resolution” has the meaning set forth in Section 6.10 and 6.13 hereof;

“Final Prospectus” means the (final) short form prospectus of the Company which qualifies, among other things, the distribution of the Warrants in the Qualifying Jurisdictions and includes any amendments or supplements thereto;

“Final Receipt” means the final decision document in respect of the Final Prospectus issued in accordance with Multilateral Instrument 11-102 — Passport System and National Policy 11-202 — Process for Prospectus Reviews in Multiple Jurisdictions by the Ontario Securities Commission and the Company’s principal regulator on its own behalf and on behalf of the regulators in the Qualifying Jurisdictions (other than the Ontario Securities Commission);

“Global Warrant Certificate” means a Warrant Certificate that is issued to and registered in the name of the Depository or its nominee;

“Indenture”, “hereto”, “hereunder”, “hereof”, “hereby” and similar expressions mean or refer to this Indenture and not to any particular Article, Section, Subsection, paragraph, clause, subdivision or portion hereof and include any agreement, deed or instrument supplemental or ancillary hereto and the expressions “Article”, “Section”, “Subsection” and “paragraph” followed by a number mean and refer to the specified Articles, Sections, Subsections or paragraphs of this Indenture;

“Issue Date” means in respect of any Warrants issued hereunder, their date of issue as shown on the corresponding Warrant Certificate;

“Option” has the meaning ascribed thereto in the Agency Agreement;

“Option Special Warrants” has the meaning ascribed thereto in the Special Warrant Indenture;

“Participant” means a person recognized by the Depository as a participant in the Book-Entry Only System administered by the Depository;

“person” means any entity whatsoever including, without limitation, an individual, a corporation, a partnership, a trust, an unincorporated organization, a syndicate and words importing persons have a similar meaning;

“Qualifying Provinces” has the meaning set out in the Special Warrant Indenture;

“Regulation S” means Regulation S under the U.S. Securities Act;

“Share Rate” has the meaning ascribed to such term in Section 4.1(b) hereto;

“Special Warrants” means special warrants of the Company issued pursuant to the Special Warrant Indenture, each special warrant entitling the holder thereof to one Common Share and one-quarter (0.25) of one Warrant upon conversion or deemed conversion thereof;

“Special Warrant Indenture” means the Special Warrant Indenture among the Company, the Agent and the Warrant Agent dated January 25, 2010;

“subsidiary of the Company” means a corporation of which voting securities carrying a majority of votes attached to all outstanding voting securities are owned, directly or indirectly, by the Company or by one or more subsidiaries of the Company, or by the Company and one or more subsidiaries of the Company, and, as used in this definition, voting securities means securities, other than debt securities, carrying a voting right to elect directors either under all circumstances or under some circumstances that may have occurred and are continuing;

“Trading Day”, with respect to any stock exchange or over-the-counter market, means a day on which shares may be traded through the facilities of such stock exchange or in such over-the-counter market and otherwise means a day on which shares may be traded through the facilities of the principal stock exchange on which the Common Shares are then listed (or, if the Common Shares are not then listed on any stock exchange, then in the over-the-counter market).

“United States” means the “United States” as that term is defined in Rule 902 of Regulation S;

“U.S. Person” means a “U.S. person” as that term is defined in Rule 902 of Regulation S;

“U.S. Securities Act” means the United States Securities Act of 1933, as amended;

“Warrant Certificate” means a certificate substantially in the form attached hereto as Schedule “A” evidencing one or more Warrants;

“Warrantholder” or “holder” means the registered holder of a Warrant hereunder;

“Warrantholders’ Request” means an instrument, signed in one or more counterparts by Warrantholders and/or holders of Agent’s Option Warrants who hold in the aggregate not less than 10% of the total number of Warrants and Agent’s Option Warrants then outstanding, requesting the Warrant Agent to take some action or proceeding specified therein;

“Warrants” means, collectively, the Common Share purchase warrants of the Company issued and certified hereunder entitling holders thereof to receive, upon the exercise of one (1) such Common Share purchase warrant, one (1) Common Share and/or such kind and amount of securities or property determined pursuant to Article 4 hereof; and

“written direction of the Company”, “written order of the Company” and any other document required to be signed by the Company, mean, respectively, a written direction, order or request, consent or other document signed in the name of the Company by any of the President, Vice-President, Secretary or Chief Financial Officer of the Company, and may consist of one or more instruments so executed.

Unless the Book-Entry Only System is terminated or required to do so by applicable law, Warrant Certificates will only be issued in the form of a Global Warrant Certificate, which will be registered in the name of and deposited with the Depository or its nominee.

