Exhibit 10.2

 

U.S. GOLD CORPORATION

 

- and -

 

GMP SECURITIES L.P.

 

- and -

 

EQUITY TRANSFER SERVICES INC.

 

 

SUBSCRIPTION RECEIPT INDENTURE

 

Providing for the Issue of
Subscription Receipts

 

 

Dated as of February 22, 2006

 

Fraser Milner Casgrain LLP

 

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TABLE OF CONTENTS

 

ARTICLE ONE
INTERPRETATION

 

Section 1.01

 

Definitions

 

2

Section 1.02

 

Words Importing the Singular

 

8

Section 1.03

 

Interpretation Not Affected by Headings, Etc.

 

8

Section 1.04

 

Day Not a Business Day

 

8

Section 1.05

 

Time of the Essence

 

8

Section 1.06

 

Currency

 

8

Section 1.07

 

Applicable Law

 

8

 

 

 

 

 

 

 

ARTICLE TWO

 

 

 

 

THE SUBSCRIPTION RECEIPTS

 

 

 

 

 

 

 

Section 2.01

 

Creation and Issue of Subscription Receipts

 

8

Section 2.02

 

Terms of Subscription Receipts

 

9

Section 2.03

 

Form of Subscription Receipt Certificates

 

10

Section 2.04

 

Signing of Subscription Receipt Certificates

 

11

Section 2.05

 

Certification by Subscription Receipt Agent

 

11

Section 2.06

 

Subscription Receipts to Rank Pari Passu

 

12

Section 2.07

 

Issue in Substitution for Lost Certificates, Etc.

 

12

Section 2.08

 

Cancellation of Surrendered Subscription Receipts

 

12

Section 2.09

 

Subscription Receiptholder not a Shareholder

 

13

 

 

 

 

 

 

 

ARTICLE THREE

 

 

 

 

REGISTRATION, TRANSFER AND OWNERSHIP OF SUBSCRIPTION RECEIPTS

 

 

 

 

AND EXCHANGE OF SUBSCRIPTION RECEIPT CERTIFICATES

 

 

 

 

 

 

 

Section 3.01

 

Registration and Transfer of Subscription Receipts

 

13

Section 3.02

 

Exchange of Subscription Receipt Certificates

 

14

Section 3.03

 

No Charges for Transfer or Exchange

 

15

Section 3.04

 

Ownership of Subscription Receipts

 

15

 

 

 

 

 

 

 

ARTICLE FOUR

 

 

 

 

CONVERSION OF SUBSCRIPTION RECEIPTS

 

 

 

 

 

 

 

Section 4.01

 

Conversion of Subscription Receipts

 

16

Section 4.02

 

Effect of Conversion

 

16

Section 4.03

 

No Fractional Common Shares or Warrants

 

17

Section 4.04

 

Recording:

 

17

Section 4.05

 

Securities Restrictions

 

17

Section 4.06

 

Adjustments

 

19

 

 

 

 

 

 

 

ARTICLE FIVE

 

 

 

 

COVENANTS

 

 

 

 

 

 

 

Section 5.01

 

General Covenants

 

25

Section 5.02

 

Remuneration and Expenses of Subscription Receipt Agent

 

28

Section 5.03

 

Securities Qualification Requirements

 

28

 

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Section 5.04

 

Notice of Issue

 

28

Section 5.05

 

Performance of Covenants by Subscription Receipt Agent

 

28

 

 

 

 

 

 

 

ARTICLE SIX

 

 

 

 

DEPOSIT OF PROCEEDS AND CANCELLATION OF SUBSCRIPTION RECEIPTS

 

 

 

 

 

 

 

Section 6.01

 

Deposit of Escrowed Proceeds

 

29

Section 6.02

 

Investment of Escrowed Funds

 

29

Section 6.03

 

Release of Escrowed Proceeds

 

29

Section 6.04

 

Escrowed Proceeds Held by the Subscription Receipt Agent

 

30

Section 6.05

 

Role as Subscription Receipt Agent

 

30

 

 

 

 

 

 

 

ARTICLE SEVEN

 

 

 

 

ENFORCEMENT

 

 

 

 

 

 

 

Section 7.01

 

Suits by Subscription Receiptholders

 

30

Section 7.02

 

Limitation of Liability

 

31

 

 

 

 

 

 

 

ARTICLE EIGHT

 

 

 

 

MEETINGS OF SUBSCRIPTION RECEIPTHOLDERS

 

 

 

 

 

 

 

Section 8.01

 

Right to Convene Meetings

 

31

Section 8.02

 

Notice

 

31

Section 8.03

 

Chairman

 

31

Section 8.04

 

Quorum

 

32

Section 8.05

 

Power to Adjourn

 

32

Section 8.06

 

Show of Hands

 

32

Section 8.07

 

Poll

 

32

Section 8.08

 

Voting

 

32

Section 8.09

 

Regulations

 

33

Section 8.10

 

The Corporation and Subscription Receipt Agent may be Represented

 

33

Section 8.11

 

Powers Exercisable by Extraordinary Resolution

 

33

Section 8.12

 

Meaning of “Extraordinary Resolution”

 

35

Section 8.13

 

Powers Cumulative

 

35

Section 8.14

 

Minutes

 

36

Section 8.15

 

Instruments in Writing

 

36

Section 8.16

 

Binding Effect of Resolutions

 

36

Section 8.17

 

Holdings by the Corporation and Subsidiaries Disregarded

 

36

 

 

 

 

 

 

 

ARTICLE NINE

 

 

 

 

SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS

 

 

 

 

 

 

 

Section 9.01

 

Provision for Supplemental Indentures for Certain Purposes

 

36

Section 9.02

 

Successor Corporations

 

37

 

 

 

 

 

 

 

ARTICLE TEN

 

 

 

 

CONCERNING SUBSCRIPTION RECEIPT AGENT

 

 

 

 

 

 

 

Section 10.01

 

Trust Indenture Legislation

 

38

Section 10.02

 

Rights and Duties of Subscription Receipt Agent

 

38

Section 10.03

 

Evidence, Experts and Advisers

 

39

Section 10.04

 

Documents, Money, Etc. held by Subscription Receipt Agent

 

40

 

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Section 10.05

 

Action by Subscription Receipt Agent to Protect Interests

 

40

Section 10.06

 

Subscription Receipt Agent not Required to Give Security

 

41

Section 10.07

 

Protection of Subscription Receipt Agent

 

41

Section 10.08

 

Replacement of Subscription Receipt Agent

 

42

Section 10.09

 

Conflict of Interest

 

43

Section 10.10

 

Acceptance of Duties and Obligations

 

43

 

 

 

 

 

 

 

ARTICLE ELEVEN

 

 

 

 

GENERAL

 

 

 

 

 

 

 

Section 11.01

 

Notice to the Corporation and Subscription Receipt Agent

 

44

Section 11.02

 

Notice to Subscription Receiptholders

 

47

Section 11.03

 

Satisfaction and Discharge of Indenture

 

47

Section 11.04

 

Sole Benefit of Parties and Subscription Receiptholders

 

47

Section 11.05

 

Discretion of Directors

 

48

Section 11.06

 

Counterparts and Formal Date

 

48

 

 

 

 

 

Schedule A – Form of Subscription Receipt Certificate

 

 

Schedule B – Release Notice

 

 

 

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SUBSCRIPTION RECEIPT INDENTURE

 

THIS INDENTURE dated as of the 22nd day of February, 2006.

 

BETWEEN:

 

U.S. GOLD CORPORATION., a corporation duly organized and existing under the laws
of the State of Colorado

 

(hereinafter called the “Corporation”)

 

OF THE FIRST PART

 

- and -

 

GMP SECURITIES L.P., a partnership
existing under the laws of the Province of Ontario

 

(hereinafter called the “Agent”)

 

OF THE SECOND PART

 

- and –

 

EQUITY TRANSFER SERVICES INC., a corporation existing
under the Canada Business Corporations Act

 

(hereinafter called the “Subscription Receipt Agent”)

 

OF THE THIRD PART

 

WHEREAS the Corporation proposes to create and issue Subscription Receipts (as
hereinafter defined) to be constituted and issued as herein provided;

 

AND WHEREAS the Corporation is authorized to create and issue the Subscription
Receipts as herein provided and to complete the transactions contemplated
herein;

 

AND WHEREAS all things necessary have been done and performed to make the
Subscription Receipt Certificates (as hereinafter defined), when certified by
the Subscription Receipt Agent and issued and delivered as herein provided,
legal, valid and binding obligations of the Corporation with the benefits of and
subject to the terms of this Indenture;

 

AND WHEREAS the foregoing recitals are made as representations by the
Corporation and not by the Subscription Receipt Agent;

 

AND WHEREAS the Subscription Receipt 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 from time to time become holders of
Subscription Receipts issued pursuant to this Indenture;

 

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NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable consideration
mutually given, the receipt and sufficiency of which are hereby acknowledged, by
each of the Corporation, the Agent and the Subscription Receipt Agent, the
Corporation hereby appoints the Subscription Receipt Agent as agent for the
Subscription Receiptholders (as hereinafter defined), to hold all rights,
interests and benefits contained herein for and on behalf of those persons who
from time to time become holders of Subscription Receipts issued pursuant to
this Indenture, and the Corporation, the Agent and the Subscription Receipt
Agent hereby covenant, agree and declare as follows:

 

ARTICLE ONE
INTERPRETATION

 

Section 1.01                            Definitions

 

In this Indenture and in the Subscription Receipt Certificates, unless there is
something in the subject matter or context inconsistent therewith:

 

(A)                                  “ACCREDITED INVESTOR” MEANS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(A) OF REGULATION D;

 

(B)                                 “ADJUSTMENT PERIOD” MEANS THE PERIOD
COMMENCING ON THE DATE HEREOF AND ENDING AT THE TIME OF EXPIRY;

 

(C)                                  “AGENT” MEANS GMP SECURITIES L.P. AND
GRIFFITHS MCBURNEY CORP. COLLECTIVELY;

 

(D)                                 “AGENT’S COMPENSATION OPTION” MEANS THE
AGENT’S COMPENSATION OPTION ISSUED TO THE AGENT ON THE DATE HEREOF ENTITLING THE
AGENT, WITHOUT PAYMENT OF ANY CONSIDERATION, TO BE ISSUED THE AGENT’S WARRANT AT
THE TIME OF EXPIRY;

 

(E)                                  “AGENT’S WARRANTS” MEANS THE AGENTS
WARRANTS ISSUABLE TO THE AGENT UPON THE CONVERSION OF THE AGENT’S COMPENSATION
OPTION WHICH WILL ENTITLE THE AGENT TO ACQUIRE UP TO 1,002,000 UNITS OF THE
CORPORATION, AT A PRICE OF $4.50 PER UNIT, WITH EACH UNIT CONSISTING OF ONE
COMMON SHARE AND ONE WARRANT;

 

(F)                                    “APPLICABLE LEGISLATION” MEANS SUCH
PROVISIONS OF ANY STATUTE OF CANADA OR OF A PROVINCE THEREOF, AND OF REGULATIONS
UNDER ANY SUCH STATUTE, RELATING TO TRUST INDENTURES OR TO THE RIGHTS, DUTIES
AND OBLIGATIONS OF CORPORATIONS AND OF TRUSTEES UNDER TRUST INDENTURES, AS ARE
FROM TIME TO TIME IN FORCE AND APPLICABLE TO THIS INDENTURE;

 

(G)                                 “BUSINESS DAY” MEANS ANY DAY THAT IS NOT A
SATURDAY, SUNDAY OR STATUTORY HOLIDAY IN TORONTO, ONTARIO OR DENVER, COLORADO,
OR A DAY WHEN THE PRINCIPAL OFFICE OF THE SUBSCRIPTION RECEIPT AGENT IN SUCH
CITY IS NOT GENERALLY OPEN TO THE PUBLIC FOR THE TRANSACTION OF BUSINESS;

 

(H)                                 “COMMON SHARES” MEANS THE SHARES OF COMMON
STOCK, NO PAR VALUE, OF THE CORPORATION AS CONSTITUTED ON THE DATE HEREOF,
PROVIDED THAT, IN THE EVENT OF ANY ADJUSTMENT PURSUANT TO SECTION 4.06 HEREOF,
COMMON SHARES SHALL THEREAFTER MEAN  OR INCLUDE, AS THE CASE MAY BE, THE SHARES,
OTHER SECURITIES OR PROPERTY RESULTING FROM SUCH ADJUSTMENT;

 

2

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(I)                                     “CONVERSION DATE” MEANS THE DAY ON WHICH
THE SUBSCRIPTION RECEIPT AGENT IS REQUIRED TO CONVERT EACH SUBSCRIPTION RECEIPT
PURSUANT TO SUBSECTION 4.01(A) HEREOF;

 

(J)                                     “CORPORATION” MEANS U.S. GOLD
CORPORATION, THE PARTY OF THE FIRST PART HEREUNDER, AND INCLUDES ANY SUCCESSOR
CORPORATION TO OR OF THE CORPORATION WHICH SHALL HAVE COMPLIED WITH THE
PROVISIONS OF SECTION 9.02 HEREOF;

 

(K)                                  “CORPORATION’S AUDITORS” MEANS STARK,
WINTER, SCHENKEIN & CO. LLP OR SUCH OTHER FIRM OF CHARTERED ACCOUNTANTS
APPOINTED AS THE AUDITOR OF THE CORPORATION;

 

(L)                                     “COUNSEL” MEANS A BARRISTER OR SOLICITOR
OR AN ATTORNEY-AT-LAW OR A FIRM OF BARRISTERS AND SOLICITORS OR
ATTORNEYS-AT-LAW, WHO MAY BE COUNSEL FOR THE CORPORATION, ACCEPTABLE TO THE
SUBSCRIPTION RECEIPT AGENT, ACTING REASONABLY;

 

(M)                               “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 STOCK EXCHANGE FOR ANY 20 CONSECUTIVE
TRADING DAYS SELECTED BY THE CORPORATION ENDING NOT MORE THAN FIVE TRADING DAYS
BEFORE SUCH DATE, OR, IF THE COMMON SHARES ARE NOT LISTED ON THE STOCK EXCHANGE,
ON ANY OTHER STOCK EXCHANGE 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
THE 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;

 

(N)                                 “DIRECTOR” MEANS A DIRECTOR OF THE
CORPORATION FOR THE TIME BEING, AND REFERENCE WITHOUT MORE TO AN ACTION BY THE
DIRECTORS MEANS AN ACTION BY THE DIRECTORS OF THE CORPORATION AS A BOARD OR, TO
THE EXTENT EMPOWERED, BY A COMMITTEE OF THE BOARD, IN EACH CASE BY RESOLUTION
DULY PASSED;

 

(O)                                 “DIVIDENDS PAID IN THE ORDINARY COURSE”
MEANS DIVIDENDS PAID OR DECLARED PAYABLE IN ANY FINANCIAL YEAR OF THE
CORPORATION, TO THE EXTENT THAT 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 CORPORATION
SUBJECT, IF APPLICABLE, TO THE PRIOR CONSENT OF ANY STOCK EXCHANGE OR ANY
OVER-THE COUNTER MARKET IN WHICH THE COMMON SHARES ARE TRADED;

 

(P)                                 “EFFECTIVE DATE” MEANS THE DATE OF THIS
INDENTURE OR, FOR ANY SUBSCRIPTION RECEIPT ISSUED AFTER THE DATE HEREOF, THE
DATE OF ISSUE OF SUCH SUBSCRIPTION RECEIPT;

 

(Q)                                 “ESCROWED FUNDS” MEANS THE ESCROWED PROCEEDS
PLUS ANY INTEREST EARNED THEREON;

 

3

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(R)                                    “ESCROWED PROCEEDS” MEANS THE 50% OF THE
PROCEEDS TO BE PLACED INTO ESCROW WITH THE SUBSCRIPTION RECEIPT AGENT ON THE
EFFECTIVE DATE;

 

(S)                                  “EXPIRY DATE” MEANS THE EARLIEST OF:

 

(I)                                     THE DATE WHICH IS THE THIRD BUSINESS DAY
FOLLOWING THE QUALIFICATION DATE; AND

 

(II)                                  THE FINAL QUALIFICATION DEADLINE;

 

(T)                                    “EXTRAORDINARY RESOLUTION” HAS THE
MEANING ATTRIBUTED THERETO IN SECTIONS 8.12 AND 8.15 HEREOF;

 

(U)                                 “FINAL PROSPECTUS” MEANS THE (FINAL)
PROSPECTUS OF THE CORPORATION WHICH QUALIFIES THE DISTRIBUTION OF THE UNDERLYING
SECURITIES IN THE QUALIFYING JURISDICTIONS AND INCLUDES ANY AMENDMENTS OR
SUPPLEMENTS THERETO;

 

(V)                                 “FINAL QUALIFICATION DEADLINE” MEANS
5:00 P.M. (MOUNTAIN TIME) ON THE FIRST BUSINESS DAY WHICH IS NOT LESS THAN 18
MONTHS AFTER THE DATE HEREOF;

 

(W)                               “INITIAL QUALIFICATION DEADLINE” MEANS
5:00 P.M. (MOUNTAIN TIME) ON THE FIRST BUSINESS DAY WHICH IS NOT LESS THAN 12
MONTHS AFTER THE DATE HEREOF;

 

(X)                                   “MRRS” MEANS THE MUTUAL RELIANCE REVIEW
SYSTEM ESTABLISHED UNDER NATIONAL POLICY 43-201;

 

(Y)                                 “NATIONAL POLICY 43-201” MEANS NATIONAL
POLICY 43-201 – MUTUAL RELIANCE REVIEW SYSTEM FOR PROSPECTUSES AND ANNUAL
INFORMATION FORMS;

 

(Z)                                   “PENALTY DEADLINE” MEANS 5:00 P.M.
(MOUNTAIN TIME) ON THE DATE WHICH IS NOT LESS THAN 183 DAYS AFTER THE DATE
HEREOF;

 

(AA)                            “PERMITTED INVESTMENTS” MEANS SHORT TERM
INVESTMENT GRADE DEBT OBLIGATIONS AS AGREED TO BY THE CORPORATION AND THE AGENT;

 

(BB)                          “PERSON” INCLUDES AN INDIVIDUAL, CORPORATION,
PARTNERSHIP, TRUSTEE, UNINCORPORATED ORGANIZATION OR ANY OTHER ENTITY
WHATSOEVER, AND WORDS IMPORTING PERSONS HAVE A SIMILAR EXTENDED MEANING;

 

(CC)                            “PROCEEDS” MEANS THE GROSS PROCEEDS RECEIVED BY
THE CORPORATION IN CONNECTION WITH THE SALE OF THE SUBSCRIPTION RECEIPTS;

 

(DD)                          “QUALIFICATION DATE” MEANS THE DATE ON WHICH THE
RELEASE CONDITIONS ARE SATISFIED OR WAIVED BY THE AGENT;

 

(EE)                            “QUALIFIED U.S. ENTITY” MEANS ANY DISCRETIONARY
ACCOUNT OR SIMILAR ACCOUNT (OTHER THAN AN ESTATE OR TRUST) HELD FOR THE BENEFIT
OR ACCOUNT OF A NON-U.S. PERSON BY A DEALER OR OTHER PROFESSIONAL FIDUCIARY
ORGANIZED, INCORPORATED, OR (IF ANY INDIVIDUAL) RESIDENT IN THE UNITED STATES;
ANY ESTATE OF WHICH ANY PROFESSIONAL FIDUCIARY ACTING AS EXECUTOR OR
ADMINISTRATOR IS A U.S. PERSON IF (I) AN EXECUTOR OR

 

4

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ADMINISTRATOR OF THE ESTATE WHO IS NOT A U.S. PERSON HAS SOLE OR SHARED
INVESTMENT DISCRETION WITH RESPECT TO THE ASSETS OF THE ESTATE; AND (II) THE
ESTATE IS GOVERNED BY FOREIGN LAW; AND ANY TRUST OF WHICH ANY PROFESSIONAL
FIDUCIARY ACTING AS TRUSTEE IS A U.S. PERSON, IF A TRUSTEE WHO IS NOT A U.S.
PERSON HAS SOLE OR SHARED INVESTMENT DISCRETION WITH RESPECT TO THE TRUST
ASSETS, AND NO BENEFICIARY OF THE TRUST (AND NO SETTLER IF THE TRUST IS
REVOCABLE) IF A U.S. PERSON;

 

(FF)                                “QUALIFYING JURISDICTIONS” MEANS THE
PROVINCES OF CANADA WHERE PURCHASERS OF SUBSCRIPTION RECEIPTS ARE LOCATED AND
ANY OTHER JURISDICTION IN CANADA IN WHICH THE CORPORATION IS REQUIRED TO FILE
THE FINAL PROSPECTUS PURSUANT TO AN AGREEMENT BETWEEN THE CORPORATION AND THE
AGENT, OR OTHERWISE;

 

(GG)                          “REGISTRATION STATEMENT” MEANS THE RESALE
REGISTRATION STATEMENT OF THE CORPORATION TO BE FILED WITH THE SEC IN ORDER TO
REGISTER THE RESALE OF, INTER ALIA, THE COMMON SHARES, WARRANTS AND TO REGISTER
THE COMMON SHARES UNDERLYING THE WARRANTS;

 

(HH)                          “REGULATION D” MEANS REGULATION D UNDER THE U.S.
SECURITIES ACT;

 

(II)                                  “REGULATION S” MEANS REGULATION S UNDER
THE U.S. SECURITIES ACT;

 

(JJ)                                  “RELEASE CONDITIONS” MEANS THE CONDITIONS
TO BE SATISFIED PRIOR TO AUTOMATIC CONVERSION OF THE SUBSCRIPTION RECEIPTS,
WHICH SHALL BE SATISFIED UPON THE LATEST TO OCCUR OF THE FOLLOWING: (I) THE
THIRD BUSINESS DAY AFTER THE DATE ON WHICH THE ONTARIO SECURITIES COMMISSION, AS
THE PRINCIPAL REGULATOR UNDER NATIONAL POLICY 43-201 AND THE MRRS, ISSUES A
DECISION DOCUMENT EVIDENCING THAT EACH OF THE SECURITIES COMMISSIONS HAS ISSUED
A RECEIPT FOR THE FINAL PROSPECTUS; (II) THE COMPLETION AND FILING VIA SEDAR OF
A CURRENT TECHNICAL REPORT REGARDING THE TONKIN SPRINGS GOLD PROJECT THAT
COMPLIES WITH NATIONAL INSTRUMENT 43-101 – STANDARDS OF DISCLOSURE FOR MINERAL
PROJECTS OF THE CANADIAN SECURITIES ADMINISTRATORS; (III) THE COMMON SHARES
BEING LISTED FOR TRADING ON THE TORONTO STOCK EXCHANGE; (IV) THE EFFECTIVENESS
OF THE REGISTRATION STATEMENT; AND (V) THE DELIVERY OF A 10B-5 OPINION,
ADDRESSED TO THE AGENT IN A FORM SATISFACTORY TO THE AGENT, ACTING REASONABLY,
PROVIDED BY UNITED STATES COUNSEL TO THE CORPORATION IN RESPECT OF THE
REGISTRATION STATEMENT;

 

(KK)                            “RELEASE DATE” MEANS THE DATE ON WHICH THE
SUBSCRIPTION RECEIPT AGENT RECEIVES THE RELEASE NOTICE FROM THE CORPORATION AND
THE AGENT;

 

(LL)                                  “RELEASE NOTICE” MEANS A WRITTEN NOTICE
ADVISING THE SUBSCRIPTION RECEIPT AGENT THAT THE RELEASE CONDITIONS HAVE BEEN
SATISFIED OR WAIVED BY THE AGENT IN THE FORM SET OUT IN SCHEDULE B ATTACHED
HERETO AND EXECUTED BY EACH OF THE CORPORATION AND THE AGENT;

 

(MM)                      “RELEASE TIME” MEANS THE TIME THE SUBSCRIPTION RECEIPT
AGENT RECEIVES THE RELEASE NOTICE FROM THE CORPORATION AND THE AGENT;

 

(NN)                          “SEC” MEANS THE SECURITIES AND EXCHANGE COMMISSION
IN THE UNITED STATES;

 

5

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(OO)                          “SECURITIES COMMISSIONS” MEANS, COLLECTIVELY, THE
SECURITIES REGULATORY AUTHORITIES OF THE JURISDICTIONS OF CANADA IN WHICH
SUBSCRIPTION RECEIPTHOLDERS RESIDE;

 

(PP)                          “SHARE RATE” MEANS THE NUMBER OF COMMON SHARES
WHICH ARE ISSUABLE UPON THE CONVERSION OF EACH SUBSCRIPTION RECEIPT IN
ACCORDANCE WITH SECTION 2.02 HEREOF, SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH
SECTION 4.06 HEREOF;

 

(QQ)                          “STOCK EXCHANGE” MEANS THE TORONTO STOCK EXCHANGE;

 

(RR)                                “SUBSCRIPTION RECEIPTS” MEANS THE
SUBSCRIPTION RECEIPTS CREATED AND ISSUED PURSUANT TO SUBSECTIONS 2.01(A) AND
2.01(B) HEREOF AND AUTHORIZED FOR ISSUE HEREUNDER AND REPRESENTED BY
SUBSCRIPTION RECEIPT CERTIFICATES ISSUED AND CERTIFIED IN ACCORDANCE WITH THE
PROVISIONS HEREOF AND THAT HAVE NOT AT THE PARTICULAR TIME EXPIRED, BEEN
PURCHASED BY THE CORPORATION OR CONVERTED;

