Exhibit 10.3

 

U.S. GOLD CORPORATION

 

- and -

 

 

EQUITY TRANSFER SERVICES INC.

 

 

WARRANT INDENTURE

 

 

Dated February 22, 2006

 

Fraser Milner Casgrain LLP

 

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TABLE OF CONTENTS

 

ARTICLE ONE

 

2

 

 

 

SECTION 1.01

 

DEFINITIONS:

 

2

SECTION 1.02

 

NUMBER AND GENDER:

 

6

SECTION 1.03

 

INTERPRETATION NOT AFFECTED BY HEADINGS:

 

6

SECTION 1.04

 

DAY NOT A BUSINESS DAY:

 

6

SECTION 1.05

 

CURRENCY:

 

7

SECTION 1.06

 

APPLICABLE LAW:

 

7

SECTION 1.07

 

REFERENCES TO THIS INDENTURE:

 

7

SECTION 1.08

 

SCHEDULE:

 

7

 

 

 

 

 

ARTICLE TWO

 

7

 

 

 

SECTION 2.01

 

ISSUE AND FORM OF WARRANTS:

 

7

SECTION 2.02

 

TERMS AND DELIVERY OF WARRANTS:

 

9

SECTION 2.03

 

WARRANTHOLDER NOT A SHAREHOLDER:

 

10

SECTION 2.04

 

SIGNING OF WARRANT CERTIFICATE:

 

10

SECTION 2.05

 

COUNTERSIGNATURE BY THE WARRANT AGENT:

 

10

SECTION 2.06

 

ISSUE IN SUBSTITUTION FOR LOST WARRANT CERTIFICATE:

 

10

SECTION 2.07

 

EXCHANGE OF WARRANT CERTIFICATES:

 

11

SECTION 2.08

 

REGISTRATION AND TRANSFER OF WARRANTS:

 

11

SECTION 2.09

 

OWNERSHIP OF WARRANTS:

 

13

SECTION 2.10

 

WARRANTS TO RANK PARI PASSU:

 

13

 

 

 

 

 

ARTICLE THREE

 

13

 

 

 

SECTION 3.01

 

WARRANT CERTIFICATES:

 

13

 

 

 

 

 

ARTICLE FOUR

 

14

 

 

 

SECTION 4.01

 

METHOD OF EXERCISE OF WARRANTS:

 

14

SECTION 4.02

 

EFFECT OF EXERCISE OF WARRANTS:

 

17

SECTION 4.03

 

SUBSCRIPTION FOR LESS THAN ENTITLEMENT:

 

18

SECTION 4.04

 

WARRANT CERTIFICATES FOR FRACTIONS OF COMMON SHARES:

 

18

SECTION 4.05

 

EXPIRATION OF WARRANTS:

 

18

SECTION 4.06

 

SECURITIES RESTRICTIONS; LEGENDS:

 

18

 

 

 

 

 

ARTICLE FIVE

 

19

 

 

 

SECTION 5.01

 

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF COMMON SHARES PURCHASABLE UPON
EXERCISE:

 

19

SECTION 5.02

 

RULES REGARDING CALCULATION OF ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF COMMON
SHARES PURCHASABLE UPON EXERCISE:

 

23

SECTION 5.03

 

POSTPONEMENT OF SUBSCRIPTION:

 

25

SECTION 5.04

 

NOTICE OF ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF COMMON SHARES PURCHASABLE
UPON EXERCISE:

 

25

ARTICLE SIX

 

26

 

 

 

SECTION 6.01

 

OPTIONAL PURCHASES BY THE CORPORATION:

 

26

SECTION 6.02

 

SURRENDER OF WARRANT CERTIFICATES:

 

26

 

 

 

 

 

ARTICLE SEVEN

 

26

 

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SECTION 7.01

 

GENERAL COVENANTS OF THE CORPORATION:

 

26

SECTION 7.02

 

WARRANT AGENT’S REMUNERATION AND EXPENSES:

 

28

SECTION 7.03

 

NOTICE OF ISSUE:

 

28

SECTION 7.04

 

PERFORMANCE OF COVENANTS BY WARRANT AGENT:

 

28

 

 

 

 

 

ARTICLE EIGHT

 

29

 

 

 

SECTION 8.01

 

SUITS BY WARRANTHOLDERS:

 

29

SECTION 8.02

 

LIMITATION OF LIABILITY:

 

29

 

 

 

 

 

ARTICLE NINE

 

29

 

 

 

SECTION 9.01

 

RIGHT TO CONVENE MEETINGS:

 

29

SECTION 9.02

 

NOTICE:

 

29

SECTION 9.03

 

CHAIRMAN:

 

30

SECTION 9.04

 

QUORUM:

 

30

SECTION 9.05

 

POWER TO ADJOURN:

 

30

SECTION 9.06

 

SHOW OF HANDS:

 

30

SECTION 9.07

 

POLL:

 

30

SECTION 9.08

 

VOTING:

 

31

SECTION 9.09

 

REGULATIONS:

 

31

SECTION 9.10

 

CORPORATION AND WARRANT AGENT MAY BE REPRESENTED:

 

31

SECTION 9.11

 

POWERS EXERCISABLE BY EXTRAORDINARY RESOLUTION:

 

31

SECTION 9.12

 

EXTRAORDINARY RESOLUTION:

 

32

SECTION 9.13

 

POWERS CUMULATIVE:

 

33

SECTION 9.14

 

MINUTES:

 

33

SECTION 9.15

 

INSTRUMENTS IN WRITING:

 

33

SECTION 9.16

 

BINDING EFFECT OF RESOLUTIONS:

 

34

SECTION 9.17

 

HOLDINGS BY CORPORATION AND WARRANT AGENT DISREGARDED:

 

34

 

 

 

 

 

ARTICLE TEN

 

 

 

34

 

 

 

 

 

SECTION 10.01

 

PROVISION FOR SUPPLEMENTAL INDENTURES FOR CERTAIN PURPOSES:

 

34

SECTION 10.02

 

SUCCESSOR CORPORATION:

 

35

 

 

 

 

 

ARTICLE ELEVEN

 

35

 

 

 

SECTION 11.01

 

TRUST INDENTURE LEGISLATION:

 

35

SECTION 11.02

 

RIGHTS AND DUTIES OF WARRANT AGENT:

 

35

SECTION 11.03

 

EVIDENCE:

 

36

SECTION 11.04

 

EXPERTS AND ADVISERS:

 

37

SECTION 11.05

 

WARRANT AGENT NOT REQUIRED TO GIVE SECURITY:

 

37

SECTION 11.06

 

PROTECTION OF WARRANT AGENT:

 

37

SECTION 11.07

 

REPLACEMENT OF WARRANT AGENT, SUCCESSOR BY MERGER:

 

38

SECTION 11.08

 

CONFLICT OF INTEREST:

 

39

SECTION 11.09

 

ACCEPTANCE OF DUTIES AND OBLIGATIONS:

 

39

SECTION 11.10

 

ACTIONS BY WARRANT AGENT TO PROTECT INTEREST:

 

39

SECTION 11.11

 

DOCUMENTS, MONEYS, ETC. HELD BY WARRANT AGENT:

 

39

SECTION 11.12

 

WARRANT AGENT NOT TO BE APPOINTED RECEIVER:

 

40

 

 

 

 

 

ARTICLE TWELVE

 

40

 

 

 

SECTION 12.01

 

NOTICE:

 

40

 

 

 

 

 

ARTICLE THIRTEEN

 

40

 

 

 

SECTION 13.01

 

NOTICE TO THE CORPORATION AND THE WARRANT AGENT:

 

40

 

2

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SECTION 13.02

 

TIME OF THE ESSENCE:

 

42

SECTION 13.03

 

COUNTERPARTS:

 

42

SECTION 13.04

 

SATISFACTION AND DISCHARGE OF INDENTURE:

 

42

SECTION 13.05

 

PROVISIONS OF INDENTURE AND WARRANT CERTIFICATE FOR THE SOLE BENEFIT OF PARTIES
AND WARRANTHOLDERS:

 

42

SECTION 13.06

 

STOCK EXCHANGE CONSENTS:

 

42

 

 

 

 

 

SCHEDULE A

 

FORM OF WARRANT CERTIFICATE

 

 

 

3

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

B E T W E E N:

 

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

 

(hereinafter called the “Corporation”)

 

OF THE FIRST PART

 

- and -

 

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

 

(hereinafter called the “Warrant Agent”),

 

OF THE SECOND PART

 

WHEREAS the Corporation is authorized to issue Two Hundred Fifty Million
(250,000,000) Common Shares (as hereinafter defined);

 

AND WHEREAS the Corporation proposes to issue up to 16,700,000 subscription
receipts, each subscription receipt will entitle the holder thereof, without
payment of any additional consideration, to be issued one Common Share and
one-half Warrant (as hereinafter defined), and with each whole Warrant entitling
the holder thereof to subscribe for and purchase, subject to adjustment, one
Common Share at the price and upon the other terms and conditions hereinafter
set forth;

 

AND WHEREAS the Corporation proposes to issue a compensation option as partial
compensation for the services of the Agents (as hereinafter defined) such option
being exercisable, without payment of additional consideration, to acquire
Agent’s Warrants equal to up to 1,002,000 units at an exercise price of US$4.50,
each unit consisting of one Common Share and one-half Warrant , and with each
whole Warrant entitling the holder thereof to subscribe for and purchase,
subject to adjustment, one Common Share at the price and upon the other terms
and conditions hereinafter set forth;

 

AND WHEREAS the Corporation is authorized under the laws applicable to it to
create and issue the Warrants as hereinafter provided;

 

AND WHEREAS the Warrants will be represented by Warrant Certificates (as
hereinafter defined) issued and countersigned in accordance with the provisions
hereof;

 

AND WHEREAS all things necessary have been or will be done and performed by the
Corporation to make each of the Warrants and the Warrant Certificates, when
countersigned by the Warrant Agent and issued in accordance with the provisions
of this Indenture, legal, valid and binding obligations of the Corporation with
the benefits and subject to the provisions of this Indenture;

 

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AND WHEREAS the Warrant Agent has agreed to enter into this Indenture and to
hold all rights, interests and benefits contained herein for and on behalf of
those persons who become holders of Warrants issued hereunder;

 

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

 

NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable consideration
mutually given and received, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed and declared as follows:

 

ARTICLE ONE

DEFINITIONS AND INTERPRETATION

 

Section 1.01                            Definitions:

 

In this Indenture and in the Warrant Certificates, unless there is something in
the subject matter or context inconsistent therewith, the words and terms
defined in this section 1.01 shall, for the purpose of this Indenture and all
supplemental indentures hereto and for the purpose of the Warrant Certificates,
have the respective meanings specified in this section 1.01:

 

(A)                                  “1933 ACT” MEANS THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED;

 

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

 

(C)                                  “AGENTS” MEANS GMP SECURITIES LP AND
GRIFFITHS MCBURNEY CORP. COLLECTIVELY;

 

(D)                                 “AGENT’S WARRANTS” MEANS THE UP TO 1,002,000
AGENT’S WARRANTS ISSUED IN ACCORDANCE WITH THE AGENCY AGREEMENT DATED AS OF THE
DATE HEREOF BETWEEN THE CORPORATION AND THE AGENT;

 

(E)                                  “APPLICABLE LEGISLATION” MEANS THE
PROVISIONS, IF ANY, OF THE BUSINESS CORPORATIONS ACT (ONTARIO) AND ANY STATUTE
OF CANADA OR A PROVINCE THEREOF, AND OF THE REGULATIONS UNDER ANY SUCH STATUTES,
RELATING TO WARRANT INDENTURES OR TO THE RIGHTS, DUTIES AND OBLIGATIONS OF
TRUSTEES AND OF CORPORATIONS UNDER WARRANT INDENTURES, TO THE EXTENT THAT SUCH
PROVISIONS ARE AT THE TIME IN FORCE AND APPLICABLE TO THIS INDENTURE;

 

(F)                                    “BUSINESS DAY” MEANS A DAY WHICH IS NOT A
SATURDAY OR SUNDAY OR A CIVIC OR STATUTORY HOLIDAY IN ANY OF THE CITIES WHERE
WARRANT CERTIFICATES MAY BE SURRENDERED TO THE WARRANT AGENT PURSUANT TO THE
PROVISIONS HEREOF;

 

(G)                                 “CERTIFIED RESOLUTION” MEANS A COPY OF A
RESOLUTION CERTIFIED BY THE PRESIDENT OR THE SECRETARY OF THE CORPORATION, WHICH
MAY BUT NEED NOT BE UNDER THE CORPORATE SEAL OF THE CORPORATION, TO HAVE BEEN
PASSED BY THE DIRECTORS AND TO BE IN FULL FORCE AND EFFECT ON THE DATE OF SUCH
CERTIFICATION;

 

(H)                                 “COMMON SHARE REORGANIZATION” MEANS ANY OF
THE EVENTS DESCRIBED IN PARAGRAPHS 5.01(A)(I), (II), (III) OR (IV) HEREOF;

 

2

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(I)                                     “COMMON SHARES” MEANS THE SHARES OF
COMMON STOCK, NO PAR VALUE, WHICH THE CORPORATION IS AUTHORIZED TO ISSUE AS SUCH
SHARES OF COMMON STOCK ARE CONSTITUTED AT THE CLOSE OF BUSINESS ON THE EFFECTIVE
DATE; PROVIDED THAT IN THE EVENT OF ANY ADJUSTMENT PURSUANT TO THE PROVISIONS OF
ARTICLE FIVE HEREOF, “COMMON SHARES” SHALL THEREAFTER MEAN THE SHARES OR OTHER
SECURITIES OR PROPERTY RESULTING FROM SUCH ADJUSTMENT;

 

(J)                                     “CORPORATION” MEANS U.S. GOLD
CORPORATION AND INCLUDES ANY SUCCESSOR CORPORATION THERETO;

 

(K)                                  “CORPORATION’S AUDITORS” MEANS THE FIRM OF
CHARTERED ACCOUNTANTS APPOINTED AS THE AUDITORS OF THE CORPORATION AT THE
PARTICULAR TIME;

 

(L)                                     “COUNSEL” MEANS A BARRISTER AND
SOLICITOR OR A FIRM OF BARRISTERS AND SOLICITORS, WHO MAY BE COUNSEL FOR THE
CORPORATION, ACCEPTABLE TO THE WARRANT AGENT;

 

(M)                               “CURRENT MARKET PRICE” OF THE COMMON SHARES AT
ANY DATE MEANS THE PRICE PER SHARE EQUAL TO THE VOLUME WEIGHTED AVERAGE TRADING
PRICE AT WHICH THE COMMON SHARES HAVE TRADED ON THE TORONTO STOCK EXCHANGE OR,
IF THE COMMON SHARES ARE NOT THEN LISTED ON THE TORONTO STOCK EXCHANGE, ON SUCH
OTHER CANADIAN STOCK EXCHANGE AS MAY BE SELECTED BY THE DIRECTORS OF THE
CORPORATION FOR SUCH PURPOSE OR, IF THE COMMON SHARES ARE NOT THEN LISTED ON ANY
CANADIAN STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET, DURING THE PERIOD OF
ANY 20 CONSECUTIVE TRADING DAYS ENDING NOT MORE THAN FIVE BUSINESS DAYS BEFORE
SUCH DATE; PROVIDED THAT THE WEIGHTED AVERAGE TRADING PRICE SHALL BE DETERMINED
BY DIVIDING THE AGGREGATE SALE PRICE OF ALL COMMON SHARES SOLD ON THE SAID
EXCHANGE OR MARKET, AS THE CASE MAY BE, DURING THE SAID 20 CONSECUTIVE TRADING
DAYS BY THE TOTAL NUMBER OF COMMON SHARES SO SOLD; AND PROVIDED FURTHER THAT IF
THE COMMON SHARES ARE NOT THEN LISTED ON ANY CANADIAN STOCK EXCHANGE OR TRADED
IN THE OVER-THE-COUNTER MARKET, THEN THE CURRENT MARKET PRICE SHALL BE
DETERMINED BY A FIRM OF INDEPENDENT CHARTERED ACCOUNTANTS SELECTED BY THE
DIRECTORS AND ACCEPTABLE TO THE WARRANT AGENT;

 

(N)                                 “DIRECTOR” MEANS A DIRECTOR OF THE
CORPORATION FOR THE TIME BEING, AND, UNLESS OTHERWISE SPECIFIED HEREIN,
REFERENCE TO “ACTION BY THE DIRECTORS” MEANS ACTION BY THE DIRECTORS OF THE
CORPORATION AS A BOARD OR, WHENEVER EMPOWERED, ACTION BY ANY COMMITTEE OF THE
DIRECTORS OF THE CORPORATION;

 

(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 HEREOF;

 

(Q)                                 “EXERCISE DATE” WITH RESPECT TO ANY WARRANT
MEANS THE DATE ON WHICH SUCH WARRANT IS SURRENDERED FOR EXERCISE IN ACCORDANCE
WITH THE PROVISIONS OF ARTICLE FOUR HEREOF;

 

3

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(R)                                    “EXERCISE PRICE” MEANS US$10.00 PER
COMMON SHARE, UNLESS SUCH AMOUNT SHALL HAVE BEEN ADJUSTED PURSUANT TO THE
PROVISIONS OF ARTICLE FIVE HEREOF IN WHICH CASE SUCH TERM SHALL MEAN THE
ADJUSTED PRICE IN EFFECT AT THE APPLICABLE TIME;

 

(S)                                  “EXPIRY DATE” MEANS FEBRUARY 22, 2011;

 

(T)                                    “EXTRAORDINARY RESOLUTION” MEANS, SUBJECT
AS HEREINAFTER PROVIDED IN SECTIONS 9.12, 9.15 AND 9.16 HEREOF, A MOTION
PROPOSED AT A MEETING OF WARRANTHOLDERS CALLED FOR THAT PURPOSE AND HELD IN
ACCORDANCE WITH THE PROVISIONS OF ARTICLE NINE HEREOF AT WHICH THERE ARE PRESENT
IN PERSON OR REPRESENTED BY PROXY WARRANTHOLDERS HOLDING IN THE AGGREGATE AT
LEAST 50% OF THE TOTAL NUMBER OF WARRANTS THEN OUTSTANDING AS OF THE DATE OF THE
MEETING AND PASSED BY THE AFFIRMATIVE VOTES OF WARRANTHOLDERS WHO HOLD IN THE
AGGREGATE NOT LESS THAN 66 2/3% OF THE TOTAL NUMBER OF WARRANTS REPRESENTED AT
THE MEETING AND VOTED ON SUCH MOTION;

 

(U)                                 “FINAL PROSPECTUS” MEANS THE FINAL
PROSPECTUS OF THE CORPORATION WHICH QUALIFIES, AMONG OTHER THINGS, THE
DISTRIBUTION OF THE COMMON SHARES AND WARRANTS ISSUABLE UPON CONVERSION OF THE
SUBSCRIPTION RECEIPTS AND EXERCISE OF THE AGENT’S WARRANTS IN THE QUALIFYING
JURISDICTIONS AND INCLUDES ANY AMENDMENTS OR SUPPLEMENTS THERETO;

 

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

 

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

 

(X)                                   “ORIGINAL U.S. PURCHASER” MEANS A U.S.
PERSON OR A PERSON IN THE UNITED STATES WHO OBTAINED THE WARRANT UPON EXERCISE
OF THE SUBSCRIPTION RECEIPT SUCH PERSON PURCHASED FROM THE CORPORATION;

 