All references herein to actions by, notices given or payments made to Warrantholders shall, where Warrants are held through the Depository, refer to actions taken by, or notices given or payments made to, the Depository upon instruction from the Participants in accordance with its rules and procedures. For the purposes of any provision hereof requiring or permitting actions with the consent of or at the direction of Warrantholders evidencing a specified percentage of the aggregate Warrants outstanding, such direction or consent may be given by holders of Warrants acting through the Depository and the Participants owning Warrants evidencing the requisite percentage of the Warrants. The rights of a Warrantholder whose Warrants are held through the Depository shall be exercised only through the Depository and the Participants and shall be limited to those established by law and agreements between such holders and the Depository and the Participants upon instructions from the Participants. Each of the Warrant Agent and the Company may deal with the Depository for all purposes as the authorized representative of the respective Warrantholders and such dealing with the Depository shall constitute satisfaction or performance, as applicable, of their respective obligations hereunder. For so long as Warrants are held through the Depository, if any notice or other communication is required to be given to Warrantholders, the Warrant Agent will give such notices and communications to the Depository.

The Company shall issue the Warrants pursuant to one or more Global Warrant Certificates registered in the name of the Depository or its nominee and the Company shall execute and the Warrant Agent shall certify and deliver one or more Global Warrant Certificates that shall represent the aggregate number of outstanding Warrants.

Transfers of beneficial ownership in any Warrant represented by a Global Warrant Certificate will be effected only (i) with respect to the interest of a Participant, through records maintained by the Depository or its nominee for such Global Warrant Certificate, and (ii) with respect to the interest of any person other than a Participant, through records maintained by Participants. Beneficial Owners who are not Participants but who desire to sell or otherwise transfer ownership of or any other interest in Warrants represented by such Global Warrant Certificate may do so only through a Participant.

The rights of Beneficial Owners shall be limited to those established by applicable law and agreements between the Depository and the Participants and between such Participants and Beneficial Owners and must be exercised through a Participant in accordance with the rules and procedures of the Depository.

Subject to subsection 2.3(e) and 2.3(f), neither the Company nor the Warrant Agent shall be under any obligation to deliver to any Participant or Beneficial Owner, nor shall any Participant or Beneficial Owner have any right to require the delivery of, a certificate or other instrument evidencing any interest in Warrants except where physical certificates evidencing ownership in the Warrants.

If any Warrant is represented by a Global Warrant Certificate and any of the following events occurs:

the Depository or the Company has notified the Warrant Agent that (A) the Depository is unwilling or unable to continue as Depository or (B) the Depository ceases to be a clearing agency in good standing under applicable laws and, in either case, the Company is unable to locate a qualified successor Depository within 90 days of delivery of such notice;

the Company has determined, in is sole discretion, to terminate the Book-Entry Only System in respect of such Global Warrant Certificate and has communicated such determination to the Warrant Agent in writing;

the Company or the Depository is required by applicable law to take the action contemplated in this subsection 2.3(e); or

the Book-Entry Only System administered by the Depository ceases to exist;

then one or more definitive fully registered Warrant Certificates shall be executed by the Company and certified and delivered by the Warrant Agent to the Depository in exchange for the Global Warrant Certificate(s) held by the Depository.

Fully registered Warrant Certificates issued and exchanged pursuant to subsection 2.3(e) shall be registered in such names and in such denominations as the Depository shall instruct the Warrant Agent, provided that the aggregate number of Warrants represented by such Warrant Certificates shall be equal to the aggregate number of Warrants represented by the Global Warrant Certificate(s) so exchanged. Upon exchange of a Global Warrant Certificate for one or more Warrant Certificates in definitive form, such Global Warrant Certificate shall be cancelled by the Warrant Agent.

Notwithstanding anything herein or in the terms of the Warrant Certificates to the contrary, neither the Company nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for (i) the records maintained by the Depository relating to any ownership interests or any other interest in the Warrants or the depository system maintained by the Depository, or payments made on account of any ownership interest or any other interest of any person in any Warrant represented by any Global Warrant Certificate (other than the applicable Depository or its nominee), (ii) maintaining, supervising or reviewing any records of the Depository or any Participant relating to any such interest, or (iii) any advice or representation made or given by the Depository or those contained herein that relate to the rules and regulations of the Depository or any action to be taken by the Depository on its own direction or at the direction of any Participant.