 

(SS)                            “SUBSCRIPTION RECEIPT AGENT” MEANS EQUITY
TRANSFER SERVICES INC., THE PARTY OF THE THIRD PART HEREUNDER, INCLUDING ITS
SUCCESSORS AND ASSIGNS;

 

(TT)                                “SUBSCRIPTION RECEIPT CERTIFICATE” MEANS A
CERTIFICATE REPRESENTING ONE OR MORE SUBSCRIPTION RECEIPTS SUBSTANTIALLY IN THE
FORM OF THE CERTIFICATE ATTACHED HERETO AS SCHEDULE A;

 

(UU)                          “SUBSCRIPTION RECEIPTHOLDERS” OR “HOLDERS” MEANS
THE PERSONS FOR THE TIME BEING ENTERED IN A REGISTER OF HOLDERS DESCRIBED IN
SECTION 3.01 HEREOF AS HOLDERS OF SUBSCRIPTION RECEIPTS;

 

(VV)                          “SUBSCRIPTION RECEIPTHOLDERS’ REQUEST” MEANS AN
INSTRUMENT, SIGNED IN ONE OR MORE COUNTERPARTS BY SUBSCRIPTION RECEIPTHOLDERS
WHO HOLD IN THE AGGREGATE NOT LESS THAN 10% OF THE TOTAL NUMBER OF SUBSCRIPTION
RECEIPTS THEN OUTSTANDING, REQUESTING THE SUBSCRIPTION RECEIPT AGENT TO TAKE
SOME ACTION OR PROCEEDING SPECIFIED THEREIN;

 

(WW)                      “SUBSIDIARY OF THE CORPORATION” MEANS ANY CORPORATION
OR OTHER CORPORATE ENTITY OF WHICH VOTING SHARES CARRYING MORE THAN 50% OF THE
VOTES ATTACHED TO ALL OUTSTANDING VOTING SHARES OF SUCH CORPORATION ARE OWNED,
DIRECTLY OR INDIRECTLY, OTHER THAN BY WAY OF SECURITY ONLY, BY ONE OR MORE OF
THE CORPORATION AND ANY SUBSIDIARY OF THE CORPORATION, REGARDLESS OF WHETHER THE
CORPORATION OR SUCH SUBSIDIARY OF THE CORPORATION IS NOT CONTRACTUALLY OR
OTHERWISE PROHIBITED OR RESTRICTED FROM EXERCISING SUFFICIENT OF THE VOTING
RIGHTS ATTACHED TO SUCH VOTING SHARES TO ELECT AT LEAST A MAJORITY OF THE
DIRECTORS OF SUCH CORPORATION;

 

(XX)                              “THIS SUBSCRIPTION RECEIPT INDENTURE”, “THIS
INDENTURE”, “HERETO”, “HEREUNDER”, “HEREOF’, “HEREIN”, “HEREBY” AND SIMILAR
EXPRESSIONS MEAN OR REFER TO THIS SUBSCRIPTION RECEIPT INDENTURE AND ANY
INDENTURE, DEED OR INSTRUMENT SUPPLEMENTAL OR ANCILLARY HERETO, AND THE
EXPRESSIONS “ARTICLE”, “SECTION”, “SUBSECTION”, “PARAGRAPH”, “SUBPARAGRAPH”,
“CLAUSE” AND “SUBCLAUSE” FOLLOWED BY A NUMBER MEAN THE SPECIFIED ARTICLE,
SECTION, SUBSECTION, PARAGRAPH, SUBPARAGRAPH, CLAUSE OR SUBCLAUSE OF THIS
INDENTURE;

 

6

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(YY)                          “TIME OF EXPIRY” MEANS 5:00 P.M. (MOUNTAIN TIME)
ON THE EXPIRY DATE;

 

(ZZ)                              “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);

 

(AAA)                      “UNDERLYING SECURITIES” MEANS THE COMMON SHARES AND
THE WARRANTS ISSUABLE PURSUANT TO THE SUBSCRIPTION RECEIPTS;

 

(BBB)                   “UNITED STATES” MEANS THE UNITED STATES, AS THAT TERM IS
DEFINED IN RULE 902(1) OF REGULATION S;

 

(CCC)                      “U.S. PERSON” MEANS A U.S. PERSON, AS THAT TERM IS
DEFINED IN RULE 902(N) REGULATION S;

 

(DDD)                   “U.S. PURCHASER” MEANS (I) A PERSON IN THE UNITED
STATES, OR (II) A U.S. PERSON OR PERSON PURCHASING ON BEHALF, OR FOR THE BENEFIT
OR ACCOUNT, OF ANY U.S. PERSON OR PERSON IN THE UNITED STATES;

 

(EEE)                      “U.S. PROSPECTUS” MEANS A PROSPECTUS MEETING THE
REQUIREMENTS OF SECTION 10(A) OF THE U.S. SECURITIES ACT, WHICH WILL
FORM PART OF THE REGISTRATION STATEMENT;

 

(FFF)                            “U.S. SECURITIES ACT” MEANS THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED;

 

(GGG)                   “VOTING SHARES” OF ANY CORPORATION MEANS SHARES OF ONE
OR MORE CLASSES OR SERIES OF A CLASS OF SHARES OF SUCH CORPORATION CARRYING
VOTING RIGHTS UNDER ALL CIRCUMSTANCES (AND NOT BY REASON OF THE HAPPENING OF A
CONTINGENCY) SUFFICIENT IF EXERCISED TO ELECT ALL OF THE DIRECTORS OF SUCH
CORPORATION, IRRESPECTIVE OF WHETHER OR NOT SHARES OF ANY OTHER CLASS OR CLASSES
SHALL HAVE OR MAY HAVE THE RIGHT TO VOTE FOR DIRECTORS BY REASON OF THE
HAPPENING OF ANY CONTINGENCY;

 

(HHH)                   “WARRANT INDENTURE” MEANS THE WARRANT INDENTURE TO BE
ENTERED INTO BETWEEN THE CORPORATION AND EQUITY TRANSFER SERVICES INC. GOVERNING
THE WARRANTS AND DATED AS OF THE DATE HEREOF;

 

(III)                               “WARRANT SHARES” MEANS THE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THE WARRANTS;

 

(JJJ)                               “WARRANTS” MEANS THE COMMON SHARE PURCHASE
WARRANTS OF THE CORPORATION ISSUABLE UNDER THE WARRANT INDENTURE UPON THE
CONVERSION OF THE SUBSCRIPTION RECEIPTS AND ANY EXERCISE OF THE AGENT’S
WARRANTS, AND, AS OF THE DATE HEREOF, EACH WHOLE WARRANT ENTITLING THE HOLDER
THEREOF TO ACQUIRE ONE WARRANT SHARE AT ANY TIME FROM THE DATE OF ISSUE OF THE
WARRANTS UNTIL 5:00 P.M. (MOUNTAIN TIME) ON THE DATE WHICH IS FIVE YEARS AFTER
THE DATE HEREOF AT AN EXERCISE PRICE OF $10.00, SUBJECT TO ADJUSTMENT IN
ACCORDANCE WITH THE PROVISIONS OF THE WARRANT INDENTURE; AND

 

7

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(KKK)                      “WRITTEN ORDER OF THE CORPORATION”, “WRITTEN REQUEST
OF THE CORPORATION”, “WRITTEN CONSENT OF THE CORPORATION”, “WRITTEN DIRECTION OF
THE CORPORATION” AND “CERTIFICATE OF THE CORPORATION” MEAN A WRITTEN ORDER,
REQUEST, CONSENT, DIRECTION AND CERTIFICATE, RESPECTIVELY, SIGNED IN THE NAME OF
THE CORPORATION BY ANY DIRECTOR OR

 

OFFICER OF THE CORPORATION OR BY ANY OTHER INDIVIDUAL TO WHOM SUCH SIGNING
AUTHORITY IS DELEGATED BY THE DIRECTORS FROM TIME TO TIME, AND MAY CONSIST OF
ONE OR MORE INSTRUMENTS SO EXECUTED RESPECTIVELY.

 

Section 1.02                            Words Importing the Singular

 

Words importing the singular include the plural and vice versa and words
importing a particular gender or neuter include both genders and neuter.

 

Section 1.03                            Interpretation Not Affected by Headings,
Etc.

 

The division of this Indenture into articles, sections, subsections, paragraphs,
subparagraphs, clauses and subclauses, the provision of a table of contents and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Indenture.

 

Section 1.04                            Day Not a Business Day

 

If the day on or before which any action which would otherwise be required to be
taken hereunder is not a Business Day in the place where the action is required
to be taken, that action will be required to be taken on or before the requisite
time on the next succeeding day that is a Business Day.

 

Section 1.05                            Time of the Essence

 

Time will be of the essence in all respects in this Indenture and the
Subscription Receipt Certificates.

 

Section 1.06                            Currency

 

Except as otherwise stated, all dollar amounts herein and in the Subscription
Receipt Certificates are expressed in United States dollars.

 

Section 1.07                            Applicable Law

 

This Indenture and the Subscription Receipt Certificates will be construed and
enforced in accordance with the laws prevailing in the Province of Ontario and
the federal laws of Canada applicable therein and will be treated in all
respects as Ontario contracts.

 

ARTICLE TWO
THE SUBSCRIPTION RECEIPTS

 

Section 2.01                            Creation and Issue of Subscription
Receipts

 

(A)                                  CREATION OF SUBSCRIPTION RECEIPTS: 
16,700,000 SUBSCRIPTION RECEIPTS ENTITLING THE HOLDERS THEREOF TO BE ISSUED,
SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH THE PROVISIONS OF THIS INDENTURE, AN
AGGREGATE OF NO MORE THAN 16,700,000 COMMON SHARES AND 8,350,000 WARRANTS
TOGETHER WITH SUCH ADDITIONAL INDETERMINATE NUMBER OF COMMON SHARES AS MAY BE
REQUIRED TO BE ISSUED PURSUANT TO ANY ADJUSTMENT REQUIRED TO BE MADE BY THE
PROVISIONS OF SECTION 4.06 HEREOF ON THE

 

8

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TERMS AND SUBJECT TO THE CONDITIONS HEREIN PROVIDED, ARE HEREBY CREATED AND
AUTHORIZED FOR ISSUE AT A PRICE OF $4.50 FOR EACH SUBSCRIPTION RECEIPT.

 

(B)                                 CERTIFICATION OF SUBSCRIPTION RECEIPTS: 
UPON THE ISSUE OF THE SUBSCRIPTION RECEIPTS AND UPON RECEIPT OF THE ISSUE PRICE
THEREFOR, SUBSCRIPTION RECEIPT CERTIFICATES SHALL BE EXECUTED BY THE CORPORATION
AND DELIVERED TO THE SUBSCRIPTION RECEIPT AGENT, CERTIFIED BY THE SUBSCRIPTION
RECEIPT AGENT UPON THE WRITTEN ORDER OF THE CORPORATION AND DELIVERED BY THE
SUBSCRIPTION RECEIPT AGENT TO THE CORPORATION OR TO THE ORDER OF THE CORPORATION
PURSUANT TO A WRITTEN DIRECTION OF THE CORPORATION, WITHOUT ANY FURTHER ACT OF
OR FORMALITY ON THE PART OF THE CORPORATION AND WITHOUT THE SUBSCRIPTION RECEIPT
AGENT RECEIVING ANY CONSIDERATION THEREFOR.

 

Section 2.02                            Terms of Subscription Receipts

 

(A)                                  CONVERSION TERMS:  EACH SUBSCRIPTION
RECEIPT ISSUED HEREUNDER WILL ENTITLE THE HOLDER THEREOF, UPON THE CONVERSION
THEREOF IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE FOUR HEREOF, AND WITHOUT
PAYMENT OF ANY ADDITIONAL CONSIDERATION, TO BE ISSUED:

 

(I)                                     ONE COMMON SHARE AND ONE-HALF OF ONE
WARRANT; OR

 

(II)                                  IF THE RELEASE CONDITIONS HAVE NOT BEEN
SATISFIED PRIOR TO THE PENALTY DEADLINE, 1.1 COMMON SHARES (IN LIEU OF ONE
COMMON SHARE) AND 0.55 WARRANTS (IN LIEU OF ONE-HALF OF ONE WARRANT).

 

(B)                                 ADJUSTMENT:  IN ADDITION TO THE ADJUSTMENT
TO THE NUMBER OF COMMON SHARES AND WARRANTS WHICH SHALL BE ISSUED UPON THE
CONVERSION OF THE SUBSCRIPTION RECEIPTS CONTEMPLATED BY CLAUSE
2.02(A)(II) HEREOF (FOR PURPOSES OF THIS SECTION 2.02(A)(II), “SECTION 2.02
ADJUSTMENTS”), THE NUMBER OF COMMON SHARES ISSUED UPON THE CONVERSION OF THE
SUBSCRIPTION RECEIPTS IN ACCORDANCE WITH THE PROVISIONS HEREOF WILL BE ADJUSTED
IN ACCORDANCE WITH SECTION 4.06 HEREOF AND THE WARRANTS ISSUED UPON THE
CONVERSION OF THE SUBSCRIPTION RECEIPTS WILL BE ADJUSTED IN ACCORDANCE WITH
SUBSECTION 4.06(K) HEREOF (FOR PURPOSES OF THIS SECTION 2.02(A)(II),
COLLECTIVELY, THE “SECTION 4.06 ADJUSTMENTS”), ON THE FOLLOWING BASIS:

 

(I)                                     FOR ANY AND ALL EVENTS GIVING RISE TO
THE SECTION 4.06 ADJUSTMENTS WHICH OCCUR PRIOR TO THE EVENT GIVING RISE TO THE
SECTION 2.02 ADJUSTMENTS, THE SECTION 4.06 ADJUSTMENTS SHALL BE MADE BEFORE
GIVING EFFECT TO THE SECTION 2.02 ADJUSTMENTS; AND

 

(II)                                  FOR ANY AND ALL EVENTS GIVING RISE TO THE
SECTION 4.06 ADJUSTMENTS WHICH OCCUR AFTER THE EVENT GIVING RISE TO THE
SECTION 2.02 ADJUSTMENTS, THE SECTION 4.06 ADJUSTMENTS SHALL BE MADE AFTER
GIVING EFFECT TO THE SECTION 2.02 ADJUSTMENTS.

 

(C)                                  PURCHASE BY CORPORATION:  THE CORPORATION
MAY FROM TIME TO TIME PURCHASE SUBSCRIPTION RECEIPTS BY PRIVATE AGREEMENT OR
OTHERWISE, ANY SUCH PURCHASE MAY BE MADE IN SUCH MANNER, FROM SUCH PERSONS, AT
SUCH PRICES AND ON SUCH TERMS AS THE CORPORATION IN ITS SOLE DISCRETION
MAY DETERMINE. SUBSCRIPTION RECEIPT CERTIFICATES REPRESENTING SUBSCRIPTION
RECEIPTS PURCHASED BY THE CORPORATION

 

9

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PURSUANT TO THIS SUBSECTION 2.02(C) SHALL BE SURRENDERED TO THE SUBSCRIPTION
RECEIPT AGENT FOR CANCELLATION AND SHALL BE ACCOMPANIED BY A WRITTEN DIRECTION
OF THE CORPORATION TO CANCEL THE SUBSCRIPTION RECEIPTS REPRESENTED THEREBY.

 

(D)                                 CANCELLATION:  IN THE EVENT THAT THE RELEASE
NOTICE IS NOT DELIVERED TO THE SUBSCRIPTION RECEIPT AGENT PRIOR TO THE INITIAL
QUALIFICATION DEADLINE, 50% OF THE SUBSCRIPTION RECEIPTS HELD BY EACH
SUBSCRIPTION RECEIPT HOLDER SHALL, WITHOUT ANY ACTION ON THE PART OF THE HOLDERS
THEREOF (INCLUDING THE SURRENDER OF SUBSCRIPTION RECEIPT CERTIFICATES), BE
CANCELLED BY THE SUBSCRIPTION RECEIPT AGENT AND HOLDERS OF SUBSCRIPTION RECEIPT
CERTIFICATES SHALL THEREAFTER HAVE NO RIGHTS THEREUNDER, EXCEPT TO RECEIVE, AND
THE SUBSCRIPTION RECEIPT AGENT SHALL PAY TO SUCH HOLDERS FROM THE ESCROWED
PROCEEDS, AN AMOUNT EQUAL TO $4.50 PER SUBSCRIPTION RECEIPT SO CANCELLED,
TOGETHER WITH ANY INTEREST ACCRUED THEREON (LESS ANY WITHHOLDING TAX REQUIRED TO
BE WITHHELD IN RESPECT THEREOF). THE AMOUNT OF $4.50 PER SUBSCRIPTION RECEIPT,
TOGETHER WITH ANY INTEREST ACCRUED THEREON (LESS ANY WITHHOLDING TAX REQUIRED TO
BE WITHHELD IN RESPECT THEREOF), SHALL BE RETURNED TO EACH HOLDER OF A
SUBSCRIPTION RECEIPT BY THE SUBSCRIPTION RECEIPT AGENT IN ACCORDANCE WITH
SUBSECTION 6.03(B) HEREOF AND THE CORPORATION SHALL HAVE NO FURTHER OBLIGATIONS
WITH RESPECT TO ANY SUBSCRIPTION RECEIPTS CANCELLED PURSUANT TO THIS
SECTION 2.02(D).

 

Section 2.03                            Form of Subscription Receipt
Certificates

 

(A)                                  FORM:  THE SUBSCRIPTION RECEIPT
CERTIFICATES (INCLUDING THE CERTIFICATE OF THE SUBSCRIPTION RECEIPT AGENT
ENDORSED THEREON) WILL BE SUBSTANTIALLY IN THE FORM OF THE CERTIFICATE ATTACHED
HERETO AS SCHEDULE A, WILL BE DATED AS OF THE DATE HEREOF (REGARDLESS OF THE
ACTUAL DATES OF THEIR ISSUE), WILL BEAR SUCH DISTINGUISHING LETTERS AND NUMBERS
AS THE CORPORATION, WITH THE APPROVAL OF THE SUBSCRIPTION RECEIPT AGENT,
MAY PRESCRIBE AND SUCH LEGENDS AS PERMITTED UNDER THIS INDENTURE AND WILL BE
ISSUABLE IN ANY WHOLE NUMBER DENOMINATION.

 

(B)                                 PRODUCTION:  THE SUBSCRIPTION RECEIPT
CERTIFICATES MAY BE ENGRAVED, LITHOGRAPHED OR PRINTED (THE EXPRESSION “PRINTED”
INCLUDING FOR PURPOSES HEREOF BOTH ORIGINAL TYPEWRITTEN MATERIAL AS WELL AS
MIMEOGRAPHED, MECHANICALLY, PHOTOGRAPHICALLY, PHOTOSTATICALLY OR ELECTRONICALLY
REPRODUCED, TYPEWRITTEN OR OTHER WRITTEN MATERIAL), OR PARTLY IN ONE FORM AND
PARTLY IN ANOTHER, AS THE CORPORATION MAY DETERMINE.

 

(c)                                  Legends:  Certificates representing
Subscription Receipts, as well as all certificates issued in exchange for or in
substitution of such certificates representing Subscription Receipts, shall bear
the following legends:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE
LATER OF (I) FEBRUARY 22, 2006, AND (II) THE DATE THE ISSUER BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.”;

 

and

 

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
U.S. GOLD CORPORATION (“U.S. GOLD”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH
RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
(E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO U.S. GOLD AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN
EITHER CASE REASONABLY SATISFACTORY TO U.S. GOLD. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S.
SECURITIES ACT.

 

Section 2.04                            Signing of Subscription Receipt
Certificates

 

(A)                                  SIGNING OFFICERS:  THE SUBSCRIPTION RECEIPT
CERTIFICATES SHALL BE SIGNED BY ANY ONE OFFICER OF THE CORPORATION OR ANY ONE
DIRECTOR OR BY ANY OTHER INDIVIDUAL TO WHOM SUCH SIGNING AUTHORITY IS DELEGATED
BY THE DIRECTORS FROM TIME TO TIME.

 

(B)                                 SIGNATURES:  THE SIGNATURE OF ANY OFFICER OF
THE CORPORATION OR DIRECTOR OR ANY INDIVIDUAL REFERRED TO IN
SUBSECTION 2.04(A) HEREOF MAY BE A MANUAL SIGNATURE, ENGRAVED, LITHOGRAPHED OR
PRINTED IN FACSIMILE AND SUBSCRIPTION RECEIPT CERTIFICATES BEARING SUCH
FACSIMILE SIGNATURE WILL, SUBJECT TO SECTION 2.05 HEREOF, BE BINDING ON THE
CORPORATION AS IF THEY HAD BEEN MANUALLY SIGNED BY SUCH OFFICER OF THE
CORPORATION OR DIRECTOR OR INDIVIDUAL.

 

(C)                                  NO LONGER OFFICER:  NOTWITHSTANDING THAT
ANY INDIVIDUAL WHOSE MANUAL OR FACSIMILE SIGNATURE APPEARS ON A SUBSCRIPTION
RECEIPT CERTIFICATE AS ONE OF THE OFFICERS OF THE CORPORATION OR DIRECTORS
REFERRED TO IN SUBSECTION 2.04(A) HEREOF NO LONGER HOLDS THE SAME OR ANY OTHER
OFFICE WITH, OR IS NO LONGER A DIRECTOR OF, THE CORPORATION AT THE DATE OF ISSUE
OF ANY SUBSCRIPTION RECEIPT CERTIFICATE OR AT THE DATE OF CERTIFICATION OR
DELIVERY THEREOF, SUCH SUBSCRIPTION RECEIPT CERTIFICATE WILL, SUBJECT TO
SECTION 2.05 HEREOF, BE VALID AND BINDING ON THE CORPORATION.

 

Section 2.05                            Certification by Subscription Receipt
Agent

 

(A)                                  CERTIFICATION:  NO SUBSCRIPTION RECEIPT
CERTIFICATE WILL BE ISSUED OR, IF ISSUED, WILL BE VALID OR ENTITLE THE HOLDER TO
THE BENEFITS HEREOF UNTIL IT HAS BEEN CERTIFIED BY MANUAL SIGNATURE BY OR ON
BEHALF OF THE SUBSCRIPTION RECEIPT AGENT SUBSTANTIALLY IN THE FORM OF THE
CERTIFICATE ATTACHED HERETO AS SCHEDULE A OR IN SUCH OTHER FORM AS MAY BE
APPROVED BY THE SUBSCRIPTION RECEIPT AGENT. THE CERTIFICATION BY THE
SUBSCRIPTION RECEIPT AGENT ON A SUBSCRIPTION RECEIPT CERTIFICATE WILL BE
CONCLUSIVE EVIDENCE AS AGAINST THE CORPORATION THAT SUCH SUBSCRIPTION RECEIPT
CERTIFICATE HAS BEEN ISSUED HEREUNDER AND THAT THE HOLDER THEREOF IS ENTITLED TO
THE BENEFITS HEREOF.

 

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(B)                                 CERTIFICATION NO REPRESENTATION:  THE
CERTIFICATION BY THE SUBSCRIPTION RECEIPT AGENT ON ANY SUBSCRIPTION RECEIPT
CERTIFICATE ISSUED HEREUNDER WILL NOT BE CONSTRUED AS A REPRESENTATION OR
WARRANTY BY THE SUBSCRIPTION RECEIPT AGENT AS TO THE VALIDITY OF THIS INDENTURE
OR SUCH SUBSCRIPTION RECEIPT CERTIFICATE (EXCEPT THE DUE CERTIFICATION THEREOF)
OR AS TO THE PERFORMANCE BY THE CORPORATION OF THE OBLIGATIONS THEREOF UNDER
THIS INDENTURE, AND THE SUBSCRIPTION RECEIPT AGENT SHALL IN NO RESPECT BE LIABLE
OR ANSWERABLE FOR THE USE MADE OF ANY SUBSCRIPTION RECEIPT CERTIFICATE OR OF THE
CONSIDERATION THEREFOR, EXCEPT AS OTHERWISE SPECIFIED HEREIN.

 

Section 2.06                            Subscription Receipts to Rank Pari Passu

 

All Subscription Receipts will rank pari passu, whatever may be the actual dates
of issue of the Subscription Receipt Certificates by which they are represented.

 

Section 2.07                            Issue in Substitution for Lost
Certificates, Etc.

 

(A)                                  SUBSTITUTION:  IF ANY SUBSCRIPTION RECEIPT
CERTIFICATE BECOMES MUTILATED OR IS LOST, DESTROYED OR STOLEN, THE CORPORATION,
SUBJECT TO APPLICABLE LAW AND TO SUBSECTION 2.07(B) HEREOF, WILL ISSUE, AND
THEREUPON THE SUBSCRIPTION RECEIPT AGENT WILL CERTIFY AND DELIVER, A NEW
SUBSCRIPTION RECEIPT CERTIFICATE OF LIKE DENOMINATION AND TENOR AND BEARING THE
APPLICABLE LEGENDS AS THE ONE MUTILATED, LOST, DESTROYED OR STOLEN IN EXCHANGE
FOR AND IN PLACE OF AND ON SURRENDER AND CANCELLATION OF SUCH MUTILATED
CERTIFICATE OR IN LIEU OF AND IN SUBSTITUTION FOR SUCH LOST, DESTROYED OR STOLEN
CERTIFICATE.