(Y)                                 “PERSON” MEANS AN INDIVIDUAL, CORPORATION,
PARTNERSHIP, TRUST OR ANY UNINCORPORATED ORGANIZATION;

 

(Z)                                   “QUALIFICATION DATE” MEANS 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;

 

(AA)                            “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 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;

 

(BB)                          “QUALIFYING JURISDICTIONS” MEANS THE PROVINCES OF
CANADA WHERE PURCHASERS OF SUBSCRIPTION RECEIPTS AND AGENT’S WARRANTS ARE
LOCATED AND ANY OTHER JURISDICTION IN

 

4

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CANADA IN WHICH THE CORPORATION IS REQUIRED TO FILE THE FINAL PROSPECTUS
PURSUANT TO AN AGREEMENT BETWEEN THE CORPORATION AND THE AGENTS, OR OTHERWISE;

 

(CC)                            “REGISTRATION STATEMENT” MEANS THE RESALE
REGISTRATION STATEMENT OF THE CORPORATION TO BE FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION IN ORDER TO REGISTER THE RESALE OF, INTER
ALIA, THE COMMON SHARES, WARRANTS AND TO REGISTER THE COMMON SHARES UNDERLYING
THE WARRANTS;

 

(DD)                          “REGULATION D” MEANS REGULATION D UNDER THE 1933
ACT;

 

(EE)                            “REGULATION S” MEANS REGULATION S UNDER THE 1933
ACT;

 

(FF)                                “RIGHTS OFFERING” MEANS ANY OF THE EVENTS
DESCRIBED IN SUBSECTION 5.01(B) HEREOF;

 

(GG)                          “RIGHTS PERIOD” MEANS ANY PERIOD DETERMINED FOR
THE PURPOSES OF SUBSECTION 5.01(B) HEREOF;

 

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

 

(II)                                  “SHAREHOLDER” MEANS A HOLDER OF RECORD OF
ONE OR MORE COMMON SHARES;

 

(JJ)                                  “SPECIAL DISTRIBUTION” MEANS ANY OF THE
EVENTS DESCRIBED IN SUBSECTION 5.01(C) HEREOF;

 

(KK)                            “SUBSCRIPTION RECEIPTS” MEANS THE UP TO
16,700,000 SUBSCRIPTION RECEIPTS ISSUED IN ACCORDANCE WITH THE SUBSCRIPTION
RECEIPT INDENTURE DATED AS OF THE DATE HEREOF BETWEEN THE CORPORATION, THE AGENT
AND THE WARRANT AGENT;

 

(LL)                                  “SUBSIDIARY” MEANS A CORPORATION, OF WHICH
VOTING SECURITIES CARRYING A MAJORITY OF THE VOTES ATTACHED TO ALL OUTSTANDING
VOTING SECURITIES, DIRECTLY OR INDIRECTLY, ARE OWNED BY THE CORPORATION, BY THE
CORPORATION AND ONE OR MORE SUBSIDIARIES THEREOF, OR BY ONE OR MORE OF THE
SUBSIDIARIES OF THE CORPORATION, AND, AS USED IN THIS DEFINITION, “VOTING
SECURITIES” MEANS SECURITIES, OTHER THAN DEBT SECURITIES, CARRYING THE RIGHT TO
ELECT DIRECTORS EITHER UNDER ALL CIRCUMSTANCES OR UNDER SOME CIRCUMSTANCES THAT
HAVE OCCURRED AND ARE CONTINUING;

 

(MM)                      “TIME OF EXPIRY” MEANS 5:00 P.M., DENVER TIME, ON THE
EXPIRY DATE;

 

(NN)                          “TRADING DAY” WITH RESPECT TO A STOCK EXCHANGE
MEANS A DAY ON WHICH SUCH STOCK EXCHANGE IS OPEN FOR BUSINESS AND WITH RESPECT
TO THE OVER-THE-COUNTER MARKET MEANS A DAY ON WHICH SHARES MAY BE TRADED THROUGH
THE FACILITIES OF SUCH OVER-THE-COUNTER MARKET;

 

(OO)                          “TRANSFER AGENT” MEANS THE TRANSFER AGENT FOR THE
TIME BEING OF THE COMMON SHARES;

 

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

 

(QQ)                          “U.S. PERSON” MEANS A U.S. PERSON AS THAT TERM IS
DEFINED IN RULE 902(1) OF REGULATION S;

 

(RR)                                “U.S. PROSPECTUS” MEANS A PROSPECTUS MEETING
THE REQUIREMENTS OF SECTION 10(A) OF THE 1933 ACT WHICH WILL FORM PART OF THE
REGISTRATION STATEMENT;

 

5

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(SS)                            “U.S. PURCHASER” MEANS (I) A PERSON IN THE
UNITED STATES, (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, (III) A
PERSON WHO WAS IN THE UNITED STATES AT THE TIME THE ORDER WAS MADE TO EXERCISE
WARRANTS OR (IV) A PERSON WHO EXECUTED OR DELIVERED A WARRANT EXERCISE FORM
WHILE IN THE UNITED STATES;

 

(TT)                                “WARRANT AGENT” MEANS EQUITY TRANSFER
SERVICES INC., OR THE SUCCESSOR THEREOF FOR THE TIME BEING OF THE DUTIES AND
OBLIGATIONS HEREBY CREATED;

 

(UU)                          “WARRANT CERTIFICATES” MEANS THE CERTIFICATES
REPRESENTING THE WARRANTS SUBSTANTIALLY IN THE FORM ATTACHED AS SCHEDULE A
HERETO ISSUED AND COUNTERSIGNED HEREUNDER AND FOR THE TIME BEING OUTSTANDING;

 

(VV)                          “WARRANTHOLDERS”, OR “HOLDERS” WITHOUT REFERENCE
TO COMMON SHARES, MEANS THE PERSONS FOR THE TIME BEING WHO ARE REGISTERED
HOLDERS OF WARRANT CERTIFICATES;

 

(WW)                      “WARRANTHOLDERS’ REQUEST” MEANS AN INSTRUMENT SIGNED
IN ONE OR MORE COUNTERPARTS BY WARRANTHOLDERS ENTITLED TO PURCHASE IN THE
AGGREGATE NOT LESS THAN 25% OF THE AGGREGATE NUMBER OF COMMON SHARES WHICH COULD
BE PURCHASED PURSUANT TO ALL WARRANTS THEN UNEXERCISED AND OUTSTANDING,
REQUESTING THE WARRANT AGENT TO TAKE SOME ACTION OR PROCEEDING SPECIFIED
THEREIN;

 

(XX)                              “WARRANTS” MEANS THE WARRANTS ISSUED
HEREUNDER, EACH WHOLE WARRANT WILL ENTITLE THE HOLDER THEREOF TO PURCHASE ONE
COMMON SHARE FOR THE EXERCISE PRICE AT ANY TIME UP TO THE TIME OF EXPIRY,
SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH ARTICLE FIVE HEREOF; AND

 

(YY)                          “WRITTEN ORDER OF THE CORPORATION”, “WRITTEN
REQUEST OF THE CORPORATION”, “WRITTEN CONSENT OF THE CORPORATION” AND
“CERTIFICATE OF THE CORPORATION” MEAN RESPECTIVELY A WRITTEN ORDER, REQUEST,
CONSENT OR CERTIFICATE SIGNED IN THE NAME OF THE CORPORATION BY ITS PRESIDENT, A
VICE-PRESIDENT OR A DIRECTOR AND, IN ADDITION, BY ITS SECRETARY OR A DIRECTOR,
AND MAY CONSIST OF ONE OR MORE INSTRUMENTS SO EXECUTED.

 

Section 1.02                            Number and Gender:

 

Unless herein otherwise expressly provided or unless the context otherwise
requires, words importing the singular include the plural and vice versa and
words importing the masculine include the feminine and neuter genders.

 

Section 1.03                            Interpretation not Affected by Headings:

 

The division of this Indenture into articles, sections, subsections, paragraphs
and subparagraphs, the provision of the 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 that 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.

 

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Section 1.05                            Currency:

 

All references to currency herein and in the Warrant Certificates are to lawful
money of the United States unless otherwise specified herein.

 

Section 1.06                            Applicable Law:

 

This Indenture, the Warrant Certificates and the Warrants represented by the
Warrant Certificates shall be governed by and performed, construed and enforced
in accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.  Any and all disputes arising under this Indenture,
the Warrant Certificates and the Warrants represented by the Warrant
Certificates , whether as to interpretation, performance or otherwise, shall be
subject to the exclusive jurisdiction of the courts of the Province of Ontario
and each of the parties hereto hereby irrevocably attorns to the jurisdiction of
the courts of such province.

 

Section 1.07                            References to this Indenture:

 

The words and phrases “this Warrant Indenture”, “this Indenture”, “herein”,
“hereby”, “hereof” and similar expressions mean or refer to this indenture and
any indenture, deed or instrument supplemental hereto and the words “article”,
“section”, “subsection”, “paragraph” and “subparagraph” followed by a number
mean and refer to the specified article, section, subsection, paragraph or
subparagraphs of this Indenture

 

Section 1.08                            Schedule:

 

The following schedule is attached to, forms part of and shall be deemed to be
incorporated into this Indenture.

 

Schedule

 

Title

 

 

 

A

 

Form of Warrant Certificate

 

 

 

B

 

Warrant Exercise Certification (to be
completed if Registration Statement is not
effective)

 

ARTICLE TWO

ISSUE AND FORM OF WARRANTS

 

Section 2.01                            Issue and Form of Warrants:

 

(A)                                  AUTHORIZATION OF WARRANTS:  THE CORPORATION
HEREBY CREATES AND AUTHORIZES FOR ISSUE UP TO 8,851,000 WARRANTS ENTITLING THE
HOLDERS THEREOF TO SUBSCRIBE FOR AND PURCHASE UP TO AN AGGREGATE OF 8,851,000
COMMON SHARES 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 ARTICLE FIVE HEREOF, AND SUCH WARRANTS ARE HEREBY
AUTHORIZED TO BE ISSUED.

 

(B)                                 FORM OF WARRANT CERTIFICATE: UPON THE ISSUE
OF THE WARRANTS, WARRANT CERTIFICATES SHALL BE EXECUTED BY THE CORPORATION AND
DELIVERED TO THE WARRANT AGENT, COUNTERSIGNED BY THE

 

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WARRANT AGENT UPON THE WRITTEN DIRECTION OF THE CORPORATION AND DELIVERED BY THE
WARRANT AGENT TO THE CORPORATION OR TO THE ORDER OF THE CORPORATION PURSUANT TO
A WRITTEN DIRECTION OF THE CORPORATION, WITHOUT ANY FURTHER ACT OF OR FORMALITY
ON THE PART OF THE CORPORATION.  THE WARRANT CERTIFICATES SHALL BE SUBSTANTIALLY
IN THE FORM OF THE CERTIFICATE ATTACHED HERETO AS SCHEDULE “A”, SHALL BE DATED
AS OF THE DATE OF ISSUE THEREOF (INCLUDING ALL REPLACEMENTS ISSUED IN ACCORDANCE
WITH THIS INDENTURE) AND MAY BEAR A FACSIMILE OF THE SEAL OF THE CORPORATION AND
SUCH DISTINGUISHING LETTERS AND NUMBERS AS THE CORPORATION MAY, WITH THE
APPROVAL OF THE WARRANT AGENT, PRESCRIBE.  IRRESPECTIVE OF ANY ADJUSTMENTS
REQUIRED TO BE MADE BY THE PROVISIONS OF ARTICLE FIVE HEREOF, ALL REPLACEMENT
WARRANT CERTIFICATES SHALL CONTINUE TO EXPRESS THE NUMBER OF COMMON SHARES
PURCHASABLE UPON THE EXERCISE OF THE WARRANTS REPRESENTED THEREBY AND THE
EXERCISE PRICE AS IF SUCH WARRANT CERTIFICATES WERE ISSUED AS OF THE INITIAL
DATE OF ISSUE THEREOF PURSUANT HERETO.

 

(C)                                  LEGENDS ON WARRANT CERTIFICATES:

 

(I)                                     UNLESS THE REGISTRATION STATEMENT HAS
BEEN DECLARED EFFECTIVE BY THE SEC PRIOR TO THE DATE OF THE ISSUANCE OF THE
WARRANTS AND IS EFFECTIVE AT THE TIME OF EXERCISE, WARRANT CERTIFICATES
REPRESENTING WARRANTS ISSUED TO U.S. PERSONS, TO PERSONS IN THE UNITED STATES OR
TO PERSONS FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED
STATES, AS WELL AS ALL CERTIFICATES ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION OF
SUCH CERTIFICATES REPRESENTING WARRANTS SHALL BEAR THE FOLLOWING LEGEND:

 

“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.

 

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 “1933
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 1933 ACT AND
APPLICABLE STATE SECURITIES

 

8

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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.”

 

(II)                                  CERTIFICATES REPRESENTING WARRANTS ISSUED
PRIOR TO THE EARLIER OF THE QUALIFICATION DATE AND THE DATE THAT IS FOUR MONTHS
AND ONE DAY AFTER THE LATER OF (I) THE DATE HEREOF; AND (II) THE DATE THE
CORPORATION BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA
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 ONE 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.”

 

Section 2.02                            Terms and Delivery of Warrants:

 

(A)                                  TERMS:  EACH ONE WARRANT ISSUED HEREUNDER
SHALL ENTITLE THE HOLDER THEREOF TO SUBSCRIBE FOR AND PURCHASE ONE COMMON SHARE
AT THE EXERCISE PRICE AT ANY TIME AFTER THE DATE OF ISSUE THEREOF UNTIL THE TIME
OF EXPIRY, SUBJECT TO ANY ADJUSTMENTS REQUIRED TO BE MADE PURSUANT TO ARTICLE
FIVE HEREOF.

 

(B)                                 DELIVERY OF WARRANT CERTIFICATES:  WARRANT
CERTIFICATES IN DEFINITIVE FORM REPRESENTING THE WARRANTS AUTHORIZED TO BE
ISSUED IN PARAGRAPH 2.01(A) HEREOF SHALL BE CREATED AND EXECUTED BY THE
CORPORATION, SHALL BE COUNTERSIGNED BY THE WARRANT AGENT AND SHALL BE DELIVERED
BY THE WARRANT AGENT UPON THE EXCHANGE OF SUBSCRIPTION RECEIPTS IN ACCORDANCE
WITH THE PROVISIONS OF THE SUBSCRIPTION RECEIPT INDENTURE DATED AS OF THE DATE
HEREOF BETWEEN THE CORPORATION, THE AGENTS AND THE WARRANT AGENT OR THE EXERCISE
OF AGENT’S WARRANTS IN ACCORDANCE WITH THE PROVISIONS OF THE CERTIFICATE
REPRESENTING THE AGENT’S WARRANTS.

 

(C)                                  ADJUSTMENT:  THE EXERCISE PRICE AND THE
NUMBER OF COMMON SHARES WHICH CAN BE SUBSCRIBED FOR AND PURCHASED PURSUANT TO
THE WARRANTS SHALL BE ADJUSTED IN THE EVENTS AND IN THE MANNER SPECIFIED IN
ARTICLE FIVE HEREOF.

 

(D)                                 NO FRACTIONAL WARRANTS:  NO WARRANT
CERTIFICATE REPRESENTING A FRACTIONAL WARRANT SHALL BE ISSUED OR OTHERWISE
PROVIDED FOR, AND A HOLDER OF A WARRANT CERTIFICATE SHALL NOT BE ENTITLED TO
SUBSCRIBE FOR OR PURCHASE A FRACTIONAL COMMON SHARE OR BE ENTITLED TO ANY CASH
OR OTHER CONSIDERATION SUCH HOLDER MIGHT OTHERWISE BE ENTITLED TO BASED UPON THE
HOLDING OF SUCH WARRANT CERTIFICATE.  IF THE NUMBER OF WARRANTS TO WHICH A
WARRANTHOLDER WOULD OTHERWISE BE ENTITLED IS NOT A WHOLE NUMBER, THEN THE NUMBER
OF WARRANTS TO BE ISSUED TO SUCH WARRANTHOLDER SHALL BE ROUNDED DOWN TO THE NEXT
WHOLE NUMBER AND THE WARRANTHOLDER SHALL NOT BE ENTITLED TO ANY COMPENSATION IN
RESPECT OF SUCH FRACTIONAL WARRANT.

 

(E)                                  ISSUE OF COMMON SHARES:  SUBJECT TO SECTION
4.04 HEREOF, THE CORPORATION SHALL ISSUE COMMON SHARES UPON THE EXERCISE OF
WARRANTS IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

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Section 2.03                            Warrantholder not a Shareholder:

 

Nothing in this Indenture nor in the holding of a Warrant represented by a
Warrant Certificate, or otherwise, shall be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder including, but
not limited to, the right to vote at, to receive notice of, or to attend,
meetings of Shareholders or the right to receive distributions or other
dividends.

 

Section 2.04                            Signing of Warrant Certificate:

 

Warrant Certificates shall be signed by (a) the Chairman, the President, the
Chief Executive Officer or any Vice-President of the Corporation and by (b) the
Secretary, the Chief Financial Officer or the Treasurer of the Corporation and
may, but need not be, under the seal of the Corporation or a reproduction
thereof (which shall be deemed to be the seal of the Corporation).  The
signatures of such officers may be mechanically reproduced in facsimile and
Warrant Certificates bearing such facsimile signatures shall be binding upon the
Corporation as if they had been manually signed by such officers. 
Notwithstanding that any of the persons whose manual or facsimile signature
appears on any Warrant Certificate as one of such officers may no longer hold
such office at the date of such Warrant Certificate or at the date of the
countersigning or delivery thereof, any Warrant Certificate signed as aforesaid
and countersigned by the Warrant Agent shall be valid and binding upon the
Corporation and the holder thereof shall be entitled to the benefits of this
Indenture.

 

Section 2.05                            Countersignature by the Warrant Agent:

 

(A)                                  COUNTERSIGNATURE:  NO WARRANT CERTIFICATE
SHALL BE ISSUED OR, IF ISSUED, SHALL BE VALID FOR ANY PURPOSE OR ENTITLE THE
HOLDER TO THE BENEFITS HEREOF UNTIL IT HAS BEEN COUNTERSIGNED BY THE WARRANT
AGENT BY MEANS OF A MANUAL SIGNATURE OF ONE OR MORE OF ITS AUTHORIZED OFFICERS,
AND SUCH COUNTERSIGNATURE BY THE WARRANT AGENT UPON ANY WARRANT CERTIFICATE
SHALL BE CONCLUSIVE EVIDENCE AS AGAINST THE CORPORATION THAT THE WARRANT
CERTIFICATE SO COUNTERSIGNED HAS BEEN ISSUED HEREUNDER AND THAT THE HOLDER
THEREOF IS ENTITLED TO THE BENEFITS HEREOF.