The provisions of Sections 2.6 and 2.7 with respect to the transfer of Warrants are subject to the provisions of this section 2.3 while the Warrants are represented by Global Warrant Certificate(s).

the executor, administrator, heir or legal representative of the heirs of the estate of a deceased Warrantholder;

a guardian, committee, Warrant Agent, curator or tutor representing a Warrantholder who is an infant, an incompetent person or a missing person;

a liquidator of, or a Warrant Agent in bankruptcy for, a Warrantholder; or

a transferee of a Warrantholder who provides the Warrant Agent with evidence satisfactory to the Warrant Agent and the Company, acting reasonably, including but not limited to a properly completed and executed declaration attached as Exhibit “A” to the transfer form attached to the Warrant Certificate, that such transferee is/was either: (i) not in the United States at the time the buy order for the Warrants was executed, not acquiring the Warrants for the account or benefit of a U.S. Person or a person in the United States and was not offered the Warrants in the United States, or (ii) a person that has purchased or acquired Warrants in a transaction that was exempt from registration under the U.S. Securities Act and has provided the Company with satisfactory evidence of the availability of such exemption which shall include an opinion of counsel reasonably acceptable to the Company that such transaction was exempt from registration under any applicable securities laws of any state of the United States and that the securities laws of any other applicable jurisdiction(s) have been complied with in relation to the transfer of the Warrants involved,

No Common Shares will be issued pursuant to the exercise of any Warrant if the issue of such Common Shares would constitute a violation of the securities laws of any jurisdiction and, without limiting the generality of the foregoing, the certificates representing the Common Shares thereby issued will bear such legend or legends as may, in the opinion of counsel to the Company, be necessary or advisable in order to avoid a violation of any securities laws of any jurisdiction or to comply with the requirements of any stock exchange on which the Common Shares are then listed, provided that if, at any time, in the opinion of counsel to the Company, such legend or legends are no longer necessary or advisable in order to avoid a violation of any such laws or requirements, or the holder of any such legended certificate, at such holder’s 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 holder is entitled to sell or otherwise transfer such Common Shares in a transaction in which such legend or 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 or legends.

For greater certainty, if any Special Warrants are converted to Common Shares and Warrants prior to the receipt of the Final Receipt, the certificates representing such Warrants and the Common Shares issuable upon the exercise of such Warrants will bear the following legend:

Certificates representing Warrants and Common Shares issuable on the exercise of such Warrants originally issued to a U.S. Person, a person in the United States, or a person purchasing for the account or benefit of a U.S. Person or a person in the United States, as well as all certificates issued in exchange for or in substitution of such certificates, will bear the following additional legend:

Warrant Certificates in the form of a Global Warrant Certificate, as well as all certificates issued in exchange for, in substitution of or upon exercise of such certificates representing Warrants, will, if directed by the Company, bear the following legend:

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 the same number of Warrants. The Company shall sign, and the Warrant Agent shall countersign, in accordance with Sections 2.10 and 2.11, all Warrant Certificates necessary to carry out the exchanges contemplated herein;

Warrant Certificates may be exchanged only at the principal office of the Warrant Agent in the city of Vancouver. Any Warrant Certificates tendered for exchange shall be surrendered to the Warrant Agent and cancelled; and

the Warrant Agent may charge registered holders requesting an exchange a reasonable sum for each Warrant Certificate exchanged 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.

To Issue Warrants and Reserve Common Shares: The Company is duly authorized to create and issue the Warrants and the Warrant Certificates, when issued and countersigned as herein provided, will be valid and enforceable against the Company and, subject to the provisions of this Indenture, the Company will cause a sufficient number of Common Shares from time to time issuable upon the exercise of Warrants under this Indenture together with the certificates representing such Common Shares to be duly issued and delivered in accordance with instructions on the Warrant Certificates and the terms hereof. At all times prior to the Expiry Time, while any of the Warrants are outstanding, the Company shall reserve and allot and conditionally issue out of its authorized capital a number of Common Shares sufficient to enable the Company to meet its obligation to issue Common Shares in respect of the exercise of all Warrants outstanding hereunder from time to time. All Common Shares acquired upon the exercise of the Warrants shall be fully paid and non-assessable.

To Pay Warrant Agent’s Remuneration: The Company will pay to the Warrant Agent from time to time reasonable remuneration for its services hereunder and will repay to the Warrant Agent on demand the amount of all expenditures, disbursements and advances whatsoever which the Warrant Agent reasonably incurs in and about the administration or execution of the trusts hereby created (including the compensation and disbursements of its counsel and other advisors and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder have been finally and fully performed.

To Execute Further Assurances: The Company will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law as the Warrant Agent may reasonably require for effecting the intentions and provisions of this Indenture.