 

(B)                                 COST OF SUBSTITUTION:  THE APPLICANT FOR THE
ISSUE OF A NEW SUBSCRIPTION RECEIPT CERTIFICATE PURSUANT TO THIS SECTION 2.07
SHALL BEAR THE REASONABLE COST OF THE ISSUE THEREOF AND, IN THE CASE OF LOSS,
DESTRUCTION OR THEFT, SHALL AS A CONDITION PRECEDENT TO THE ISSUE THEREOF:

 

(I)                                     FURNISH TO THE CORPORATION AND TO THE
SUBSCRIPTION RECEIPT AGENT SUCH EVIDENCE OF OWNERSHIP AND OF THE LOSS,
DESTRUCTION OR THEFT OF THE SUBSCRIPTION RECEIPT CERTIFICATE TO BE REPLACED AS
IS SATISFACTORY TO THE CORPORATION AND TO THE SUBSCRIPTION RECEIPT AGENT IN
THEIR DISCRETION, ACTING REASONABLY;

 

(II)                                  IF SO REQUESTED, FURNISH AN INDEMNITY IN
AMOUNT AND FORM SATISFACTORY TO THE CORPORATION AND TO THE SUBSCRIPTION RECEIPT
AGENT IN THEIR DISCRETION, ACTING REASONABLY; AND

 

(III)                               PAY THE REASONABLE CHARGES OF THE
CORPORATION AND THE SUBSCRIPTION RECEIPT AGENT IN CONNECTION THEREWITH.

 

Section 2.08                            Cancellation of Surrendered Subscription
Receipts

 

All Subscription Receipt Certificates surrendered to the Subscription Receipt
Agent in accordance with the provisions of this Indenture will be cancelled by
the Subscription Receipt Agent and, if requested in writing by the Corporation,
the Subscription Receipt Agent will furnish the Corporation with a cancellation
certificate identifying each Subscription Receipt Certificate so cancelled, the
number of

 

12

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Subscription Receipts represented thereby and the number of Common Shares and
Warrants, if any, issued pursuant to such Subscription Receipts.

 

Section 2.09                            Subscription Receiptholder not a
Shareholder

 

Nothing in this Indenture or in the holding of a Subscription Receipt
represented by a Subscription Receipt Certificate, or otherwise, shall be
construed as conferring on any Subscription Receiptholder any right or interest
whatsoever as a shareholder of the Corporation, including but not limited to any
right to vote at, to receive notice of, or to attend, any meeting of
shareholders or any right to receive any Dividend Paid in the Ordinary Course.

 

ARTICLE THREE
REGISTRATION, TRANSFER AND OWNERSHIP OF SUBSCRIPTION RECEIPTS
AND EXCHANGE OF SUBSCRIPTION RECEIPT CERTIFICATES

 

Section 3.01                            Registration and Transfer of
Subscription Receipts

 

(A)                                  REGISTER:  THE CORPORATION WILL CAUSE TO BE
KEPT BY THE SUBSCRIPTION RECEIPT AGENT AT THE PRINCIPAL OFFICE IN TORONTO,
ONTARIO OF THE SUBSCRIPTION RECEIPT AGENT:

 

(I)                                     A REGISTER OF HOLDERS IN WHICH SHALL BE
ENTERED THE NAMES AND ADDRESSES OF THE HOLDERS OF SUBSCRIPTION RECEIPTS AND
PARTICULARS OF THE SUBSCRIPTION RECEIPTS HELD BY THEM; AND

 

(II)                                  A REGISTER OF TRANSFERS IN WHICH ALL
TRANSFERS OF SUBSCRIPTION RECEIPTS AND THE DATE AND OTHER PARTICULARS OF EACH
TRANSFER SHALL BE ENTERED.

 

(B)                                 TRANSFER:  NO TRANSFER OF ANY SUBSCRIPTION
RECEIPT WILL BE VALID UNLESS ENTERED ON THE REGISTER OF TRANSFERS REFERRED TO IN
SUBSECTION 3.01(A) HEREOF, OR ON ANY BRANCH REGISTER MAINTAINED PURSUANT TO
SUBSECTION 3.01(G) HEREOF, UPON SURRENDER TO THE SUBSCRIPTION RECEIPT AGENT OF
THE SUBSCRIPTION RECEIPT CERTIFICATE REPRESENTING SUCH SUBSCRIPTION RECEIPT,
WITH A PROPERLY COMPLETED TRANSFER FORM IN SUBSTANTIALLY THE FORM ATTACHED TO
THE SUBSCRIPTION RECEIPT CERTIFICATE EXECUTED BY THE REGISTERED HOLDER OR THE
EXECUTORS, ADMINISTRATORS OR OTHER LEGAL REPRESENTATIVES THEREOF OR THE ATTORNEY
THEREOF DULY APPOINTED BY AN INSTRUMENT IN WRITING IN FORM AND EXECUTED IN A
MANNER SATISFACTORY TO THE SUBSCRIPTION RECEIPT AGENT, AND, UPON COMPLIANCE WITH
SUCH REQUIREMENTS AND SUCH OTHER REASONABLE REQUIREMENTS AS THE SUBSCRIPTION
RECEIPT AGENT MAY PRESCRIBE, SUCH TRANSFER WILL BE DULY NOTED ON ONE OF SUCH
REGISTERS BY THE SUBSCRIPTION RECEIPT AGENT.

 

(C)                                  REGISTER OF TRANSFERS:  THE TRANSFEREE OF
ANY SUBSCRIPTION RECEIPT WILL, AFTER SURRENDER TO THE SUBSCRIPTION RECEIPT AGENT
OF THE SUBSCRIPTION RECEIPT CERTIFICATE REPRESENTING SUCH SUBSCRIPTION RECEIPT
AS REQUIRED BY SUBSECTION 3.01(B) HEREOF 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 3.01(A) HEREOF, OR ON ANY BRANCH REGISTER OF HOLDERS MAINTAINED
PURSUANT TO SUBSECTION 3.01(G) HEREOF, AS THE OWNER OF SUCH SUBSCRIPTION RECEIPT
FREE FROM ALL EQUITIES OR RIGHTS OF SET-OFF OR COUNTERCLAIM BETWEEN THE
CORPORATION AND THE TRANSFEROR OR ANY PREVIOUS HOLDER OF SUCH

 

13

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SUBSCRIPTION RECEIPT, EXCEPT IN RESPECT OF EQUITIES OF WHICH THE CORPORATION IS
REQUIRED TO TAKE NOTICE BY STATUTE OR BY ORDER OF A COURT OF COMPETENT
JURISDICTION.

 

(D)                                 REFUSAL OF REGISTRATION:  THE CORPORATION
SHALL BE ENTITLED, AND MAY DIRECT THE SUBSCRIPTION RECEIPT AGENT, TO REFUSE TO
RECOGNIZE ANY TRANSFER, OR ENTER THE NAME OF ANY TRANSFEREE, OF ANY SUBSCRIPTION
RECEIPT ON THE REGISTERS REFERRED TO IN SUBSECTION 3.01(A) HEREOF OR ON ANY
BRANCH REGISTER MAINTAINED PURSUANT TO SUBSECTION 3.01(G) HEREOF IF SUCH
TRANSFER WOULD CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF ANY JURISDICTION
OR THE INSTRUMENTS, RULES, REGULATIONS OR POLICIES OF ANY REGULATORY AUTHORITY
(INCLUDING THE TORONTO STOCK EXCHANGE) HAVING JURISDICTION. IN PARTICULAR, PRIOR
TO THE REGISTRATION STATEMENT BECOMING EFFECTIVE, NONE OF THE COMMON SHARES AND
WARRANTS ISSUABLE ON THE EXCHANGE OF THE SUBSCRIPTION RECEIPTS HAVE BEEN
REGISTERED UNDER THE 1933 ACT AND SUCH SECURITIES MAY NOT BE OFFERED OR SOLD TO
A U.S. PERSON (EXCEPT A QUALIFIED U.S. ENTITY), A PERSON IN THE UNITED STATES OR
A PERSON FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (EXCEPT A QUALIFIED U.S.
ENTITY), ABSENT AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE 1933 ACT.

 

(E)                                  NO NOTICE OF TRUSTS:  SUBJECT TO APPLICABLE
LAW, NEITHER THE CORPORATION NOR THE SUBSCRIPTION RECEIPT AGENT WILL BE BOUND TO
TAKE NOTICE OF OR SEE TO THE EXECUTION OF ANY TRUST, WHETHER EXPRESS, IMPLIED OR
CONSTRUCTIVE, IN RESPECT OF ANY SUBSCRIPTION RECEIPT, AND MAY TRANSFER ANY
SUBSCRIPTION RECEIPT ON THE DIRECTION OF THE PERSON REGISTERED AS THE HOLDER
THEREOF, WHETHER NAMED AS TRUSTEE OR OTHERWISE, AS THOUGH THAT PERSON WERE THE
BENEFICIAL OWNER THEREOF.

 

(F)                                    INSPECTION:  THE REGISTERS REFERRED TO IN
SUBSECTION 3.01(A) HEREOF, AND ANY BRANCH REGISTER MAINTAINED PURSUANT TO
SUBSECTION 3.01(G) HEREOF, WILL AT ALL REASONABLE TIMES BE OPEN FOR INSPECTION
BY THE CORPORATION AND ANY SUBSCRIPTION RECEIPTHOLDER. THE SUBSCRIPTION RECEIPT
AGENT WILL FROM TIME TO TIME WHEN REQUESTED TO DO SO IN WRITING BY THE
CORPORATION OR ANY SUBSCRIPTION RECEIPTHOLDER (UPON PAYMENT OF THE REASONABLE
CHARGES OF THE SUBSCRIPTION RECEIPT AGENT) FURNISH THE CORPORATION OR SUCH
SUBSCRIPTION RECEIPTHOLDER WITH A LIST OF THE NAMES AND ADDRESSES OF HOLDERS OF
SUBSCRIPTION RECEIPTS ENTERED ON SUCH REGISTERS AND SHOWING THE NUMBER OF
SUBSCRIPTION RECEIPTS HELD BY EACH SUCH HOLDER.

 

(G)                                 LOCATION OF REGISTERS:  THE CORPORATION
MAY AT ANY TIME AND FROM TIME TO TIME CHANGE THE PLACE AT WHICH THE REGISTERS
REFERRED TO IN SUBSECTION 3.01(A) HEREOF ARE KEPT, CAUSE BRANCH REGISTERS OF
HOLDERS OR TRANSFERS TO BE KEPT, IN EACH CASE SUBJECT TO THE APPROVAL OF THE
SUBSCRIPTION RECEIPT AGENT, AT OTHER PLACES AND CLOSE SUCH BRANCH REGISTERS OR
CHANGE THE PLACE AT WHICH SUCH BRANCH REGISTERS ARE KEPT. NOTICE OF ALL SUCH
CHANGES OR CLOSURES SHALL BE GIVEN BY THE CORPORATION TO THE SUBSCRIPTION
RECEIPT AGENT AND TO THE HOLDERS OF SUBSCRIPTION RECEIPTS IN ACCORDANCE WITH
SECTION 11.02 HEREOF.

 

Section 3.02                            Exchange of Subscription Receipt
Certificates

 

(A)                                  EXCHANGE:  ONE OR MORE SUBSCRIPTION RECEIPT
CERTIFICATES MAY AT ANY TIME PRIOR TO THE TIME OF EXPIRY, ON COMPLIANCE WITH THE
REASONABLE REQUIREMENTS OF THE SUBSCRIPTION RECEIPT AGENT, BE EXCHANGED FOR ONE
OR MORE SUBSCRIPTION RECEIPT CERTIFICATES OF DIFFERENT DENOMINATIONS
REPRESENTING IN THE AGGREGATE THE SAME

 

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NUMBER OF SUBSCRIPTION RECEIPTS AS THE SUBSCRIPTION RECEIPT CERTIFICATE OR
SUBSCRIPTION RECEIPT CERTIFICATES BEING EXCHANGED.

 

(B)                                 PLACE OF EXCHANGE:  SUBSCRIPTION RECEIPT
CERTIFICATES MAY BE EXCHANGED ONLY AT THE PRINCIPAL OFFICE IN TORONTO, ONTARIO
OF THE SUBSCRIPTION RECEIPT AGENT OR AT ANY OTHER PLACE DESIGNATED BY THE
CORPORATION WITH THE APPROVAL OF THE SUBSCRIPTION RECEIPT AGENT.

 

(C)                                  CANCELLATION:  ANY SUBSCRIPTION RECEIPT
CERTIFICATE TENDERED FOR EXCHANGE PURSUANT TO THIS SECTION 3.02 SHALL BE
SURRENDERED TO THE SUBSCRIPTION RECEIPT AGENT AND CANCELLED.

 

(D)                                 EXECUTION:  THE CORPORATION WILL SIGN ALL
SUBSCRIPTION RECEIPT CERTIFICATES IN ACCORDANCE WITH SECTION 2.04 HEREOF
NECESSARY TO CARRY OUT EXCHANGES PURSUANT TO THIS SECTION 3.02 AND SUCH
SUBSCRIPTION RECEIPT CERTIFICATES WILL BE CERTIFIED BY THE SUBSCRIPTION RECEIPT
AGENT.

 

(E)                                  SUBSCRIPTION RECEIPT CERTIFICATES:
SUBSCRIPTION RECEIPT CERTIFICATES EXCHANGED FOR SUBSCRIPTION RECEIPT
CERTIFICATES THAT BEAR ANY OF THE LEGENDS SET FORTH IN SECTION 2.03 HEREOF SHALL
BEAR THE SAME LEGENDS.

 

Section 3.03                            No Charges for Transfer or Exchange

 

No charge will be levied on a presenter of a Subscription Receipt Certificate
pursuant to this Indenture for the transfer of any Subscription Receipt or the
exchange of any Subscription Receipt Certificate.

 

Section 3.04                            Ownership of Subscription Receipts

 

(A)                                  OWNER:  THE CORPORATION AND THE
SUBSCRIPTION RECEIPT AGENT MAY DEEM AND TREAT THE PERSON IN WHOSE NAME ANY
SUBSCRIPTION RECEIPT IS REGISTERED AS THE ABSOLUTE OWNER OF SUCH SUBSCRIPTION
RECEIPT FOR ALL PURPOSES, AND SUCH PERSON WILL FOR ALL PURPOSES OF THIS
INDENTURE BE AND BE DEEMED TO BE THE ABSOLUTE OWNER THEREOF, AND THE CORPORATION
AND THE SUBSCRIPTION RECEIPT AGENT WILL NOT BE AFFECTED BY ANY NOTICE OR
KNOWLEDGE TO THE CONTRARY, EXCEPT AS REQUIRED BY STATUTE OR BY ORDER OF A COURT
OF COMPETENT JURISDICTION.

 

(B)                                 RIGHTS OF REGISTERED HOLDER:  THE REGISTERED
HOLDER OF ANY SUBSCRIPTION RECEIPT WILL BE ENTITLED TO THE RIGHTS REPRESENTED
THEREBY FREE FROM ALL EQUITIES AND RIGHTS OF SET-OFF OR COUNTERCLAIM BETWEEN THE
CORPORATION AND THE ORIGINAL OR ANY INTERMEDIATE HOLDER THEREOF AND ALL PERSONS
MAY ACT ACCORDINGLY, AND THE ISSUE AND DELIVERY TO ANY SUCH REGISTERED HOLDER OF
THE COMMON SHARES AND WARRANTS ISSUABLE PURSUANT THERETO (OR THE PAYMENT OF
AMOUNTS PAYABLE IN RESPECT THEREOF PURSUANT TO SUBSECTION 2.02(D)) WILL BE A
GOOD DISCHARGE TO THE CORPORATION AND THE SUBSCRIPTION RECEIPT AGENT THEREFOR,
AND NEITHER THE CORPORATION NOR THE SUBSCRIPTION RECEIPT AGENT WILL BE BOUND TO
INQUIRE INTO THE TITLE OF ANY SUCH REGISTERED HOLDER.

 

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ARTICLE FOUR
CONVERSION OF SUBSCRIPTION RECEIPTS

 

Section 4.01                            Conversion of Subscription Receipts

 

(A)                                  CONVERSION BY SUBSCRIPTION RECEIPT AGENT: 
EACH SUBSCRIPTION RECEIPT WILL BE CONVERTED BY THE SUBSCRIPTION RECEIPT AGENT
FOR AND ON BEHALF OF THE HOLDER THEREOF AND THE HOLDER THEREOF SHALL, WITHOUT
ANY ACTION ON THE PART OF SUCH HOLDER (INCLUDING THE SURRENDER OF ANY
SUBSCRIPTION RECEIPT CERTIFICATE OR PAYMENT OF ANY AMOUNT), BE DEEMED TO HAVE
SUBSCRIBED FOR THE COMMON SHARES AND WARRANTS ISSUABLE UPON THE CONVERSION OF
THE SUBSCRIPTION RECEIPT IMMEDIATELY PRIOR TO THE TIME OF EXPIRY.

 

(B)                                 RIGHTS ON CONVERSION BY SUBSCRIPTION RECEIPT
AGENT:  THE HOLDER OF ANY SUBSCRIPTION RECEIPT CONVERTED PURSUANT TO
SUBSECTION 4.01(A) HEREOF SHALL HAVE NO RIGHTS THEREUNDER, EXCEPT TO RECEIVE THE
CERTIFICATES REPRESENTING THE COMMON SHARES AND WARRANTS ISSUED UPON THE
CONVERSION THEREOF TO SUCH HOLDER.

 

(C)                                  DIRECTION OF SUBSCRIPTION RECEIPT AGENT: 
THE HOLDERS OF SUBSCRIPTION RECEIPTS HEREBY IRREVOCABLY AUTHORIZE AND DIRECT THE
SUBSCRIPTION RECEIPT AGENT TO CONVERT THE SUBSCRIPTION RECEIPTS THEREOF PURSUANT
TO SUBSECTION 4.01(A) HEREOF.

 

Section 4.02                            Effect of Conversion

 

(A)                                  EFFECT OF CONVERSION:  UPON THE CONVERSION
OF ANY SUBSCRIPTION RECEIPTS IN ACCORDANCE WITH SECTION 4.01 HEREOF, THE COMMON
SHARES AND WARRANTS THEREBY ISSUABLE WILL BE DEEMED TO HAVE BEEN ISSUED, AND THE
PERSON OR PERSONS TO WHOM SUCH COMMON SHARES AND WARRANTS ARE TO BE ISSUED WILL
BE DEEMED TO HAVE BECOME THE HOLDER OR HOLDERS OF RECORD THEREOF, ON THE
CONVERSION DATE, UNLESS THE TRANSFER REGISTERS MAINTAINED BY OR ON BEHALF OF THE
CORPORATION FOR THE COMMON SHARES AND WARRANTS ARE CLOSED ON THAT DATE, IN WHICH
CASE SUCH COMMON SHARES AND WARRANTS WILL BE DEEMED TO HAVE BEEN ISSUED, AND
SUCH PERSON OR PERSONS WILL BE DEEMED TO HAVE BECOME THE HOLDER OR HOLDERS OF
RECORD THEREOF, ON THE DATE ON WHICH SUCH TRANSFER REGISTERS ARE REOPENED, BUT
SUCH COMMON SHARES AND WARRANTS WILL BE ISSUED ON THE BASIS OF THE NUMBER OF
COMMON SHARES AND WARRANTS TO WHICH SUCH PERSON OR PERSONS WERE ENTITLED ON THE
CONVERSION DATE. THE CERTIFICATES REPRESENTING THE COMMON SHARES AND WARRANTS
WHICH ARE ISSUED TO A HOLDER OF SUBSCRIPTION RECEIPTS UPON THE CONVERSION OF
SUBSCRIPTION RECEIPTS BY THE SUBSCRIPTION RECEIPT AGENT PURSUANT TO
SUBSECTION 4.01(A) HEREOF SHALL BE ISSUED IN THE NAME OF SUCH HOLDER.

 

(B)                                 MAILING OF CERTIFICATES:  WITHIN THREE
BUSINESS DAYS AFTER THE CONVERSION DATE, THE SUBSCRIPTION RECEIPT AGENT SHALL
MAIL TO THE PERSON OR PERSONS IN WHOSE NAME OR NAMES THE COMMON SHARES AND
WARRANTS THEREBY ISSUED HAVE BEEN ISSUED, AT THE RESPECTIVE ADDRESSES THEREOF,
OR, IF SO SPECIFIED, DELIVER TO SUCH PERSON OR PERSONS AT THE PLACE WHERE A
SUBSCRIPTION RECEIPT CERTIFICATE REPRESENTING SUBSCRIPTION RECEIPTS WAS
SURRENDERED, CERTIFICATES REPRESENTING THE COMMON SHARES AND WARRANTS SO ISSUED.

 

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(C)                                  ISSUE TO OTHER THAN HOLDER:  IF ANY COMMON
SHARES OR WARRANTS ISSUABLE PURSUANT TO ANY SUBSCRIPTION RECEIPTS ARE TO BE
ISSUED TO A PERSON OR PERSONS OTHER THAN THE SUBSCRIPTION RECEIPTHOLDER, THE
SUBSCRIPTION RECEIPTHOLDER MUST PAY TO THE CORPORATION AN AMOUNT EQUAL TO ALL
EXIGIBLE TRANSFER TAXES OR OTHER GOVERNMENT CHARGES, AND NEITHER THE CORPORATION
NOR THE SUBSCRIPTION RECEIPT AGENT SHALL BE REQUIRED TO ISSUE OR DELIVER ANY
CERTIFICATES REPRESENTING ANY SUCH COMMON SHARES OR WARRANTS UNLESS OR UNTIL
SUCH AMOUNT HAS BEEN SO PAID OR THE SUBSCRIPTION RECEIPTHOLDER HAS ESTABLISHED
TO THE SATISFACTION OF THE CORPORATION IN ITS DISCRETION, ACTING REASONABLY,
THAT SUCH TAXES AND CHARGES HAVE BEEN PAID OR THAT NO SUCH TAXES OR CHARGES ARE
OWING.

 

Section 4.03                            No Fractional Common Shares or Warrants

 

The Corporation will not, whether pursuant to an adjustment in accordance with
section 4.06 hereof or under any other circumstance, be obligated after the
aggregation of the number of Common Shares or Warrants to be issued to each
holder of Subscription Receipts to issue any fraction of a Common Share or
Warrants on the conversion of Subscription Receipts, and any such fraction shall
be rounded down to the next whole number of Common Shares or Warrants, as the
case may be. A holder of Subscription Receipts shall not be entitled to receive
a cash payment or any other compensation in respect of any such fraction of a
Common Share or of a Warrant.

 

Section 4.04                            Recording:

 

The Subscription Receipt Agent will record the particulars of each Subscription
Receipt converted, which particulars will include the name and address of each
person to whom Common Shares and Warrants are thereby issued, the number of
Common Shares and Warrants so issued and the Conversion Date in respect thereof.
Within three Business Days after each Conversion Date, the Subscription Receipt
Agent will provide such particulars in writing to the Corporation.

 

Section 4.05                            Securities Restrictions

 

(A)                                  GENERAL:  NO COMMON SHARES OR WARRANTS WILL
BE ISSUED PURSUANT TO THE CONVERSION OF ANY SUBSCRIPTION RECEIPT IF THE ISSUE OF
SUCH COMMON SHARES OR WARRANTS 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 OR WARRANTS THEREBY ISSUED WILL
BEAR SUCH LEGEND OR LEGENDS AS MAY, IN THE OPINION OF COUNSEL TO THE
CORPORATION, BE NECESSARY OR ADVISABLE IN ORDER TO AVOID A VIOLATION OF ANY
SECURITIES LAWS OF ANY JURISDICTION OR TO COMPLY WITH THE REQUIREMENTS OF ANY
STOCK EXCHANGE ON WHICH THE COMMON SHARES OR WARRANTS ARE THEN LISTED, PROVIDED
THAT IF, AT ANY TIME, IN THE OPINION OF COUNSEL TO THE CORPORATION, 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 THE EXPENSE THEREOF, PROVIDES THE CORPORATION WITH EVIDENCE SATISFACTORY IN
FORM AND SUBSTANCE TO THE CORPORATION (WHICH MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION) TO THE EFFECT THAT SUCH HOLDER IS ENTITLED TO
SELL OR OTHERWISE TRANSFER SUCH COMMON SHARES OR WARRANTS IN A TRANSACTION IN
WHICH SUCH LEGEND OR LEGENDS ARE NOT REQUIRED, SUCH LEGENDED CERTIFICATE
MAY THEREAFTER BE SURRENDERED TO THE CORPORATION IN EXCHANGE FOR A CERTIFICATE
WHICH DOES NOT BEAR SUCH LEGEND OR LEGENDS.

 

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(B)                                 CANADIAN LEGENDS:  CERTIFICATES REPRESENTING
COMMON SHARES OR WARRANTS ISSUED UPON THE CONVERSION OF SUBSCRIPTION RECEIPTS
AFTER THE FINAL QUALIFICATION DEADLINE, AND WITHOUT THE ONTARIO SECURITIES
COMMISSION, AS THE PRINCIPAL REGULATOR UNDER NATIONAL POLICY 43-201 AND THE
MRRS, HAVING ISSUED A DECISION DOCUMENT EVIDENCING THAT EACH OF THE SECURITIES
COMMISSIONS HAS ISSUED A RECEIPT FOR THE FINAL PROSPECTUS, SHALL BEAR THE
FOLLOWING LEGEND:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE
LATER OF (I) FEBRUARY 22, 2006 AND (II) THE DATE THE ISSUER BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.”.

 

If the Common Shares are also then listed on the Toronto Stock Exchange.
certificates representing the Common Shares will also bear the following legend

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.”