 

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

 

Section 2.06                            Issue in Substitution for Lost Warrant
Certificate:

 

(A)                                  SUBSTITUTION:  IN CASE ANY WARRANT
CERTIFICATE ISSUED AND COUNTERSIGNED HEREUNDER SHALL BECOME MUTILATED, LOST,
DESTROYED OR STOLEN, THE CORPORATION, SUBJECT TO APPLICABLE LAW, SHALL ISSUE AND
THEREUPON THE WARRANT AGENT SHALL COUNTERSIGN AND DELIVER A NEW WARRANT
CERTIFICATE FOR THE SAME CLASS OF WARRANTS AND OF LIKE DENOMINATION, DATE AND
TENOR, AND BEARING THE APPLICABLE LEGENDS, IF ANY, AS THE ONE MUTILATED, LOST,
DESTROYED OR STOLEN (I) IN EXCHANGE FOR AND IN PLACE OF AND UPON CANCELLATION OF
SUCH MUTILATED CERTIFICATE, OR (II) IN LIEU OF AND IN SUBSTITUTION FOR SUCH
LOST, DESTROYED OR STOLEN CERTIFICATE AND THE SUBSTITUTED CERTIFICATE SHALL BE
IN A FORM APPROVED BY THE WARRANT AGENT AND SHALL BE ENTITLED TO THE BENEFIT
HEREOF AND SHALL RANK EQUALLY IN ACCORDANCE WITH ITS TERMS WITH ALL WARRANTS OF
THE SAME CLASS EITHER ISSUED OR TO BE ISSUED HEREUNDER.

 

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(B)                                 ISSUE OF NEW WARRANT CERTIFICATES:  THE
APPLICANT FOR THE ISSUE OF A NEW WARRANT CERTIFICATE PURSUANT TO SUBSECTION
2.06(A) HEREOF SHALL BEAR THE COST OF THE ISSUE THEREOF AND IN CASE OF LOSS,
DESTRUCTION OR THEFT SHALL, AS A CONDITION PRECEDENT TO THE ISSUE THEREOF,
FURNISH TO THE CORPORATION AND TO THE WARRANT AGENT SUCH EVIDENCE OF OWNERSHIP
AND OF THE LOSS, DESTRUCTION OR THEFT, AS THE CASE MAY BE, OF THE CERTIFICATE SO
LOST, DESTROYED OR STOLEN AS SHALL BE SATISFACTORY TO THE CORPORATION AND TO THE
WARRANT AGENT IN THEIR DISCRETION, ACTING REASONABLY, AND SUCH APPLICANT MAY
ALSO BE REQUIRED TO FURNISH INDEMNITY OR SECURITY IN AMOUNT AND FORM
SATISFACTORY TO THE CORPORATION AND THE WARRANT AGENT IN THEIR DISCRETION,
ACTING REASONABLY, TO SAVE EACH OF THEM HARMLESS, AND SHALL PAY THE REASONABLE
EXPENSES, CHARGES AND ANY TAXES APPLICABLE THERETO OF THE CORPORATION AND THE
WARRANT AGENT IN CONNECTION THEREWITH.

 

Section 2.07                            Exchange of Warrant Certificates:

 

(A)                                  EXCHANGE:  WARRANT CERTIFICATES ISSUED AND
COUNTERSIGNED HEREUNDER REPRESENTING ANY SPECIFIED NUMBER OF WARRANTS TO
SUBSCRIBE FOR AND PURCHASE COMMON SHARES MAY, UPON COMPLIANCE WITH THE
REASONABLE REQUIREMENTS OF THE WARRANT AGENT, BE EXCHANGED FOR WARRANT
CERTIFICATES REPRESENTING IN THE AGGREGATE THE SAME NUMBER OF WARRANTS AND
ENTITLING THE HOLDER THEREOF TO SUBSCRIBE FOR AND PURCHASE AN EQUAL AGGREGATE
NUMBER OF COMMON SHARES AT THE SAME EXERCISE PRICE AND ON THE SAME TERMS AS THE
WARRANT CERTIFICATES SO EXCHANGED.

 

(B)                                 PLACES OF EXCHANGE:  WARRANT CERTIFICATES
MAY BE EXCHANGED AT THE PRINCIPAL OFFICE OF THE WARRANT AGENT IN THE CITY OF
TORONTO, ONTARIO, OR AT ANY OTHER PLACE THAT IS DESIGNATED BY THE CORPORATION
WITH THE APPROVAL OF THE WARRANT AGENT.  ANY WARRANT CERTIFICATE TENDERED FOR
EXCHANGE SHALL BE SURRENDERED TO THE WARRANT AGENT AND UPON COMPLETION OF THE
EXCHANGE BE CANCELLED BY THE WARRANT AGENT. THE CORPORATION SHALL SIGN AND THE
WARRANT AGENT SHALL COUNTERSIGN ALL WARRANT CERTIFICATES NECESSARY TO CARRY OUT
SUCH EXCHANGES.

 

(C)                                  CHARGES FOR EXCHANGE:  FOR EACH WARRANT
CERTIFICATE EXCHANGED, THE WARRANT AGENT, EXCEPT AS OTHERWISE HEREIN PROVIDED,
SHALL, IF REQUIRED BY THE CORPORATION, CHARGE THE WARRANTHOLDER A REASONABLE
AMOUNT FOR EACH NEW WARRANT CERTIFICATE ISSUED. PAYMENT FOR ANY AND ALL TAXES OR
GOVERNMENTAL OR OTHER CHARGES REQUIRED TO BE PAID SHALL BE MADE BY THE
WARRANTHOLDER REQUESTING SUCH EXCHANGE, AS A CONDITION PRECEDENT THERETO.

 

Section 2.08                            Registration and Transfer of Warrants:

 

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

 

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

 

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

 

(B)                                 VALID TRANSFERS:  NO TRANSFER OF ANY WARRANT
WILL BE VALID UNLESS ENTERED ON THE APPROPRIATE REGISTER OF TRANSFERS REFERRED
TO IN SUBSECTION 2.08(A) HEREOF, OR ON ANY BRANCH REGISTERS MAINTAINED PURSUANT
TO SUBSECTION 2.08(G) HEREOF, UPON SURRENDER TO THE WARRANT AGENT OF THE WARRANT
CERTIFICATE REPRESENTING SUCH WARRANT, DULY ENDORSED BY, OR

 

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ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER IN FORM SATISFACTORY TO THE
WARRANT AGENT EXECUTED BY THE REGISTERED HOLDER OR HIS EXECUTORS, ADMINISTRATORS
OR OTHER LEGAL REPRESENTATIVES OR HIS OR THEIR ATTORNEY DULY APPOINTED BY AN
INSTRUMENT IN WRITING IN FORM AND EXECUTED SATISFACTORY TO THE WARRANT AGENT,
AND, UPON COMPLIANCE WITH SUCH REQUIREMENTS AND SUCH OTHER REASONABLE
REQUIREMENTS AS THE WARRANT AGENT MAY PRESCRIBE, SUCH TRANSFER WILL BE RECORDED
ON THE APPROPRIATE REGISTER OF TRANSFERS BY THE WARRANT AGENT.

 

(C)                                  REGISTER OF TRANSFERS:  THE TRANSFEREE OF
ANY WARRANT WILL, AFTER SURRENDER TO THE WARRANT AGENT OF THE WARRANT
CERTIFICATE REPRESENTING SUCH WARRANT AS REQUIRED BY SUBSECTION 2.08(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 APPROPRIATE REGISTER
OF HOLDERS REFERRED TO IN SUBSECTION 2.08(A) HEREOF, OR ON ANY BRANCH REGISTERS
OF HOLDERS MAINTAINED PURSUANT TO SUBSECTION 2.08(G) HEREOF, AS THE OWNER OF
SUCH WARRANT FREE FROM ALL EQUITIES OR RIGHTS OF SET-OFF OR COUNTERCLAIM BETWEEN
THE CORPORATION AND THE TRANSFEROR OR ANY PREVIOUS HOLDER OF SUCH WARRANT,
EXCEPT IN RESPECT OF EQUITIES OF WHICH THE CORPORATION IS REQUIRED TO TAKE
NOTICE BY STATUTE OR BY ORDER OF A COURT OF COMPETENT JURISDICTION.

 

(D)                                 REFUSAL OF REGISTRATION:  THE CORPORATION
WILL BE ENTITLED, AND MAY DIRECT THE WARRANT AGENT, TO REFUSE TO RECOGNIZE ANY
TRANSFER, OR ENTER THE NAME OF ANY TRANSFEREE, OF ANY WARRANT ON THE REGISTERS
REFERRED TO IN SUBSECTION 2.08(A) HEREOF, IF SUCH TRANSFER WOULD CONSTITUTE A
VIOLATION OF THE SECURITIES LAWS OF ANY JURISDICTION OR THE RULES, REGULATIONS
OR POLICIES OF ANY REGULATORY AUTHORITY HAVING JURISDICTION.  IN PARTICULAR,
PRIOR TO THE REGISTRATION STATEMENT BECOMING EFFECTIVE, NONE OF THE WARRANTS AND
NONE OF THE COMMON SHARES ISSUABLE ON THE EXCHANGE OF THE WARRANTS 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), OR A PERSON IN THE UNITED STATES 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 WARRANT AGENT WILL BE BOUND TO TAKE NOTICE
OF OR SEE TO THE EXECUTION OF ANY TRUST, WHETHER EXPRESS, IMPLIED OR
CONSTRUCTIVE, IN RESPECT OF ANY WARRANT, AND MAY TRANSFER ANY WARRANT ON THE
DIRECTION OF THE PERSON REGISTERED AS THE HOLDER THEREOF, WHETHER NAMED AS
TRUSTEE OR OTHERWISE, AS THOUGH THAT PERSON WERE THE BENEFICIAL OWNER THEREOF.

 

(F)                                    INSPECTION:  THE REGISTERS REFERRED TO IN
SUBSECTION 2.08(A) HEREOF, AND ANY BRANCH REGISTERS MAINTAINED PURSUANT TO
SUBSECTION 2.08(G) HEREOF, WILL DURING EACH BUSINESS DAY AND AT ALL OTHER
REASONABLE TIMES BE OPEN FOR INSPECTION BY THE CORPORATION AND/OR ANY
WARRANTHOLDER. THE WARRANT AGENT WILL FROM TIME TO TIME WHEN REQUESTED TO DO SO
IN WRITING BY THE CORPORATION OR ANY WARRANTHOLDER (UPON PAYMENT OF THE
REASONABLE CHARGES OF THE WARRANT AGENT), FURNISH THE CORPORATION OR SUCH
WARRANTHOLDER WITH A LIST OF THE NAMES AND ADDRESSES OF HOLDERS OF WARRANTS (IN
THE CASE OF A WARRANTHOLDER OF THE SAME CLASS AS SUCH WARRANTHOLDER) ENTERED ON
SUCH REGISTERS AND SHOWING THE NUMBER OF WARRANTS (IN THE CASE OF A
WARRANTHOLDER OF THE SAME CLASS AS SUCH WARRANTHOLDER) HELD BY EACH SUCH HOLDER
THEREOF.

 

(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 2.08(A) HEREOF ARE KEPT, CAUSE BRANCH REGISTERS OF
HOLDERS OR TRANSFERS TO BE KEPT AT OTHER PLACES AND CLOSE SUCH BRANCH REGISTERS
OR CHANGE THE PLACE AT WHICH SUCH BRANCH REGISTERS ARE KEPT, IN EACH CASE
SUBJECT

 

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TO THE APPROVAL OF THE WARRANT AGENT.  NOTICE OF ALL SUCH CHANGES OR CLOSURES
SHALL BE GIVEN BY THE CORPORATION TO THE WARRANT AGENT AND TO HOLDERS OF
WARRANTS IN ACCORDANCE WITH ARTICLE TWELVE HEREOF.

 

(H)                                 RELIANCE BY WARRANT AGENT:  THE WARRANT
AGENT SHALL HAVE NO OBLIGATION TO ENSURE OR VERIFY COMPLIANCE WITH ANY
APPLICABLE LEGISLATION OR REGULATORY REQUIREMENTS ON THE ISSUE, EXERCISE OR
TRANSFER OF ANY WARRANTS OR ANY COMMON SHARES OR OTHER SECURITIES ISSUED UPON
THE EXERCISE OF ANY WARRANTS EXCEPT AS OTHERWISE SET FORTH HEREIN.  THE WARRANT
AGENT SHALL BE ENTITLED TO PROCESS ALL PREFERRED TRANSFERS AND EXERCISES OF
WARRANTS UPON THE PRESUMPTION THAT SUCH TRANSFERS OR EXERCISES ARE PERMISSIBLE
PURSUANT TO ALL APPLICABLE LEGISLATION AND REGULATORY REQUIREMENTS AND THE TERMS
OF THE INDENTURE AND THE RELATED WARRANT CERTIFICATES IN THE ABSENCE OF PRIMA
FACIE EVIDENCE TO THE CONTRARY.  THE WARRANT AGENT MAY ASSUME FOR THE PURPOSES
OF THIS INDENTURE THAT THE ADDRESS ON THE REGISTER OF WARRANTHOLDERS OF ANY
WARRANTHOLDER IS THE ACTUAL ADDRESS OF SUCH WARRANTHOLDER AND IS ALSO
DETERMINATIVE OF THE RESIDENCY OF SUCH WARRANTHOLDER AND THAT THE ADDRESS OF ANY
TRANSFEREE TO WHOM ANY WARRANTS OR COMMON SHARES OR OTHER SECURITIES ISSUABLE
UPON THE EXERCISE OF ANY WARRANTS ARE TO BE REGISTERED, AS SHOWN ON THE TRANSFER
DOCUMENT, IS THE ACTUAL ADDRESS OF THE TRANSFEREE AND IS ALSO DETERMINATIVE OF
THE RESIDENCY OF THE TRANSFEREE.

 

Section 2.09                            Ownership of Warrants:

 

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

 

(B)                                 RIGHTS OF REGISTERED HOLDER:  THE REGISTERED
HOLDER OF ANY WARRANT WILL BE ENTITLED TO THE RIGHTS EVIDENCED THEREBY FREE FROM
ALL EQUITIES AND RIGHTS OF SET-OFF OR COUNTERCLAIM BETWEEN THE CORPORATION AND
THE 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 ISSUABLE PURSUANT THERETO WILL BE A GOOD DISCHARGE TO THE
CORPORATION AND THE WARRANT AGENT THEREFOR AND NEITHER THE CORPORATION NOR THE
WARRANT AGENT WILL BE BOUND TO INQUIRE INTO THE TITLE OF ANY SUCH REGISTERED
HOLDER.

 

Section 2.10                            Warrants to Rank Pari Passu:

 

All Warrants shall rank pari passu, whatever may be the actual date of issue of
any Warrants.

 

ARTICLE THREE

DISTRIBUTION OF WARRANT CERTIFICATES

 

Section 3.01                            Warrant Certificates:

 

Warrant Certificates, issuable only in registered form, will be issued and
mailed or delivered to the holders of Warrants upon the exchange thereof in
accordance with the terms thereof.

 

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ARTICLE FOUR

EXERCISE OF WARRANTS

 

Section 4.01                            Method of Exercise of Warrants:

 

(A)                                  EXERCISE:  SUBJECT TO SUBSECTION 4.01(C)
HEREOF, THE HOLDER OF ANY WARRANT MAY EXERCISE THE RIGHT THEREBY CONFERRED ON
SUCH HOLDER TO SUBSCRIBE FOR AND PURCHASE COMMON SHARES BY SURRENDERING, AFTER
THE DATE OF ISSUE OF THE WARRANT BUT PRIOR TO THE TIME OF EXPIRY, TO THE WARRANT
AGENT AT THE PLACE SPECIFIED IN SUBSECTION 4.01(H) HEREOF OR ANY OTHER PLACE OR
PLACES THAT MAY BE DESIGNATED BY THE CORPORATION WITH THE APPROVAL OF THE
WARRANT AGENT:

 

(I)                                   THE WARRANT CERTIFICATE, WITH A PROPERLY
COMPLETED AND EXECUTED SUBSCRIPTION FORM IN SUBSTANTIALLY THE FORM CONTAINED ON
THE WARRANT CERTIFICATE; AND

 

(II)                                A CERTIFIED CHEQUE, BANK DRAFT OR MONEY
ORDER IN LAWFUL MONEY OF THE UNITED STATES PAYABLE TO OR TO THE ORDER OF THE
CORPORATION AT PAR IN THE CITY WHERE SUCH WARRANT CERTIFICATE IS SURRENDERED FOR
EXERCISE, IN AN AMOUNT EQUAL TO THE PRODUCT OBTAINED BY MULTIPLYING THE EXERCISE
PRICE BY THE NUMBER OF COMMON SHARES SUBSCRIBED FOR PURSUANT TO SUCH WARRANT
CERTIFICATE.

 

A Warrant Certificate with the duly completed and executed subscription form
referred to in paragraph 4.01(a)(i) above, together with the certified cheque,
bank draft or money order referred to in paragraph 4.01(a)(ii) above, shall be
deemed to be surrendered only upon delivery thereof or, if sent by mail or other
means of transmission, upon receipt thereof, in each case at the office of the
Warrant Agent provided for in subsection 4.01(h) hereof or any such other place
designated by the Corporation with the approval of the Warrant Agent.

 

(B)                                 CANADIAN LEGENDS:  CERTIFICATES REPRESENTING
COMMON SHARES ISSUED UPON THE EXERCISE OF WARRANTS PRIOR TO THE EARLIER OF THE
QUALIFICATION DATE AND THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE LATER
OF (I) THE DATE HEREOF; AND (II) THE DATE THE CORPORATION BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA 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 ONE DAY AFTER THE
LATER OF (I) FEBRUARY 22, 2006, AND (II) THE DATE THE ISSUER BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY.”

 

(C)                                  EXERCISE MECHANICS IF REGISTRATION
STATEMENT NOT EFFECTIVE:  NOTWITHSTANDING ANY PROVISION TO THE CONTRARY
CONTAINED IN THIS INDENTURE, IF THE CORPORATION ADVISES THE WARRANT AGENT IN
WRITING THAT THE ISSUANCE OF COMMON SHARES UPON THE EXERCISE OF WARRANTS
REQUIRES THE MAINTENANCE OF AN EFFECTIVE REGISTRATION STATEMENT, WITH RESPECT TO
SUCH COMMON SHARES UNDER THE 1933 ACT, IN NO EVENT SHALL SUCH COMMON SHARES BE
ISSUED UNLESS THE COMMON SHARES ARE REGISTERED UNDER THE 1933 ACT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT; PROVIDED, HOWEVER, THAT IF THE REGISTRATION
STATEMENT CEASES TO BE EFFECTIVE, PRIOR TO THE TIME OF EXPIRY TIME AND FOR SO
LONG AS THE REGISTRATION STATEMENT IS NOT EFFECTIVE, SUBJECT TO APPLICABLE LAW,
A HOLDER OF ANY WARRANT MAY ONLY EXERCISE THE RIGHT TO PURCHASE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THE WARRANTS THE CIRCUMSTANCES NOTED BELOW:

 

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(I)                                    EXERCISE SUCH WARRANTS, IF THE HOLDER IS
NOT A U.S. PURCHASER AND THE HOLDER DELIVERS A DULY COMPLETED AND EXECUTED
WARRANT EXERCISE CERTIFICATION (IN THE FORM ATTACHED HERETO AS SCHEDULE B)
CERTIFYING THAT THE HOLDER: (A)(1) IS NOT IN THE UNITED STATES; (2) IS NOT A
U.S. PERSON AND IS NOT EXERCISING THE WARRANTS FOR, OR ON BEHALF OR BENEFIT OF,
A U.S. PERSON OR PERSON IN THE UNITED STATES; (3) DID NOT EXECUTE OR DELIVER THE
WARRANT EXERCISE FORM IN THE UNITED STATES; (4) AGREES NOT TO ENGAGE IN HEDGING
TRANSACTIONS WITH REGARD TO THE COMMON SHARE PRIOR TO THE EXPIRATION OF THE
ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD SET FORTH IN RULE 903(B)(3) OF
REGULATION S; (5) ACKNOWLEDGES THAT THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THE WARRANTS ARE “RESTRICTED SECURITIES” AS DEFINED IN RULE 144 OF THE 1933 ACT
AND UPON THE ISSUANCE THEREOF, AND UNTIL SUCH TIME AS THE SAME IS NO LONGER
REQUIRED UNDER THE APPLICABLE REQUIREMENTS OF THE 1933 ACT OR APPLICABLE U.S.
STATE LAWS AND REGULATIONS, THE CERTIFICATES REPRESENTING THE COMMON SHARES WILL
BEAR A RESTRICTIVE LEGEND; AND (6) ACKNOWLEDGES THAT THE CORPORATION SHALL
REFUSE TO REGISTER ANY TRANSFER OF THE COMMON SHARES NOT MADE IN ACCORDANCE WITH
THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE 1933 ACT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT; AND (B)
NEITHER THE CORPORATION NOR THE HOLDER HAS ENGAGED IN ANY “DIRECTED SELLING
EFFORTS” (AS DEFINED IN REGULATION S) IN THE UNITED STATES; OR

 

(II)                                 EXERCISE SUCH WARRANTS IN A TRANSACTION
THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE U.S.
STATE LAWS AND REGULATIONS AND THE HOLDER HAS (A) DELIVERED A DULY COMPLETED AND
EXECUTED WARRANT EXERCISE CERTIFICATION (IN THE FORM ATTACHED HERETO AS SCHEDULE
B) CERTIFYING THAT THE HOLDER IS EXERCISING THE WARRANTS PURSUANT TO SUCH
EXEMPTIONS AND (B) FURNISHED TO THE CORPORATION, PRIOR TO SUCH EXERCISE, AN
OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO
THE CORPORATION TO SUCH EFFECT.