To Carry on Business: Subject to the express provisions hereof, the Company will at all times maintain its corporate existence, carry on and conduct (and cause to be carried on and conducted) its business in the same manner as heretofore carried on and conducted, provided, however, that the Company or any subsidiary of the Company may dispose of any business, premises, property or operation if in the reasonable opinion of the directors or officers of the Company or any subsidiary of the Company, as the case may be, it would be advisable and in the best interests of the Company or any subsidiary of the Company to do so; and subject to the express provisions hereof, it will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, provided, however, that (subject to compliance with the provisions of Article 4 hereof) nothing herein contained shall prevent the amalgamation, consolidation or merger of the Company or any subsidiary of the Company or the abandonment of any rights and franchises of the Company or any subsidiary of the Company if, in the reasonable opinion of the directors or officers of the Company, or the directors or officers of any subsidiary of the Company, as the case may be, it would be advisable and in the best interests of the Company or of such subsidiary of the Company to do so. The Company will keep or cause to be kept proper books of account in accordance with generally accepted accounting practices and will file with the Warrant Agent copies of all annual statements of the Company furnished to its shareholders after the date hereof, forthwith following delivery to its shareholders.

Performance of Covenants By Warrant Agent: If the Company shall fail to perform any of its covenants contained in this Indenture, 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, subject to Section 8.3 hereof, the Warrant Agent shall be under no obligation to do so or to notify any Warrantholder. All sums reasonably expended or advanced by the Warrant Agent in performance of its rights provided for in this Subsection 3.1(e) shall be repayable as provided in Subsection 3.1(b). No such performance, expenditure or advance by the Warrant Agent shall be deemed to relieve the Company of any default hereunder or its continuing obligations hereunder.

Performance of Indenture: The Company will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture.

if and whenever at any time from the date hereof (and for greater certainty such date being prior to the issuance of the Warrants) and prior to the Expiry Time, the Company shall:

subdivide, redivide or change its outstanding Common Shares into a greater number of shares;

reduce, consolidate or combine the outstanding Common Shares into a lesser number of shares; or

issue Common Shares or securities convertible into or exchangeable for Common Shares to all or substantially all of the holders of Common Shares by way of stock dividend or other distribution;

the numerator shall be the total number of Common Shares outstanding immediately after such date, or, in the case of the issuance of securities convertible into or exchangeable for Common Shares, the total number of Common Shares outstanding immediately after such date plus the number of Common Shares issuable upon conversion or exchange of such securities, and

the denominator shall be the total number of Common Shares outstanding immediately prior to such date,

if and whenever at any time from the date hereof (and for greater certainty such date being prior to the issuance of the Warrants) and prior to the Expiry Time, the Company shall fix a record date for the issue of rights, options or warrants to all or substantially all of the holders of Common Shares entitling the holders thereof, within a period expiring not more than 45 days after the record date for such issue, to subscribe for or purchase Common Shares (or securities convertible into or exchangeable for Common Shares) at a price per Common Share (or having a conversion or exchange price per Common Share) less than 95% of the Current Market Price on the earlier of such record date and the date on which the Company announces its intention to make such issue, then, in each such case, the Exercise Consideration will be adjusted immediately after such record date so that it will equal the price determined by multiplying the Exercise Consideration in effect on such record date by a fraction, of which the denominator shall be the total number of Common Shares outstanding on such record date plus the number arrived at when (A) either the product of (1) the number of Common Shares so offered for subscription 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 Common Shares for or into which the convertible or exchangeable securities so offered pursuant to the rights offering may be converted or exchanged, as the case may be, is divided by (B) the Current Market Price on the record day, and of which the numerator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares so offered for subscription or purchase (or into or for which the convertible or exchangeable securities so offered are convertible or exchangeable). Any Common Shares owned by or held for the account of the Company or any subsidiary of the Company will be deemed not to be outstanding for the purpose of any such computation. Such adjustment will be made successively whenever such a record date is fixed, provided that if two or more such record dates or record dates referred to in Section 4.1(c) hereof are fixed within a period of 20 Trading Days, such adjustment will be made successively as if each of such record dates occurred on the earliest of such record dates. To the extent that any such rights, options or warrants are not exercised prior to the expiration thereof, the number of Common Shares obtainable on the exercise of each Warrant (“Share Rate”) will then be readjusted to the Share Rate which would then be in effect based upon the number of Common Shares (or securities convertible into or exchangeable for Common Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be;

if and whenever at any time from the date hereof (and for greater certainty such date being prior to the issuance of the Warrants) and prior to the Expiry Time, the Company shall fix a record date for the making of a distribution to all or substantially all of the holders of Common Shares of:

shares of any other class other than Common Shares whether of the Company or any other corporation;

rights, options or warrants to acquire Common Shares or securities exchangeable for or convertible into Common Shares or property or other assets of the Company (other than rights, options or warrants exercisable by the holders thereof within a period expiring not more than 45 days after the record date for such issue or distribution to acquire Common Shares or securities exchangeable for or convertible into Common Shares at a price per share, or at an exchange or conversion price per share in the case of securities exchangeable for or convertible into Common Shares, of at least 95% of the Current Market Price of the Common Shares on such record date);