 

(C)                                  U.S. LEGENDS:  CERTIFICATES REPRESENTING
COMMON SHARES OR WARRANTS ISSUED UPON THE CONVERSION OF SUBSCRIPTION RECEIPTS
AFTER THE FINAL QUALIFICATION DEADLINE, AND WITHOUT THE REGISTRATION STATEMENT
HAVING BEEN DECLARED EFFECTIVE BY THE SEC, SHALL BEAR THE FOLLOWING LEGENDS:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
U.S. GOLD CORPORATION (“U.S. GOLD”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH
RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
(E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO U.S. GOLD AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN
EITHER CASE REASONABLY SATISFACTORY TO U.S. GOLD. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S.
SECURITIES ACT.”

 

If the Common Shares are also then listed on the Toronto Stock Exchange.
certificates representing the Common Shares will also bear the following legend

 

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.”

 

provided however, if the Underlying Securities are registered for resale
pursuant to an effective registration statement under the U.S. Securities Act
subsequent to the issue of the Underlying Securities and the above resale
restriction is therefore no longer applicable, then the holder may exchange the
certificates representing the Underlying Securities for certificates bearing no
such legend.

 

(D)                                 IF UPON THE AUTOMATIC CONVERSION OF THE
SUBSCRIPTION RECEIPTS UPON THE FINAL QUALIFICATION DEADLINE, THE RESALE OF THE
WARRANTS BY THE HOLDER AND THE ISSUANCE BY THE CORPORATION OF THE WARRANT SHARES
UPON EXERCISE OF THE WARRANTS ARE NOT REGISTERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT, THEN THE CERTIFICATES REPRESENTING THE
WARRANTS SHALL BEAR THE FOLLOWING LEGEND:

 

“THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY
OR ON BEHALF OF ANY U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS SUCH
EXERCISE IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE, AND THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO IT TO SUCH EFFECT.”

 

If the Common Shares are also then listed on the Toronto Stock Exchange.
certificates representing the Common Shares will also bear the following legend

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.”

 

Section 4.06                            Adjustments

 

(A)                                  ADJUSTMENT:  THE RIGHTS OF THE HOLDER OF
ANY SUBSCRIPTION RECEIPT, INCLUDING THE NUMBER OF COMMON SHARES ISSUABLE UPON
THE CONVERSION OR DEEMED CONVERSION OF SUCH SUBSCRIPTION RECEIPT, WILL BE
ADJUSTED FROM TIME TO TIME IN THE EVENTS AND IN THE MANNER PROVIDED IN, AND IN
ACCORDANCE WITH THE PROVISIONS OF, THIS SECTION, WITH ADJUSTMENTS IN RESPECT OF
THE WARRANTS BEING MADE IN THE MANNER DESCRIBED IN SUBSECTION 4.06(K) HEREOF.

 

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(B)                                 THE SHARE RATE IN EFFECT AT ANY DATE WILL BE
SUBJECT TO ADJUSTMENT FROM TIME TO TIME AS FOLLOWS:

 

(I)                                     SHARE REORGANIZATION:  IF, AND WHENEVER
AT ANY TIME DURING THE ADJUSTMENT PERIOD, THE CORPORATION SHALL (A) SUBDIVIDE OR
REDIVIDE THE OUTSTANDING COMMON SHARES INTO A GREATER NUMBER OF COMMON SHARES,
(B) CONSOLIDATE OR COMBINE THE OUTSTANDING COMMON SHARES INTO A LESSER NUMBER OF
COMMON SHARES, OR (C) ISSUE COMMON SHARES (OR SECURITIES CONVERTIBLE OR
EXCHANGEABLE INTO COMMON SHARES) TO ALL OR SUBSTANTIALLY ALL OF THE HOLDERS OF
COMMON SHARES BY WAY OF A STOCK DIVIDEND OR OTHER DISTRIBUTION, THEN, IN EACH
SUCH EVENT, THE SHARE RATE WILL, ON THE RECORD DATE FOR SUCH EVENT OR, IF NO
RECORD DATE IS FIXED, THE EFFECTIVE DATE OF SUCH EVENT, BE ADJUSTED SO THAT IT
WILL EQUAL THE RATE DETERMINED BY MULTIPLYING THE SHARE RATE IN EFFECT
IMMEDIATELY PRIOR TO SUCH DATE BY A FRACTION, OF WHICH THE DENOMINATOR SHALL BE
THE TOTAL NUMBER OF COMMON SHARES OUTSTANDING ON SUCH DATE BEFORE GIVING EFFECT
TO SUCH EVENT, AND OF WHICH THE NUMERATOR SHALL BE THE TOTAL NUMBER OF COMMON
SHARES OUTSTANDING ON SUCH DATE AFTER GIVING EFFECT TO SUCH EVENT (INCLUDING
COMMON SHARES INTO WHICH SUCH CONVERTIBLE OR EXCHANGEABLE SECURITIES BY WAY OF
STOCK DIVIDEND MAY BE ISSUED). SUCH ADJUSTMENT WILL BE MADE SUCCESSIVELY
WHENEVER ANY SUCH EVENT SHALL OCCUR. ANY SUCH ISSUE OF COMMON SHARES BY WAY OF A
STOCK DIVIDEND SHALL BE DEEMED TO HAVE BEEN MADE ON THE RECORD DATE FOR SUCH
STOCK DIVIDEND FOR THE PURPOSE OF CALCULATING THE NUMBER OF OUTSTANDING COMMON
SHARES UNDER CLAUSES 4.06(B)(I) AND (II) HEREOF.

 

(II)                                  RIGHTS OFFERING:  IF, AND WHENEVER AT ANY
TIME DURING THE ADJUSTMENT PERIOD, THE CORPORATION 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 SHARE (OR HAVING A CONVERSION OR EXCHANGE PRICE
PER SHARE) LESS THAN 95% OF THE CURRENT MARKET PRICE ON THE EARLIER OF SUCH
RECORD DATE AND THE DATE ON WHICH THE CORPORATION ANNOUNCES ITS INTENTION TO
MAKE SUCH ISSUE, THEN, IN EACH SUCH CASE, THE SHARE RATE WILL BE ADJUSTED
IMMEDIATELY AFTER SUCH RECORD DATE SO THAT IT WILL EQUAL THE RATE DETERMINED BY
MULTIPLYING THE SHARE RATE 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 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 DATE, 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

 

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EXCHANGEABLE). ANY COMMON SHARES OWNED BY OR HELD FOR THE ACCOUNT OF THE
CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION SHALL BE DEEMED NOT TO BE
OUTSTANDING FOR THE PURPOSE OF ANY SUCH COMPUTATION. 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 CLAUSE 4.06(B)(III) HEREOF
ARE FIXED WITHIN A PERIOD OF 25 TRADING DAYS, SUCH ADJUSTMENT WILL BE MADE
SUCCESSIVELY AS IF EACH OF SUCH RECORD DATES OCCURRED ON THE EARLIEST OF SUCH
RECORD DATES. TO THE EXTENT THAT ANY SUCH RIGHTS, OPTIONS OR WARRANTS ARE NOT
EXERCISED PRIOR TO THE EXPIRATION THEREOF, THE 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.

 

(III)                               DISTRIBUTION:  IF, AND WHENEVER AT ANY TIME
DURING THE ADJUSTMENT PERIOD, THE CORPORATION SHALL FIX A RECORD DATE FOR THE
MAKING OF A DISTRIBUTION TO ALL OR SUBSTANTIALLY ALL OF THE HOLDERS OF COMMON
SHARES OF (A) SHARES OF ANY CLASS OTHER THAN COMMON SHARES WHETHER OF THE
CORPORATION OR ANY OTHER CORPORATION, (B) RIGHTS, OPTIONS OR WARRANTS TO ACQUIRE
COMMON SHARES OR SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON SHARES
OR PROPERTY OR OTHER ASSETS OR THE CORPORATION (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),
(C) EVIDENCES OF INDEBTEDNESS, OR (D) CASH, SECURITIES OR OTHER PROPERTY OR
ASSETS THEN, IN EACH SUCH CASE, THE SHARE RATE WILL BE ADJUSTED IMMEDIATELY
AFTER SUCH RECORD DATE SO THAT IT WILL EQUAL THE RATE DETERMINED BY MULTIPLYING
THE SHARE RATE 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 MULTIPLIED BY THE CURRENT MARKET PRICE ON THE EARLIER OF SUCH RECORD
DATE AND THE DATE ON WHICH THE CORPORATION ANNOUNCES ITS INTENTION TO MAKE SUCH
DISTRIBUTION, LESS THE AGGREGATE FAIR MARKET VALUE (AS DETERMINED BY THE
DIRECTORS, ACTING REASONABLY, AT THE TIME SUCH DISTRIBUTION IS AUTHORIZED) OF
SUCH SHARES OR RIGHTS, OPTIONS OR WARRANTS OR EVIDENCES OF INDEBTEDNESS OR CASH,
SECURITIES OR OTHER PROPERTY OR ASSETS SO DISTRIBUTED, AND OF WHICH THE
NUMERATOR SHALL BE THE TOTAL NUMBER OF COMMON SHARES OUTSTANDING ON SUCH RECORD
DATE MULTIPLIED BY SUCH CURRENT MARKET PRICE. ANY COMMON SHARES OWNED BY OR HELD
FOR THE ACCOUNT OF THE CORPORATION OR ANY SUBSIDIARY OF THE CORPORATION SHALL BE
DEEMED NOT TO BE OUTSTANDING FOR THE PURPOSE OF ANY SUCH COMPUTATION. 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
CLAUSE 4.06(B)(II) HEREOF ARE FIXED WITHIN A PERIOD OF 25 TRADING DAYS, SUCH
ADJUSTMENT WILL BE MADE SUCCESSIVELY AS IF EACH OF SUCH RECORD DATES OCCURRED ON
THE EARLIEST OF SUCH RECORD DATES. TO THE EXTENT THAT ANY SUCH RIGHTS, OPTIONS
OR WARRANTS SO DISTRIBUTED ARE NOT

 

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EXERCISED PRIOR TO THE EXPIRATION THEREOF, THE SHARE RATE WILL THEN BE
READJUSTED TO THE SHARE RATE WHICH WOULD THEN BE IN EFFECT BASED UPON SUCH
RIGHTS, OPTIONS OR WARRANTS OR EVIDENCES OF INDEBTEDNESS OR CASH, SECURITIES OR
OTHER PROPERTY OR ASSETS ACTUALLY DISTRIBUTED OR BASED UPON THE NUMBER OR AMOUNT
OF SECURITIES OR THE PROPERTY OR ASSETS ACTUALLY ISSUED OR DISTRIBUTED UPON THE
EXERCISE OF SUCH RIGHTS, OPTIONS OR WARRANTS, AS THE CASE MAY BE.

 

(C)                                  RECLASSIFICATIONS:  IF AND WHENEVER AT ANY
TIME DURING THE ADJUSTMENT PERIOD, THERE IS (A) ANY RECLASSIFICATION OF THE
OUTSTANDING COMMON SHARES, ANY CHANGE OF THE COMMON SHARES INTO OTHER SHARES OR
ANY OTHER REORGANIZATION OF THE CORPORATION (OTHER THAN AS DESCRIBED IN
SUBSECTION 4.06(B) HEREOF), (B) ANY CONSOLIDATION, AMALGAMATION, ARRANGEMENT,
MERGER OR OTHER FORM OF BUSINESS COMBINATION OF THE CORPORATION WITH OR INTO ANY
OTHER CORPORATION OR OTHER ENTITY RESULTING IN ANY RECLASSIFICATION OF THE
OUTSTANDING COMMON SHARES, ANY CHANGE OF THE COMMON SHARES INTO OTHER SHARES OR
ANY OTHER REORGANIZATION OF THE CORPORATION, OR (C) ANY SALE, LEASE, EXCHANGE OR
TRANSFER OF THE UNDERTAKING OR ASSETS OF THE CORPORATION AS AN ENTIRETY OR
SUBSTANTIALLY AS AN ENTIRETY TO ANOTHER CORPORATION OR ENTITY, THEN, IN EACH
SUCH EVENT, EACH HOLDER OF ANY SUBSCRIPTION RECEIPT WHICH IS THEREAFTER
EXCHANGED WILL BE ENTITLED TO RECEIVE, AND SHALL ACCEPT, IN LIEU OF THE NUMBER
OF COMMON SHARES TO WHICH SUCH HOLDER WAS THERETOFOR ENTITLED UPON SUCH
EXCHANGE, THE KIND AND NUMBER OR AMOUNT OF SHARES OR OTHER SECURITIES OR
PROPERTY WHICH SUCH HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE AS A RESULT OF
SUCH EVENT IF, ON THE EFFECTIVE DATE THEREOF, SUCH HOLDER HAD BEEN THE
REGISTERED HOLDER OF THE NUMBER OF COMMON SHARES TO WHICH SUCH HOLDER WAS
THERETOFOR ENTITLED UPON SUCH CONVERSION OR EXCHANGE. IF NECESSARY AS A RESULT
OF ANY SUCH EVENT, APPROPRIATE ADJUSTMENTS WILL BE MADE IN THE APPLICATION OF
THE PROVISIONS SET FORTH IN THIS SUBSECTION 4.06(C) WITH RESPECT TO THE RIGHTS
AND INTERESTS THEREAFTER OF THE HOLDERS OF SUBSCRIPTION RECEIPTS TO THE END THAT
THE PROVISIONS SET FORTH IN THIS SUBSECTION 4.06(C) WILL THEREAFTER
CORRESPONDINGLY BE MADE APPLICABLE, AS NEARLY AS MAY REASONABLY BE, IN THE
RELATION TO ANY SHARES OR OTHER SECURITIES OR PROPERTY THEREAFTER DELIVERABLE
UPON THE EXERCISE OF ANY SUBSCRIPTION RECEIPT. ANY SUCH ADJUSTMENTS WILL BE SET
FORTH IN AN INDENTURE SUPPLEMENTAL HERETO WITH THE SUCCESSOR TO THE CORPORATION
OR SUCH CORPORATION OR OTHER ENTITY, AS APPLICABLE, CONTEMPORANEOUSLY WITH SUCH
RECLASSIFICATION, CONSOLIDATION, AMALGAMATION, ARRANGEMENT, MERGER, OTHER
FORM OF BUSINESS COMBINATION OR OTHER EVENT AND WHICH SUPPLEMENTAL INDENTURE
SHALL BE APPROVED BY THE DIRECTORS, ACTING REASONABLY, AND SHALL FOR ALL
PURPOSES BE CONCLUSIVELY DEEMED TO BE AN APPROPRIATE ADJUSTMENT AND SUCH
SUPPLEMENTAL INDENTURE SHALL PROVIDE FOR ADJUSTMENTS WHICH SHALL BE AS NEARLY
EQUIVALENT AS MAY BE PRACTICABLE TO THE ADJUSTMENTS PROVIDED IN THIS
SECTION 4.06 AND WHICH SHALL APPLY TO SUCCESSIVE RECLASSIFICATIONS,
REORGANIZATIONS, AMALGAMATIONS, MERGERS, OTHER FORMS OF BUSINESS COMBINATION OR
OTHER EVENTS. THE CORPORATION, ITS SUCCESSOR OR SUCH CORPORATION OR OTHER
ENTITY, AS THE CASE MAY BE, SHALL ALSO, PRIOR TO OR CONTEMPORANEOUSLY WITH ANY
SUCH EVENT, ENTER INTO A SUPPLEMENTAL INDENTURE SUBSTANTIALLY IN THE FORM OF THE
WARRANT INDENTURE WITH RESPECT TO THE RIGHTS AND INTEREST THEREAFTER OF THE
HOLDERS OF THE WARRANTS TO THE END OF THE PROVISIONS SET FORTH IN THE WARRANT
INDENTURE SHALL THEREAFTER CORRESPONDINGLY BE MADE APPLICABLE, AS NEARLY AS
REASONABLY BE, WITH ANY SHARES OR OTHER SECURITIES OR PROPERTY TO WHICH THE
HOLDERS OF THE WARRANTS WOULD BE ENTITLED ON EXERCISE OF ACQUISITION RIGHTS
THEREUNDER.

 

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(D)                                 DEFERRAL OF ADJUSTMENT:  IN ANY CASE IN
WHICH THIS SECTION 4.06 SHALL REQUIRE THAT AN ADJUSTMENT SHALL BECOME EFFECTIVE
IMMEDIATELY AFTER A RECORD DATE FOR OR AN EFFECTIVE DATE OF AN EVENT REFERRED TO
HEREIN, THE CORPORATION MAY DEFER, UNTIL THE OCCURRENCE AND CONSUMMATION OF SUCH
EVENT, ISSUING TO THE HOLDER OF ANY SUBSCRIPTION RECEIPT EXCHANGED AFTER SUCH
RECORD DATE OR EFFECTIVE DATE AND BEFORE THE OCCURRENCE AND CONSUMMATION OF SUCH
EVENT THE ADDITIONAL COMMON SHARES, WARRANTS OR OTHER SECURITIES OR PROPERTY
ISSUABLE UPON SUCH EXCHANGE BY REASON OF THE ADJUSTMENT REQUIRED BY SUCH EVENT,
PROVIDED, HOWEVER, THAT THE CORPORATION WILL DELIVER TO SUCH HOLDER AN
APPROPRIATE INSTRUMENT EVIDENCING SUCH HOLDER’S RIGHT TO RECEIVE SUCH ADDITIONAL
COMMON SHARES, WARRANTS OR OTHER SECURITIES OR PROPERTY UPON THE OCCURRENCE AND
CONSUMMATION OF SUCH EVENT AND THE RIGHT TO RECEIVE ANY DIVIDEND OR OTHER
DISTRIBUTION IN RESPECT OF SUCH ADDITIONAL COMMON SHARES, WARRANTS OR OTHER
SECURITIES OR PROPERTY DECLARED IN FAVOUR OF THE HOLDERS OF RECORD OF COMMON
SHARES, WARRANTS OR OF SUCH OTHER SECURITIES OR PROPERTY ON OR AFTER THE
CONVERSION DATE OR SUCH LATER DATE AS SUCH HOLDER WOULD, BUT FOR THE PROVISIONS
OF THIS SUBSECTION, HAVE BECOME THE HOLDER OF RECORD OF SUCH ADDITIONAL COMMON
SHARES, WARRANTS OR OF SUCH OTHER SECURITIES OR PROPERTY PURSUANT TO
SUBSECTION 4.02(A) HEREOF.

 

(E)                                  ADJUSTMENTS CUMULATIVE:  THE ADJUSTMENTS
PROVIDED FOR IN THIS SECTION 4.06 ARE CUMULATIVE, SHALL, IN THE CASE OF ANY
ADJUSTMENT TO THE SHARE RATE, BE COMPUTED TO THE NEAREST ONE ONE-HUNDREDTH OF A
COMMON SHARE AND WILL APPLY (WITHOUT DUPLICATION) TO SUCCESSIVE SUBDIVISIONS,
CONSOLIDATIONS, DISTRIBUTIONS, ISSUES OR OTHER EVENTS RESULTING IN ANY
ADJUSTMENT UNDER THE PROVISIONS OF THIS SECTION 4.06, PROVIDED THAT,
NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION, NO ADJUSTMENT OF THE SHARE
RATE WILL BE REQUIRED (I) UNLESS SUCH ADJUSTMENT WOULD REQUIRE AN INCREASE OR
DECREASE OF AT LEAST 1% IN THE SHARE RATE THEN IN EFFECT (PROVIDED, HOWEVER,
THAT ANY ADJUSTMENT WHICH BY REASON OF THIS SUBSECTION 4.06(E) IS NOT REQUIRED
TO BE MADE WILL BE CARRIED FORWARD AND TAKEN INTO ACCOUNT IN ANY SUBSEQUENT
ADJUSTMENT), (II) IF, IN RESPECT OF ANY EVENT DESCRIBED IN THIS SECTION 4.06
(OTHER THAN THE EVENTS REFERRED TO IN CLAUSES (A) AND (B) OF CLAUSE
4.06(B)(I) HEREOF AND IN SUBSECTION 4.06(C) HEREOF), THE HOLDERS OF SUBSCRIPTION
RECEIPTS ARE ENTITLED TO PARTICIPATE IN SUCH EVENT, OR ARE ENTITLED TO
PARTICIPATE WITHIN 45 DAYS IN A COMPARABLE EVENT, ON THE SAME TERMS, WITH THE
NECESSARY CHANGES, AS IF THE SUBSCRIPTION RECEIPTS HAD BEEN EXERCISED PRIOR TO
OR ON THE EFFECTIVE DATE OF OR RECORD DATE FOR SUCH EVENT, (III) IN RESPECT OF
ANY COMMON SHARES ISSUABLE OR ISSUED PURSUANT TO ANY STOCK OPTION OR ANY STOCK
OPTION OR STOCK PURCHASE PLAN IN FORCE FROM TIME TO TIME FOR DIRECTORS, OFFICERS
OR EMPLOYEES OF THE CORPORATION OR OF SUBSIDIARIES OF THE CORPORATION, OR
(IV) IN RESPECT OF ANY COMMON SHARES ISSUABLE OR ISSUED PURSUANT TO THE
CONVERSION OF SUBSCRIPTION RECEIPTS OR THE EXERCISE OF WARRANTS.

 

(F)                                    RESOLUTION OF QUESTIONS:  IF ANY QUESTION
ARISES WITH RESPECT TO THE ADJUSTMENTS PROVIDED IN THIS SECTION 4.06, SUCH
QUESTION SHALL BE CONCLUSIVELY DETERMINED BY THE CORPORATION’S AUDITORS OR, IF
THEY ARE UNABLE OR UNWILLING TO ACT, BY SUCH FIRM OF CHARTERED ACCOUNTANTS AS IS
APPOINTED BY THE CORPORATION AND IS ACCEPTABLE TO THE SUBSCRIPTION RECEIPT
AGENT. SUCH ACCOUNTANTS SHALL HAVE ACCESS TO ALL NECESSARY RECORDS OF THE
CORPORATION AND SUCH DETERMINATION SHALL BE BINDING UPON THE CORPORATION, THE
SUBSCRIPTION RECEIPT AGENT AND THE SUBSCRIPTION RECEIPTHOLDERS.

 

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(G)                                 OTHER ACTIONS:  IF, AND WHENEVER AT ANY TIME
DURING THE ADJUSTMENT PERIOD, THE CORPORATION SHALL TAKE ANY ACTION AFFECTING OR
RELATING TO THE COMMON SHARES, OTHER THAN ANY ACTION DESCRIBED IN THIS
SECTION 4.06, WHICH IN THE OPINION OF THE DIRECTORS WOULD PREJUDICIALLY AFFECT
THE RIGHTS OF HOLDERS OF SUBSCRIPTION RECEIPTS, THE SHARE RATE WILL BE ADJUSTED
BY THE DIRECTORS IN SUCH MANNER, IF ANY, AND AT SUCH TIME, AS THE DIRECTORS
MAY REASONABLY DETERMINE TO BE EQUITABLE IN THE CIRCUMSTANCES TO SUCH HOLDERS.

 

(H)                                 ADDITIONAL ACTIONS:  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 CORPORATION WILL TAKE ANY
ACTION WHICH MAY, IN THE OPINION OF COUNSEL TO THE CORPORATION, BE NECESSARY IN
ORDER THAT THE CORPORATION, OR ANY SUCCESSOR TO THE CORPORATION OR SUCCESSOR TO
THE UNDERTAKING OR ASSETS OF THE CORPORATION, WILL BE OBLIGATED TO AND
MAY VALIDLY AND LEGALLY ISSUE ALL THE COMMON SHARES, WARRANTS OR OTHER
SECURITIES OR PROPERTY WHICH THE HOLDERS OF SUBSCRIPTION RECEIPTS WOULD BE
ENTITLED TO RECEIVE THEREAFTER ON THE EXERCISE THEREOF IN ACCORDANCE WITH THE
PROVISIONS HEREOF.

 

(I)                                     NOTICE TO SUBSCRIPTION RECEIPT AGENT: 
AT LEAST TEN DAYS BEFORE THE EARLIER OF THE EFFECTIVE DATE OF OR RECORD DATE FOR
ANY EVENT REFERRED TO IN THIS SECTION 4.06 THAT REQUIRES OR MIGHT REQUIRE AN
ADJUSTMENT IN ANY OF THE RIGHTS UNDER THE SUBSCRIPTION RECEIPTS, THE CORPORATION
WILL:

 

(I)                                     FILE WITH THE SUBSCRIPTION RECEIPT AGENT
A CERTIFICATE OF THE CORPORATION SPECIFYING THE PARTICULARS OF SUCH EVENT AND,
TO THE EXTENT DETERMINABLE, ANY ADJUSTMENT REQUIRED AND THE COMPUTATION OF SUCH
ADJUSTMENT; AND

 

(II)                                  GIVE NOTICE TO THE SUBSCRIPTION
RECEIPTHOLDERS OF THE PARTICULARS OF SUCH EVENT AND, TO THE EXTENT DETERMINABLE,
ANY ADJUSTMENT REQUIRED, IN ACCORDANCE WITH SUBSECTION 11.02(A) HEREOF.

 

Such notice need only set forth such particulars as have been determined at the
date such notice is given. If any adjustment for which such notice is given is
not then determinable, promptly after such adjustment is determinable the
Corporation will:

 

(III)                               FILE WITH THE SUBSCRIPTION RECEIPT AGENT A
CERTIFICATE OF THE CORPORATION SHOWING THE COMPUTATION OF SUCH ADJUSTMENT; AND

 

(IV)                              GIVE NOTICE TO THE SUBSCRIPTION RECEIPTHOLDERS
OF SUCH ADJUSTMENT IN ACCORDANCE WITH SUBSECTION 11.02(A) HEREOF.