 

(D)                                 LEGENDING IF REGISTRATION STATEMENT NOT
EFFECTIVE:  UNLESS THE WARRANT IS EXERCISED PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, THE CERTIFICATE REPRESENTING THE COMMON SHARES IS ISSUED
UPON EXERCISE OF THE WARRANT WILL BEAR LEGENDS RESTRICTING THE TRANSFER WITHOUT
REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
AND RESTRICTING TRANSFER UNDER THE TORONTO STOCK EXCHANGE, SUBSTANTIALLY IN THE
FORM SET FORTH BELOW:

 

“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.”

 

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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.”

 

(E)                                  SUSPENSIONS OF REGISTRATION STATEMENT,
ETC,…:  IF ANY COMMON SHARES ISSUABLE UPON THE EXERCISE OF WARRANTS REQUIRE THE
MAINTENANCE OF A CURRENT REGISTRATION STATEMENT, WITH RESPECT TO SUCH COMMON
SHARES UNDER THE 1933 ACT, THE CORPORATION SHALL HAVE THE AUTHORITY TO SUSPEND
THE EXERCISE OF ANY OR ALL WARRANTS WHILE SUCH REGISTRATION STATEMENT IS NOT
CURRENT.  SIMILARLY, A WARRANTHOLDER RESIDING IN A STATE WHERE A REQUIRED
REGISTRATION OR GOVERNMENTAL APPROVAL OF ISSUANCE OF THE COMMON SHARES IS NOT IN
EFFECT AS OF OR HAS NOT BEEN OBTAINED WITHIN A REASONABLE TIME AFTER THE
SURRENDER DATE OF THE WARRANT CERTIFICATE FOR EXERCISE SHALL NOT BE ENTITLED TO
EXERCISE WARRANTS, UNLESS IN THE OPINION OF COUNSEL TO THE CORPORATION SUCH
REGISTRATION OR APPROVAL IN SUCH STATE SHALL NOT BE REQUIRED OR THE CORPORATION
OTHERWISE AUTHORIZES THE ISSUANCE. IN SUCH EVENT, THE WARRANTHOLDER SHALL BE
ENTITLED TO TRANSFER THE WARRANTS TO OTHERS, BUT ONLY PRIOR TO THE EXPIRY DATE
FOR THE WARRANTS BEING TRANSFERRED.  IF NO REGISTRATION STATEMENT IS EFFECTIVE
AT ANY TIME WHEN ANY WARRANT IS EXERCISED, SUCH WARRANTHOLDER SHALL BE NOTIFIED
FORTHWITH BY THE TRANSFER AGENT THAT SUCH WARRANTHOLDER IS ENTITLED, AT HIS OR
HER OPTION, TO EXERCISE THE WARRANT ONLY IN ACCORDANCE WITH THE CONDITIONS SET
FORTH IN SECTIONS 4.01(C)(I) AND (II) AND UPON DELIVERY OF A WARRANT EXERCISE
CERTIFICATION (IN THE FORM ATTACHED HERETO AS SCHEDULE B) TO THE WARRANT AGENT
AND THE CORPORATION.

 

(F)                                    NO ADDITIONAL CASH PAYMENT FOR WARRANTS: 
NOTWITHSTANDING THAT THE CORPORATION MAY NOT HAVE MAINTAINED A CURRENT
REGISTRATION STATEMENT IN RESPECT OF COMMON SHARES UNDER THE 1933 ACT, NO
WARRANTHOLDER (WHETHER A U.S. PURCHASER OR OTHERWISE) SHALL HAVE ANY RIGHT TO
RECEIVE, AND THE CORPORATION SHALL BE UNDER NO OBLIGATION TO PAY TO ANY
WARRANTHOLDER (WHETHER A U.S. PURCHASER OR OTHERWISE), ANY CASH AMOUNT OR OTHER
CONSIDERATION OR COMPENSATION UPON EXERCISE OF THE WARRANTS, OTHER THAN AS
EXPRESSLY PROVIDED BY THIS INDENTURE, AND THE CORPORATION SHALL NOT BE UNDER ANY
OBLIGATION TO REDEEM OR OTHERWISE PURCHASE ANY WARRANTS IN ANY CIRCUMSTANCE;
PROVIDED, HOWEVER, THAT NOTHING IN THIS CLAUSE SHALL LIMIT OR RESTRICT ANY
REMEDIES OF THE TRANSFER AGENT OR ANY WARRANTHOLDER OR WARRANTHOLDERS IN RESPECT
OF A BREACH BY THE CORPORATION OF A REPRESENTATION, WARRANTY OR COVENANT
HEREUNDER, INCLUDING WITHOUT LIMITATION THE COVENANT IN SECTION 7.01(J) OF THIS
INDENTURE.

 

(G)                                 SUBSCRIPTION FORM COMPLETION:  ANY
SUBSCRIPTION FORM REFERRED TO IN SUBSECTION 4.01(A) HEREOF SHALL BE SIGNED BY
THE WARRANTHOLDER, OR HIS EXECUTORS, ADMINISTRATORS OR OTHER LEGAL
REPRESENTATIVES OR HIS OR THEIR ATTORNEY DULY APPOINTED BY AN INSTRUMENT IN
WRITING IN FORM AND EXECUTED IN A MANNER SATISFACTORY TO THE WARRANT AGENT,
ACTING REASONABLY, AND SHALL SPECIFY (A) THE NUMBER OF WARRANTS THAT THE HOLDER
DESIRES TO EXERCISE, SUCH NUMBER BEING NOT MORE THAN THE NUMBER WHICH THE HOLDER
IS ENTITLED TO EXERCISE PURSUANT TO THE WARRANT CERTIFICATE SURRENDERED, (B) THE
PERSON OR PERSONS IN WHOSE NAME OR NAMES COMMON SHARES ISSUABLE UPON SUCH
EXERCISE ARE TO BE ISSUED, (C) THE ADDRESS OR ADDRESSES OF SUCH PERSON OR
PERSONS, OR THE OFFICE OF THE WARRANT AGENT AT WHICH THE WARRANT CERTIFICATE WAS
SURRENDERED AND THE CERTIFICATES REPRESENTING SUCH COMMON

 

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SHARES ARE TO BE SENT, AND (D) THE NUMBER OF COMMON SHARES TO BE ISSUED TO EACH
SUCH PERSON IF MORE THAN ONE IS SO SPECIFIED.  IF ANY OF THE COMMON SHARES
SUBSCRIBED FOR ARE TO BE ISSUED TO A PERSON OR PERSONS OTHER THAN THE
WARRANTHOLDER, THE WARRANTHOLDER SHALL PAY TO THE WARRANT AGENT ALL APPLICABLE
TRANSFER OR SIMILAR TAXES, IF ANY, AND, THE CORPORATION AND THE WARRANT AGENT
SHALL NOT BE REQUIRED TO ISSUE OR DELIVER CERTIFICATES REPRESENTING COMMON
SHARES UNLESS OR UNTIL SUCH WARRANTHOLDER SHALL HAVE PAID TO THE WARRANT AGENT
THE AMOUNT OF SUCH TAX, IF ANY, OR SHALL HAVE ESTABLISHED TO THE SATISFACTION OF
THE WARRANT AGENT THAT SUCH TAX HAS BEEN PAID OR THAT NO TAX IS DUE.

 

(H)                                 PLACES FOR EXERCISE:  THE CORPORATION HAS
DESIGNATED THE WARRANT AGENT, AT ITS PRINCIPAL OFFICE IN THE CITY OF TORONTO,
ONTARIO, AS THE PLACE AT WHICH THE WARRANTS MAY BE EXERCISED.  THE CORPORATION
WILL GIVE NOTICE TO THE WARRANTHOLDERS PURSUANT TO ARTICLE TWELVE HEREOF OF THE
LOCATION OF ANY OTHER PLACE APPOINTED BY THE CORPORATION AND APPROVED BY THE
WARRANT AGENT AND OF THE CHANGE IN THE LOCATION OF ANY NEW OR EXISTING PLACE
WHERE WARRANTS MAY BE EXERCISED.

 

(I)                                     ACCOUNTING TO CORPORATION:  THE WARRANT
AGENT SHALL AS SOON AS PRACTICABLE ACCOUNT TO THE TRANSFER AGENT AND THE
CORPORATION WITH RESPECT TO WARRANTS EXERCISED. ALL SUCH MONIES, AND ANY
SECURITIES OR OTHER INSTRUMENTS, FROM TIME TO TIME RECEIVED BY THE WARRANT AGENT
SHALL BE RECEIVED IN TRUST FOR, AND SHALL BE SEGREGATED AND KEPT APART BY THE
WARRANT AGENT IN TRUST FOR, THE CORPORATION.  WITHIN FIVE BUSINESS DAYS OF
RECEIPT THEREOF THE WARRANT AGENT SHALL FORWARD TO THE CORPORATION (OR TO AN
ACCOUNT OR ACCOUNTS OF THE CORPORATION WITH A BANK OR TRUST COMPANY DESIGNATED
IN WRITING BY THE CORPORATION FOR THAT PURPOSE) ALL MONIES RECEIVED THROUGH THE
EXERCISE OF WARRANTS PURSUANT TO THIS ARTICLE FOUR.

 

(J)                                     RECORD OF EXERCISE:  THE WARRANT AGENT
SHALL RECORD THE PARTICULARS OF THE WARRANTS EXERCISED FOR COMMON SHARES WHICH
PARTICULARS SHALL INCLUDE THE NAMES AND ADDRESSES OF THE PERSONS WHO BECOME
HOLDERS OF COMMON SHARES, IF ANY, ON EXERCISE, THE NUMBER OF COMMON SHARES
ISSUED, THE EXERCISE DATE AND THE EXERCISE PRICE.  WITHIN FIVE BUSINESS DAYS OF
EACH EXERCISE DATE, THE WARRANT AGENT SHALL PROVIDE SUCH PARTICULARS IN WRITING
TO THE CORPORATION AND THE TRANSFER AGENT.

 

Section 4.02                            Effect of Exercise of Warrants:

 

(A)                                  EFFECT OF EXERCISE:  UPON COMPLIANCE BY THE
HOLDER OF ANY WARRANT CERTIFICATE WITH THE PROVISIONS OF SECTION 4.01 HEREOF,
BUT SUBJECT TO THE PROVISIONS OF SUBSECTION SECTION 2.02(D) HEREOF, THE NUMBER
OF COMMON SHARES SUBSCRIBED FOR AND PURCHASED SHALL BE DEEMED TO HAVE BEEN
ISSUED AND THE PERSON OR PERSONS TO WHOM SUCH COMMON SHARES ARE TO BE ISSUED
SHALL BE DEEMED TO HAVE BECOME THE HOLDER OR HOLDERS OF RECORD OF SUCH COMMON
SHARES ON THE EXERCISE DATE THEREOF UNLESS THE TRANSFER BOOKS OF THE CORPORATION
SHALL BE CLOSED ON SUCH DATE, IN WHICH CASE THE COMMON SHARES SUBSCRIBED FOR AND
PURCHASED SHALL BE DEEMED TO HAVE BEEN ISSUED, AND SUCH PERSON OR PERSONS SHALL
BE DEEMED TO HAVE BECOME THE HOLDER OR HOLDERS OF RECORD OF SUCH COMMON SHARES
ON THE DATE ON WHICH SUCH TRANSFER BOOKS ARE REOPENED BUT SUCH COMMON SHARES
SHALL BE ISSUED AT THE EXERCISE PRICE IN EFFECT ON THE EXERCISE DATE.

 

(B)                                 ISSUE OF SHARE CERTIFICATES:  AS SOON AS
PRACTICABLE, AND IN ANY EVENT NO LATER THAN THE THIRD BUSINESS DAY ON WHICH THE
TRANSFER BOOKS OF THE CORPORATION HAVE BEEN OPENED AFTER THE EXERCISE OF A
WARRANT AS AFORESAID, THE CORPORATION SHALL FORTHWITH (A) CAUSE TO BE MAILED TO
THE PERSON OR PERSONS IN WHOSE NAME OR NAMES THE COMMON SHARES SO

 

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SUBSCRIBED FOR AND PURCHASED ARE TO BE ISSUED, AS SPECIFIED IN THE SUBSCRIPTION
COMPLETED ON THE WARRANT CERTIFICATE, AT THE ADDRESS SPECIFIED IN SUCH
SUBSCRIPTION FORM, OR (B) IF SPECIFIED IN SUCH SUBSCRIPTION FORM, CAUSE TO BE
MAILED TO THE PERSON OR PERSONS IN WHOSE NAME OR NAMES THE REPLACEMENT WARRANT
CERTIFICATE REPRESENTING THE APPROPRIATE NUMBER OF WARRANTS TO WHICH THE
WARRANTHOLDER IS ENTITLED AND ELECTED TO SUBSCRIBE FOR AND PURCHASE PURSUANT TO
THE WARRANT CERTIFICATE SURRENDERED TO THE WARRANT AGENT.

 

Section 4.03                            Subscription for Less than Entitlement:

 

The holder of any Warrant Certificate may exercise a number of Warrants less
than the maximum number represented by the surrendered Warrant Certificate
subject to Section 2.02(d).  In such event, the holder thereof upon exercise
thereof shall be entitled to receive a new Warrant Certificate complying with
section 2.02 hereof in respect of the balance of the Warrants not exercised.

 

Section 4.04                            Warrant Certificates for Fractions of
Common Shares:

 

To the extent that the holder of a Warrant Certificate is entitled to receive on
the exercise or partial exercise thereof a fraction of a Common Share, such
right may only be exercised in respect of such fraction in combination with
another Warrant Certificate which in the aggregate entitles the Warrantholder to
receive a whole number of Common Shares.

 

Section 4.05                            Expiration of Warrants:

 

After the Time of Expiry all rights under any Warrant in respect of which the
right of subscription and purchase therein and herein provided shall not
theretofore have been exercised shall wholly cease and terminate and such
Warrant shall be void, of no force or effect and of no value whatsoever.

 

Section 4.06                            Securities Restrictions; Legends:

 

Notwithstanding any provision to the contrary contained in this Indenture, no
Common Shares will be issued pursuant to the exercise of any Warrant if the
issuance of such securities would constitute a violation of the securities laws
of any applicable jurisdiction, and, without limiting the generality of the
foregoing, the Corporation will legend the certificates representing the Common
Shares if, in the opinion of counsel to the Corporation such legend is necessary
in order to avoid a violation of any securities laws of any applicable
jurisdiction or to comply with the requirements of any stock exchange on which
the Common Shares are listed, provided that if, at any time, in the opinion of
outside counsel to the Corporation, acting reasonably, such legends are no
longer necessary in order to avoid a violation of any such laws, or the holder
of any such legended certificate, at his expense, provides the Corporation with
evidence satisfactory in form and substance to the Corporation (which may
include an opinion of counsel of recognized standing satisfactory to the
Corporation) to the effect that such holder is entitled to sell or otherwise
transfer such securities in a transaction in which such legends are not
required, such legended certificates may thereafter be surrendered to the
Corporation in exchange for a certificate which does not bear such legends. For
greater certainty, should no Registration Statement be effective, the
Corporation shall issue legended Common Shares in accordance with 4.01(d).

 

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ARTICLE FIVE

ADJUSTMENTS

 

Section 5.01                            Adjustment of Exercise Price and Number
of Common Shares Purchasable Upon Exercise:

 

The Exercise Price and the number of Common Shares purchasable upon the exercise
of the Warrants shall be subject to adjustment from time to time in the events
and in the manner provided in the following subsections:

 

(A)                                  STOCK DIVIDEND; DISTRIBUTION OF COMMON
SHARES; SUBDIVISION; CONSOLIDATION:  IF AT ANY TIME AFTER THE EFFECTIVE DATE BUT
PRIOR TO THE EXPIRY DATE, THE CORPORATION SHALL:

 

(I)                                   FIX A RECORD DATE FOR THE ISSUE OF, OR
ISSUE, COMMON SHARES OR SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON
SHARES TO THE HOLDERS OF ALL OR SUBSTANTIALLY ALL OF THE OUTSTANDING COMMON
SHARES BY WAY OF A STOCK DIVIDEND OR OTHERWISE, OTHER THAN AS A DIVIDEND PAID IN
THE ORDINARY COURSE,

 

(II)                                FIX A RECORD DATE FOR THE DISTRIBUTION TO,
OR MAKE A DISTRIBUTION TO, THE HOLDERS OF ALL OR SUBSTANTIALLY ALL OF THE
OUTSTANDING COMMON SHARES PAYABLE IN COMMON SHARES OR SECURITIES EXCHANGEABLE
FOR OR CONVERTIBLE INTO COMMON SHARES, OTHER THAN AS A DIVIDEND PAID IN THE
ORDINARY COURSE,

 

(III)                             SUBDIVIDE, REDIVIDE OR CHANGE THE OUTSTANDING
COMMON SHARES INTO A GREATER NUMBER OF COMMON SHARES, OR

 

(IV)                            CONSOLIDATE, REDUCE OR COMBINE THE OUTSTANDING
COMMON SHARES INTO A LESSER NUMBER OF COMMON SHARES,

 

(any of such events in paragraphs 5.01(a)(i), (ii), (iii) and (iv) above being
herein called a “Common Share Reorganization”), the Exercise Price shall be
adjusted on the earlier of the record date on which holders of Common Shares are
determined for the purposes of the Common Share Reorganization and the effective
date of the Common Share Reorganization to the amount determined by multiplying
the Exercise Price in effect immediately prior to such record date or effective
date, as the case may be, by a fraction:

 

A.                                  THE NUMERATOR OF WHICH SHALL BE THE NUMBER
OF COMMON SHARES OUTSTANDING ON SUCH RECORD DATE OR EFFECTIVE DATE, AS THE CASE
MAY BE, BEFORE GIVING EFFECT TO SUCH COMMON SHARE REORGANIZATION; AND

 

B.                                    THE DENOMINATOR OF WHICH SHALL BE THE
NUMBER OF COMMON SHARES WHICH WILL BE OUTSTANDING IMMEDIATELY AFTER GIVING
EFFECT TO SUCH COMMON SHARE REORGANIZATION (INCLUDING IN THE CASE OF A
DISTRIBUTION OF SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON SHARES
THE NUMBER OF COMMON SHARES THAT WOULD HAVE BEEN OUTSTANDING HAD SUCH SECURITIES
BEEN EXCHANGED FOR OR CONVERTED INTO COMMON SHARES ON SUCH DATE).