evidences of indebtedness; or

cash, securities or other property or assets (other than cash dividends paid in the ordinary course);

if and whenever at any time from the date hereof (and for greater certainty such date being prior to the issuance of the Warrants) and prior to the Expiry Time, there is a reclassification of the Common Shares or a capital reorganization of the Company other than as described in Subsections 4.1(a), (b) or (c) or a consolidation, amalgamation, arrangement or merger of the Company or other form of business combination of the Company with or into any other body corporate, trust, partnership or other entity, any sale, conveyance, lease, exchange or transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another corporation or entity, any Warrantholder who has not exercised his right of subscription prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, merger, sale or conveyance, upon the exercise of such right thereafter, shall be entitled to receive and shall accept the kind and number of shares, securities or property that such Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, merger, sale or conveyance, if, on the record date or the effective date thereof, as the case may be, the Warrantholder had been the registered holder of the number of Common Shares receivable upon the exercise of Warrants then held, subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this Section 4.1; provided that no such action shall be carried into effect unless all necessary steps shall have been taken so that the holders of the Warrants shall thereafter be entitled to receive such kind and number of securities and property. The Company, its successor, or purchasing body corporate, partnership, trust or other entity, as the case may be, shall, as a condition precedent to any such reclassification, capital reorganization, consolidation, amalgamation, merger, sale or conveyance, take all necessary steps hereunder to enter into an agreement which shall provide, to the extent possible, that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, to the securities and property to which a Warrantholder is entitled on the exercise of his Warrants thereafter. Any agreement entered into between the Company and the Warrant Agent pursuant to the provisions of this Subsection 4.1(d) shall be a supplemental agreement entered into pursuant to the provisions of Article 7 hereof. Any agreement entered into between the Company, any successor to the Company or any purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances;

in any case in which this Section 4.1 requires an adjustment to become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event, issuing any Warrantholder exercising or deemed to be exercising his subscription rights after such record date the additional Common Shares or other securities or property issuable upon such exercise by reason of the adjustment required by such event; provided, however, that the Company shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional Common Shares or other securities or property, as the case may be, upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares or other securities or property, as the case may be, declared in favour of holders of record of such Common Shares or other securities or property, as the case may be, on and after the date of exercise or such later date as such holder would but for the provisions of this Subsection 4.1(e), have become the holder of record of such additional Common Shares, other securities or property, as the case may be, upon the exercise of the Warrants held by such holder;

after any adjustment pursuant to this Section 4.1, the term “Common Shares” where used in this Indenture shall be interpreted to mean securities of any class or classes or property which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, a Warrantholder is entitled to receive upon the exercise of such holder’s Warrants, and the number of Common Shares indicated to be issuable upon any exercise of a Warrant shall be interpreted to include the number of Common Shares or other securities or property a Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the exercise of the Warrant;

all shares of any class or classes or other securities or property which a Warrantholder is at the time in question entitled to receive on the exercise of his Warrant, whether or not as a result of adjustments made pursuant to this Section 4.1 shall, for the purposes of the interpretation of this Indenture, be deemed to be Common Shares which such Warrantholder is entitled to subscribe for pursuant to the exercise of such Warrant;

anything in this Section 4.1 to the contrary notwithstanding, no adjustment shall be made in the subscription rights attaching to the Warrants if the issue of Common Shares is being made pursuant to any stock option or stock purchase plan in force from time to time for directors, officers or employees of the Company or any other currently existing obligation of the Company; and

in the event of any question arising with respect to the adjustments provided for in this Section 4.1 such question shall be conclusively determined, subject to the consent of any stock exchange upon which the Common Shares are then listed, by a firm of chartered accountants appointed by the Company and acceptable to the Warrant Agent (which may be the Company’s auditors). Such accountants shall have access to all necessary records of the Company, and such determination shall be binding upon the Company, the Warrant Agent, all Warrantholders and all other persons interested therein. In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Agent describing such determination;

shall not at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1 hereof, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;

shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Share or of any other securities or property which may at any time be issued or delivered upon the exercise of the subscription rights attaching to any Warrant;

shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver Common Shares (or certificates representing same) upon the surrender or deemed surrender of any Warrants upon the exercise of the subscription rights attaching to any Warrants or to comply with any of the covenants contained in this Article 4; and

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.