 

Where a notice pursuant to this subsection 4.06(i) has been given, the
Subscription Receipt Agent shall be entitled to act and rely on any adjustment
calculation of the Corporation or of the Corporation’s auditors.

 

(J)                                     DUTY OF SUBSCRIPTION RECEIPT AGENT: 
SUBJECT TO SUBSECTION 10.02(A) HEREOF, THE SUBSCRIPTION RECEIPT AGENT SHALL NOT:

 

(I)                                     AT ANY TIME BE UNDER ANY DUTY OR
RESPONSIBILITY TO ANY SUBSCRIPTION RECEIPTHOLDER TO DETERMINE WHETHER ANY FACTS
EXIST WHICH MAY REQUIRE ANY ADJUSTMENT IN THE SHARE RATE, OR WITH RESPECT TO THE
NATURE OR EXTENT

 

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OF ANY SUCH ADJUSTMENT WHEN MADE, OR WITH RESPECT TO THE METHOD EMPLOYED IN
MAKING SUCH ADJUSTMENT;

 

(II)                                  BE ACCOUNTABLE WITH RESPECT TO THE
VALIDITY OR VALUE (OR THE KIND OR AMOUNT) OF ANY COMMON SHARES, WARRANTS OR OF
ANY SHARES OR OTHER SECURITIES OR PROPERTY WHICH MAY AT ANY TIME BE ISSUED OR
DELIVERED UPON THE EXERCISE OF ANY SUBSCRIPTION RECEIPT; OR

 

(III)                               BE RESPONSIBLE FOR ANY FAILURE OF THE
CORPORATION TO MAKE ANY CASH PAYMENT OR TO ISSUE, TRANSFER OR DELIVER COMMON
SHARES OR SHARE CERTIFICATES, WARRANTS, OR CERTIFICATES REPRESENTING THE
WARRANTS UPON THE SURRENDER OF ANY SUBSCRIPTION RECEIPTS FOR THE PURPOSE OF
EXERCISE, OR TO COMPLY WITH ANY OF THE COVENANTS CONTAINED IN THIS SECTION.

 

(K)                                  ADJUSTMENTS IN RESPECT OF WARRANTS:  IN THE
EVENT THAT, AT ANY TIME PRIOR TO THE ISSUE OF WARRANTS IN ACCORDANCE WITH THE
WARRANT INDENTURE IN THE CIRCUMSTANCES REQUIRED UNDER THIS INDENTURE, THERE
SHALL HAVE OCCURRED ONE OR MORE EVENTS WHICH, IF ANY WARRANT WAS OUTSTANDING,
WOULD REQUIRE AN ADJUSTMENT OR ADJUSTMENTS THERETO OR TO THE EXERCISE PRICE
THEREOF IN ACCORDANCE WITH THE PROVISIONS OF THE WARRANT INDENTURE, THEN,
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN AND NOTWITHSTANDING THAT NO
WARRANTS MAY BE OUTSTANDING AT THE APPLICABLE TIME UNDER THE WARRANT INDENTURE,
AT THE TIME OF THE ISSUE OF WARRANTS UPON THE CONVERSION OF SUBSCRIPTION
RECEIPTS, THE SAME ADJUSTMENT OR ADJUSTMENTS IN ACCORDANCE WITH THE ADJUSTMENT
PROVISIONS OF THE WARRANT INDENTURE SHALL BE MADE TO THE WARRANTS ISSUABLE UPON
THE CONVERSION OF SUBSCRIPTION RECEIPTS, MUTATIS MUTANDIS, AS IF SUCH WARRANTS
WERE OUTSTANDING AND GOVERNED BY THE WARRANT INDENTURE UPON THE OCCURRENCE OF
SUCH EVENT OR EVENTS.

 

ARTICLE FIVE
COVENANTS

 

Section 5.01                            General Covenants

 

The Corporation covenants with the Subscription Receipt Agent that so long as
any Subscription Receipts remain outstanding:

 

(A)                                  MAINTENANCE:  THE CORPORATION WILL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO AT ALL TIMES MAINTAIN ITS CORPORATE EXISTENCE
AND KEEP OR CAUSE TO BE KEPT PROPER BOOKS OF ACCOUNT IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OR CANADA.

 

(B)                                 RESERVATION OF COMMON SHARES:  THE
CORPORATION WILL RESERVE AND CONDITIONALLY ALLOT FOR THE PURPOSE AND KEEP
AVAILABLE SUFFICIENT UNISSUED COMMON SHARES TO ENABLE IT TO SATISFY ITS
OBLIGATIONS ON THE CONVERSION OF THE SUBSCRIPTION RECEIPTS AND THE EXERCISE OF
THE WARRANTS.

 

(C)                                  ISSUE OF COMMON SHARES AND WARRANTS:  THE
CORPORATION WILL CAUSE THE COMMON SHARES AND WARRANTS FROM TIME TO TIME ISSUED
PURSUANT TO THE CONVERSION OF THE SUBSCRIPTION RECEIPTS AND THE EXERCISE OF
WARRANTS, AND THE CERTIFICATES REPRESENTING SUCH COMMON SHARES AND WARRANTS, TO
BE ISSUED AND

 

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DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF THIS INDENTURE AND THE TERMS
HEREOF AND ALL COMMON SHARES THAT ARE ISSUED ON THE CONVERSION OF THE
SUBSCRIPTION RECEIPTS AND UPON THE EXERCISE OF WARRANTS WILL BE FULLY PAID AND
NON-ASSESSABLE SHARES.

 

(D)                                 OPEN REGISTERS:  THE CORPORATION WILL CAUSE
THE SUBSCRIPTION RECEIPT AGENT TO KEEP OPEN THE REGISTERS OF HOLDERS AND
REGISTERS OF TRANSFERS REFERRED TO IN SECTION 3.01 HEREOF AS REQUIRED BY SUCH
SECTION AND WILL NOT TAKE ANY ACTION OR OMIT TO TAKE ANY ACTION WHICH WOULD HAVE
THE EFFECT OF PREVENTING THE SUBSCRIPTION RECEIPTHOLDERS FROM CONVERTING ANY OF
THE SUBSCRIPTION RECEIPTS OR RECEIVING ANY OF THE COMMON SHARES AND WARRANTS
ISSUED UPON SUCH CONVERSION.

 

(E)                                  FILINGS:  THE CORPORATION WILL MAKE ALL
REQUISITE FILINGS, INCLUDING FILINGS WITH APPROPRIATE SECURITIES COMMISSIONS AND
STOCK EXCHANGES, IN CONNECTION WITH THE CONVERSION OF THE SUBSCRIPTION RECEIPTS
AND THE ISSUE OF THE COMMON SHARES AND WARRANTS IN CONNECTION THEREWITH.

 

(F)                                    REPORTING:  THE CORPORATION SHALL FILE
WITHIN THE TIME REQUIRED BY THE U.S. SECURITIES ACT AND THE RULES AND
REGULATIONS THEREUNDER:

 

(I)                                   UNAUDITED INTERIM CONDENSED FINANCIAL
STATEMENTS FOR EACH QUARTER (INCLUDING MANAGEMENT’S DISCUSSION AND ANALYSIS);

 

(II)                                AUDITED ANNUAL FINANCIAL STATEMENTS
(INCLUDING MANAGEMENT’S DISCUSSION AND ANALYSIS) FOR EACH FISCAL YEAR; AND

 

(III)                             SUCH OTHER REPORTS AND DOCUMENTS AS MAY BE
REQUIRED THEREUNDER; AND

 

(G)                                 NOTICE OF RECEIPT:  THE CORPORATION WILL
SEND OR CAUSE TO BE SENT TO EACH SUBSCRIPTION RECEIPTHOLDER A WRITTEN NOTICE
ADVISING OF THE ISSUANCE OF A RECEIPT FOR THE FINAL PROSPECTUS BY EACH OF THE
SECURITIES COMMISSIONS, TOGETHER WITH A COPY OF THE FINAL PROSPECTUS AND SUCH
NOTICE SHALL BE SENT WITHIN THREE BUSINESS DAYS AFTER THE DATE ON WHICH THE
RECEIPT IS ISSUED BY THE LAST OF THE SECURITIES COMMISSIONS.

 

(H)                                 NOTICE OF PENALTY DEADLINE:  IF THE RELEASE
CONDITIONS SHALL NOT HAVE BEEN SATISFIED ON OR PRIOR TO THE PENALTY DEADLINE,
THE CORPORATION SHALL SEND OR CAUSE TO BE SENT TO EACH REGISTERED HOLDER OF
SUBSCRIPTION RECEIPTS A WRITTEN NOTICE ADVISING THAT SUCH HOLDER HAS THE RIGHT
TO RECEIVE, UPON THE SUBSEQUENT CONVERSION THEREOF, 1.1 COMMON SHARES (IN LIEU
OF ONE COMMON SHARE) AND 0.55 WARRANTS (IN LIEU OF ONE-HALF OF ONE WARRANT)
PURSUANT TO EACH SUBSCRIPTION RECEIPT AND SUCH NOTICE SHALL BE SENT WITHIN THREE
BUSINESS DAYS AFTER THE PENALTY DEADLINE.

 

(I)                                     NOTICE OF INITIAL QUALIFICATION
DEADLINE:  IF THE RELEASE CONDITIONS SHALL NOT HAVE BEEN SATISFIED ON OR PRIOR
TO THE INITIAL QUALIFICATION DEADLINE, THE CORPORATION SHALL SEND OR CAUSE TO BE
SENT TO EACH HOLDER OF SUBSCRIPTION RECEIPTS WRITTEN NOTICE ADVISING OF THAT
FACT AND THAT 50% OF THE SUBSCRIPTION RECEIPTS HELD BY EACH SUBSCRIPTION RECEIPT
HOLDER HAVE BEEN CANCELLED BY THE SUBSCRIPTION RECEIPT AGENT AND EACH HOLDER OF
SUBSCRIPTION RECEIPTS WILL BE ENTITLED TO RECEIVE THEIR PRO RATA SHARE OF THE
ESCROWED FUNDS BEING AN AMOUNT EQUAL TO $4.50 PER SUBSCRIPTION RECEIPT SO
CANCELLED, TOGETHER WITH INTEREST THEREON FROM

 

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THE SUBSCRIPTION RECEIPT AGENT (LESS ANY APPLICABLE WITHHOLDING TAX THEREON),
AND SUCH NOTICE SHALL BE SENT WITHIN THREE BUSINESS DAYS AFTER THE INITIAL
QUALIFICATION DEADLINE.

 

(J)                                     RELEASE CONDITIONS:  THE CORPORATION
WILL USE ITS REASONABLE COMMERCIAL EFFORTS TO SATISFY THE RELEASE CONDITIONS.

 

(K)                                  GENERAL PERFORMANCE:  GENERALLY, THE
CORPORATION, USING REASONABLE COMMERCIAL EFFORTS, WILL WELL AND TRULY
PERFORM AND CARRY OUT ALL ACTS AND THINGS TO BE DONE BY IT AS PROVIDED IN THIS
INDENTURE OR IN ORDER TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(L)                                     REPORTING ISSUER STATUS:  IT WILL USE
ITS COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN ITS STATUS AS A REPORTING ISSUER
OR EQUIVALENT NOT IN DEFAULT, AND NOT BE IN DEFAULT IN ANY MATERIAL RESPECT OF
THE APPLICABLE REQUIREMENTS OF, THE APPLICABLE SECURITIES LAWS OF THE APPLICABLE
JURISDICTION OF CANADA AND THE FEDERAL SECURITIES LAWS OF THE UNITED STATES,
PROVIDED THAT THE FOREGOING SHALL APPLY FROM THE DATE THAT THE CORPORATION
BECOMES A REPORTING ISSUER IN A JURISDICTION OF CANADA.

 

(M)                               FILING REGISTRATION STATEMENT:  THE
CORPORATION SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO FILE AND CAUSE THE
REGISTRATION STATEMENT TO BE DECLARED EFFECTIVE BY NO LATER THAN THE FINAL
QUALIFICATION DEADLINE, AND THEREAFTER SHALL CAUSE THE REGISTRATION STATEMENT TO
REMAIN EFFECTIVE AND AVAILABLE FOR USE BY THE HOLDERS UNTIL THE LATER OF TWO
YEARS FROM THE DATE HEREOF IN RESPECT OF THE PROSPECTUS AND A DATE WHICH IS 10
DAYS AFTER ALL OF THE WARRANTS HAVE BEEN EXERCISED.

 

(N)                                 FILING FINAL PROSPECTUS:   THE CORPORATION
SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO FILE AND CAUSE THE ONTARIO
SECURITIES COMMISSION, AS THE PRINCIPAL REGULATOR UNDER NATIONAL POLICY 43-201
AND THE MRRS, TO ISSUE A DECISION DOCUMENT EVIDENCING THAT EACH OF THE
SECURITIES COMMISSIONS HAS ISSUED A RECEIPT FOR THE FINAL PROSPECTUS BY NO LATER
THAN THE FINAL QUALIFICATION DEADLINE

 

(O)                                 NOTICE IF REGISTRATION STATEMENT NOT
EFFECTIVE:  IF AT ANY TIME A PREVIOUSLY EFFECTIVE REGISTRATION IS NO LONGER
EFFECTIVE, THE CORPORATION WILL GIVE NOTICE TO THE SUBSCRIPTION RECEIPT AGENT
FORTHWITH AND WILL GIVE NOTICE, IN ACCORDANCE WITH THE PROVISIONS SET OUT IN
SECTION 11.01, AS SOON AS REASONABLY PRACTICABLE, BUT IN ANY EVENT WITHIN FIVE
BUSINESS DAYS, AFTER LEARNING THAT SUCH REGISTRATION STATEMENT IS NO LONGER
EFFECTIVE.

 

(P)                                 FURTHER ACTS. IF, IN THE OPINION OF OUTSIDE
COUNSEL TO THE CORPORATION, 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 ISSUABLE UPON EXERCISE OF THE WARRANTS MAY BE ISSUED OR DELIVERED TO A
WARRANTHOLDER, THE CORPORATION WILL USE ITS REASONABLE COMMERCIAL EFFORTS TO
FILE SUCH INSTRUMENT, OBTAIN SUCH PERMISSION, ORDER OR RULING OR TAKE ALL SUCH
OTHER ACTIONS, AT ITS EXPENSE, AS ARE REQUIRED.

 

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Any notices or deliveries required to be provided to holders of Subscription
Receipts hereunder shall be sent by prepaid mail or delivery to each holder of
Subscription Receipts at the address of such holder appearing on the register of
Subscription Receipts maintained hereunder.

 

Section 5.02                            Remuneration and Expenses of
Subscription Receipt Agent

 

The Corporation will pay to the Subscription Receipt Agent from time to time
reasonable remuneration for the services of the Subscription Receipt Agent
hereunder and will, on the request of the Subscription Receipt Agent, pay to or
reimburse the Subscription Receipt Agent for all reasonable expenses,
disbursements and advances made or incurred by the Subscription Receipt Agent in
the administration or execution of the duties and obligations hereof (including
reasonable compensation and disbursements of its counsel and other advisers and
assistants not regularly in the employment thereof), both before any default
hereunder and thereafter until all duties of the Subscription Receipt Agent
hereunder have been finally and fully performed, except any such expense,
disbursement or advance that arises out of or results from negligence, wilful
misconduct or bad faith of the Subscription Receipt Agent or of persons for whom
the Subscription Receipt Agent is responsible or has retained. In no event shall
any amount payable to the Subscription Receipt Agent hereunder be paid out of
the Escrowed Proceeds or accrued interest thereon unless the Escrowed Proceeds
and accrued interest are, at the time of payment, payable to the Corporation.

 

Section 5.03                            Securities Qualification Requirements

 

(A)                                  IF, IN THE OPINION OF COUNSEL, ANY
INSTRUMENT IS REQUIRED TO BE FILED WITH, OR ANY PERMISSION IS REQUIRED TO BE
OBTAINED FROM ANY GOVERNMENTAL AUTHORITY IN CANADA OR THE UNITED STATES OR ANY
OTHER STEP IS REQUIRED UNDER ANY FEDERAL OR PROVINCIAL LAW OF CANADA, OR FEDERAL
OR STATE LAW OF THE UNITED STATES, BEFORE ANY UNDERLYING SECURITIES WHICH A
SUBSCRIPTION RECEIPTHOLDER IS ENTITLED TO ACQUIRE PURSUANT TO THE CONVERSION OF
ANY SUBSCRIPTION RECEIPT MAY PROPERLY AND LEGALLY BE ISSUED UPON DUE CONVERSION
THEREOF, THE CORPORATION COVENANTS THAT, USING REASONABLE COMMERCIAL EFFORTS, IT
WILL PROMPTLY TAKE SUCH REQUIRED ACTION.

 

(B)                                 NOTICE OF QUALIFICATION DATE:  THE
CORPORATION WILL, NO LATER THAN ONE BUSINESS DAY AFTER THE QUALIFICATION DATE,
GIVE NOTICE OF THE QUALIFICATION DATE TO THE SUBSCRIPTION RECEIPT AGENT AND THE
CORPORATION WILL GIVE, OR CAUSE THE SUBSCRIPTION RECEIPT AGENT TO GIVE, NOTICE
OF THE QUALIFICATION DATE TO THE HOLDERS OF SUBSCRIPTION RECEIPTS NO LATER THAN
THREE BUSINESS DAYS AFTER RECEIPT BY THE SUBSCRIPTION RECEIPT AGENT OF SUCH
NOTICE FROM THE CORPORATION.

 

Section 5.04                            Notice of Issue

 

The Corporation will give written notice of and make all requisite filings
respecting the issue of securities pursuant to the exercise of any Subscription
Receipts, in such detail as may be required, to each securities commission,
stock exchange, or similar regulatory authority in each jurisdiction in Canada
and the United States in which there is legislation or regulations requiring the
giving of any such notice in order that such issue of securities and the
subsequent disposition of the securities so issued will not be subject to the
prospectus requirements, if any, of such legislation or regulations.

 

Section 5.05                            Performance of Covenants by Subscription
Receipt Agent

 

If the Corporation fails to perform any of the obligations thereof under this
Indenture, the Subscription Receipt Agent may notify the Subscription
Receiptholders of such failure or may itself perform any of

 

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such obligations capable of being performed by the Subscription Receipt Agent,
but will not be bound to do so or to notify the Subscription Receiptholders that
it is so doing. All amounts expended or advanced by the Subscription Receipt
Agent in so doing will be repayable as provided in section 5.02 hereof. No such
performance, expenditure or advance by the Subscription Receipt Agent will
relieve the Corporation of any default or of its continuing obligations
hereunder.

 

ARTICLE SIX
DEPOSIT OF PROCEEDS AND
CANCELLATION OF SUBSCRIPTION RECEIPTS

 

Section 6.01                            Deposit of Escrowed Proceeds

 

Contemporaneous with the issue of the Subscription Receipts, the Escrowed
Proceeds shall be deposited with the Subscription Receipt Agent and retained by
the Subscription Receipt Agent in a segregated account in accordance with the
provisions of this Article Six. The Corporation acknowledges and agrees that it
is a condition of the payment by the holders of Subscription Receipts of the
issue price therefor that the Escrowed Funds are held in escrow by the
Subscription Receipt Agent in accordance with the provisions of this
Article Six. The Corporation further acknowledges and confirms that it has no
interest in the Escrowed Funds or in the interest thereon unless and until the
Release Notice is delivered to the Subscription Receipt Agent. The Subscription
Receipt Agent shall retain the Escrowed Funds and the interest thereon for the
benefit of the holders of Subscription Receipts and, upon the delivery of the
Release Notice to the Subscription Receipt Agent, retroactively for the benefit
of the Corporation and the Agent, in accordance with the provisions of this
Article Six.

 

Section 6.02                            Investment of Escrowed Funds

 

The Escrowed Funds pending any release or application thereof as required in
accordance with the provisions of this Article Six, shall be invested by the
Subscription Receipt Agent in the name thereof in Permitted Investments in
accordance with any written direction given by the Corporation and the Agent
from time to time to the Subscription Receipt Agent or, in the absence of any
such direction, shall be held by the Subscription Receipt Agent in accordance
with subsection 10.04(b) hereof.

 

Section 6.03                            Release of Escrowed Proceeds

 

The Subscription Receipt Agent shall release the Escrowed Proceeds and any
interest accrued thereon by certified cheque, bank draft or wire transfer, as
follows in the following circumstances:

 

(A)                                  IMMEDIATELY AFTER THE RELEASE TIME AS
PROVIDED FOR IN THE RELEASE NOTICE:

 

(I)                                     THE AMOUNT OF $2,630,250.00 (PLUS
ACCRUED INTEREST THEREON) SHALL BE RELEASED BY THE SUBSCRIPTION RECEIPT AGENT TO
THE AGENT;

 

(II)                                  AN AMOUNT PAYABLE TO THE SUBSCRIPTION
RECEIPT AGENT EQUAL TO ITS REASONABLE FEES FOR SERVICES RENDERED AND
DISBURSEMENTS INCURRED; AND

 

(III)                               ALL OF THE REMAINING ESCROWED PROCEEDS
TOGETHER WITH THE INTEREST ON THE ESCROWED PROCEEDS SHALL BE RELEASED BY THE
SUBSCRIPTION RECEIPT AGENT TO OR AT THE DIRECTION OF THE CORPORATION; AND

 

(B)                                 IN THE EVENT THAT THE RELEASE CONDITIONS
HAVE NOT BEEN SATISFIED PRIOR TO THE INITIAL QUALIFICATION DEADLINE, THE
SUBSCRIPTION RECEIPT AGENT SHALL PAY THE AMOUNT OF

 

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$4.50 PER SUBSCRIPTION RECEIPT, TOGETHER WITH ANY INTEREST EARNED THEREON LESS
ANY WITHHOLDING TAX REQUIRED TO BE WITHHELD IN RESPECT THEREOF, TO HOLDERS OF
SUBSCRIPTION RECEIPTS USING THE ESCROWED FUNDS AND THE SUBSCRIPTION RECEIPT
AGENT SHALL, WITHIN THREE BUSINESS DAYS OF THE INITIAL QUALIFICATION DEADLINE,
MAIL OR DELIVER, OR CAUSE TO BE MAILED OR DELIVERED, TO THE SUBSCRIPTION
RECEIPTHOLDERS CHEQUES IN THE AMOUNTS PAYABLE TO THE RESPECTIVE SUBSCRIPTION
RECEIPTHOLDERS AT THE ADDRESS ON THE REGISTER OF HOLDERS OF SUBSCRIPTION
RECEIPTS PROVIDED HEREIN.

 

Section 6.04                            Escrowed Proceeds Held by the
Subscription Receipt Agent

 

In addition to the other rights granted to holders of Subscription Receipts in
this Indenture, until the Release Time, each holder of Subscription Receipts has
a pro rata claim against the Escrowed Funds, which claim shall subsist until
such time as the Common Shares and Warrants issuable upon the conversion of such
Subscription Receipt are issued or such amount is paid in full. In the event
that, prior to the Release Time, the Corporation: (i) makes a general assignment
for the benefit of creditors or any proceeding is instituted by the Corporation
seeking relief on behalf thereof as a debtor, or to adjudicate the Corporation a
bankrupt or insolvent, or seeking liquidation, winding-up, reorganization,
arrangement, adjustment or composition of the Corporation or the debts of the
Corporation under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, receiver and manager,
trustee, custodian or similar official for the Corporation or any substantial
part of the property and assets the Corporation or the Corporation takes any
corporate action to authorize any of the actions set forth above; or (ii) the
Corporation shall be declared bankrupt, or a receiver, receiver and manager,
trustee, custodian or similar official is appointed for the Corporation or any
substantial part of its property and assets the Corporation or an encumbrancer
shall legally take possession of any substantial part of the property or assets
of the Corporation or a distress or execution or any similar process is levied
or enforced against such property and assets and remains unsatisfied for such
period as would permit such property or such part thereof to be sold thereunder,
the right of each holder of Subscription Receipts to be issued Common Shares and
Warrants upon the conversion of the Subscription Receipts of such holder will
terminate and such holder will be entitled to assert a claim against the
Escrowed Proceeds held in escrow in an amount equal to $4.50 for each
Subscription Receipt held by such holder plus interest earned thereon less any
withholding tax or charges required to be withheld in respect thereof.

 

Section 6.05                            Role as Subscription Receipt Agent

 

The Subscription Receipt Agent accepts its duties and responsibilities under
this Indenture solely as a custodian, bailee and agent, and no trust is intended
to be, or is or will be, created hereby and the Subscription Receipt Agent shall
owe no duty hereunder as a trustee.

 

ARTICLE SEVEN
ENFORCEMENT

 

Section 7.01                            Suits by Subscription Receiptholders

 

All or any of the rights conferred on the holder of any Subscription Receipt by
the terms of the Subscription Receipt Certificate representing such Subscription
Receipt or of this Indenture may be enforced by such holder by appropriate legal
proceedings but without prejudice to the right which is hereby conferred on the
Subscription Receipt Agent to proceed in the name thereof or on behalf of the
holders of Subscription Receipts to enforce each and every provision herein
contained for the benefit of the Subscription Receiptholders.