 

To the extent that any adjustment in the Exercise Price occurs pursuant to this
subsection 5.01(a) as a result of the fixing by the Corporation of a record date
for the distribution of securities exchangeable for or convertible into Common
Shares, the Exercise Price shall be readjusted immediately after the expiry of
any relevant exchange

 

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or conversion right to the Exercise Price which would then be in effect based
upon the number of Common Shares actually issued and remaining issuable after
such expiry and shall be further readjusted in such manner upon the expiry of
any further such right.  Any Warrantholder who has not exercised his right to
subscribe for and purchase Common Shares on or prior to the record date of such
stock dividend or distribution or the effective date of such subdivision or
consolidation, as the case may be, upon the exercise of such right thereafter
shall be entitled to receive and shall accept in lieu of the number of Common
Shares then subscribed for and purchased by such Warrantholder, at the Exercise
Price determined in accordance with this subsection 5.01(a) the aggregate number
of Common Shares that such Warrantholder would have been entitled to receive as
a result of such Common Share Reorganization, if, on such record date or
effective date, as the case may be, such Warrantholder had been the holder of
record of the number of Common Shares so subscribed for and purchased.

 

(B)                                 ISSUE OF RIGHTS, OPTIONS OR WARRANTS:  IF AT
ANY TIME AFTER THE EFFECTIVE DATE BUT PRIOR TO THE EXPIRY DATE, THE CORPORATION
SHALL FIX A RECORD DATE FOR THE ISSUE OR DISTRIBUTION TO THE HOLDERS OF ALL OR
SUBSTANTIALLY ALL OF THE OUTSTANDING COMMON SHARES OF RIGHTS, OPTIONS OR
WARRANTS PURSUANT TO WHICH SUCH HOLDERS ARE ENTITLED, DURING A PERIOD EXPIRING
NOT MORE THAN FORTY-FIVE DAYS AFTER THE RECORD DATE FOR SUCH ISSUE (SUCH PERIOD
BEING THE “RIGHTS PERIOD”), TO SUBSCRIBE FOR OR PURCHASE COMMON SHARES OR
SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON SHARES AT A PRICE PER
SHARE TO THE HOLDER (OR IN THE CASE OF SECURITIES EXCHANGEABLE FOR OR
CONVERTIBLE INTO COMMON SHARES, AT AN EXCHANGE OR CONVERSION PRICE PER SHARE) AT
THE DATE OF ISSUE OF SUCH SECURITIES OF LESS THAN 95% OF THE CURRENT MARKET
PRICE OF THE COMMON SHARES ON SUCH RECORD DATE (ANY OF SUCH EVENTS BEING CALLED
A “RIGHTS OFFERING”), THE EXERCISE PRICE SHALL BE ADJUSTED EFFECTIVE IMMEDIATELY
AFTER THE RECORD DATE FOR SUCH RIGHTS OFFERING TO THE AMOUNT DETERMINED BY
MULTIPLYING THE EXERCISE PRICE IN EFFECT ON SUCH RECORD DATE BY A FRACTION:

 

(I)                                     THE NUMERATOR OF WHICH SHALL BE THE
AGGREGATE OF

 

A.                                   THE NUMBER OF COMMON SHARES OUTSTANDING ON
THE RECORD DATE FOR THE RIGHTS OFFERING, AND

 

B.                                     THE QUOTIENT DETERMINED BY DIVIDING

 

I.                                         either (a) the product of the number
of Common Shares offered during the Rights Period pursuant to the Rights
Offering and the price at which such Common Shares are offered, or, (b) the
product of the exchange or conversion price of the securities so offered and the
number of Common Shares for or into which the securities offered pursuant to the
Rights Offering may be exchanged or converted, as the case may be, by

 

II.                                     the Current Market Price of the Common
Shares as of the record date for the Rights Offering; and

 

(II)                                THE DENOMINATOR OF WHICH SHALL BE THE
AGGREGATE OF THE NUMBER OF COMMON SHARES OUTSTANDING ON SUCH RECORD DATE AND THE
NUMBER OF COMMON SHARES OFFERED PURSUANT TO THE RIGHTS OFFERING (INCLUDING IN
THE CASE OF THE ISSUE OR DISTRIBUTION OF SECURITIES EXCHANGEABLE FOR OR
CONVERTIBLE INTO COMMON SHARES THE NUMBER OF COMMON SHARES FOR OR INTO WHICH
SUCH SECURITIES MAY BE EXCHANGED OR CONVERTED).

 

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(C)                                  SPECIAL DISTRIBUTIONS:  IF AT ANY TIME
AFTER THE EFFECTIVE DATE BUT PRIOR TO THE EXPIRY DATE, THE CORPORATION SHALL FIX
A RECORD DATE FOR THE PAYMENT, ISSUE OR DISTRIBUTION TO THE HOLDERS OF ALL OR
SUBSTANTIALLY ALL OF THE OUTSTANDING COMMON SHARES OF:

 

(I)                                    SHARES OF THE CORPORATION OR ANY OTHER
CORPORATION OF ANY CLASS OTHER THAN COMMON SHARES;

 

(II)                                 RIGHTS, OPTIONS OR WARRANTS TO ACQUIRE
COMMON SHARES OR SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON SHARES
(OTHER THAN RIGHTS, OPTIONS OR WARRANTS PURSUANT TO WHICH HOLDERS OF COMMON
SHARES ARE ENTITLED, DURING A PERIOD EXPIRING NOT MORE THAN FORTY-FIVE DAYS
AFTER THE RECORD DATE FOR SUCH ISSUE, TO SUBSCRIBE FOR OR PURCHASE COMMON SHARES
OR SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON SHARES AT A PRICE PER
SHARE (OR IN THE CASE OF SECURITIES EXCHANGEABLE FOR OR CONVERTIBLE INTO COMMON
SHARES AT AN EXCHANGE OR CONVERSION PRICE PER SHARE) AT THE DATE OF ISSUE OF
SUCH SECURITIES TO THE HOLDER OF AT LEAST 95% OF THE CURRENT MARKET PRICE OF THE
COMMON SHARES ON SUCH RECORD DATE);

 

(III)                              EVIDENCES OF INDEBTEDNESS OF THE CORPORATION;
OR

 

(IV)                             ANY PROPERTY OR ASSETS OF THE CORPORATION,
INCLUDING CASH;

 

AND IF SUCH ISSUE OR DISTRIBUTION DOES NOT CONSTITUTE A DIVIDEND PAID IN THE
ORDINARY COURSE, A COMMON SHARE REORGANIZATION OR A RIGHTS OFFERING (ANY OF SUCH
NON-EXCLUDED EVENTS BEING HEREIN CALLED A “SPECIAL DISTRIBUTION”), THE EXERCISE
PRICE SHALL BE ADJUSTED EFFECTIVE IMMEDIATELY AFTER THE RECORD DATE FOR THE
SPECIAL DISTRIBUTION TO THE AMOUNT DETERMINED BY MULTIPLYING THE EXERCISE PRICE
IN EFFECT ON THE RECORD DATE FOR THE SPECIAL DISTRIBUTION BY A FRACTION:

 

A.                                   THE NUMERATOR OF WHICH SHALL BE THE
DIFFERENCE BETWEEN

 

I.                                       the product of the number of Common
Shares outstanding on such record date and the Current Market Price of the
Common Shares on such record date, and

 

II.                                   the fair market value, as determined in
good faith by the directors of the Corporation (whose determination shall be
conclusive, subject to the prior written consent, if required, of any stock
exchange on which the Common Shares are then listed), of such dividend, cash,
securities, rights, options, warrants, evidences of indebtedness or property or
assets to be issued or distributed in the Special Distribution, and

 

B.                                     THE DENOMINATOR OF WHICH SHALL BE THE
PRODUCT OBTAINED BY MULTIPLYING THE NUMBER OF COMMON SHARES OUTSTANDING ON SUCH
RECORD DATE BY THE CURRENT MARKET PRICE OF THE COMMON SHARES ON SUCH RECORD
DATE.

 

Any Common Shares owned by or held for the account of the Corporation shall be
deemed not to be outstanding for the purpose of such calculation.  To the extent
that any adjustment in the Exercise Price occurs pursuant to this subsection
5.01(c) as a result of the fixing by the Corporation of a record date for the
issue or distribution of rights, options or warrants to acquire Common Shares or
securities exchangeable for or

 

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convertible into Common Shares referred to in this subsection 5.01(c), the
Exercise Price shall be readjusted immediately after the expiry of any relevant
exercise, exchange or conversion right to the amount which would then be in
effect based upon the number of Common Shares issued and remaining issuable
after such expiry and shall be further readjusted in such manner upon the expiry
of any further such right.

 

(D)                                 RECLASSIFICATION OF COMMON SHARES;
CONSOLIDATION; AMALGAMATION; MERGER:  IF AT ANY TIME AFTER THE EFFECTIVE DATE
BUT PRIOR TO THE EXPIRY DATE THERE SHALL OCCUR:

 

(I)                                   A RECLASSIFICATION OR REDESIGNATION OF THE
COMMON SHARES, A CHANGE OF THE COMMON SHARES INTO OTHER SHARES OR SECURITIES OR
ANY OTHER CAPITAL REORGANIZATION INVOLVING THE COMMON SHARES OTHER THAN A COMMON
SHARE REORGANIZATION;

 

(II)                                A CONSOLIDATION, ARRANGEMENT, AMALGAMATION
OR MERGER OF THE CORPORATION WITH OR INTO ANOTHER BODY CORPORATE WHICH RESULTS
IN A RECLASSIFICATION OR REDESIGNATION OF THE COMMON SHARES OR A CHANGE OF THE
COMMON SHARES INTO OTHER SHARES OR SECURITIES;

 

(III)                             THE TRANSFER, SALE OR CONVEYANCE OF THE
UNDERTAKING OR ASSETS OF THE CORPORATION AS AN ENTIRETY OR SUBSTANTIALLY AS AN
ENTIRETY TO ANOTHER CORPORATION OR ENTITY;

 

(any of such events being called a “Capital Reorganization”), after the
effective date of the Capital Reorganization the Warrantholder shall be entitled
to receive, and shall accept, for the same aggregate consideration, upon
exercise of the Warrants, in lieu of the number of Common Shares to which the
Warrantholder was theretofor entitled upon the exercise of the Warrants, the
kind and aggregate number of shares and other securities or property resulting
from the Capital Reorganization which the Warrantholder would have been entitled
to receive as a result of the Capital Reorganization if, on the effective date
thereof, the Warrantholder had been the registered holder of the number of
Common Shares which the Warrantholder was theretofor entitled to purchase or
receive upon the exercise of the Warrants.  If necessary, as a result of any
such Capital Reorganization, appropriate adjustments shall be made in the
application of the provisions of this Warrant Indenture with respect to the
rights and interests thereafter of the Warrantholder to the end that the
provisions shall thereafter correspondingly be made applicable as nearly as may
reasonably be possible in relation to any shares or other securities or property
thereafter deliverable upon the exercise of the Warrants.  Any such adjustments
shall be made by and set forth in an indenture supplemental hereto with its
successor or such corporation or other entity, as applicable, contemporaneously
with such Capital Reorganization, provided that no such adjustments shall be
prejudicial to the interests of any Warrantholders, and which supplemental
indenture shall be approved by action by the directors and shall for all
purposes be conclusively deemed to be an appropriate adjustment.  To give effect
to the provisions of this subsection, the Corporation shall or shall impose upon
its successor or such purchasing corporation or entity, as the case may be,
prior to or contemporaneously with the Capital Reorganization, an agreement or
an undertaking which shall provide, to the extent possible, for the applications
of the provisions set forth herein with respect to the rights and interests
thereafter of the Warrantholder to the extent that the adjustment provisions set
forth in this Warrant Indenture shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, with respect to any shares, other
securities or property to which the Warrantholder is entitled on exercise of
acquisition rights hereunder.  Any such agreement or undertaking shall provide
that such adjustments shall apply to successive Capital Reorganizations.

 

22

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(E)                                  IF AT ANY TIME AFTER THE EFFECTIVE DATE BUT
PRIOR TO THE EXPIRY DATE ANY ADJUSTMENT OR READJUSTMENT IN THE EXERCISE PRICE
SHALL OCCUR PURSUANT TO THE PROVISIONS OF SUBSECTIONS 5.01(A), 5.01(B) OR
5.01(C) OF THIS INDENTURE, THEN THE NUMBER OF COMMON SHARES PURCHASABLE UPON THE
SUBSEQUENT EXERCISE OF WARRANTS SHALL BE SIMULTANEOUSLY ADJUSTED OR READJUSTED,
AS THE CASE MAY BE, BY MULTIPLYING THE NUMBER OF COMMON SHARES PURCHASABLE UPON
THE EXERCISE OF WARRANTS IMMEDIATELY PRIOR TO SUCH ADJUSTMENT OR READJUSTMENT BY
A FRACTION WHICH SHALL BE THE RECIPROCAL OF THE FRACTION USED IN THE ADJUSTMENT
OR READJUSTMENT OF THE EXERCISE PRICE.

 

(F)                                    ADJUSTMENTS PRIOR TO EFFECTIVE DATE: 
NOTWITHSTANDING ANY OTHER PROVISIONS HEREOF, IN THE EVENT THAT, AT ANY TIME
PRIOR TO THE EFFECTIVE DATE, 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
HEREOF, THEN, NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN AND
NOTWITHSTANDING THAT NO WARRANTS MAY BE OUTSTANDING AT THE APPLICABLE TIME UNDER
THIS INDENTURE, AT THE TIME OF THE ISSUE OF WARRANTS HEREUNDER THE SAME
ADJUSTMENT OR ADJUSTMENTS IN ACCORDANCE WITH THE ADJUSTMENT PROVISIONS HEREOF
SHALL BE MADE TO SUCH WARRANTS, MUTATIS MUTANDIS, AS IF SUCH WARRANTS WERE
OUTSTANDING AND GOVERNED BY THE PROVISIONS HEREOF UPON THE OCCURRENCE OF SUCH
EVENT OR EVENTS.

 

Section 5.02                            Rules Regarding Calculation of
Adjustment of Exercise Price and Number of Common Shares Purchasable Upon
Exercise:

 

For the purposes of section 5.01 hereof the following subsections shall apply:

 

(A)                                  SUCCESSIVE ADJUSTMENTS:  ANY ADJUSTMENT
MADE PURSUANT TO SECTION 5.01 HEREOF SHALL BE CUMULATIVE AND MADE SUCCESSIVELY
WHENEVER AN EVENT REFERRED TO THEREIN SHALL OCCUR, SUBJECT TO THE FOLLOWING
SUBSECTIONS OF THIS SECTION 5.02.

 

(B)                                 MINIMUM ADJUSTMENTS:  NO ADJUSTMENT IN THE
EXERCISE PRICE SHALL BE REQUIRED UNLESS SUCH ADJUSTMENT WOULD RESULT IN A CHANGE
OF AT LEAST 1% IN THE EXERCISE PRICE AND NO ADJUSTMENT SHALL BE MADE IN THE
NUMBER OF COMMON SHARES PURCHASABLE UPON EXERCISE OF A WARRANT UNLESS IT WOULD
RESULT IN A CHANGE OF AT LEAST ONE ONE-HUNDREDTH OF A COMMON SHARE; PROVIDED,
HOWEVER, THAT ANY ADJUSTMENTS WHICH, EXCEPT FOR THE PROVISIONS OF THIS
SUBSECTION 5.02(B), WOULD OTHERWISE HAVE BEEN REQUIRED TO BE MADE, SHALL BE
CARRIED FORWARD AND TAKEN INTO ACCOUNT IN ANY SUBSEQUENT ADJUSTMENT, AND
PROVIDED FURTHER THAT IN NO EVENT SHALL THE CORPORATION BE OBLIGATED TO ISSUE
FRACTIONAL COMMON SHARES UPON EXERCISE OF WARRANTS.

 

(C)                                  MUTATIS MUTANDIS ADJUSTMENT:  SUBJECT TO
THE PRIOR WRITTEN CONSENT, IF REQUIRED, OF ANY STOCK EXCHANGE UPON WHICH THE
COMMON SHARES OR WARRANTS MAY BE LISTED, NO ADJUSTMENT IN THE EXERCISE PRICE OR
IN THE NUMBER OR KIND OF SECURITIES PURCHASABLE UPON EXERCISE OF A WARRANT SHALL
BE MADE IN RESPECT OF ANY EVENT DESCRIBED IN SECTION 5.01 HEREOF IF
WARRANTHOLDERS ARE ENTITLED TO PARTICIPATE IN SUCH EVENT ON THE SAME TERMS
MUTATIS MUTANDIS AS IF WARRANTHOLDERS HAD EXERCISED THEIR WARRANTS PRIOR TO OR
ON THE EFFECTIVE DATE OR RECORD DATE, AS THE CASE MAY BE, OF SUCH EVENT.

 

(D)                                 NO ADJUSTMENT FOR CERTAIN EVENTS:  NO
ADJUSTMENT IN THE EXERCISE PRICE OR IN THE NUMBER OF COMMON SHARES PURCHASABLE
UPON THE EXERCISE OF WARRANTS SHALL BE MADE PURSUANT TO SECTION 5.01 HEREOF IN
RESPECT OF THE ISSUE FROM TIME TO TIME OF COMMON SHARES PURSUANT TO THIS
INDENTURE OR PURSUANT TO ANY STOCK OPTION, STOCK PURCHASE OR STOCK BONUS PLAN IN

 

23

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EFFECT FROM TIME TO TIME FOR DIRECTORS, OFFICERS OR EMPLOYEES OF THE CORPORATION
AND/OR ANY SUBSIDIARY OF THE CORPORATION AND ANY SUCH ISSUE, AND ANY GRANT OF
OPTIONS IN CONNECTION THEREWITH, SHALL BE DEEMED NOT TO BE A COMMON SHARE
REORGANIZATION, A RIGHTS OFFERING NOR ANY OTHER EVENT DESCRIBED IN SECTION 5.01
HEREOF.

 

(E)                                  OTHER ACTIONS:  IF AT ANY TIME AFTER THE
EFFECTIVE DATE BUT PRIOR TO THE EXPIRY DATE THE CORPORATION SHALL TAKE ANY
ACTION AFFECTING THE COMMON SHARES, OTHER THAN AN ACTION DESCRIBED IN SECTION
5.01 HEREOF, WHICH IN THE OPINION OF THE DIRECTORS ACTING IN GOOD FAITH WOULD
MATERIALLY AFFECT THE RIGHTS OF WARRANTHOLDERS, EITHER OR BOTH THE EXERCISE
PRICE AND THE NUMBER OF COMMON SHARES PURCHASABLE UPON EXERCISE OF WARRANTS
SHALL BE ADJUSTED IN SUCH MANNER AND AT SUCH TIME BY ACTION BY THE DIRECTORS,
ACTING IN GOOD FAITH IN THEIR SOLE DISCRETION, BUT SUBJECT TO THE PRIOR WRITTEN
CONSENT, IF REQUIRED, OF ANY STOCK EXCHANGE UPON WHICH THE COMMON SHARES OR
WARRANTS MAY BE LISTED, AS MAY BE EQUITABLE IN THE CIRCUMSTANCES.  FAILURE OF
THE TAKING OF ACTION BY THE DIRECTORS SO AS TO PROVIDE FOR AN ADJUSTMENT PRIOR
TO THE EFFECTIVE DATE OF ANY ACTION BY THE CORPORATION AFFECTING THE COMMON
SHARES SHALL BE DEEMED TO BE CONCLUSIVE EVIDENCE THAT THE DIRECTORS HAVE
DETERMINED THAT IT IS EQUITABLE TO MAKE NO ADJUSTMENT IN THE CIRCUMSTANCES.