Upon and subject to the provisions of this Article 5, any holder of a Warrant may exercise the right thereby conferred on him to subscribe for Common Shares by delivering or causing to be delivered to the Warrant Agent after the Issue Date and until the Expiry Time at its principal office in the City of Vancouver, or any other place designated by the Company with the approval of the Warrant Agent, during normal business hours on a Business Day,

the Warrant Certificate evidencing the Warrants, with the Exercise Form attached to the Warrant Certificate duly completed and executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and manner satisfactory to the Warrant Agent; and

either:

a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Warrant Agent, in trust for the Company, at par in such city or other place, in an amount equal to the Exercise Consideration multiplied by the number of Warrants being exercised; or

a written notice by the Company that the Company has received payment in full of an amount equal to the Exercise Consideration multiplied by the number of Warrants being exercised.

Unless the Company has instructed the Warrant Agent in writing to waive any or all of the following requirements, the Warrants may not be exercised by or for the account or benefit of a U.S. Person or a person in the United States unless the holder certifies in writing to the Company and the Warrant Agent that the holder: (i) purchased the Special Warrants directly from the Company pursuant to a written subscription agreement for the purchase of Special Warrants, (ii) is exercising the Warrants solely for its own account and not on behalf of any other Person; and (iii) was an “Accredited Investor”, as that term is defined in Regulation D under the Securities Act, both on the date the Warrants were issued by the Company and on the date of exercise of the Warrants; or (iii) a registered transferee of such Warrants who has complied with Subsection 2.7(d) hereof, provided that the Company may, in its sole discretion, accept, in substitution of the foregoing, evidence satisfactory to the Company, acting reasonably, to the effect that the Common Shares have been registered under the U.S. Securities Act and applicable state securities laws or that the Common Shares may be issued upon exercise of the Warrants without registration under the U.S. Securities Act and any applicable state securities laws.

The Exercise Form attached to the Warrant Certificate shall be signed as set out above and shall specify:

the number of Warrants which the Warrantholder wishes to exercise; and

the number of Common Shares owned or controlled (beneficially and legally) by the Warrantholder on the date of exercise; and

the person or persons in whose name or names the Common Shares issuable upon the exercise of such Warrants are to be registered, the address or addresses and the social insurance number or numbers of such person or persons and the number of Common Shares to be issued to each such person if more than one is so specified, provided that the Warrantholder shall only be entitled to direct his entitlement to the Common Shares in a manner permitted by applicable securities legislation, and provided further that no certificates for Common Shares shall be registered at or delivered to an address in the United States unless the person in whose name the certificates are to be registered has complied with the requirements of subsection 2.7(d) hereof.

If at the time of the exercise of the Warrants there remain trading restrictions on the Common Shares issuable upon such exercise pursuant to Applicable Securities Laws, the Company may, on the advice of counsel, endorse the certificates representing such Common Shares with legends accordingly until such time as the Company determines that such endorsement is no longer necessary to avoid a violation of such securities laws by the Company and so advises the Warrant Agent in writing or unless and until the holder of any such endorsed certificate, at the holder’s 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 holder is entitled to sell or otherwise transfer such Common Shares in a transaction in which such endorsement is not required, whereupon such endorsed certificate may thereafter be surrendered to the Company in exchange for a certificate which does not bear such endorsement.

In the event of non-receipt of any certificates representing Common Shares issuable upon an exercise of Warrants by the person to whom such certificates are so sent as aforesaid, or the loss or destruction thereof, the Company shall issue and the Warrant Agent shall countersign and deliver to such person a replacement certificate of like date and tenor in place of the one lost or destroyed upon being furnished with such evidence of ownership and non-receipt, loss or destruction and with such indemnity and surety bond or security as the Company may reasonably require. The Warrantholder shall bear the cost of the issue of such replacement certificates.

cause to be mailed to the person in whose name the Common Shares so subscribed for are to be issued, at the address specified in the Exercise Form attached to the Warrant Certificate representing the Warrant exercised;

if so specified therein, cause to be delivered to such person at the office of the Warrant Agent where such Warrant was surrendered; or

if no specification as contemplated by (a) or (b) is provided, cause to be mailed to the person in whose name the Common Shares are to be issued at the address of such person last appearing on the register maintained by the Warrant Agent pursuant hereto or as such person may otherwise notify the Warrant Agent in writing on or prior to the Exercise Date,

promptly account to the Company with respect to Warrants exercised and forward to the Company or to an account or accounts of the Company at a bank or trust company designated by the Company for that purpose) all cash or instruments of payment received on the exercise of Warrants; and

record the particulars of Warrants exercised, which particulars shall include the names and addresses of the persons who become holders of Common Shares on such exercise and the Exercise Date in respect thereof. The Warrant Agent shall provide such particulars in writing to the Company within five (5) Business Days of any request by the Company therefor.