 

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Section 7.02                            Limitation of Liability

 

The obligations hereunder are not personally binding on, nor will resort
hereunder be had to the private property of, any past, present or future
director, shareholder, officer, employee or agent of the Corporation, but only
the property of the Corporation shall be bound in respect hereof.

 

ARTICLE EIGHT
MEETINGS OF SUBSCRIPTION RECEIPTHOLDERS

 

Section 8.01                            Right to Convene Meetings

 

(A)                                  CONVENING OF MEETING:  THE SUBSCRIPTION
RECEIPT AGENT MAY AT ANY TIME AND FROM TIME TO TIME CONVENE A MEETING OF THE
SUBSCRIPTION RECEIPTHOLDERS, AND WILL DO SO ON RECEIPT OF A WRITTEN REQUEST OF
THE CORPORATION OR A SUBSCRIPTION RECEIPTHOLDERS’ REQUEST AND ON BEING FUNDED
AND INDEMNIFIED TO ITS REASONABLE SATISFACTION BY THE CORPORATION OR BY ONE OR
MORE OF THE SUBSCRIPTION RECEIPTHOLDERS SIGNING SUCH SUBSCRIPTION
RECEIPTHOLDERS’ REQUEST AGAINST THE COSTS WHICH IT MAY INCUR IN CONNECTION WITH
CALLING AND HOLDING SUCH MEETING.

 

(B)                                 FAILURE TO CONVENE:  IF THE SUBSCRIPTION
RECEIPT AGENT FAILS, WITHIN TEN BUSINESS DAYS AFTER RECEIPT OF SUCH WRITTEN
REQUEST OF THE CORPORATION OR SUBSCRIPTION RECEIPTHOLDERS’ REQUEST, FUNDING AND
INDEMNIFICATION, TO GIVE NOTICE CONVENING A MEETING, THE CORPORATION OR ANY OF
SUCH SUBSCRIPTION RECEIPTHOLDERS, AS THE CASE MAY BE, MAY CONVENE SUCH MEETING.

 

(C)                                  PLACE OF MEETING:  EVERY SUCH MEETING WILL
BE HELD IN TORONTO, ONTARIO, OR SUCH OTHER PLACE AS IS APPROVED OR DETERMINED BY
THE SUBSCRIPTION RECEIPT AGENT AND THE CORPORATION.

 

Section 8.02                            Notice

 

(A)                                  NOTICE:  AT LEAST 21 BUSINESS DAYS’ NOTICE
OF ANY MEETING MUST BE GIVEN TO THE SUBSCRIPTION RECEIPTHOLDERS, TO THE
SUBSCRIPTION RECEIPT AGENT (UNLESS THE MEETING HAS BEEN CALLED BY IT) AND TO THE
CORPORATION (UNLESS THE MEETING HAS BEEN CALLED BY IT).

 

(B)                                 CONTENTS:  THE NOTICE OF THE MEETING MUST
STATE THE TIME WHEN AND THE PLACE WHERE THE MEETING IS TO BE HELD AND MUST STATE
BRIEFLY THE GENERAL NATURE OF THE BUSINESS TO BE TRANSACTED THEREAT, BUT IT WILL
NOT BE NECESSARY FOR THE NOTICE TO SET OUT THE TERMS OF ANY RESOLUTION TO BE
PROPOSED OR ANY OF THE PROVISIONS OF THIS ARTICLE.

 

Section 8.03                            Chairman

 

Some person (who need not be a Subscription Receiptholder) designated in writing
by the Subscription Receipt Agent, or by the Corporation in the case of a
meeting called by the Corporation, will be chairman of the meeting or, if no
person is so designated or the person so designated is not present within 15
minutes after the time fixed for the holding of the meeting, the Subscription
Receiptholders present in person or by proxy may choose some person present to
be chairman.

 

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Section 8.04                            Quorum

 

(A)                                  QUORUM:  SUBJECT TO THE PROVISIONS OF
SECTION 8.12 HEREOF, AT ANY MEETING OF SUBSCRIPTION RECEIPTHOLDERS A QUORUM WILL
CONSIST OF SUBSCRIPTION RECEIPTHOLDERS, 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 SUBSCRIPTION RECEIPTS THEN OUTSTANDING.

 

(B)                                 NO QUORUM:  IF A QUORUM OF SUBSCRIPTION
RECEIPTHOLDERS IS NOT PRESENT WITHIN 30 MINUTES AFTER THE TIME APPOINTED FOR
HOLDING A MEETING, THE MEETING, IF CONVENED BY SUBSCRIPTION RECEIPTHOLDERS OR ON
A SUBSCRIPTION RECEIPTHOLDERS’ REQUEST, WILL BE DISSOLVED, BUT, SUBJECT TO
SECTION 8.12 HEREOF, IN ANY OTHER CASE WILL STAND ADJOURNED TO SUCH DAY, BEING
NOT LESS THAN FIVE BUSINESS DAYS OR MORE THAN TEN BUSINESS DAYS LATER, AND TO
SUCH PLACE AND TIME AS IS APPOINTED BY THE CHAIRMAN.

 

(C)                                  ADJOURNED MEETING:  AT THE ADJOURNED
MEETING THE SUBSCRIPTION RECEIPTHOLDERS 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 SUBSCRIPTION RECEIPTS THAT THEY HOLD.

 

Section 8.05                            Power to Adjourn

 

The chairman of a 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 such adjournment need be given except as the meeting prescribes.

 

Section 8.06                            Show of Hands

 

Every question submitted to a meeting, other than an Extraordinary Resolution,
will be decided in the first place by a majority of the votes given on a show of
hands and, unless a poll is duly demanded as herein provided, a declaration by
the chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority will be
conclusive evidence of the fact.

 

Section 8.07                            Poll

 

(A)                                  EXTRAORDINARY RESOLUTION:  ON EVERY
EXTRAORDINARY RESOLUTION, AND ON EVERY OTHER QUESTION SUBMITTED TO A MEETING ON
WHICH A POLL IS DIRECTED BY THE CHAIRMAN OR REQUESTED BY ONE OR MORE
SUBSCRIPTION RECEIPTHOLDERS ACTING IN PERSON OR BY PROXY AND HOLDING IN THE
AGGREGATE NOT LESS THAN 10% OF THE TOTAL NUMBER OF SUBSCRIPTION RECEIPTS THEN
OUTSTANDING, A POLL WILL BE TAKEN IN SUCH MANNER AS THE CHAIRMAN DIRECTS.

 

(B)                                 OTHER:  QUESTIONS OTHER THAN THOSE REQUIRED
TO BE DETERMINED BY EXTRAORDINARY RESOLUTION WILL BE DECIDED BY A MAJORITY OF
THE VOTES CAST ON THE POLL.

 

Section 8.08                            Voting

 

On a show of hands each person present and entitled to vote, whether as a
Subscription Receiptholder or as proxy for one or more absent Subscription
Receiptholders, or both, will have one vote, and on a poll each Subscription
Receiptholder present in person or represented by a proxy duly appointed by
instrument

 

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in writing will be entitled to one vote in respect of each Subscription Receipt
held by such holder. A proxy need not be a Subscription Receiptholder.

 

Section 8.09                            Regulations

 

(A)                                  ABILITY TO MAKE:  THE SUBSCRIPTION RECEIPT
AGENT, OR THE CORPORATION WITH THE APPROVAL OF THE SUBSCRIPTION RECEIPT AGENT,
MAY FROM TIME TO TIME MAKE OR VARY SUCH REGULATIONS AS IT THINKS FIT:

 

(I)                                     FOR THE FORM OF INSTRUMENT APPOINTING A
PROXY, THE MANNER IN WHICH IT MUST BE EXECUTED AND VERIFICATION OF THE AUTHORITY
OF A PERSON WHO EXECUTES IT ON BEHALF OF A SUBSCRIPTION RECEIPTHOLDER;

 

(II)                                  GOVERNING THE PLACES AT WHICH AND THE
TIMES BY WHICH VOTING CERTIFICATES OR INSTRUMENTS APPOINTING PROXIES MUST BE
DEPOSITED;

 

(III)                               GENERALLY FOR THE CALLING OF MEETINGS OF
SUBSCRIPTION RECEIPTHOLDERS AND THE CONDUCT OF BUSINESS THEREOF; AND

 

(IV)                              FOR THE DEPOSIT OF INSTRUMENTS APPOINTING
PROXIES AT SOME APPROVED PLACE OR PLACES OTHER THAN THE PLACE AT WHICH THE
MEETING IS TO BE HELD AND ENABLING PARTICULARS OF SUCH INSTRUMENTS APPOINTING
PROXIES TO BE SENT BY MAIL, TELECOPIER OR OTHER MEANS OF PREPAID, TRANSMITTED,
RECORDED COMMUNICATION BEFORE THE MEETING TO THE CORPORATION OR TO THE
SUBSCRIPTION RECEIPT AGENT AT THE PLACE WHERE THE MEETING IS TO BE HELD AND FOR
VOTING PURSUANT TO INSTRUMENTS APPOINTING PROXIES SO DEPOSITED AS THOUGH THE
INSTRUMENTS THEMSELVES WERE PRODUCED AT THE MEETING.

 

Any regulations so made will be binding and effective and the votes given in
accordance therewith will be valid and will be counted.

 

(B)                                 RECOGNITION:  EXCEPT AS SUCH REGULATIONS
PROVIDE, THE ONLY PERSONS WHO WILL BE RECOGNIZED AT A MEETING AS THE HOLDERS OF
ANY SUBSCRIPTION RECEIPTS, OR AS ENTITLED TO VOTE OR, SUBJECT TO SECTION 8.10
HEREOF, TO BE PRESENT AT THE MEETING IN RESPECT THEREOF, WILL BE THE REGISTERED
HOLDERS OF SUCH SUBSCRIPTION RECEIPTS OR PERSONS HOLDING PROXIES ON THEIR
BEHALF.

 

Section 8.10                            The Corporation and Subscription Receipt
Agent may be Represented

 

The Corporation and the Subscription Receipt Agent by their respective
employees, officers or directors, and the counsel of the Corporation and the
Subscription Receipt Agent, may attend any meeting of Subscription
Receiptholders, but will have no vote as such.

 

Section 8.11                            Powers Exercisable by Extraordinary
Resolution

 

In addition to all other powers conferred on them by the other provisions of
this Indenture or by law, the Subscription Receiptholders at a meeting will have
the power, exercisable from time to time by Extraordinary Resolution:

 

(A)                                  TO ASSENT TO OR SANCTION ANY AMENDMENT,
MODIFICATION, ABROGATION, ALTERATION, COMPROMISE OR ARRANGEMENT OF ANY RIGHT OF
THE SUBSCRIPTION RECEIPTHOLDERS OR,

 

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WITH THE REASONABLE CONSENT OF THE SUBSCRIPTION RECEIPT AGENT, OF THE
SUBSCRIPTION RECEIPT AGENT IN ITS CAPACITY AS TRUSTEE HEREUNDER OR ON BEHALF OF
THE SUBSCRIPTION RECEIPTHOLDERS AGAINST THE CORPORATION, WHETHER SUCH RIGHT
ARISES UNDER THIS INDENTURE OR OTHERWISE, WHICH SHALL BE AGREED TO BY THE
CORPORATION, AND TO AUTHORIZE THE SUBSCRIPTION RECEIPT AGENT TO CONCUR IN AND
EXECUTE ANY INDENTURE SUPPLEMENTAL HERETO IN CONNECTION THEREWITH;

 

(B)                                 TO AMEND, ALTER OR REPEAL ANY EXTRAORDINARY
RESOLUTION PREVIOUSLY PASSED;

 

(C)                                  SUBJECT TO ARRANGEMENTS AS TO FINANCING AND
INDEMNITY SATISFACTORY TO THE SUBSCRIPTION RECEIPT AGENT, TO DIRECT OR AUTHORIZE
THE SUBSCRIPTION RECEIPT AGENT TO ENFORCE ANY OBLIGATION OF THE CORPORATION
UNDER THIS INDENTURE OR TO ENFORCE ANY RIGHT OF THE SUBSCRIPTION RECEIPTHOLDERS
IN ANY MANNER SPECIFIED IN THE EXTRAORDINARY RESOLUTION;

 

(D)                                 TO DIRECT OR AUTHORIZE THE SUBSCRIPTION
RECEIPT AGENT TO REFRAIN FROM ENFORCING ANY OBLIGATION OR RIGHT REFERRED TO IN
CLAUSE 8.11(C) HEREOF;

 

(E)                                  TO WAIVE AND DIRECT THE SUBSCRIPTION
RECEIPT AGENT TO WAIVE ANY DEFAULT BY THE CORPORATION IN COMPLYING WITH ANY
PROVISION OF THIS INDENTURE, EITHER UNCONDITIONALLY OR ON ANY CONDITION
SPECIFIED IN THE EXTRAORDINARY RESOLUTION;

 

(F)                                    TO APPOINT A COMMITTEE WITH POWER AND
AUTHORITY TO EXERCISE, AND TO DIRECT THE SUBSCRIPTION RECEIPT AGENT TO EXERCISE,
ON BEHALF OF THE SUBSCRIPTION RECEIPTHOLDERS, SUCH OF THE POWERS OF THE
SUBSCRIPTION RECEIPTHOLDERS AS ARE EXERCISABLE BY EXTRAORDINARY RESOLUTION;

 

(G)                                 TO RESTRAIN ANY SUBSCRIPTION RECEIPTHOLDER
FROM TAKING OR INSTITUTING ANY SUIT, ACTION OR PROCEEDING AGAINST THE
CORPORATION FOR THE ENFORCEMENT OF ANY OBLIGATION OF THE CORPORATION UNDER THIS
INDENTURE OR TO ENFORCE ANY RIGHT OF THE SUBSCRIPTION RECEIPTHOLDERS;

 

(H)                                 TO DIRECT ANY SUBSCRIPTION RECEIPTHOLDER
WHO, AS SUCH, HAS BROUGHT ANY SUIT, ACTION OR PROCEEDING, TO STAY OR DISCONTINUE
OR OTHERWISE DEAL THEREWITH ON PAYMENT OF THE COSTS, CHARGES AND EXPENSES
REASONABLY AND PROPERLY INCURRED BY HIM IN CONNECTION THEREWITH;

 

(I)                                     TO ASSENT TO ANY CHANGE IN OR OMISSION
FROM THE PROVISIONS CONTAINED IN THE SUBSCRIPTION RECEIPT CERTIFICATES AND THIS
INDENTURE OR ANY ANCILLARY OR SUPPLEMENTAL INSTRUMENT WHICH MAY BE AGREED TO BY
THE CORPORATION, AND TO AUTHORIZE THE SUBSCRIPTION RECEIPTHOLDERS TO CONCUR IN
AND EXECUTE ANY ANCILLARY OR SUPPLEMENTAL INDENTURE EMBODYING THE CHANGE OR
OMISSION;

 

(J)                                     TO ASSENT TO ANY COMPROMISE OR
ARRANGEMENT WITH ANY CREDITOR OR CREDITORS OR ANY CLASS OR CLASSES OF CREDITORS,
WHETHER SECURED OR OTHERWISE, AND WITH HOLDERS OF ANY SHARES OR OTHER SECURITIES
OF THE CORPORATION; AND

 

(K)                                  FROM TIME TO TIME AND AT ANY TIME TO REMOVE
THE SUBSCRIPTION RECEIPT AGENT AND APPOINT A SUCCESSOR, AGENT OR TRUSTEE.

 

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Section 8.12                            Meaning of “Extraordinary Resolution”

 

(A)                                  MEANING:  THE EXPRESSION “EXTRAORDINARY
RESOLUTION” WHEN USED IN THIS INDENTURE MEANS, SUBJECT TO THE PROVISIONS OF THIS
SECTION AND OF SECTIONS 8.15 AND 8.16 HEREOF, A MOTION PROPOSED AT A MEETING OF
SUBSCRIPTION RECEIPTHOLDERS DULY CONVENED FOR THAT PURPOSE AND HELD IN
ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE EIGHT AT WHICH THERE ARE PRESENT
IN PERSON OR BY PROXY AT LEAST 25% OF THE SUBSCRIPTION RECEIPTHOLDERS HOLDING IN
THE AGGREGATE MORE THAN 25% OF THE TOTAL NUMBER OF SUBSCRIPTION RECEIPTS THEN
OUTSTANDING AND PASSED BY THE AFFIRMATIVE VOTES OF SUBSCRIPTION RECEIPTHOLDERS
WHO HOLD IN THE AGGREGATE NOT LESS THAN 66 2/3% OF THE TOTAL NUMBER OF
SUBSCRIPTION RECEIPTS REPRESENTED AT THE MEETING AND VOTED ON THE MOTION.

 

(B)                                 QUORUM:  IF, AT A MEETING CALLED FOR THE
PURPOSE OF PASSING AN EXTRAORDINARY RESOLUTION, THE QUORUM REQUIRED BY
SUBSECTION 8.12(A) HEREOF IS NOT PRESENT WITHIN 30 MINUTES AFTER THE TIME
APPOINTED FOR THE MEETING, THE MEETING, IF CONVENED BY SUBSCRIPTION
RECEIPTHOLDERS OR ON A SUBSCRIPTION RECEIPTHOLDERS’ REQUEST, WILL BE DISSOLVED,
BUT IN ANY OTHER CASE WILL STAND ADJOURNED TO SUCH DAY, BEING NOT LESS THAN FIVE
BUSINESS DAYS OR MORE THAN TEN BUSINESS DAYS LATER, AND TO SUCH PLACE AND TIME,
AS IS APPOINTED BY THE CHAIRMAN.

 

(C)                                  NOTICE:  NOT LESS THAN THREE BUSINESS DAYS’
NOTICE MUST BE GIVEN TO THE SUBSCRIPTION RECEIPTHOLDERS OF THE TIME AND PLACE OF
SUCH ADJOURNED MEETING.

 

(D)                                 FORM OF NOTICE:  THE NOTICE MUST STATE THAT
AT THE ADJOURNED MEETING THE SUBSCRIPTION RECEIPTHOLDERS PRESENT IN PERSON OR BY
PROXY WILL FORM A QUORUM BUT IT WILL NOT BE NECESSARY TO SET FORTH THE PURPOSES
FOR WHICH THE MEETING WAS ORIGINALLY CALLED OR ANY OTHER PARTICULARS.

 

(E)                                  QUORUM AT ADJOURNED MEETING:  AT THE
ADJOURNED MEETING THE SUBSCRIPTION RECEIPTHOLDERS PRESENT IN PERSON OR BY PROXY
WILL FORM A QUORUM AND MAY TRANSACT ANY BUSINESS FOR WHICH THE MEETING WAS
ORIGINALLY CONVENED, AND A MOTION PROPOSED AT SUCH ADJOURNED MEETING AND PASSED
BY THE REQUISITE VOTE AS PROVIDED IN SUBSECTION 8.12(A) HEREOF WILL BE AN
EXTRAORDINARY RESOLUTION WITHIN THE MEANING OF THIS INDENTURE NOTWITHSTANDING
THAT SUBSCRIPTION RECEIPTHOLDERS HOLDING IN THE AGGREGATE 25% OF THE TOTAL
NUMBER OF SUBSCRIPTION RECEIPTS OUTSTANDING MAY NOT BE PRESENT.

 

(F)                                    POLL:  VOTES ON AN EXTRAORDINARY
RESOLUTION MUST ALWAYS BE GIVEN ON A POLL AND NO DEMAND FOR A POLL ON AN
EXTRAORDINARY RESOLUTION WILL BE NECESSARY.

 

Section 8.13                            Powers Cumulative

 

Any one or more of the powers, and any combination of the powers, in this
Indenture stated to be exercisable by the Subscription Receiptholders by
Extraordinary Resolution or otherwise, may be exercised from time to time, and
the exercise of any one or more of such powers or any combination of such powers
from time to time will not prevent the Subscription Receiptholders from
exercising such power or powers or combination of powers thereafter from time to
time.

 

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Section 8.14                            Minutes

 

Minutes of all resolutions passed and proceedings taken at every meeting of the
Subscription Receiptholders will be made and duly entered in books from time to
time provided for such purpose by the Subscription Receipt Agent at the expense
of the Corporation, and any such minutes, if signed by the chairman of the
meeting at which such resolutions were passed or such proceedings were taken,
will be prima facie evidence of the matters therein stated, and, until the
contrary is proved, every such meeting in respect of the proceedings of which
minutes have been so made, entered and signed will be deemed to have been duly
convened and held, and all resolutions passed and proceedings taken thereat to
have been duly passed and taken.

 

Section 8.15                            Instruments in Writing

 

Any action that may be taken and any power that may be exercised by Subscription
Receiptholders at a meeting held as provided in this Article Eight  may also be
taken and exercised by Subscription Receiptholders who hold in the aggregate not
less than 50% of the total number of Subscription Receipts at the time
outstanding or in the case of an Extraordinary Resolution, Subscription
Receiptholders who hold in the aggregate not less than 66 2/3% of the total
number of Subscription Receipts at the time outstanding, by their signing, each
in person or by attorney duly appointed in writing, an instrument in writing in
one or more counterparts, and the expression “Extraordinary Resolution” when
used in this Indenture includes a resolution embodied in an instrument so
signed.

 

Section 8.16                            Binding Effect of Resolutions

 

Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this Article Eight at a meeting of Subscription Receiptholders
will be binding on all Subscription Receiptholders, whether present at or absent
from the meeting and whether voting for or against the resolution or abstaining,
and every instrument in writing signed by Subscription Receiptholders in
accordance with section 8.15 hereof will be binding on all Subscription
Receiptholders, whether signatories thereto or not, and every Subscription
Receiptholder and the Subscription Receipt Agent (subject to the provisions for
its indemnity herein contained) will be bound to give effect accordingly to
every such resolution and instrument in writing.

 

Section 8.17                            Holdings by the Corporation and
Subsidiaries Disregarded

 

In determining whether Subscription Receiptholders holding the required total
number of Subscription Receipts are present in person or by proxy for the
purpose of constituting a quorum, or have voted or consented to a resolution,
Extraordinary Resolution, consent, waiver, Subscription Receiptholders’ Request
or other action under this Indenture, a Subscription Receipt held by the
Corporation or by a Subsidiary of the Corporation will be deemed to be not
outstanding. The Corporation shall provide the Subscription Receipt Agent with a
certificate of the Corporation providing details of any Subscription Receipts
held by the Corporation or by a Subsidiary of the Corporation upon the written
request of the Subscription Receipt Agent.

 

ARTICLE NINE
SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS

 

Section 9.01                            Provision for Supplemental Indentures
for Certain Purposes

 

From time to time the Corporation (when authorized by the directors) and the
Subscription Receipt Agent may, subject to the provisions hereof, and will when
so directed hereby, execute and deliver by their

 

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proper officers indentures or instruments supplemental hereto, which thereafter
will form part hereof, for any or all of the following purposes:

 

(A)                                  INCREASING THE NUMBER OF SUBSCRIPTION
RECEIPTS AUTHORIZED FOR ISSUE HEREUNDER AND THE CORRESPONDING NUMBER OF
UNDERLYING SECURITIES TO WHICH SUBSCRIPTION RECEIPTHOLDERS ARE ENTITLED;

 

(B)                                 SETTING FORTH ANY ADJUSTMENTS RESULTING FROM
THE APPLICATION OF THE PROVISIONS OF SECTION 4.06 HEREOF;

 

(C)                                  ADDING HERETO SUCH ADDITIONAL COVENANTS AND
ENFORCEMENT PROVISIONS AS IN THE OPINION OF COUNSEL ARE NECESSARY OR ADVISABLE,
AND ARE NOT IN THE OPINION OF THE SUBSCRIPTION RECEIPT AGENT PREJUDICIAL TO THE
INTEREST OF THE SUBSCRIPTION RECEIPTHOLDERS;

 

(D)                                 GIVING EFFECT TO ANY EXTRAORDINARY
RESOLUTION PASSED AS PROVIDED IN ARTICLE EIGHT HEREOF;

 

(E)                                  MAKING SUCH PROVISIONS NOT INCONSISTENT
WITH THIS INDENTURE AS ARE 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 ON A STOCK EXCHANGE OR OVER-THE-COUNTER MARKET,
AND ARE NOT IN THE OPINION OF COUNSEL PREJUDICIAL TO THE INTERESTS OF THE
SUBSCRIPTION RECEIPTHOLDERS;

 

(F)                                    ADDING TO, DELETING OR ALTERING THE
PROVISIONS HEREOF IN RESPECT OF THE TRANSFER OF SUBSCRIPTION RECEIPTS OR THE
CONVERSION OF SUBSCRIPTION RECEIPT CERTIFICATES, AND MAKING ANY MODIFICATION IN
THE FORM OF THE SUBSCRIPTION RECEIPT CERTIFICATES THAT DOES NOT AFFECT THE
SUBSTANCE THEREOF;

 

(G)                                 MODIFYING ANY PROVISION OF THIS INDENTURE
(INCLUDING, WITHOUT LIMITATION, MAKING ANY MODIFICATION WHICH INCREASES THE
NUMBER OR AMOUNT OF COMMON SHARES AND WARRANTS ISSUABLE PURSUANT TO THE
SUBSCRIPTION RECEIPTS) OR RELIEVING THE CORPORATION FROM ANY OBLIGATION,
CONDITION OR RESTRICTION HEREIN CONTAINED, EXCEPT THAT NO SUCH MODIFICATION OR
RELIEF WILL BE OR BECOME OPERATIVE OR EFFECTIVE IF IN THE OPINION OF COUNSEL IT
WOULD IMPAIR ANY RIGHT OF THE SUBSCRIPTION RECEIPTHOLDERS OR OF THE SUBSCRIPTION
RECEIPT AGENT, AND THE SUBSCRIPTION RECEIPT AGENT MAY IN ITS UNCONTROLLED
DISCRETION DECLINE TO ENTER INTO ANY SUCH SUPPLEMENTAL INDENTURE WHICH IN ITS
OPINION WILL NOT AFFORD ADEQUATE PROTECTION TO THE SUBSCRIPTION RECEIPT AGENT
WHEN IT BECOMES OPERATIVE; AND

 

(H)                                 FOR ANY OTHER PURPOSE NOT INCONSISTENT WITH
THE TERMS OF THIS INDENTURE, INCLUDING THE CORRECTION OR RECTIFICATION OF ANY
AMBIGUITY, DEFECTIVE OR INCONSISTENT PROVISION, ERROR OR OMISSION HEREIN, IF IN
THE OPINION OF COUNSEL, THE RIGHTS OF THE SUBSCRIPTION RECEIPT AGENT AND OF THE
SUBSCRIPTION RECEIPTHOLDERS ARE NOT PREJUDICED THEREBY.