 

(F)                                    ABANDONMENT OF EVENT:  IF THE CORPORATION
SHALL SET A RECORD DATE TO DETERMINE THE HOLDERS OF COMMON SHARES FOR THE
PURPOSE OF ENTITLING SUCH HOLDERS TO RECEIVE ANY DIVIDEND OR DISTRIBUTION OR ANY
SUBSCRIPTION OR PURCHASE RIGHTS AND SHALL, THEREAFTER AND BEFORE THE
DISTRIBUTION TO SUCH SHAREHOLDERS OF ANY SUCH DIVIDEND, DISTRIBUTION OR
SUBSCRIPTION OR PURCHASE RIGHTS, LEGALLY ABANDON ITS PLAN TO PAY OR DELIVER SUCH
DIVIDEND, DISTRIBUTION OR SUBSCRIPTION OR PURCHASE RIGHTS, THEN NO ADJUSTMENT IN
THE EXERCISE PRICE OR THE NUMBER OF COMMON SHARES PURCHASABLE UPON EXERCISE OF
ANY WARRANT SHALL BE REQUIRED BY REASON OF THE SETTING OF SUCH RECORD DATE.

 

(G)                                 DEEMED RECORD DATE:  IN THE ABSENCE OF A
RESOLUTION OF THE DIRECTORS FIXING A RECORD DATE FOR A COMMON SHARE
REORGANIZATION, A RIGHTS OFFERING OR A SPECIAL DISTRIBUTION, THE CORPORATION
SHALL BE DEEMED TO HAVE FIXED AS THE RECORD DATE THEREFOR THE EARLIER OF THE
DATE ON WHICH HOLDERS OF RECORD OF COMMON SHARES ARE DETERMINED FOR THE PURPOSE
OF PARTICIPATING IN THE COMMON SHARE REORGANIZATION, RIGHTS OFFERING OR SPECIAL
DISTRIBUTION AND THE DATE ON WHICH THE COMMON SHARE REORGANIZATION, RIGHTS
OFFERING OR SPECIAL DISTRIBUTION BECOMES EFFECTIVE.

 

(H)                                 DISPUTES:  IF A DISPUTE SHALL AT ANY TIME
ARISE WITH RESPECT TO ADJUSTMENTS OF THE EXERCISE PRICE OR THE NUMBER OF COMMON
SHARES PURCHASABLE UPON EXERCISE OF WARRANTS, SUCH DISPUTES SHALL BE
CONCLUSIVELY DETERMINED BY THE CORPORATION’S AUDITORS OR IF THEY ARE UNABLE OR
UNWILLING TO ACT, BY SUCH OTHER FIRM OF INDEPENDENT CHARTERED ACCOUNTANTS AS MAY
BE SELECTED BY ACTION BY THE DIRECTORS AND ACCEPTABLE TO THE WARRANT AGENT AND
ANY SUCH DETERMINATION SHALL BE CONCLUSIVE EVIDENCE OF THE CORRECTNESS OF ANY
ADJUSTMENT MADE UNDER SECTION 5.01 HEREOF AND SHALL BE BINDING UPON THE
CORPORATION, THE WARRANT AGENT AND THE WARRANTHOLDERS.  SUCH AUDITORS OR
ACCOUNTANTS SHALL BE PROVIDED ACCESS TO ALL NECESSARY RECORDS OF THE CORPORATION
FOR THE PURPOSE OF SUCH DETERMINATION.  IN THE EVENT ANY DETERMINATION IS MADE,
THE CORPORATION SHALL DELIVER A CERTIFICATE OF THE CORPORATION TO THE WARRANT
AGENT DESCRIBING SUCH DETERMINATION.

 

(I)                                     CORPORATE AFFAIRS:  AS A CONDITION
PRECEDENT TO THE TAKING OF ANY ACTION WHICH WOULD REQUIRE ANY ADJUSTMENT IN ANY
OF THE SUBSCRIPTION RIGHTS PURSUANT TO THE WARRANTS, INCLUDING THE EXERCISE
PRICE AND THE NUMBER OR CLASS OF SHARES OR OTHER SECURITIES WHICH ARE TO BE
RECEIVED UPON THE EXERCISE THEREOF, THE CORPORATION SHALL TAKE ANY ACTION WHICH

 

24

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MAY, IN THE OPINION OF COUNSEL, BE NECESSARY IN ORDER THAT THE CORPORATION MAY
VALIDLY AND LEGALLY ISSUE AS FULLY PAID AND NON-ASSESSABLE ALL THE SHARES OR
OTHER SECURITIES WHICH ALL HOLDERS OF WARRANTS ARE ENTITLED TO RECEIVE IN
ACCORDANCE WITH THE PROVISIONS THEREOF.

 

Section 5.03                            Postponement of Subscription:

 

In any case in which this article five shall require that an adjustment shall be
effective immediately after a record date for an event referred to herein, the
Corporation may defer, until the occurrence of such event:

 

(A)                                  ISSUING TO THE HOLDER OF ANY WARRANT, TO
THE EXTENT THAT WARRANTS ARE EXERCISED AFTER SUCH RECORD DATE AND BEFORE THE
OCCURRENCE OF SUCH EVENT, THE ADDITIONAL COMMON SHARES OR OTHER SECURITIES
ISSUABLE UPON SUCH EXERCISE BY REASON OF THE ADJUSTMENT REQUIRED BY SUCH EVENT;
AND

 

(B)                                 DELIVERING TO SUCH HOLDER ANY DISTRIBUTION
DECLARED WITH RESPECT TO SUCH ADDITIONAL COMMON SHARES OR OTHER SECURITIES AFTER
SUCH EXERCISE DATE AND BEFORE SUCH EVENT;

 

provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing the right of such holder upon the occurrence
of the event requiring the adjustment, to an adjustment in the Exercise Price or
the number of Common Shares purchasable on the exercise of any Warrant and to
such distributions declared with respect to any additional Common Shares
issuable on the exercise of any Warrant.

 

Section 5.04                            Notice of Adjustment of Exercise Price
and Number of Common Shares Purchasable Upon Exercise:

 

(A)                                  NOTICE OF EFFECTIVE OR RECORD DATE:  AT
LEAST TEN DAYS PRIOR TO THE EFFECTIVE DATE OR RECORD DATE, AS THE CASE MAY BE,
OF ANY EVENT WHICH REQUIRES OR MIGHT REQUIRE AN ADJUSTMENT IN ANY OF THE
SUBSCRIPTION RIGHTS PURSUANT TO ANY OF THE WARRANTS, INCLUDING THE EXERCISE
PRICE AND THE NUMBER OF COMMON SHARES WHICH ARE PURCHASABLE UPON THE EXERCISE
THEREOF, THE CORPORATION SHALL:

 

(I)                                    FILE WITH THE WARRANT AGENT A CERTIFICATE
OF THE CORPORATION SPECIFYING THE PARTICULARS OF SUCH EVENT TO THE EXTENT THEN
KNOWN INCLUDING, IF DETERMINABLE, THE REQUIRED ADJUSTMENT AND THE COMPUTATION OF
SUCH ADJUSTMENT; AND

 

(II)                                 GIVE NOTICE TO THE WARRANTHOLDERS IN THE
MANNER PROVIDED FOR IN ARTICLE TWELVE HEREOF OF THE PARTICULARS OF SUCH EVENT TO
THE EXTENT THEN KNOWN INCLUDING, IF DETERMINABLE, THE REQUIRED ADJUSTMENT.

 

(B)                                 ADJUSTMENT NOT DETERMINABLE:  IN CASE ANY
ADJUSTMENT FOR WHICH A NOTICE PURSUANT TO SUBSECTION 5.04(A) HEREOF HAS BEEN
GIVEN IS NOT THEN DETERMINABLE, THE CORPORATION SHALL PROMPTLY AFTER SUCH
ADJUSTMENT IS DETERMINABLE:

 

(I)                                    FILE WITH THE WARRANT AGENT A COMPUTATION
OF SUCH ADJUSTMENT; AND

 

(II)                                 GIVE NOTICE TO THE WARRANTHOLDERS IN THE
MANNER PROVIDED FOR IN ARTICLE TWELVE HEREOF OF THE ADJUSTMENT.

 

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Where a notice pursuant to this subsection 5.04(b) has been given, the Warrant
Agent shall be entitled to act and rely on any adjustment calculation of the
Corporation or of the auditors of the Corporation.

 

(C)                                  DUTY OF WARRANT AGENT:  SUBJECT TO
SUBSECTION 11.02(A) HEREOF, THE WARRANT AGENT SHALL NOT:

 

(I)                                   AT ANY TIME BE UNDER ANY DUTY OR
RESPONSIBILITY TO ANY WARRANTHOLDER TO DETERMINE WHETHER ANY FACTS EXIST WHICH
MAY REQUIRE ANY ADJUSTMENT IN THE EXERCISE PRICE OR NUMBER OF COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THE WARRANTS, OR WITH RESPECT TO THE NATURE OR
EXTENT OF ANY SUCH ADJUSTMENT WHEN MADE, OR WHICH 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 OR OF ANY SHARES OR OTHER
SECURITIES OR PROPERTY WHICH MAY AT ANY TIME BE ISSUED OR DELIVERED UPON THE
EXERCISE OF ANY WARRANT; 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 UPON THE SURRENDER OF ANY WARRANTS FOR THE PURPOSE
OF EXERCISE, OR TO COMPLY WITH ANY OF THE COVENANTS CONTAINED IN THIS SECTION
5.04.

 

ARTICLE SIX

PURCHASES BY THE CORPORATION

 

Section 6.01                            Optional Purchases by the Corporation:

 

Subject to applicable law, the Corporation may from time to time purchase
Warrants on any stock exchange, in the open market, 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.

 

Section 6.02                            Surrender of Warrant Certificates:

 

Warrant Certificates representing Warrants purchased pursuant to section 6.01
hereof shall be surrendered to the Warrant Agent for cancellation and shall be
accompanied by a direction of the Corporation to cancel the Warrants represented
thereby.

 

ARTICLE SEVEN

COVENANTS OF THE CORPORATION

 

Section 7.01                            General Covenants of the Corporation:

 

The Corporation covenants with the Warrant Agent for the benefit of the Warrant
Agent and the Warrantholders that so long as any Warrants remain outstanding:

 

(A)                                  THE CORPORATION WILL AT ALL TIMES USE ITS
COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN ITS CORPORATE EXISTENCE, WILL CARRY
ON AND CONDUCT ITS BUSINESS IN A PROPER, EFFICIENT AND BUSINESS LIKE MANNER AND
IN ACCORDANCE WITH GOOD BUSINESS PRACTICE AND CAUSE TO BE KEPT PROPER BOOKS OF
ACCOUNT IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRACTICES;

 

26

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(B)                                 THE CORPORATION WILL CAUSE CERTIFICATES
REPRESENTING THE COMMON SHARES, IF ANY, FROM TIME TO TIME SUBSCRIBED AND PAID
FOR PURSUANT TO THE EXERCISE OF WARRANTS TO BE ISSUED AND DELIVERED IN
ACCORDANCE WITH THE TERMS HEREOF;

 

(C)                                  ALL COMMON SHARES WHICH ARE ISSUED UPON
EXERCISE OF THE RIGHT TO SUBSCRIBE FOR AND PURCHASE PROVIDED FOR HEREIN, UPON
PAYMENT OF THE EXERCISE PRICE HEREIN PROVIDED FOR, SHALL BE FULLY PAID AND
NON-ASSESSABLE SHARES;

 

(D)                                 THE CORPORATION WILL RESERVE AND KEEP
AVAILABLE A SUFFICIENT NUMBER OF COMMON SHARES FOR THE PURPOSE OF ENABLING THE
CORPORATION TO SATISFY ITS OBLIGATIONS TO ISSUE COMMON SHARES UPON THE EXERCISE
OF THE WARRANTS, AND ALL WARRANTS SHALL, WHEN COUNTERSIGNED AND REGISTERED AS
PROVIDED HEREIN, BE VALID AND ENFORCEABLE AGAINST THE CORPORATION;

 

(E)                                  THE CORPORATION WILL GIVE TO THE
WARRANTHOLDERS, IN THE MANNER PROVIDED IN ARTICLE TWELVE HEREOF, AND TO THE
WARRANT AGENT, NOTICE OF ITS INTENTION TO FIX A RECORD DATE, OR EFFECTIVE DATE,
AS THE CASE MAY BE, FOR ANY EVENT REFERRED TO IN SECTION 5.01 HEREOF WHICH MAY
GIVE RISE TO AN ADJUSTMENT IN THE EXERCISE PRICE OR IN THE NUMBER OF COMMON
SHARES PURCHASABLE UPON THE EXERCISE OF WARRANTS AND, IN EACH CASE, SUCH NOTICE
SHALL SPECIFY THE PARTICULARS OF SUCH EVENT AND THE RECORD DATE, OR THE
EFFECTIVE DATE, FOR SUCH EVENT; PROVIDED THAT THE CORPORATION SHALL ONLY BE
REQUIRED TO SPECIFY IN SUCH NOTICE SUCH PARTICULARS OF SUCH EVENT AS SHALL HAVE
BEEN FIXED AND DETERMINED ON THE DATE ON WHICH SUCH NOTICE IS GIVEN, AND SUCH
NOTICE SHALL BE GIVEN IN EACH CASE NOT LESS THAN 21 DAYS PRIOR TO THE APPLICABLE
RECORD DATE OR EFFECTIVE DATE, AS THE CASE MAY BE;

 

(F)                                    THE CORPORATION WILL NOT CLOSE ITS
TRANSFER BOOKS NOR TAKE ANY OTHER ACTION WHICH MIGHT DEPRIVE A WARRANTHOLDER OF
THE OPPORTUNITY OF EXERCISING THE RIGHT OF PURCHASE PURSUANT TO THE WARRANTS
HELD BY SUCH PERSON DURING THE PERIOD OF 21 DAYS AFTER THE GIVING OF A NOTICE
REQUIRED BY THIS SECTION 7.01 OR UNDULY RESTRICT SUCH OPPORTUNITY;

 

(G)                                 IF THE CORPORATION IS A PARTY TO ANY
TRANSACTION IN WHICH THE CORPORATION IS NOT THE CONTINUING CORPORATION, THE
CORPORATION SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN ALL CONSENTS
WHICH MAY BE NECESSARY OR APPROPRIATE UNDER CANADIAN LAW TO ENABLE THE
CONTINUING CORPORATION TO GIVE EFFECT TO THE WARRANTS;

 

(H)                                 IT WILL USE ITS COMMERCIALLY REASONABLE
EFFORTS TO OBTAIN AND MAINTAIN REPORTING ISSUER STATUS OR EQUIVALENT NOT IN
DEFAULT, AND NOT BE IN DEFAULT IN ANY MATERIAL RESPECT OF THE APPLICABLE
REQUIREMENTS OF, THE APPLICABLE SECURITIES LAWS OF EACH OF THE PROVINCES OF
CANADA AND THE FEDERAL SECURITIES LAWS OF THE UNITED STATES;

 

(I)                                     IF AT ANY TIME AFTER THE DATE OF ISSUE
OF THE WARRANTS NO REGISTRATION STATEMENT IS EFFECTIVE, THE CORPORATION WILL
GIVE NOTICE TO THE TRANSFER AGENT FORTHWITH AND WILL GIVE NOTICE, IN ACCORDANCE
WITH THE PROVISIONS SET OUT IN SECTION 12.01, AS SOON AS REASONABLY PRACTICABLE,
BUT IN ANY EVENT WITHIN 5 BUSINESS DAYS, AFTER LEARNING THAT NO REGISTRATION
STATEMENT IS EFFECTIVE. SUCH NOTICE MUST BE SENT BY FAX, IF POSSIBLE, TO ANY
SECURITIES DEPOSITARY THAT IS A REGISTERED HOLDER;

 

(J)                                     IT WILL USE ITS COMMERCIALLY REASONABLE
EFFORTS TO CAUSE THE REGISTRATION STATEMENT TO BECOME EFFECTIVE AND USE ITS
COMMERCIALLY REASONABLE EFFORTS TO KEEP THE REGISTRATION STATEMENT CONTINUOUSLY
EFFECTIVE FOR A PERIOD OF TIME THAT WILL TERMINATE NO EARLIER THAN THAT DATE ON
WHICH ALL WARRANTS HAVE BEEN EXERCISED OR UNTIL THE TIME OF EXPIRY;

 

27

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(K)                                  IT WILL USE ITS COMMERCIALLY REASONABLE
EFFORTS TO CAUSE THE FINAL PROSPECTUS TO BE FILED AND A RECEIPT TO BE ISSUED FOR
THE FINAL PROSPECTUS IN THE QUALIFYING JURISDICTIONS;

 

(L)                                     IT WILL USE ITS COMMERCIALLY REASONABLE
EFFORTS TO HAVE THE COMMON SHARES LISTED AND POSTED FOR TRADING ON THE TSX AND
TO MAINTAIN SUCH LISTING UNTIL THE TIME OF EXPIRY;

 

(M)                               IF, IN THE OPINION OF OUTSIDE COUNSEL, ANY
INSTRUMENT IS REQUIRED TO BE FILED WITH, OR ANY PERMISSION, ORDER OR RULING IS
REQUIRED TO BE OBTAINED FROM ANY SECURITIES ADMINISTRATOR, REGULATORY AGENCY OR
GOVERNMENTAL AUTHORITY IN CANADA OR THE UNITED STATES OR ANY OTHER STEP IS
REQUIRED UNDER ANY FEDERAL OR PROVINCIAL LAW OF CANADA OR ANY FEDERAL OR STATE
LAW OF THE UNITED STATES BEFORE THE COMMON SHARES ISSUABLE UPON EXERCISE OF THE
WARRANTS MAY BE ISSUED OR DELIVERED TO A WARRANTHOLDER, THE CORPORATION WILL USE
ITS REASONABLE EFFORTS TO FILE SUCH INSTRUMENT, OBTAIN SUCH PERMISSION, ORDER OR
RULING OR TAKE ALL SUCH OTHER ACTIONS, AT ITS EXPENSE, AS ARE REQUIRED;

 

(N)                                 THE CORPORATION WILL PROMPTLY ADVISE THE
WARRANT AGENT AND THE WARRANTHOLDER OF ANY DEFAULT UNDER THE TERMS OF THIS
INDENTURE; AND

 

(O)                                 GENERALLY, THE CORPORATION WILL WELL AND
TRULY PERFORM AND CARRY OUT ALL OF THE ACTS OR THINGS TO BE DONE BY THE
CORPORATION AS PROVIDED IN THIS INDENTURE.