Quorum: Subject to the provisions of Section 6.10 hereof, at any meeting of Warrantholders a quorum will consist of two or more Warrantholders, present in person or represented by proxy at the commencement of the meeting, who hold in the aggregate not less than 25% of the total number of Warrants then outstanding.

No Quorum: If a quorum of Warrantholders is not present within 30 minutes after the time appointed for holding a meeting, the meeting, if convened by Warrantholders or on a Warrantholders’ Request, will be dissolved, but, subject to Section 6.10 hereof, in any other case will stand adjourned to the same day in the next week (unless such day is not a Business Day, in which case it will be adjourned to the next following Business Day) at the same time and place and no notice of the adjournment need be given.

Adjourned Meeting: At the adjourned meeting the Warrantholders present in person or by proxy will form a quorum and may transact any business for which the meeting was originally convened notwithstanding the number of Warrants that they hold.

the setting of the record date for a meeting for the purpose of determining Warrantholders entitled to receive notice of and to vote at a meeting;

voting by proxy, the form of instrument appointing proxyholders, the manner in which proxies are to be executed and the production of the authority of any persons signing on behalf of a Warrantholder;

the lodging of and means of forwarding the instruments appointing proxyholders and the time before the holding of a meeting or adjourned meeting by which the instruments appointing proxyholders are to be deposited; and

any other matter relating to the conduct of meetings of Warrantholders.

to agree to or sanction any modification, abrogation, alteration or compromise of the rights of the Warrantholders or (subject to the prior consent of the Warrant Agent therefor) the Warrant Agent in its capacity as Warrant Agent hereunder or on behalf of Warrantholders against the Company which shall be agreed to by the Company whether such rights arise under this Indenture or under the Warrants or otherwise;

to assent to any change in or omission from the provisions contained in the Warrants and this Indenture or any ancillary or supplemental instrument which may be agreed to by the Company, and to authorize the Warrant Agent to concur in and execute any ancillary or supplemental agreement embodying the change or omission;

with the consent of the Company, not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to appoint a new Warrant Agent or Warrant Agents to take the place of the Warrant Agent so removed;

to require, direct or authorize the Warrant Agent 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, in each case upon the Warrant Agent being furnished with an indemnity and such funding as the Warrant Agent may, in the reasonable exercise of its discretion determine it requires to so act;

to restrain any Warrantholder from instituting or continuing any suit or proceedings against the Company for the enforcement of the covenants on the part of the Company contained in this Indenture or the Warrants or of any of the rights conferred upon the Warrantholders by the Warrants and this Indenture;

to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or discontinue or otherwise deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;

to waive and direct the Warrant Agent to waive any default on the part of the Company in complying with any of the provisions of this Indenture or the Warrants either unconditionally or upon any conditions specified in such Extraordinary Resolution;

to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or unsecured, and with holders of any shares or other securities of the Company; and

to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Warrantholders.

adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of counsel, are necessary or advisable in the premises, 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;

giving effect to any Extraordinary Resolution passed as provided in Article 6 hereof;

making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining a listing or quotation of the Common Shares issuable upon the exercise of the Warrants on any stock exchange, or for the purpose of complying with applicable laws, 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;

making any modification in the form of the Warrant Certificate which does not affect the substance of the Warrants;

evidencing any succession, or successive successions, of other bodies corporate, or other persons to the Company and the assumption by any successor of the covenants of the Company contained herein and in the Warrant Certificates as provided hereafter in this Article 7; and

for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective provisions, errors or omissions herein, provided that, in the opinion of the Warrant Agent, relying on the advice of counsel, the rights of the Warrant Agent and of the Warrantholders are in no way prejudiced thereby and provided that the Warrant Agent may in its uncontrolled discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Warrant Agent when the same shall become operative.

in relation to this Indenture, rely and act on, and shall be protected in relying and acting in good faith, on the opinion or advice of or information obtained from any counsel, auditor, valuer, engineer, surveyor or other expert, whether obtained by the Warrant Agent, the Company, the Agent or otherwise; and/or

employ or retain such agents and other assistants as it may reasonably require for the proper determination and discharge of its duties hereunder and may pay reasonable remuneration without taxation of costs of counsel for all services performed for it in the determination and discharge of the duties hereunder and shall receive reimbursement from the Company for all disbursements, costs and expenses reasonably made or incurred by it in the determination and discharge of its duties hereunder and in the management of the trusts hereof. Any counsel employed or consulted by the Warrant Agent may, but need not be, counsel for the Company or the Agent.