 

Section 9.02                            Successor Corporations

 

In the case of the consolidation, amalgamation, arrangement, merger, other
form of business combination or transfer of the undertaking or assets of the
Corporation as an entirety, or substantially as an entirety, to another
corporation or other entity, the successor corporation or other entity resulting
from such

 

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consolidation, amalgamation, arrangement, merger, other form of business
combination or transfer (if not the Corporation) will be bound by the provisions
hereof and for the due and punctual performance and observance of each and every
covenant and obligation contained in this Indenture to be performed by the
Corporation and will execute and deliver to the Subscription Receipt Agent a
supplemental indenture and such other instruments as are satisfactory in form to
the Subscription Receipt Agent and in the opinion of counsel are necessary or
advisable to evidence the express assumption by the successor corporation of
such obligations.

 

ARTICLE TEN
CONCERNING SUBSCRIPTION RECEIPT AGENT

 

Section 10.01                     Trust Indenture Legislation

 

If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with a mandatory requirement of Applicable Legislation, the mandatory
requirement will prevail. The Corporation and the Subscription Receipt Agent
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 benefits of Applicable
Legislation.

 

Section 10.02                     Rights and Duties of Subscription Receipt
Agent

 

(A)                                  DUTY OF SUBSCRIPTION RECEIPT AGENT:  IN THE
EXERCISE OF THE RIGHTS AND DUTIES PRESCRIBED OR CONFERRED BY THE TERMS OF THIS
INDENTURE, THE SUBSCRIPTION RECEIPT AGENT WILL ACT HONESTLY AND IN GOOD FAITH
AND WILL EXERCISE THAT DEGREE OF CARE, DILIGENCE AND SKILL THAT A REASONABLY
PRUDENT SUBSCRIPTION RECEIPT AGENT WOULD EXERCISE IN COMPARABLE CIRCUMSTANCES.
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
HEREBY UNLESS AND UNTIL IT SHALL HAVE BEEN REQUIRED SO TO DO 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 DISTINCTLY SPECIFY THE DEFAULT DESIRED TO BE BROUGHT TO THE
ATTENTION OF THE SUBSCRIPTION RECEIPT AGENT AND, IN THE ABSENCE OF ANY SUCH
NOTICE, THE SUBSCRIPTION RECEIPT AGENT MAY FOR ALL PURPOSES OF THIS INDENTURE
CONCLUSIVELY ASSUME THAT NO DEFAULT HAS BEEN MADE IN THE OBSERVANCE OR
PERFORMANCE OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR
CONDITIONS CONTAINED THEREIN. 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.

 

(B)                                 NO RELIEF FROM LIABILITY:  NO PROVISION OF
THIS INDENTURE WILL BE CONSTRUED TO RELIEVE THE SUBSCRIPTION RECEIPT AGENT FROM
LIABILITY FOR ITS OWN NEGLIGENT ACT, NEGLIGENT FAILURE TO ACT, WILFUL MISCONDUCT
OR BAD FAITH.

 

(C)                                  ACTIONS:  THE OBLIGATION OF THE
SUBSCRIPTION RECEIPT AGENT TO COMMENCE OR CONTINUE ANY ACT, ACTION OR PROCEEDING
IN CONNECTION HEREWITH, INCLUDING WITHOUT LIMITATION, FOR THE PURPOSE OF
ENFORCING ANY RIGHT OF THE SUBSCRIPTION RECEIPT AGENT OR THE SUBSCRIPTION
RECEIPTHOLDERS HEREUNDER IS ON THE CONDITION THAT THE SUBSCRIPTION RECEIPT AGENT
SHALL HAVE RECEIVED A SUBSCRIPTION RECEIPTHOLDERS’ REQUEST SPECIFYING THE ACT,
ACTION OR PROCEEDING WHICH THE SUBSCRIPTION RECEIPT AGENT IS REQUESTED TO TAKE
AND, WHEN REQUIRED BY NOTICE TO THE SUBSCRIPTION RECEIPTHOLDERS BY THE
SUBSCRIPTION RECEIPT AGENT, THE SUBSCRIPTION RECEIPT

 

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AGENT IS FURNISHED BY ONE OR MORE SUBSCRIPTION RECEIPTHOLDERS WITH SUFFICIENT
FUNDS TO COMMENCE OR CONTINUE SUCH ACT, ACTION OR PROCEEDING AND AN INDEMNITY
REASONABLY SATISFACTORY TO THE SUBSCRIPTION RECEIPT AGENT TO PROTECT AND HOLD IT
HARMLESS AGAINST THE COSTS, CHARGES, EXPENSES AND LIABILITIES TO BE INCURRED
THEREBY AND ANY LOSS AND DAMAGE IT MAY SUFFER BY REASON THEREOF.

 

(D)                                 FUNDING:  NO PROVISION OF THIS INDENTURE
WILL 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 IT IS SO INDEMNIFIED.

 

(E)                                  DEPOSIT OF SUBSCRIPTION RECEIPTS:  THE
SUBSCRIPTION RECEIPT AGENT MAY, BEFORE COMMENCING OR AT ANY TIME DURING THE
CONTINUANCE OF ANY SUCH ACT, ACTION OR PROCEEDING, 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
CERTIFICATES THE SUBSCRIPTION RECEIPT AGENT WILL ISSUE RECEIPTS.

 

(F)                                    RESTRICTION:  EVERY PROVISION OF THIS
INDENTURE THAT RELIEVES THE SUBSCRIPTION RECEIPT AGENT OF LIABILITY OR ENTITLES
IT TO RELY ON ANY EVIDENCE SUBMITTED TO IT IS SUBJECT TO THE PROVISIONS OF
APPLICABLE LEGISLATION, OF THIS SECTION AND OF SECTION 10.03 HEREOF.

 

Section 10.03                     Evidence, Experts and Advisers

 

(A)                                  EVIDENCE:  IN ADDITION TO THE REPORTS,
CERTIFICATES, OPINIONS AND OTHER EVIDENCE REQUIRED BY THIS INDENTURE, THE
CORPORATION WILL FURNISH TO THE SUBSCRIPTION RECEIPT AGENT SUCH ADDITIONAL
EVIDENCE OF COMPLIANCE WITH ANY PROVISION HEREOF, AND IN SUCH FORM, AS IS
PRESCRIBED BY APPLICABLE LEGISLATION OR AS THE SUBSCRIPTION RECEIPT AGENT
REASONABLY REQUIRES BY WRITTEN NOTICE TO THE CORPORATION.

 

(B)                                 RELIANCE BY SUBSCRIPTION RECEIPT AGENT:  IN
THE EXERCISE OF ANY RIGHT OR DUTY HEREUNDER THE SUBSCRIPTION RECEIPT AGENT, IF
IT IS ACTING IN GOOD FAITH, MAY ACT AND RELY, AS TO THE TRUTH OF ANY STATEMENT
OR THE ACCURACY OF ANY OPINION EXPRESSED THEREIN, ON ANY STATUTORY DECLARATION,
OPINION, REPORT, CERTIFICATE OR OTHER EVIDENCE FURNISHED TO THE SUBSCRIPTION
RECEIPT AGENT PURSUANT TO THE PROVISIONS HEREOF OR OF APPLICABLE LEGISLATION OR
PURSUANT TO A REQUEST OF THE SUBSCRIPTION RECEIPT AGENT, IF SUCH EVIDENCE
COMPLIES WITH APPLICABLE LEGISLATION AND THE SUBSCRIPTION RECEIPT AGENT EXAMINES
SUCH EVIDENCE AND DETERMINES THAT IT COMPLIES WITH THE APPLICABLE REQUIREMENTS
OF THIS INDENTURE.

 

(C)                                  STATUTORY DECLARATION:  WHENEVER APPLICABLE
LEGISLATION REQUIRES THAT EVIDENCE REFERRED TO IN SUBSECTION 10.03(A) HEREOF BE
IN THE FORM OF A STATUTORY DECLARATION, THE SUBSCRIPTION RECEIPT AGENT
MAY ACCEPT SUCH STATUTORY DECLARATION IN LIEU OF A CERTIFICATE OF THE
CORPORATION REQUIRED BY ANY PROVISION HEREOF. ANY SUCH STATUTORY DECLARATION
MAY BE MADE BY ANY ONE OR MORE OF THE CHAIRMAN, PRESIDENT, CHIEF FINANCIAL
OFFICER OR SECRETARY OF THE CORPORATION OR BY ANY OTHER OFFICER(S) OR
DIRECTOR(S) OF THE CORPORATION TO WHOM SUCH AUTHORITY IS DELEGATED BY THE
DIRECTORS FROM TIME TO TIME. IN ADDITION, THE SUBSCRIPTION RECEIPT AGENT MAY ACT
AND RELY AND SHALL BE PROTECTED IN ACTING AND RELYING UPON ANY RESOLUTION,

 

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CERTIFICATE, DIRECTION, INSTRUCTION, STATEMENT, INSTRUMENT, OPINION, REPORT,
NOTICE, REQUEST, CONSENT, ORDER, LETTER, TELEGRAM, CABLEGRAM OR OTHER PAPER OR
DOCUMENT BELIEVED BY IT TO BE GENUINE AND TO HAVE BEEN SIGNED, SENT OR PRESENTED
BY OR ON BEHALF OF THE PROPER PARTY OR PARTIES.

 

(D)                                 PROOF OF EXECUTION:  PROOF OF THE EXECUTION
OF ANY DOCUMENT OR INSTRUMENT IN WRITING, INCLUDING A SUBSCRIPTION
RECEIPTHOLDERS’ REQUEST, BY A SUBSCRIPTION RECEIPTHOLDER MAY BE MADE BY THE
CERTIFICATE OF A NOTARY PUBLIC, OR OTHER OFFICER WITH SIMILAR POWERS, THAT THE
PERSON SIGNING SUCH INSTRUMENT ACKNOWLEDGED TO HIM THE EXECUTION THEREOF, OR BY
AN AFFIDAVIT OF A WITNESS TO SUCH EXECUTION, OR IN ANY OTHER MANNER THAT THE
SUBSCRIPTION RECEIPT AGENT CONSIDERS ADEQUATE.

 

(E)                                  EXPERTS:  THE SUBSCRIPTION RECEIPT AGENT
MAY EMPLOY OR RETAIN SUCH COUNSEL, ACCOUNTANTS, APPRAISERS, OR OTHER EXPERTS OR
ADVISERS AS IT REASONABLY REQUIRES FOR THE PURPOSE OF DETERMINING AND
DISCHARGING ITS RIGHTS AND DUTIES HEREUNDER AND MAY PAY THE REASONABLE
REMUNERATION AND DISBURSEMENTS FOR ALL SERVICES SO PERFORMED BY ANY OF THEM,
WITHOUT TAXATION OF COSTS OF ANY COUNSEL, AND WILL NOT BE RESPONSIBLE FOR ANY
MISCONDUCT OR NEGLIGENCE ON THE PART OF ANY OF THEM WHO HAS BEEN SELECTED WITH
DUE CARE BY THE SUBSCRIPTION RECEIPT AGENT. THE SUBSCRIPTION RECEIPT AGENT
MAY ACT AND RELY AND SHALL BE PROTECTED IN ACTING OR NOT ACTING AND RELYING IN
GOOD FAITH ON THE OPINION OR ADVICE OF OR INFORMATION OBTAINED FROM ANY COUNSEL,
ACCOUNTANT OR OTHER EXPERT OR ADVISOR, WHETHER RETAINED OR EMPLOYED BY THE
CORPORATION OR BY THE SUBSCRIPTION RECEIPT AGENT, IN RELATION TO ANY MATTER
ARISING IN THE ADMINISTRATION OF THE DUTIES AND OBLIGATIONS HEREOF.

 

Section 10.04                     Documents, Money, Etc. held by Subscription
Receipt Agent

 

(A)                                  SAFEKEEPING:  ANY SECURITY, DOCUMENT OF
TITLE OR OTHER INSTRUMENT THAT MAY AT ANY TIME BE HELD BY THE SUBSCRIPTION
RECEIPT AGENT SUBJECT TO THE PROVISIONS OF THIS INDENTURE HEREOF MAY BE PLACED
IN THE DEPOSIT VAULTS OF THE SUBSCRIPTION RECEIPT AGENT OR OF ANY CANADIAN
CHARTERED BANK OR DEPOSITED FOR SAFEKEEPING WITH ANY SUCH BANK.

 

(B)                                 HOLDING OF FUNDS:  UNLESS HEREIN OTHERWISE
EXPRESSLY PROVIDED, ANY MONEY HELD BY THE SUBSCRIPTION RECEIPT AGENT PENDING THE
APPLICATION OR WITHDRAWAL THEREOF UNDER ANY PROVISION OF THIS INDENTURE SHALL BE
HELD IN A SEGREGATED ACCOUNT OF ANY MAJOR SCHEDULE I CANADIAN CHARTERED BANK
EARNING THE PRESCRIBED RATE OF INTEREST THEN IN EFFECT.

 

(C)                                  INTEREST:  EXCEPT IN THE CIRCUMSTANCES
DESCRIBED IN SECTION 6.03 HEREOF, ALL INTEREST OR OTHER INCOME RECEIVED BY THE
SUBSCRIPTION RECEIPT AGENT IN RESPECT OF SUCH DEPOSITS AND INVESTMENTS REFERRED
TO IN SUBSECTION 10.04(B) WILL BELONG TO THE CORPORATION.

 

Section 10.05                     Action by Subscription Receipt Agent to
Protect Interests

 

The Subscription Receipt Agent will have power to institute and to maintain such
actions and proceedings as it considers necessary or expedient to protect or
enforce its interests and the interests of the Subscription Receiptholders.

 

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Section 10.06                     Subscription Receipt Agent not Required to
Give Security

 

The Subscription Receipt Agent will not be required to give any bond or security
in respect of the execution of the duties and obligations and powers of this
Indenture.

 

Section 10.07                     Protection of Subscription Receipt Agent

 

(A)                                  PROTECTION:  BY WAY OF SUPPLEMENT TO THE
PROVISIONS OF ANY LAW FOR THE TIME BEING RELATING TO AGENTS, IT IS EXPRESSLY
DECLARED AND AGREED THAT:

 

(I)                                   THE SUBSCRIPTION RECEIPT AGENT WILL NOT BE
LIABLE FOR OR BY REASON OF, OR REQUIRED TO SUBSTANTIATE, ANY STATEMENT OF FACT,
REPRESENTATION OR RECITAL IN THIS INDENTURE OR IN THE SUBSCRIPTION RECEIPT
CERTIFICATES (EXCEPT THE REPRESENTATION CONTAINED IN SECTION 10.09 HEREOF OR IN
THE CERTIFICATE OF THE SUBSCRIPTION RECEIPT AGENT ON THE SUBSCRIPTION RECEIPT
CERTIFICATES OR OTHER REPRESENTATION OF THE SUBSCRIPTION RECEIPT AGENT MADE
HEREIN OR THEREIN), BUT ALL SUCH STATEMENTS OR RECITALS ARE AND WILL BE DEEMED
TO BE MADE BY THE CORPORATION;

 

(II)                                NOTHING HEREIN CONTAINED WILL IMPOSE ON THE
SUBSCRIPTION RECEIPT AGENT ANY OBLIGATION TO SEE TO, OR TO REQUIRE EVIDENCE OF,
THE REGISTRATION OR FILING (OR RENEWAL THEREOF) OF THIS INDENTURE OR ANY
INSTRUMENT ANCILLARY OR SUPPLEMENTAL HERETO;

 

(III)                             THE SUBSCRIPTION RECEIPT AGENT WILL NOT BE
BOUND TO GIVE NOTICE TO ANY PERSON OF THE EXECUTION HEREOF;

 

(IV)                            THE SUBSCRIPTION RECEIPT AGENT WILL NOT INCUR
ANY LIABILITY OR RESPONSIBILITY WHATEVER OR BE IN ANY WAY RESPONSIBLE FOR THE
CONSEQUENCE OF ANY BREACH BY THE CORPORATION OF ANY OBLIGATION OR WARRANTY
HEREIN CONTAINED OR OF ANY ACT OF ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF
THE CORPORATION;

 

(V)                               THE SUBSCRIPTION RECEIPT AGENT, IN ITS
PERSONAL OR ANY OTHER CAPACITY, MAY BUY, LEND UPON AND DEAL IN SECURITIES OF THE
CORPORATION AND IN THE SUBSCRIPTION RECEIPTS AND GENERALLY MAY CONTRACT AND
ENTER INTO FINANCIAL TRANSACTIONS WITH THE CORPORATION OR ANY RELATED
CORPORATION WITHOUT BEING LIABLE TO ACCOUNT FOR ANY PROFIT MADE THEREBY;

 

(VI)                            THE SUBSCRIPTION RECEIPT AGENT SHALL INCUR NO
LIABILITY WITH RESPECT TO THE DELIVERY OR NON-DELIVERY OF ANY CERTIFICATE OR
CERTIFICATES WHETHER DELIVERED BY HAND, MAIL OR ANY OTHER MEANS PROVIDED THAT
THEY ARE SENT IN ACCORDANCE WITH THE PROVISIONS HEREOF;

 

(VII)                         IF THE SUBSCRIPTION RECEIPT AGENT DELIVERS ANY
CHEQUE AS REQUIRED HEREUNDER, THE SUBSCRIPTION RECEIPT AGENT SHALL HAVE NO
FURTHER OBLIGATION OR LIABILITY FOR THE AMOUNT REPRESENTED THEREBY, UNLESS ANY
SUCH CHEQUE IS NOT HONOURED ON 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, IF

 

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REQUIRED BY THE SUBSCRIPTION RECEIPT AGENT, AN INDEMNITY REASONABLY SATISFACTORY
TO IT, SHALL ISSUE TO SUCH PAYEE A REPLACEMENT CHEQUE FOR THE AMOUNT OF SUCH
CHEQUE; AND

 

(VIII)                      THE SUBSCRIPTION RECEIPT AGENT WILL DISBURSE FUNDS
IN ACCORDANCE WITH THE PROVISIONS HEREOF ONLY TO THE EXTENT THAT FUNDS HAVE BEEN
DEPOSITED WITH IT.

 

(B)                                 INDEMNITY:  IN ADDITION TO AND WITHOUT
LIMITING ANY PROTECTION OF THE SUBSCRIPTION RECEIPT AGENT HEREUNDER OR OTHERWISE
BY LAW, THE CORPORATION AGREES TO INDEMNIFY THE SUBSCRIPTION RECEIPT AGENT, ITS
AGENTS, EMPLOYEES, DIRECTORS AND OFFICERS (EACH AN “INDEMNIFIED PERSON”), AND
SAVE EACH INDEMNIFIED PERSON HARMLESS FROM ALL LIABILITIES, SUITS, DAMAGES,
COSTS, EXPENSES AND ACTIONS WHICH MAY BE BROUGHT AGAINST OR SUFFERED BY IT
ARISING OUT OF OR CONNECTED WITH THE PERFORMANCE BY THE SUBSCRIPTION RECEIPT
AGENT OF ITS DUTIES HEREUNDER, EXCEPT TO THE EXTENT THAT SUCH LIABILITIES,
SUITS, DAMAGES, COSTS AND ACTIONS ARE ATTRIBUTABLE TO THE NEGLIGENCE, WILFUL
MISCONDUCT OR BAD FAITH OF THE SUBSCRIPTION RECEIPT AGENT OR AN INDEMNIFIED
PERSON. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THIS INDEMNITY SHALL SURVIVE
ANY REMOVAL OR RESIGNATION OF THE SUBSCRIPTION RECEIPT AGENT, DISCHARGE OF THIS
INDENTURE AND TERMINATION OF ANY DUTIES AND OBLIGATIONS HEREUNDER.

 

Section 10.08                     Replacement of Subscription Receipt Agent

 

(A)                                  RESIGNATION:  THE SUBSCRIPTION RECEIPT
AGENT MAY RESIGN AND BE DISCHARGED FROM ALL FURTHER DUTIES AND LIABILITIES
HEREUNDER, EXCEPT AS PROVIDED IN THIS SECTION, BY GIVING TO THE CORPORATION AND
THE SUBSCRIPTION RECEIPTHOLDERS NOT LESS THAN 60 BUSINESS DAYS NOTICE IN WRITING
OR, IF A NEW SUBSCRIPTION RECEIPT AGENT HAS BEEN APPOINTED, SUCH SHORTER NOTICE
AS THE CORPORATION ACCEPTS AS SUFFICIENT, PROVIDED THAT SUCH RESIGNATION AND
DISCHARGE SHALL BE SUBJECT TO THE APPOINTMENT OF A SUCCESSOR THERETO IN
ACCORDANCE WITH THE PROVISIONS HEREOF.

 

(B)                                 REMOVAL:  THE SUBSCRIPTION RECEIPTHOLDERS BY
EXTRAORDINARY RESOLUTION MAY AT ANY TIME REMOVE THE SUBSCRIPTION RECEIPT AGENT
AND APPOINT A NEW SUBSCRIPTION RECEIPT AGENT.

 

(C)                                  APPOINTMENT OF NEW SUBSCRIPTION RECEIPT
AGENT:  IF THE SUBSCRIPTION RECEIPT AGENT SO RESIGNS OR IS SO REMOVED OR IS
DISSOLVED, BECOMES BANKRUPT, GOES INTO LIQUIDATION OR OTHERWISE BECOMES
INCAPABLE OF ACTING HEREUNDER, THE CORPORATION WILL FORTHWITH APPOINT A NEW
SUBSCRIPTION RECEIPT AGENT, UNLESS A NEW SUBSCRIPTION RECEIPT AGENT HAS ALREADY
BEEN APPOINTED BY THE SUBSCRIPTION RECEIPTHOLDERS.

 

(D)                                 FAILURE TO APPOINT:  FAILING SUCH
APPOINTMENT BY THE CORPORATION, THE RETIRING SUBSCRIPTION RECEIPT AGENT OR ANY
SUBSCRIPTION RECEIPTHOLDER MAY APPLY AT THE EXPENSE OF THE CORPORATION TO THE
ONTARIO SUPERIOR COURT OF JUSTICE, ON SUCH NOTICE AS THE COURT DIRECTS, FOR THE
APPOINTMENT OF A NEW SUBSCRIPTION RECEIPT AGENT.

 

(E)                                  NEW SUBSCRIPTION RECEIPT AGENT:  ANY NEW
SUBSCRIPTION RECEIPT AGENT APPOINTED UNDER THIS SECTION MUST BE A CORPORATION
AUTHORIZED TO CARRY ON THE

 

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BUSINESS OF A TRANSFER AGENT OR TRUST COMPANY IN THE PROVINCE OF ONTARIO AND, IF
REQUIRED BY THE APPLICABLE LEGISLATION OF ANY OTHER PROVINCE, IN SUCH OTHER
PROVINCE. ON ANY SUCH APPOINTMENT, THE NEW SUBSCRIPTION RECEIPT AGENT WILL 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 WILL BE IMMEDIATELY EXECUTED, AT
THE EXPENSE OF THE CORPORATION, ALL SUCH CONVEYANCES OR OTHER INSTRUMENTS AS, IN
THE OPINION OF COUNSEL, ARE NECESSARY OR ADVISABLE FOR THE PURPOSE OF ASSURING
THE TRANSFER OF SUCH POWERS, RIGHTS, DUTIES AND RESPONSIBILITIES TO THE NEW
SUBSCRIPTION RECEIPT AGENT. ANY NEW SUBSCRIPTION RECEIPT AGENT SO APPOINTED BY
THE CORPORATION OR BY THE COURT WILL BE SUBJECT TO REMOVAL AS AFORESAID BY THE
SUBSCRIPTION RECEIPTHOLDERS AND BY THE CORPORATION.

 

(F)                                    NOTICE OF NEW SUBSCRIPTION RECEIPT
AGENT:  ON THE APPOINTMENT OF A NEW SUBSCRIPTION RECEIPT AGENT, THE CORPORATION
WILL PROMPTLY GIVE NOTICE THEREOF TO THE SUBSCRIPTION RECEIPTHOLDERS IN
ACCORDANCE WITH SUBSECTION 11.02(A) HEREOF.