 

Section 7.02                            Warrant Agent’s Remuneration and
Expenses:

 

The Corporation covenants that it will pay to the Warrant Agent from time to
time reasonable remuneration for its services hereunder and the Corporation will
pay or reimburse the Warrant Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Warrant Agent in the
administration or execution of its duties hereunder (including the reasonable
compensation and the disbursements of its counsel and all other advisers not
regularly in its employ) both before any default hereunder and thereafter until
all duties of the Warrant Agent hereunder shall be finally and fully performed,
except any such expense, disbursement or advance as may arise out of or result
from the Warrant Agent’s own negligent action, negligent failure to act, wilful
misconduct or bad faith.

 

Section 7.03                            Notice of Issue:

 

The Corporation will give written notice of the issue of Common Shares pursuant
to the exercise of any Warrants, in such detail as may be required, to each
securities commission or similar regulatory authority in each jurisdiction in
Canada in which there is legislation or regulations requiring the giving of any
such notice in order that such issue of Common Shares and the subsequent
disposition of the Common Shares so issued will not be subject to the prospectus
requirements, if any, of such legislation or regulations.

 

Section 7.04                            Performance of Covenants by Warrant
Agent:

 

If the Corporation shall fail to perform any of its covenants contained in this
Indenture, the Warrant Agent may notify the Warrantholders of such failure on
the part of the Corporation or may itself perform any of the said covenants
capable of being performed by it, but shall be under no obligation to do so or
to notify the Warrantholders that it is so doing.  All amounts so expended or
advanced by the Warrant Agent shall be repayable upon request of the Warrant
Agent as provided in section 7.02 hereof.  No such performance or advance by the
Warrant Agent shall be deemed to relieve the Corporation of any default
hereunder.

 

If, in the opinion of Counsel, any instrument is required to be filed with, or
any permission, order or ruling is required to be obtained from, any securities
administration or any other step is required under

 

28

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any federal or provincial law of Canada before the Common Shares may be issued
or delivered to a Warrantholder or resold by such Warrantholder, the Corporation
covenants that it will use its best efforts to file such instrument, obtain such
permission, order or ruling or take all such actions, at its expense, or is
required and appropriate in the circumstances

 

ARTICLE EIGHT

ENFORCEMENT

 

Section 8.01                            Suits by Warrantholders:

 

All or any of the rights conferred upon the holder of any Warrant Certificate by
the terms of such Warrant Certificate or the provisions of this Indenture may be
enforced by the holder of such Warrant Certificate by appropriate legal
proceedings but without prejudice to the right which is hereby conferred upon
the Warrant Agent to proceed in its own name to enforce each and all of the
provisions herein contained for the benefit of the Warrantholder.

 

Section 8.02                            Immunity of Shareholders:

 

By the acceptance of the Warrant Certificate, Warrantholders and the Warrant
Agent hereby waive and release any right, cause of action or remedy now or
hereafter existing in any jurisdiction against any past, present or future
incorporator, shareholder, director, officer, employee or agent of the
Corporation for the issue of Common Shares pursuant to the exercise of any
Warrant.

 

Section 8.03                            Limitation of Liability:

 

The obligations hereunder are not personally binding upon, nor shall resort
hereunder be had to, the private property of any of the past, present or future
officers, Directors or shareholders of the Corporation or of any successor
corporation or to any of the past, present or future officers, Directors,
employees or agents of the Corporation or any successor corporation, but only
the property of the Corporation or any successor corporation shall be bound in
respect hereof.

 

ARTICLE NINE

MEETINGS OF WARRANTHOLDERS

 

Section 9.01                            Right to Convene Meetings:

 

The Warrant Agent may at any time and from time to time and shall on receipt of
a Written Request of the Corporation or of a Warrantholders’ Request and upon
receiving sufficient funds and being indemnified to its reasonable satisfaction
by the Corporation or by the Warrantholders signing such Warrantholders’
Request, as the case may be, against the costs which may be incurred by the
Warrant Agent in connection with the calling and holding of such meeting,
convene a meeting of the Warrantholders.  In the event of the Warrant Agent
failing within 15 days after receipt of such written request by the Corporation
or of a Warrantholders’ Request and of the required funds and indemnity as
aforesaid to give notice to convene a meeting, the Corporation or such
Warrantholders, as the case may be, may convene such meeting.  Every such
meeting shall be held in the City of Toronto, Ontario, or at such other place as
may be approved or determined by the Warrant Agent.

 

Section 9.02                            Notice:

 

At least 21 days’ notice of any meeting of Warrantholders shall be given to the
Warrantholders in the manner provided in article twelve hereof and a copy
thereof shall be sent by prepaid mail to the Warrant

 

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Agent unless the meeting has been called by it and to the Corporation unless the
meeting has been called by it.  Such notice shall state the time when and the
place where the meeting is to be held and shall state briefly the general nature
of the business to be transacted thereat.  It shall not be necessary for any
such notice to set out the terms of any resolution to be proposed or any of the
provisions of this article nine.  The notice convening any such meeting may be
signed by an appropriate officer of the Warrant Agent or of the Corporation or
the person or persons designated by the Warrantholders signing such
Warrantholders’ Request, as the case may be.

 

Section 9.03                            Chairman:

 

An individual (who need not be a Warrantholder) nominated in writing by the
Warrant Agent shall be chairman of the meeting and if no individual is so
nominated, or if the individual so nominated is not present within 15 minutes
from the time fixed for the holding of the meeting, or if such person is unable
or unwilling to act as chairman, the Warrantholders present in person or by
proxy shall choose some individual to be chairman.

 

Section 9.04                            Quorum:

 

Subject to the provisions of section 9.12 hereof, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or by
proxy holding at least 25% of the aggregate number Warrants outstanding as of
the date of the meeting, provided that at least two persons entitled to vote
thereat (including proxyholders) are personally present.  If a quorum of the
Warrantholders shall not be present within 30 minutes from the time fixed for
holding any meeting, the meeting, if summoned by the Warrantholders or on a
Warrantholders’ Request, shall be dissolved, but in any other case the meeting
shall be adjourned to the same day in the next following week (unless such day
is not a Business Day in which case it shall be adjourned to the next following
Business Day thereafter) at the same time and place.  At the adjourned meeting
the Warrantholders present in person or by proxy shall form a quorum and may
transact the business for which the meeting was originally called
notwithstanding that they may not hold at least 50% of the aggregate number of
Warrants then outstanding.

 

Section 9.05                            Power to Adjourn:

 

Subject to the provisions of section 9.04 hereof, the chairman of any meeting at
which a quorum of the Warrantholders is present may, with the consent of the
meeting, adjourn any such meeting and no notice of such adjournment need be
given except such notice, if any, as the meeting may prescribe.

 

Section 9.06                            Show of Hands:

 

Every question submitted to a meeting shall be decided in the first place by a
majority of the votes given on a show of hands except that votes on
Extraordinary Resolutions shall be given in the manner hereinafter provided.  At
any such meeting, unless a poll is demanded as herein provided, a declaration by
the chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of such fact.  Any Warrantholder present in person or by
proxy can demand a poll at any meeting in accordance with the provisions of
section 9.07 hereof.

 

Section 9.07                            Poll:

 

On every Extraordinary Resolution, and on any other question submitted to a
meeting and after a vote by show of hands in respect of such question if
requested by the chairman or by one of or more of the Warrantholders acting in
person or by proxy, a poll shall be taken in such manner as the chairman shall

 

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direct.  Questions other than Extraordinary Resolutions shall be decided by a
majority of the votes cast on the poll.

 

Section 9.08                            Voting:

 

On a show of hands every person who is present and entitled to vote, whether as
a Warrantholder or as a proxy for one or more absent Warrantholders or both,
shall have one vote.  On a poll, each Warrantholder present in person or
represented by a proxy appointed by instrument in writing shall be entitled to
one vote in respect of each one Warrant held by him.  A proxy need not be a
Warrantholder.  The chairman of any meeting shall be entitled both on a show of
hands and on a poll to vote in respect of the Warrants, if any, held or
represented by him.

 

Section 9.09                            Regulations:

 

The Warrant Agent or the Corporation with the approval of the Warrant Agent may
from time to time make regulations and from time to time vary such regulations
as it shall from time to time think fit:

 

(A)                                  FOR THE DEPOSIT OF INSTRUMENTS APPOINTING
PROXIES AT SUCH PLACE AND TIME AS THE WARRANT AGENT, THE CORPORATION OR THE
WARRANTHOLDER CALLING THE MEETING, AS THE CASE MAY BE, MAY DIRECT IN THE NOTICE
CALLING THE MEETING;

 

(B)                                 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 MAILED, CABLED OR TELECOPIED BEFORE THE MEETING TO THE CORPORATION
OR TO THE WARRANT AGENT AT THE PLACE WHERE THE SAME IS TO BE HELD AND FOR THE
VOTING OF PROXIES SO DEPOSITED AS THOUGH THE INSTRUMENTS THEMSELVES WERE
PRODUCED AT THE MEETING;

 

(C)                                  FOR THE FORM OF THE INSTRUMENT APPOINTING A
PROXY, THE MANNER IN WHICH IT MAY BE EXECUTED AND VERIFICATION OF THE AUTHORITY
OF A PERSON WHO EXECUTES IT ON BEHALF OF A WARRANTHOLDER; AND

 

(D)                                 GENERALLY FOR THE CALLING OF MEETINGS OF
WARRANTHOLDERS AND THE CONDUCT OF BUSINESS THEREAT.

 

Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted.  Save as such
regulations may provide, the only persons who shall be recognized at any meeting
as the holders of any Warrant Certificates, or as entitled to vote or be present
at the meeting in respect thereof, shall be registered holders of Warrant
Certificates or proxies thereof.

 

Section 9.10                            Corporation and Warrant Agent may be
Represented:

 

The Corporation and the Warrant Agent, by their respective employees, officers
or directors, and the legal advisers of the Corporation and the Warrant Agent,
may attend any meeting of the Warrantholders, but shall have no vote as such.

 

Section 9.11                            Powers Exercisable by Extraordinary
Resolution:

 

In addition to all other powers conferred upon them by any other provision of
this Indenture or by law, the Warrantholders at a meeting shall have the
following powers exercisable from time to time by Extraordinary Resolution:

 

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(A)                                  POWER TO CONSENT AND AGREE TO ANY
MODIFICATION, ABROGATION, ALTERATION, COMPROMISE OR ARRANGEMENT OF THE RIGHTS OF
WARRANTHOLDERS OR, WITH THE REASONABLE CONSENT OF THE WARRANT AGENT, OF THE
WARRANT AGENT (IN ITS CAPACITY AS WARRANT AGENT HEREUNDER OR ON BEHALF OF THE
WARRANTHOLDERS) WITH THE CORPORATION, WHETHER SUCH RIGHTS ARISE UNDER THIS
INDENTURE OR THE WARRANT CERTIFICATES OR OTHERWISE;

 

(B)                                 SUBJECT TO ARRANGEMENTS AS TO FINANCING AND
INDEMNITY SATISFACTORY TO THE WARRANT AGENT, POWER TO DIRECT OR AUTHORIZE THE
WARRANT AGENT (I) TO ENFORCE ANY OF THE COVENANTS OF THE CORPORATION CONTAINED
IN THIS INDENTURE OR THE WARRANT CERTIFICATES, (II) TO ENFORCE ANY OF THE RIGHTS
OF THE WARRANTHOLDERS IN ANY MANNER SPECIFIED IN SUCH EXTRAORDINARY RESOLUTION,
OR (III) TO REFRAIN FROM ENFORCING ANY SUCH COVENANT OR RIGHT;

 

(C)                                  POWER TO WAIVE AND DIRECT THE WARRANT AGENT
TO WAIVE ANY DEFAULT ON THE PART OF THE CORPORATION IN COMPLYING WITH ANY
PROVISION OF THIS INDENTURE OR THE WARRANT CERTIFICATES, EITHER UNCONDITIONALLY
OR UPON ANY CONDITIONS SPECIFIED IN SUCH EXTRAORDINARY RESOLUTION;

 

(D)                                 POWER TO RESTRAIN ANY WARRANTHOLDER FROM
TAKING OR INSTITUTING ANY SUIT, ACTION OR PROCEEDING AGAINST THE CORPORATION (I)
FOR THE ENFORCEMENT OF ANY OF THE COVENANTS OF THE CORPORATION CONTAINED IN THIS
INDENTURE OR THE WARRANT CERTIFICATES, OR (II) TO ENFORCE ANY OF THE RIGHTS OF
THE WARRANTHOLDERS;

 

(E)                                  POWER TO DIRECT ANY WARRANTHOLDER WHO, AS
SUCH, HAS BROUGHT ANY SUIT, ACTION OR PROCEEDING TO STAY OR DISCONTINUE OR
OTHERWISE DEAL WITH THE SAME UPON PAYMENT OF THE COSTS, CHARGES AND EXPENSES
REASONABLY AND PROPERLY INCURRED BY SUCH WARRANTHOLDER IN CONNECTION THEREWITH;

 

(F)                                    POWER TO APPOINT ANY PERSONS (WHETHER
WARRANTHOLDERS OR NOT) AS A COMMITTEE TO REPRESENT THE INTERESTS OF THE
WARRANTHOLDERS AND TO CONFER UPON SUCH COMMITTEE ANY POWERS OR DISCRETIONS WHICH
THE WARRANTHOLDERS COULD THEMSELVES EXERCISE BY EXTRAORDINARY RESOLUTION OR
OTHERWISE;

 

(G)                                 POWER FROM TIME TO TIME AND AT ANY TIME TO
REMOVE THE WARRANT AGENT AND TO APPOINT A SUCCESSOR WARRANT AGENT;

 

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

 

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

 

(J)                                     POWER 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.

 

Section 9.12                            Extraordinary Resolution:

 

(A)                                  EXTRAORDINARY RESOLUTION:  IF, AT ANY
MEETING CALLED FOR THE PURPOSE OF PASSING AN EXTRAORDINARY RESOLUTION,
WARRANTHOLDERS HOLDING 50% OF THE AGGREGATE NUMBER OF

 

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WARRANTS OUTSTANDING AS OF THE DATE OF SUCH MEETING ARE NOT PRESENT IN PERSON OR
BY PROXY WITHIN 30 MINUTES FROM THE TIME FIXED FOR HOLDING THE MEETING, THEN THE
MEETING, IF CALLED BY WARRANTHOLDERS OR ON A WARRANTHOLDERS’ REQUEST, SHALL BE
DISSOLVED, BUT IN ANY OTHER CASE IT SHALL STAND ADJOURNED TO SUCH DAY, BEING NOT
LESS THAN 5 BUSINESS DAYS OR MORE THAN 10 BUSINESS DAYS LATER, AND TO SUCH PLACE
AND TIME AS MAY BE DETERMINED BY THE CHAIRMAN.  NOT LESS THAN THREE BUSINESS
DAYS’ NOTICE TO WARRANTHOLDERS SHALL BE GIVEN OF THE TIME AND PLACE OF SUCH
ADJOURNED MEETING IN THE MANNER PROVIDED IN ARTICLE TWELVE HEREOF.  SUCH NOTICE
SHALL STATE THAT AT THE ADJOURNED MEETING THE WARRANTHOLDERS PRESENT IN PERSON
OR BY PROXY SHALL FORM A QUORUM BUT IT SHALL NOT BE NECESSARY TO SET FORTH THE
PURPOSES FOR WHICH THE MEETING WAS ORIGINALLY CALLED OR ANY OTHER PARTICULARS. 
AT THE ADJOURNED MEETING THE WARRANTHOLDERS PRESENT IN PERSON OR BY PROXY SHALL
FORM A QUORUM NOTWITHSTANDING THE PROVISIONS OF THIS SUBSECTION 9.12(A) TO THE
CONTRARY AND MAY TRANSACT THE BUSINESS FOR WHICH THE MEETING WAS ORIGINALLY
CALLED AND A MOTION PROPOSED AT SUCH ADJOURNED MEETING AND PASSED BY THE
AFFIRMATIVE VOTE OF WARRANTHOLDERS HOLDING NOT LESS THAN 66 2/3% OF THE
AGGREGATE NUMBER OF WARRANTS REPRESENTED AT THE ADJOURNED MEETING AND VOTED ON
THE MOTION SHALL BE AN EXTRAORDINARY RESOLUTION WITHIN THE MEANING OF THIS
INDENTURE, NOTWITHSTANDING THAT WARRANTHOLDERS HOLDING 50% OF THE AGGREGATE
NUMBER OF WARRANTS THEN OUTSTANDING WARRANT CERTIFICATES ARE NOT PRESENT IN
PERSON OR BY PROXY AT SUCH ADJOURNED MEETING.

 

(B)                                 POLL TO BE TAKEN:  VOTES ON AN EXTRAORDINARY
RESOLUTION SHALL ALWAYS BE GIVEN ON A POLL AND NO DEMAND FOR A POLL ON AN
EXTRAORDINARY RESOLUTION SHALL BE NECESSARY.

 

Section 9.13                            Powers Cumulative:

 

It is hereby declared and agreed that any one or more of the powers in this
Indenture, stated to be exercisable by the Warrantholders by Extraordinary
Resolution or otherwise, may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to exhaust
the right of the Warrantholders to exercise such power or powers then or
thereafter from time to time.

 

Section 9.14                            Minutes:

 

Minutes of all resolutions and Extraordinary Resolutions and proceedings at
every meeting of Warrantholders shall be made and entered in books to be from
time to time provided for that purpose by the Warrant Agent at the expense of
the Corporation, and any such minutes, if signed by the chairman of the meeting
at which such resolutions or Extraordinary Resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting of the
Warrantholders, shall be prima facie evidence of the matters therein stated and,
until the contrary is proved, every such meeting, in respect of the proceedings
of which minutes shall have been made, shall be deemed to have been called and
held, and all resolutions passed thereat or proceedings taken, to have been
passed and taken.

 

Section 9.15                            Instruments in Writing:

 

All actions which may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as provided in this article nine may also be
taken and exercised by Warrantholders entitled to subscribe for and purchase 66
2/3% of the aggregate number of Common Shares which can be subscribed for and
purchased pursuant to all of the then outstanding Warrant Certificates, by an
instrument in writing signed in one or more counterparts by such Warrantholders
in person or by attorney appointed in writing and the expression “Extraordinary
Resolution” when used in this Indenture shall include an instrument so signed.

 

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Section 9.16                            Binding Effect of Resolutions:

 

Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this article nine at a meeting of Warrantholders shall be
binding upon all of the Warrantholders, whether present or absent at such
meeting, and every instrument in writing signed by Warrantholders in accordance
with the provisions of section 9.15 hereof shall be binding upon all of the
Warrantholders, whether signatories thereto or not, and each and every
Warrantholder and the Warrant Agent (subject to the provisions for indemnity
herein contained) shall be bound to give effect accordingly to every such
resolution, Extraordinary Resolution and instrument in writing.

 

Section 9.17                            Holdings by Corporation and Warrant
Agent Disregarded:

 

In determining whether Warrantholders are present at a meeting of Warrantholders
for the purpose of determining a quorum or have concurred in any consent,
resolution, Extraordinary Resolution, Warrantholders’ Request, waiver or other
action under this Indenture, Warrants owned by the Corporation or any Subsidiary
of the Corporation and the Warrant Agent shall be deemed not to be outstanding
and shall be disregarded. The Corporation shall provide the Warrant Agent with a
certificate of the Corporation providing details of any Warrants held by the
Corporation or by a Subsidiary of the Corporation upon the written request of
the Warrant Agent.