nothing in this Agreement will impose on the Warrant Agent any obligation to see to, or to require evidence of, the registration or filing (or renewal thereof) of this indenture or any instrument ancillary or supplemental hereto;

the Warrant Agent shall not be bound to give notice to any person of the execution hereof;

the Warrant Agent shall not incur any liability or responsibility whatever or be in any way responsible for the consequences of any breach by the Company of any obligation herein contained or of any act of any director, officer, employee or agent of the Company; and

the Warrant Agent and any person related to the Warrant Agent will not be appointed a receiver or receiver and manager or liquidator of all or any part of the assets or undertaking of the Company.

the date of delivery, if delivered during normal business hours of the Company or the Agent, as applicable, (and, if not, on the next following Business Day);

the Business Day immediately following the day of sending, if sent by telecopier (with receipt confirmed), or

on the fifth (5^th) Business Day after effectual posting in Canada.

the date of delivery, if delivered during normal business hours (and, if not, on the next following Business Day);

the Business Day immediately following the day of sending, if sent by telex, telegram, cable or telecopier (with receipt confirmed); or

on the fifth (5th) Business Day after effectual posting in Canada.

the date of delivery, if delivered during normal business hours of the Warrant Agent (and, if not, on the next following Business Day);

the Business Day immediately following the day of sending, if sent by telex, telegram, cable or telecopier (with receipt confirmed); or

on the fifth (5th) Business Day after effectual posting in Canada.

a statement that the person signing such Document has read and understands the conditions precedent with respect to compliance with which such evidence is being given;

a description of the nature and scope of the examination or investigation upon which the Document is based; and

a statement that the person providing the Document has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein.

 

the executor, administrator, heir or legal representative of the heirs of the estate of a Warrantholder,

a guardian, committee, trustee, curator or tutor representing a Warrantholder who is an infant, an incompetent person or a missing person,

a liquidator of, or a trustee in bankruptcy for, a Warrantholder, or

a transferee of a Warrantholder who provides the Warrant Agent with evidence satisfactory to the Warrant Agent and the Company, acting reasonably, including but not limited to a properly completed and executed declaration attached as Exhibit “A” to the transfer form attached to this Warrant Certificate, that such transferee is/was either: (i) not in the United States at the time the buy order for the Warrants was executed, not acquiring the Warrants for the account or benefit of a U.S. Person or a person in the United States and was not offered the Warrants in the United States, or (ii) a person that has purchased or acquired Warrants in a transaction that was exempt from registration under the U.S. Securities Act and has provided the Company with satisfactory evidence of the availability of such exemption (which shall include an opinion of counsel reasonably acceptable to the Company) and was exempt from registration under any applicable securities laws of any state of the United States and that the securities laws of any other applicable jurisdiction(s) have been complied with in relation to the transfer of the Warrants involved.

Ivanhoe Energy Inc.

 

 

 

 

 

 

is not in the United States or a U.S. Person as defined in Rule 902 of Regulation S under the U.S. Securities Act and is not exercising the Exercised Warrants for the account or benefit of a U.S. Person or a person in the United States.

is a registered holder that acquired the Exercised Warrants in a transaction that was exempt from registration under the U.S. Securities Act and applicable state securities laws and in compliance with Subsections 2.7(d) of the Warrant Indenture.

 

Signature Guaranty*

 

 

 

 

 

 

 

 

 

Check box if the share certificates are to be delivered at the office where this Warrant is exercised, failing which they will be mailed.

 

 

 

 

 

Signature Guaranteed

 

 

 

 

 

 

 

 

If the Transfer Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Warrant Agent and the Company.

The signature on the Transfer Form must be guaranteed by an authorized officer of a Schedule 1 chartered bank or medallion guaranteed by a member of a recognized medallion guarantee program.

Warrants will only be transferable in accordance with applicable securities laws and stock exchange regulations. The transfer of Warrants to a transferee may, depending on the residency of such transferee, result in the securities obtained upon the exercise of the Warrants not being freely tradeable in the jurisdiction where the transferee is resident.

TO:

 

AND TO:

(i) no offers to sell the Subject Securities were made by any person to the Transferee or any beneficial transferee for whom he is acting while such persons were in the United States;

the Transferee and each beneficial transferee for whom he is acting were outside the United States at the time of execution and delivery of the instrument by which the Transferee and each beneficial transferee for whom he is acting agreed to acquire the Subject Securities; and

the Transferee and each beneficial transferee for whom he is acting, is not, and is not acquiring the Subject Securities for the account or benefit of, a U.S. Person as defined in Rule 904 of Regulation S under the U.S. Securities Act.

The Transferee has acquired the Warrants in a transaction exempt from registration under the U.S. Securities Act and applicable state securities laws and has provided herewith evidence (which the Transferee acknowledges must be satisfactory to the Company) of such exemption. The Transferee acknowledges that there is a Warrant Indenture which contains restrictions with respect to the exercise and transfer of Warrants.