 

(G)                                 SUCCESSOR SUBSCRIPTION RECEIPT AGENT:  A
CORPORATION INTO OR WITH WHICH THE SUBSCRIPTION RECEIPT AGENT IS MERGED OR
CONSOLIDATED OR AMALGAMATED, OR A CORPORATION SUCCEEDING TO THE BUSINESS OF THE
SUBSCRIPTION RECEIPT AGENT, WILL BE THE SUCCESSOR TO THE SUBSCRIPTION RECEIPT
AGENT HEREUNDER WITHOUT ANY FURTHER ACT ON ITS PART OR ON THE PART OF ANY PARTY
HERETO IF SUCH CORPORATION WOULD BE ELIGIBLE FOR APPOINTMENT AS A NEW
SUBSCRIPTION RECEIPT AGENT UNDER SUBSECTION 10.08(E) HEREOF.

 

(H)                                 CERTIFICATES:  A SUBSCRIPTION RECEIPT
CERTIFICATE CERTIFIED BUT NOT DELIVERED BY A PREDECESSOR SUBSCRIPTION RECEIPT
AGENT MAY BE DELIVERED BY THE NEW OR SUCCESSOR SUBSCRIPTION RECEIPT AGENT IN THE
NAME OF THE PREDECESSOR SUBSCRIPTION RECEIPT AGENT OR SUCCESSOR SUBSCRIPTION
RECEIPT AGENT.

 

Section 10.09                     Conflict of Interest

 

The Subscription Receipt Agent represents to the Corporation that, at the time
of the execution and delivery hereof, no material conflict of interest exists
between its role as Subscription Receipt Agent hereunder and its role in any
other capacity and if a material conflict of interest arises hereafter it will,
within 30 days after ascertaining that it has such material conflict of
interest, either eliminate the conflict of interest or resign its duties and
obligations hereunder.

 

Section 10.10                     Acceptance of Duties and Obligations

 

The Subscription Receipt Agent hereby accepts the duties and obligations in this
Indenture declared and provided for and agrees to perform them on the terms and
conditions herein set forth. The Subscription Receipt Agent accepts the duties
and responsibilities under this indenture solely as custodian, bailee and agent.
No trust is intended to be or will be created hereby and the Subscription
Receipt Agent shall owe no duties hereunder as a trustee.

 

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ARTICLE ELEVEN
GENERAL

 

Section 11.01                     Notice to the Corporation and Subscription
Receipt Agent

 

(A)                                  CORPORATION:  UNLESS HEREIN OTHERWISE
EXPRESSLY PROVIDED, A NOTICE TO BE GIVEN HEREUNDER TO THE CORPORATION OR THE
SUBSCRIPTION RECEIPT AGENT WILL BE VALIDLY GIVEN IF DELIVERED OR IF SENT BY
REGISTERED LETTER, POSTAGE PREPAID, OR IF SENT BY FACSIMILE TRANSMISSION (IF
RECEIPT OF SUCH TRANSMISSION IS CONFIRMED):

 

(I)                                     IF TO THE CORPORATION:

 

U.S. Gold Corporation
99 George Street
3rd Floor
Toronto, Ontario
M5A 2N4

 

Attention:  Robert R. McEwen

 

U.S. Gold Corporation
Suite 100
2201 Kipling Street
Lakewood, Colorado
80215-1545

 

Attention: William Pass

 

Facsimile: (303) 238-1724

 

Facsimile:  (647) 258-0408

 

with a copy to (with such delivery or sending not to be a delivery or sending to
the Corporation for purposes of this Indenture):

 

Fraser Milner Casgrain LLP
Suite 3900
100 King Street West
Toronto, Ontario
M5X 1B2

 

Attention:  Michael Melanson

 

Facsimile:  (416) 863-4592

 

and to (with such delivery or sending not to be a delivery or sending to the
Corporation for purposes of this Indenture):

 

Dufford & Brown P.C.
1700 Broadway, Suite 2100
Denver, Colorado
80290-2101

 

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Attention: Dave Babiarz

 

Facsimile: (303) 832-3804

 

(II)                                  IF TO THE AGENT:

 

GMP Securities L.P.
145 King Street West
Suite 1100
Toronto, Ontario
M5H 1J8

 

Attention:  Mark Wellings

 

Facsimile:  (416) 943-6160

 

with a copy to:

 

Cassels Brock & Blackwell LLP
2100 Scotia Plaza
100 King Street West
Toronto, Ontario
M5H 3C2

 

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Attention:  Chad Accursi

 

Facsimile:  (416) 642-7131

 

and to:

 

Dorsey & Whitney LLP
161 Bay Street
Suite 4310
Toronto, Ontario
M5J 2S1

 

Attention: Gil Cornblum

 

Facsimile:  (416) 367-7371

 

(III)                               IF TO THE SUBSCRIPTION RECEIPT AGENT:

 

Equity Transfer Services Inc.
Suite 420
120 Adelaide Street West
Toronto, Ontario
M5H 4C3

 

Attention:                                         President

 

Facsimile:                                            (416) 361-0470

 

and any such notice delivered or sent in accordance with the foregoing will be
deemed to have been received on the date of delivery or facsimile transmission
or, if mailed, on the second Business Day following the day of the mailing of
the notice. The original of any document sent by facsimile transmission to the
Subscription Receipt Agent shall be subsequently mailed to the Subscription
Receipt Agent.

 

(B)                                 CHANGE OF ADDRESS:  THE CORPORATION OR THE
SUBSCRIPTION RECEIPT AGENT, AS THE CASE MAY BE, MAY FROM TIME TO TIME NOTIFY THE
OTHER IN THE MANNER PROVIDED IN SUBSECTION 11.01(A) HEREOF OF A CHANGE OF
ADDRESS WHICH, FROM THE EFFECTIVE DATE OF SUCH NOTICE AND UNTIL CHANGED BY LIKE
NOTICE, WILL BE THE ADDRESS OF THE CORPORATION OR THE SUBSCRIPTION RECEIPT
AGENT, AS THE CASE MAY BE, FOR ALL PURPOSES OF THIS INDENTURE.

 

(C)                                  POSTAL INTERRUPTION:  IF, BY REASON OF A
STRIKE, LOCKOUT OR OTHER WORK STOPPAGE, ACTUAL OR THREATENED, INVOLVING CANADIAN
POSTAL EMPLOYEES, A NOTICE TO BE GIVEN TO THE SUBSCRIPTION RECEIPT AGENT OR TO
THE CORPORATION HEREUNDER COULD REASONABLY BE CONSIDERED UNLIKELY TO REACH OR
LIKELY TO BE DELAYED IN REACHING ITS DESTINATION, THE NOTICE WILL BE VALID AND
EFFECTIVE ONLY IF IT IS DELIVERED TO AN OFFICER OF THE PARTY TO WHICH IT IS
ADDRESSED. ANY NOTICE DELIVERED IN ACCORDANCE WITH THE FOREGOING WILL BE DEEMED
TO HAVE BEEN RECEIVED ON THE DATE OF DELIVERY TO SUCH OFFICER.

 

(D)                                 GOVERNING LAW:  THIS SUBSCRIPTION RECEIPT
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN AND THE PARTIES
HERETO IRREVOCABLY ATTORN TO THE JURISDICTION OF THE COURTS OF THE PROVINCE OF
ONTARIO.

 

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Section 11.02                     Notice to Subscription Receiptholders

 

(A)                                  NOTICE:  UNLESS HEREIN OTHERWISE EXPRESSLY
PROVIDED, A NOTICE TO BE GIVEN HEREUNDER TO SUBSCRIPTION RECEIPTHOLDERS WILL BE
DEEMED TO BE VALIDLY GIVEN IF THE NOTICE IS SENT BY ORDINARY SURFACE OR AIR
MAIL, POSTAGE PREPAID, ADDRESSED TO THE SUBSCRIPTION RECEIPTHOLDERS OR DELIVERED
(OR SO MAILED TO CERTAIN SUBSCRIPTION RECEIPTHOLDERS AND SO DELIVERED TO THE
OTHER SUBSCRIPTION RECEIPTHOLDERS) AT THEIR RESPECTIVE ADDRESSES APPEARING ON
ANY OF THE REGISTERS OF HOLDERS DESCRIBED IN SECTION 3.01 HEREOF, PROVIDED,
HOWEVER, THAT IF, BY REASON OF A STRIKE, LOCKOUT OR OTHER WORK STOPPAGE, ACTUAL
OR THREATENED, INVOLVING CANADIAN POSTAL EMPLOYEES, THE NOTICE COULD REASONABLY
BE CONSIDERED UNLIKELY TO REACH OR LIKELY TO BE DELAYED IN REACHING ITS
DESTINATION, THE NOTICE WILL BE VALID AND EFFECTIVE ONLY IF IT IS SO DELIVERED
OR IS GIVEN BY PUBLICATION TWICE IN THE REPORT ON BUSINESS SECTION IN THE
NATIONAL EDITION OF THE GLOBE AND MAIL.

 

(B)                                 DATE OF NOTICE:  A NOTICE SO GIVEN BY MAIL
OR SO DELIVERED WILL BE DEEMED TO HAVE BEEN GIVEN ON THE FIFTH BUSINESS DAY
AFTER IT HAS BEEN MAILED OR ON THE DAY ON WHICH IT HAS BEEN DELIVERED, AS THE
CASE MAY BE, AND A NOTICE SO GIVEN BY PUBLICATION WILL BE DEEMED TO HAVE BEEN
GIVEN ON THE DAY ON WHICH IT HAS BEEN PUBLISHED AS REQUIRED. IN DETERMINING
UNDER ANY PROVISION HEREOF THE DATE WHEN NOTICE OF A MEETING OR OTHER EVENT MUST
BE GIVEN, THE DATE OF GIVING NOTICE WILL BE INCLUDED AND THE DATE OF THE MEETING
OR OTHER EVENT WILL BE EXCLUDED. ACCIDENTAL ERROR OR OMISSION IN GIVING NOTICE
OR ACCIDENTAL FAILURE TO MAIL NOTICE TO ANY SUBSCRIPTION RECEIPTHOLDER WILL NOT
INVALIDATE ANY ACTION OR PROCEEDING FOUNDED THEREON.

 

Section 11.03                     Satisfaction and Discharge of Indenture

 

If all certificates representing Common Shares and Warrants required to be
issued in compliance with the provisions hereof have been issued hereunder in
accordance with such provisions, if all payments required to be made in
compliance with the provisions of this Indenture have been made in accordance
with such provisions and payment to the Subscription Receipt Agent of the fees
and other remuneration payable to the Subscription Receipt Agent have been made,
this Indenture will cease to be of further effect and, on demand of and at the
cost and expense of the Corporation and on delivery to the Subscription Receipt
Agent of a Certificate of the Corporation stating that all conditions precedent
to the satisfaction and discharge of this Indenture have been complied with and
on payment to the Subscription Receipt Agent of the fees and other remuneration
payable to the Subscription Receipt Agent, the Subscription Receipt Agent will
execute proper instruments acknowledging the satisfaction of and discharging
this Indenture.

 

Section 11.04                     Sole Benefit of Parties and Subscription
Receiptholders

 

Nothing in this Indenture or the Subscription Receipt Certificates, expressed or
implied, will give or be construed to give to any person other than the parties
hereto and the Subscription Receiptholders, as the case may be, any legal or
equitable right, remedy or claim under this Indenture or the Subscription
Receipt Certificates, or under any covenant or provision herein or therein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and the Subscription Receiptholders.

 

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Section 11.05                     Discretion of Directors

 

Any matter provided herein to be determined by the directors will be determined
by the directors in their sole discretion, acting reasonably, and a
determination so made will be conclusive.

 

Section 11.06                     Counterparts and Formal Date

 

This Indenture may be executed in several counterparts, each of which when so
executed will be deemed to be an original and such counterparts together will
constitute one and the same instrument and notwithstanding the date of their
execution will be deemed to be dated as of this indenture.

 

IN WITNESS WHEREOF the parties hereto have executed this Subscription Receipt
Indenture as of the day and year first above written.

 

 

U.S. GOLD CORPORATION

 

 

 

 

By:

 

 

 

 

Name:

Robert R. McEwen

 

 

Title:

Chairman & Chief Executive Officer

 

 

 

 

 

GMP SECURITIES L.P.

 

 

 

 

 

By:

 

 

 

 

Name:

Mark Wellings

 

 

Title:

Director

 

 

 

 

 

EQUITY TRANSFER SERVICES INC.

 

 

 

 

 

By:

 

 

 

 

Name:

Richard Barnowski

 

 

 

Title:

President

 

 

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SCHEDULE A TO THE SUBSCRIPTION RECEIPT INDENTURE DATED AS OF
FEBRUARY 22, 2006 BETWEEN U.S. GOLD CORPORATION,
GMP SECURITIES L.P. AND EQUITY TRANSFER SERVICES INC.

 

SUBSCRIPTION RECEIPT CERTIFICATE

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE
LATER OF (I) FEBRUARY 22, 2006, AND (II) THE DATE THE ISSUER BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.”;

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
U.S. GOLD CORPORATION (“U.S. GOLD”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH
RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
(E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT
OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO U.S. GOLD AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN
EITHER CASE REASONABLY SATISFACTORY TO U.S. GOLD. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S.
SECURITIES ACT.”

 

Certificate Number:

 

Number of Subscription Receipts:

 

SUBSCRIPTION RECEIPTS

 

convertible for Common Shares and Warrants of

 

U.S. GOLD CORPORATION

 

THIS IS TO CERTIFY THAT, for value received,
                                     (the “holder”) is the registered holder of
the number of Subscription Receipts (“Subscription Receipts”) specified above of
U.S. Gold Corporation (the “Corporation”) and is thereby entitled, without
payment of any additional consideration, to be issued fully paid and
non-assessable common shares of the Corporation (“Common Shares”) and Warrants
(as defined in the Subscription Receipt Indenture hereinafter referred to)
immediately prior to the Time of Expiry (as defined in the Subscription Receipt
Indenture) on the basis of one Common Share and one-half of one Warrant for each
one Subscription Receipt, or, if the Release Conditions (as defined in the
Subscription Receipt Indenture) have not been satisfied prior to the Penalty
Deadline (as defined in the Subscription Receipt Indenture), the holder shall be
entitled, upon the conversion of the Subscription Receipts, to 1.1 Common Shares
(in lieu of one Common Share) and 0.55 Warrants (in lieu of one-half of one
Warrant) for each Subscription Receipt, all subject to adjustment in accordance
with the provisions of the Subscription Receipt Indenture, and subject to the
limitation referred to below.

 

This Subscription Receipt Certificate represents Subscription Receipts of the
Corporation issued under the provisions of a subscription receipt indenture
(which indenture, together with all instruments supplemental or ancillary
thereto, is herein referred to as the “Subscription Receipt

 

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Indenture”) dated as of February 22, 2006 between the Corporation, GMP
Securities L.P. and the Subscription Receipt Agent. Reference is hereby made for
particulars of the rights of the holders of the Subscription Receipts, the
Corporation and the Subscription Receipt Agent in respect thereof and of the
terms and conditions upon which the Subscription Receipts are issued and held,
all to the same effect as if the provisions of the Subscription Receipt
Indenture were herein set forth in full, to all of which the holder, by
acceptance hereof, assents. In the event of a conflict between the provisions of
this Subscription Receipt Certificate and the Subscription  Receipt Indenture,
the terms of the Subscription Receipt Indenture shall govern. The Corporation
will furnish to the holder, on request, a copy of the Subscription Receipt
Indenture.

 

The Subscription Receipts represented by this Subscription Receipt Certificate
will be converted by the Subscription Receipt Agent for and on behalf of the
holder immediately prior to the Time of Expiry and the holder will be deemed to
have subscribed for the Common Shares and Warrants issuable on the conversion of
such Subscription Receipts without the taking of any action or payment of any
amount by the holder, including the surrender of this Subscription Receipt
Certificate, which will thereupon be cancelled by the Subscription Receipt
Agent.

 

Pursuant to the Subscription Receipt Indenture, the Release Date is the date on
which the Corporation and GMP Securities L.P. deliver a notice to the
Subscription Receipt Agent in the form required under the Subscription Receipt
Indenture, which notice will inform the Subscription Receipt Agent of the
satisfaction of the Release Conditions. The Release Conditions will be satisfied
upon the latest to occur of the following: (i) the third Business Day after the
date on which the Ontario Securities Commission, as the principal regulator
under National Policy 43-201 and the MRRS, issues a decision document evidencing
that each of the Securities Commissions has issued a receipt for the Final
Prospectus; (ii) the completion and filing via SEDAR of a current technical
report regarding the Tonkin Springs gold project that complies with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian
Securities Administrators; (iii) the Common Shares being listed for trading on
the Toronto Stock Exchange; (iv) the effectiveness of the Registration
Statement; and (v) the delivery of a 10b-5 opinion, addressed to the Agent in a
form satisfactory to the Agent, acting reasonably, provided by United States
counsel to the Corporation in respect of the Registration Statement.

 

If any of the Release Conditions have not been satisfied prior to the Initial
Qualification Deadline, the Escrowed Funds shall be returned by the Subscription
Receipt Agent, on behalf of the Corporation, to the holders of the Subscription
Receipts in exchange for the delivery to the Corporation for cancellation of 50%
of the outstanding Subscription Receipts held by each holder. The remaining 50%
of the Subscription Receipts not returned to the Corporation on the Initial
Qualification Deadline shall remain outstanding until the Expiry Date, all as
more particularly set out in the Subscription Receipt Indenture.

 

The holder of this Subscription Receipt and any transferee hereof are cautioned
that in the event that the Subscription Receipts are deemed to be converted or
are cancelled, certificates representing the Common Shares and Warrants or
cheque, as the case may be, will be mailed or delivered to the latest address of
record of the registered holder or to the direction of the registered holder,
and the Corporation and the Subscription Receipt Agent are not bound to take
notice of any transfers or assignments unless the transferee is a duly
registered holder of the Subscription Receipt prior to such mailing or delivery.

 

On and after the date of any conversion of the Subscription Receipts represented
by this Subscription Receipt Certificate, the holder will have no rights
hereunder except to receive certificates representing the Common Shares and the
Warrants issued upon the conversion thereof to such holder.

 

2

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The Corporation will not be obligated after the aggregation of the number of
Common Shares and Warrants to be issued to a holder of Subscription Receipts to
issue any fraction of a Common Share or Warrant on the conversion of
Subscription Receipts. A holder of Subscription Receipts shall not be entitled
to receive a cash payment or any other compensation in respect of any such
fraction of a Common Share or Warrant.

 

No Common Shares or Warrants will be issued pursuant to any conversion of any
Subscription Receipt if the issue of such security would constitute a violation
of the securities laws of any applicable jurisdiction.

 

The Subscription Receipt Indenture provides for adjustments to the rights of the
holders of Subscription Receipts on the happening of certain stated events,
including the subdivision or consolidation of the outstanding Common Shares,
certain distributions of Common Shares or of securities convertible into or
exchangeable for Common Shares or of other securities or assets of the
Corporation, certain offerings of rights, warrants or options and certain
capital reorganizations.

 

The Subscription Receipt Indenture contains provisions making binding on all
holders of Subscription Receipts outstanding thereunder resolutions passed at
meetings of such holders held in accordance with such provisions and instruments
in writing signed by holders of a specified majority of all outstanding
Subscription Receipts.

 

On presentation at the principal office of the Subscription Receipt Agent in
Toronto, Ontario, subject to the provisions of the Subscription Receipt
Indenture and on compliance with the reasonable requirements of the Subscription
Receipt Agent, one or more Subscription Receipt Certificates may be exchanged at
no cost to the holder for one or more Subscription Receipt Certificates of
different denominations representing in the aggregate the same number of
Subscription Receipts as the Subscription Receipt Certificate or Subscription
Receipt Certificates being exchanged.

 

The Subscription Receipts represented by this Subscription Receipt Certificate
may only be transferred, upon compliance with the conditions prescribed in the
Subscription Receipt Indenture, on the register of transfers to be kept at the
principal office of the Subscription Receipt Agent in Toronto, Ontario, by the
holder or the executors, administrators or other legal representatives thereof
or the attorney thereof appointed by an instrument in writing in form and
executed in a manner satisfactory to the Subscription Receipt Agent and, upon
compliance with such requirements and such other reasonable requirements as the
Subscription Receipt Agent may prescribe, such transfer will be duly recorded on
such register of transfers by the Subscription Receipt Agent. Notwithstanding
the foregoing, the Corporation will be entitled, and may direct the Subscription
Receipt Agent, to refuse to record any transfer of any Subscription Receipt on
such register if such transfer would constitute a violation of the securities
laws of any jurisdiction.

 

The holding of this Subscription Receipt Certificate will not constitute the
holder a shareholder of the Corporation or entitle such holder to any right or
interest in respect thereof except as otherwise provided in the Subscription
Receipt Indenture.

 

This Subscription Receipt Certificate will not be valid for any purpose until it
has been certified by or on behalf of the Subscription Receipt Agent for the
time being under the Subscription Receipt Indenture.

 

Time is of the essence hereof.

 

3

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The Subscription Receipt Certificate will be construed and enforced in
accordance with the laws prevailing in the Province of Ontario and the federal
laws of Canada applicable therein and will be treated in all respects as an
Ontario contract.

 

IN WITNESS WHEREOF THE CORPORATION has caused this Subscription Receipt
Certificate to be signed by its officers or other individuals duly authorized in
that behalf as of February 22, 2006.

 

 

U.S. GOLD CORPORATION

 

 

 

By:

 

 

 

This Subscription Receipt Certificate is one of the Subscription Receipt
Certificates referred to in the Subscription Receipt Indenture.

 

 

EQUITY TRANSFER SERVICES INC.

 

 

 

By:

 

 

4

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FORM OF TRANSFER

 

Equity Transfer Services Inc.
Suite 420, 120 Adelaide Street West
Toronto, Ontario, M5H 4C3

 

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to
                                                                                                                                                                                                                                                                                                                          
(print name and address) the Subscription Receipts represented by this
Subscription Receipt Certificate and hereby appoints the Secretary of the
Corporation as its attorney with full power of substitution to transfer the
Subscription Receipts on the appropriate register of the Subscription Receipt
Agent.

 

DATED this           day of                                     , 200    .

 

 

)

 

 

)

 

 

 

)

Signature of Transferor

 

)

 

 

 

)

 

 

Signature Guaranteed

)

Name of Transferor

 

)

 

 

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

 

1.                                    In the case of any transfer of
Subscription Receipts to a Person resident in, or otherwise subject to the
securities laws of, any province or territory of Canada, either the transferee
must be an “accredited investor” within the meaning of such applicable
securities laws in Canada or the transfer must otherwise be exempt from the
prospectus and registration requirements of applicable securities laws in
Canada.

 

2.                                    The Subscription Receipt Indenture
contains certain other requirements relating to the transfer of Subscription
Receipts, if the Registration Statement has not been declared effective.

 

3.                                    The signature of the transferor must
correspond in every particular with the surname and the first name(s) or
initials shown on the face of this certificate and the endorsement must be
signature guaranteed, in either case, by a Canadian chartered bank, a major
trust company in Canada, a firm which is a member of a recognized stock exchange
in Canada, a national securities exchange in the United States, or the National
Association of Securities dealers or a member of a recognized securities
transfer agents medallion program (STAMP). The stamp affixed thereon by the
guarantor must bear the actual words “signature guarantee”, or “signature
medallion guaranteed” and otherwise be in accordance with industry standards.

 

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SCHEDULE B TO THE SUBSCRIPTION RECEIPT INDENTURE DATED AS OF
FEBRUARY 22, 2006 BETWEEN U.S. GOLD CORPORATION,
GMP SECURITIES L.P. AND EQUITY TRANSFER SERVICES INC.

 

TO:                                                                           
EQUITY TRANSFER SERVICES INC.

AND TO:                                             GMP SECURITIES L.P.

 

RELEASE NOTICE

 

Reference is made to the subscription receipt indenture dated as of February 22,
2006 (the “Subscription Receipt Indenture”) between U.S. Gold Corporation (the
“Corporation”), GMP Securities L.P. and Equity Transfer Services Inc. Unless
otherwise defined herein, words and terms with the initial letter or letters
thereof capitalized shall have the meanings given to such words and terms in the
Subscription Receipt Indenture.

 

The Corporation by its President and CEO represents, warrants and confirms on
behalf of the Corporation and not in a personal capacity that each of the
Release Conditions have been satisfied or waived by the Agent,

 

and, accordingly:

 

(a)                                  in accordance with section 2.02 of the
Subscription Receipt Indenture, Subscription Receipts shall entitle the holders
thereof to receive, upon conversion thereof in accordance with the provisions of
the Subscription Receipt Indenture, Common Share and Warrants, which the
Subscription Receipt Agent is hereby authorized and directed to issue in
accordance with the terms of the Subscription Receipt Indenture; and

 

(b)                                 in accordance with article six of the
Subscription Receipt Indenture, the Subscription Receipt Agent is hereby
authorized and directed to:

 

(i)                                  release $<> of the Escrowed Proceeds (and
interest earned thereon) to the Agent by means of a bank draft or certified
cheque payable to “GMP Securities L.P.”

 

(ii)                               retain $<> of the Escrowed Proceeds

 

(iii)                            release the balance of the Proceeds together
with all interest earned on the Escrowed Proceeds to the Corporation by means of
                                                                                                                                  
                                                                                                                                                                           .

 

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This Release  Notice, which may be signed in counterparts and delivered by
facsimile, is irrevocable and shall constitute your good and sufficient
authority for taking the actions described herein.

 

DATED as of this            day of                          , 200    .

 

 

U.S. GOLD CORPORATION

 

 

 

By:

 

 

 

Acknowledged as of the                   day of                     , 200    .

 

 

 

GMP SECURITIES L.P.

 

 

 

By:

 

 

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