 

ARTICLE TEN

SUPPLEMENTAL INDENTURES

 

Section 10.01                     Provision for Supplemental Indentures for
Certain Purposes:

 

From time to time the Corporation (when authorized by action by the Directors)
and the Warrant Agent may, subject to the provisions of this Indenture and they
shall, when so directed by the provisions of this Indenture, execute and deliver
by their proper officers, indentures or instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more or all of the following
purposes:

 

(A)                                  SETTING FORTH ADJUSTMENTS PURSUANT TO THE
PROVISIONS OF ARTICLE FIVE HEREOF;

 

(B)                                 INCREASING THE NUMBER OF WARRANTS (AND THE
NUMBER OF COMMON SHARES ISSUABLE UPON THE EXERCISE OF WARRANTS) WHICH THE
CORPORATION IS AUTHORIZED TO ISSUE UNDER THIS INDENTURE AND ANY CONSEQUENTIAL
AMENDMENT THERETO AS MAY BE REQUIRED BY THE WARRANT AGENT ACTING ON THE ADVICE
OF COUNSEL;

 

(C)                                  MAKING SUCH CHANGES TO THE PROVISIONS
HEREOF AND OF THE WARRANT CERTIFICATES AS MAY BE NECESSARY OR DESIRABLE IN
CONNECTION WITH THE LISTING OF THE WARRANTS ON ANY STOCK EXCHANGE;

 

(D)                                 ADDING TO THE PROVISIONS HEREOF SUCH
ADDITIONAL COVENANTS AND ENFORCEMENT PROVISIONS AS, IN THE OPINION OF COUNSEL,
ARE NECESSARY OR ADVISABLE IN THE PREMISES, PROVIDED THAT THE SAME ARE NOT, IN
THE OPINION OF THE WARRANT AGENT, PREJUDICIAL TO THE INTERESTS OF THE
WARRANTHOLDERS;

 

(E)                                  GIVING EFFECT TO ANY RESOLUTION OR
EXTRAORDINARY RESOLUTION PASSED AS PROVIDED IN ARTICLE NINE HEREOF;

 

(F)                                    MAKING SUCH PROVISIONS NOT INCONSISTENT
WITH THIS INDENTURE AS MAY BE NECESSARY OR DESIRABLE WITH RESPECT TO MATTERS OR
QUESTIONS ARISING HEREUNDER, PROVIDED THAT SUCH

 

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PROVISIONS ARE NOT, IN THE OPINION OF THE WARRANT AGENT AND ON THE ADVICE OF
COUNSEL, PREJUDICIAL TO THE INTERESTS OF THE WARRANTHOLDERS;

 

(G)                                 ADDING TO OR ALTERING THE PROVISIONS HEREOF
IN RESPECT OF THE TRANSFER OF WARRANTS, MAKING PROVISION FOR THE EXCHANGE OF
WARRANT CERTIFICATES, OR MAKING ANY MODIFICATION IN THE FORM OF THE WARRANT
CERTIFICATES WHICH DOES NOT AFFECT THE SUBSTANCE THEREOF;

 

(H)                                 MODIFYING ANY OF THE PROVISIONS OF THIS
INDENTURE OR RELIEVING THE CORPORATION FROM ANY OF THE OBLIGATIONS, CONDITIONS
OR RESTRICTIONS HEREIN CONTAINED, PROVIDED THAT NO SUCH MODIFICATION OR RELIEF
SHALL BE OR BECOME OPERATIVE OR EFFECTIVE IN SUCH MANNER AS TO IMPAIR ANY OF THE
RIGHTS OF THE WARRANTHOLDERS OR OF THE WARRANT AGENT AND PROVIDED FURTHER THAT
THE WARRANT AGENT MAY IN ITS SOLE DISCRETION DECLINE TO ENTER INTO ANY SUCH
SUPPLEMENTAL INDENTURE WHICH IN ITS OPINION MAY NOT AFFORD ADEQUATE PROTECTION
TO THE WARRANT AGENT WHEN THE SAME SHALL BECOME OPERATIVE; OR

 

(I)                                     ANY OTHER PURPOSE NOT INCONSISTENT WITH
THE TERMS OF THIS INDENTURE, INCLUDING THE CORRECTION OR RECTIFICATION OF ANY
AMBIGUITIES, DEFECTIVE PROVISIONS, ERRORS OR OMISSIONS HEREIN, PROVIDED THAT, IN
THE OPINION OF THE WARRANT AGENT AND ON THE ADVICE OF COUNSEL, THE RIGHTS OF THE
WARRANT AGENT AND OF THE WARRANTHOLDERS ARE IN NO WAY PREJUDICED THEREBY.

 

Section 10.02                     Successor Corporation:

 

In the case of a consolidation, amalgamation, arrangement, merger, separation or
transfer of the undertaking or assets of the Corporation as an entirety or
substantially as an entirety, the successor entity resulting from such
consolidation, amalgamation, arrangement, merger, separation or transfer (if not
the Corporation) shall expressly assume, by supplemental indenture satisfactory
in form to the Warrant Agent and executed and delivered to the Warrant Agent,
the performance and observance of each and every covenant and obligation
contained in this Indenture to be performed by the Corporation, as the case may
be.  Without limiting the generality of the foregoing, the continuing entity
resulting from such consolidation, amalgamation, arrangement, merger, separation
or transfer shall be deemed to be a successor entity for purposes of this
Indenture.

 

ARTICLE ELEVEN

CONCERNING THE WARRANT AGENT

 

Section 11.01                     Trust Indenture Legislation:

 

(A)                                  MANDATORY REQUIREMENTS:  IF AND TO THE
EXTENT THAT ANY PROVISION OF THIS INDENTURE LIMITS, QUALIFIES OR CONFLICTS WITH
A MANDATORY REQUIREMENT OF APPLICABLE LEGISLATION, SUCH MANDATORY REQUIREMENT
SHALL PREVAIL.

 

(B)                                 APPLICABLE LEGISLATION:  THE CORPORATION AND
THE WARRANT AGENT AGREE THAT EACH OF THEM 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 11.02                     Rights and Duties of Warrant Agent:

 

(A)                                  DEGREE OF SKILL:  IN THE EXERCISE OF THE
RIGHTS AND DUTIES PRESCRIBED OR CONFERRED BY THE TERMS OF THIS INDENTURE, THE
WARRANT AGENT SHALL ACT HONESTY AND IN GOOD FAITH WITH A VIEW TO THE BEST
INTERESTS OF THE WARRANTHOLDERS AND SHALL EXERCISE THAT DEGREE OF CARE,
DILIGENCE

 

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AND SKILL THAT A REASONABLY PRUDENT WARRANT AGENT WOULD EXERCISE IN COMPARABLE
CIRCUMSTANCES.  NO PROVISION OF THIS INDENTURE SHALL BE CONSTRUED TO RELIEVE THE
WARRANT AGENT FROM LIABILITY FOR ITS OWN NEGLIGENT ACTION, ITS OWN NEGLIGENT
FAILURE TO ACT OR ITS OWN WILFUL MISCONDUCT OR BAD FAITH.

 

(B)                                 CONDITIONS FOR ACTION:  SUBJECT TO
SUBSECTION 11.02(A) HEREOF, THE WARRANT AGENT SHALL NOT BE BOUND TO DO ANY THING
OR TAKE ANY ACT OR ACTION FOR THE ENFORCEMENT OF ANY OF THE OBLIGATIONS OF THE
CORPORATION UNDER THIS INDENTURE UNLESS AND UNTIL THE WARRANT AGENT SHALL HAVE
RECEIVED A WARRANTHOLDERS’ REQUEST SETTING OUT THE ACTION WHICH THE WARRANT
AGENT IS REQUIRED TO TAKE AND THE OBLIGATION OF THE WARRANT AGENT TO COMMENCE OR
CONTINUE ANY ACT, ACTION OR PROCEEDING FOR THE PURPOSE OF ENFORCING ANY RIGHTS
OF THE WARRANT AGENT OR THE WARRANTHOLDERS HEREUNDER SHALL BE CONDITIONAL UPON
THE WARRANTHOLDERS FURNISHING, WHEN REQUIRED BY NOTICE BY THE WARRANT AGENT,
SUFFICIENT FUNDS TO COMMENCE OR CONTINUE SUCH ACT, ACTION OR PROCEEDING AND AN
INDEMNITY REASONABLY SATISFACTORY TO THE WARRANT AGENT TO PROTECT AND HOLD
HARMLESS THE WARRANT AGENT AGAINST THE COSTS, CHARGES, EXPENSES AND LIABILITIES
TO BE INCURRED THEREBY AND ANY LOSS OR DAMAGE IT MAY SUFFER BY REASON THEREOF. 
NONE OF THE PROVISIONS CONTAINED IN THIS INDENTURE SHALL REQUIRE THE WARRANT
AGENT TO EXPEND OR RISK ITS OWN FUNDS OR OTHERWISE INCUR FINANCIAL LIABILITY IN
THE PERFORMANCE OF ANY OF ITS DUTIES OR IN THE EXERCISE OF ANY OF ITS RIGHTS OR
POWERS UNLESS INDEMNIFIED AS AFORESAID.

 

(C)                                  DEPOSIT OF WARRANT CERTIFICATES:  THE
WARRANT AGENT MAY, BEFORE COMMENCING OR AT ANY TIME DURING THE CONTINUANCE OF
ANY ACT, ACTION OR PROCEEDING FOR THE PURPOSE OF ENFORCING ANY RIGHTS OF THE
WARRANT AGENT OR THE WARRANTHOLDERS HEREUNDER, REQUIRE THE WARRANTHOLDERS AT
WHOSE INSTANCE IT IS ACTING TO DEPOSIT WITH THE WARRANT AGENT THE WARRANT
CERTIFICATES HELD BY THEM, FOR WHICH WARRANT CERTIFICATES THE WARRANT AGENT
SHALL ISSUE RECEIPTS.

 

(D)                                 SUPREMACY OF APPLICABLE LEGISLATION:  EVERY
PROVISION OF THIS INDENTURE THAT BY ITS TERMS RELIEVES THE WARRANT AGENT OF
LIABILITY OR ENTITLES IT TO RELY UPON ANY EVIDENCE SUBMITTED TO IT IS SUBJECT TO
THE PROVISIONS OF APPLICABLE LEGISLATION AND OF THIS ARTICLE ELEVEN.

 

Section 11.03                     Evidence:

 

(A)                                  ENTITLEMENT TO RELY ON EVIDENCE:  WHENEVER
IT IS PROVIDED IN THIS INDENTURE THAT THE CORPORATION SHALL DEPOSIT WITH THE
WARRANT AGENT RESOLUTIONS, CERTIFICATES, REPORTS, OPINIONS, REQUESTS, ORDERS OR
OTHER DOCUMENTS, IT IS INTENDED THAT THE TRUTH, ACCURACY AND GOOD FAITH ON THE
EFFECTIVE DATE THEREOF OF THE FACTS AND OPINIONS STATED IN ALL DOCUMENTS SO
DEPOSITED SHALL, IN EACH AND EVERY SUCH CASE, BE CONDITIONS PRECEDENT TO THE
RIGHT OF THE CORPORATION TO HAVE THE WARRANT AGENT TAKE THE ACTION TO BE BASED
THEREON.  THE WARRANT AGENT MAY RELY AND SHALL BE PROTECTED IN ACTING UPON ANY
SUCH DOCUMENTS DEPOSITED WITH IT IN PURPORTED COMPLIANCE WITH ANY SUCH PROVISION
OR FOR ANY OTHER PURPOSE HEREOF, BUT MAY, IN ITS DISCRETION, REQUIRE FURTHER
EVIDENCE BEFORE ACTING OR RELYING THEREON.  THE WARRANT AGENT MAY ALSO RELY AND
SHALL BE PROTECTED IN ACTING UPON ANY RESOLUTION, CERTIFICATE, 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.

 

(B)                                 ADDITIONAL EVIDENCE:  IN ADDITION TO THE
REPORTS, CERTIFICATES, OPINIONS AND OTHER EVIDENCE REQUIRED BY THIS INDENTURE,
THE CORPORATION SHALL FURNISH TO THE WARRANT AGENT SUCH ADDITIONAL EVIDENCE OF
COMPLIANCE WITH ANY PROVISION HEREOF, AND IN SUCH FORM, AS MAY

 

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BE PRESCRIBED BY APPLICABLE LEGISLATION OR AS THE WARRANT AGENT MAY REASONABLY
REQUIRE BY WRITTEN NOTICE TO THE CORPORATION.

 

(C)                                  STATUTORY DECLARATIONS:  WHENEVER
APPLICABLE LEGISLATION REQUIRES THAT EVIDENCE REFERRED TO IN SUBSECTION 11.03(A)
HEREOF BE IN THE FORM OF A STATUTORY DECLARATION, THE WARRANT AGENT MAY ACCEPT
SUCH STATUTORY DECLARATION IN LIEU OF A CERTIFICATE OF THE CORPORATION REQUIRED
BY ANY PROVISION HEREOF.  ANY SUCH STATUTORY DECLARATION MAY BE MADE BY ONE OR
MORE OF THE PRESIDENT, ANY VICE-PRESIDENT, THE CHIEF FINANCIAL OFFICER, THE
SECRETARY, THE TREASURER, ANY ASSISTANT SECRETARY OR ANY ASSISTANT TREASURER OF
THE CORPORATION.

 

(D)                                 PROOF OF EXECUTION:  PROOF OF EXECUTION OF
AN INSTRUMENT IN WRITING BY ANY WARRANTHOLDER MAY BE MADE BY THE CERTIFICATE OF
A NOTARY PUBLIC, OR OTHER OFFICER WITH SIMILAR POWERS, THAT THE PERSON SIGNING
SUCH INSTRUMENT ACKNOWLEDGED TO HIM THE EXECUTION THEREOF, OR BY AN AFFIDAVIT OF
A WITNESS TO SUCH EXECUTION OR IN ANY OTHER MANNER WHICH THE WARRANT AGENT MAY
CONSIDER ADEQUATE.

 

Section 11.04                     Experts and Advisers:

 

The Warrant Agent may employ or retain, at the expense of the Corporation, such
counsel, accountants or other experts or advisers as it may reasonably require,
said counsel, accountants, experts or advisers to be designated jointly by the
Warrant Agent and the Corporation for the purpose of determining and discharging
its duties hereunder, may pay reasonable remuneration for all services performed
by any of them without taxation of any costs of any counsel and shall not be
responsible for any misconduct on the part of any of them.  The Warrant Agent
may act and shall be protected in acting in good faith on the opinion or advice
of or information obtained from any counsel, accountant or other expert or
adviser, whether retained or employed by the Corporation or by the Warrant
Agent, in relation to any matter arising in relation to this Indenture.

 

Section 11.05                     Warrant Agent not Required to give Security:

 

The Warrant Agent shall not be required to give any bond or security in respect
of the execution of the duties, obligations and powers of this Indenture or
otherwise in respect of these premises.

 

Section 11.06                     Protection of Warrant Agent:

 

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

 

(I)                                  THE WARRANT AGENT SHALL NOT BE LIABLE FOR,
OR BY REASON OF, ANY STATEMENT OF FACT OR RECITAL IN THIS INDENTURE OR IN THE
WARRANT CERTIFICATES (EXCEPT THE REPRESENTATION CONTAINED IN SECTION 11.08
HEREOF AND IN THE COUNTERSIGNATURE OF THE WARRANT AGENT ON THE WARRANT
CERTIFICATES) OR REQUIRED TO VERIFY THE SAME, BUT ALL SUCH STATEMENTS OR
RECITALS ARE, AND SHALL BE DEEMED TO BE MADE BY, THE CORPORATION;

 

(II)                               THE WARRANT AGENT SHALL NOT BE BOUND TO GIVE
NOTICE TO ANY PERSON OR PERSONS OF THE EXECUTION HEREOF;

 

(III)                            THE WARRANT AGENT SHALL NOT INCUR ANY LIABILITY
OR RESPONSIBILITY WHATEVER OR BE IN ANY WAY RESPONSIBLE FOR THE CONSEQUENCE OF
ANY BREACH ON THE PART OF THE CORPORATION OF ANY OF THE REPRESENTATIONS,
WARRANTIES OR COVENANTS HEREIN CONTAINED OR OF ANY ACTS OF DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SERVANTS OF THE CORPORATION;

 

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

 

(V)                                 NOTHING HEREIN CONTAINED SHALL IMPOSE ANY
OBLIGATION ON THE WARRANT AGENT TO SEE TO OR TO REQUIRE EVIDENCE OF THE
REGISTRATION OR FILING (OR RENEWAL THEREOF) OF THIS INDENTURE OR ANY INSTRUMENT
ANCILLARY OR SUPPLEMENTAL HERETO.

 

(B)                                 INDEMNITY:  IN ADDITION TO AND WITHOUT
LIMITING ANY PROTECTION OF THE WARRANT AGENT HEREUNDER OR OTHERWISE BY LAW, THE
CORPORATION AGREES TO INDEMNIFY THE WARRANT AGENT AND SAVE IT 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 PERFORMANCE BY IT OF
ITS DUTIES HEREUNDER EXCEPT TO THE EXTENT THAT SUCH LIABILITIES, SUITS, DAMAGES,
COSTS AND ACTIONS ARE ATTRIBUTABLE TO THE NEGLIGENCE OR WILFUL MISCONDUCT OF THE
WARRANT AGENT. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THIS INDEMNITY SHALL
SURVIVE ANY REMOVAL OR RESIGNATION OF THE WARRANT AGENT, DISCHARGE OF THIS
INDENTURE AND TERMINATION OF ANY DUTIES AND OBLIGATIONS HEREUNDER.

 

Section 11.07                     Replacement of Warrant Agent, Successor by
Merger:

 

(A)                                  RESIGNATION:  THE WARRANT AGENT MAY RESIGN
ITS DUTIES AND OBLIGATIONS AND BE DISCHARGED FROM ALL FURTHER DUTIES AND
LIABILITIES HEREUNDER, SUBJECT TO THIS SUBSECTION 11.07(A), BY GIVING TO THE
CORPORATION NOT LESS THAN 60 DAYS’ PRIOR NOTICE IN WRITING OR SUCH SHORTER PRIOR
NOTICE AS THE CORPORATION MAY ACCEPT AS SUFFICIENT.  THE WARRANTHOLDERS, BY
EXTRAORDINARY RESOLUTION, SHALL HAVE POWER AT ANY TIME TO REMOVE THE WARRANT
AGENT AND TO APPOINT A NEW WARRANT AGENT.  IN THE EVENT OF THE WARRANT AGENT
RESIGNING OR BEING REMOVED AS AFORESAID OR BEING DISSOLVED, BECOMING BANKRUPT,
GOING INTO LIQUIDATION OR OTHERWISE BECOMING INCAPABLE OF ACTING HEREUNDER, THE
CORPORATION SHALL FORTHWITH APPOINT A NEW WARRANT AGENT UNLESS SUCH
EXTRAORDINARY RESOLUTION HAS APPOINTED A NEW WARRANT AGENT; FAILING SUCH
APPOINTMENT BY THE CORPORATION, THE RETIRING WARRANT AGENT, AT THE EXPENSE OF
THE CORPORATION, OR ANY WARRANTHOLDER MAY APPLY TO A JUDGE OF THE ONTARIO COURT
OF JUSTICE (GENERAL DIVISION), ON SUCH NOTICE AS SUCH JUDGE MAY DIRECT FOR THE
APPOINTMENT OF A NEW WARRANT AGENT; PROVIDED THAT ANY NEW WARRANT AGENT SO
APPOINTED BY THE CORPORATION OR BY THE COURT SHALL BE SUBJECT TO REMOVAL AS
AFORESAID BY THE WARRANTHOLDERS.  ANY NEW WARRANT AGENT APPOINTED UNDER THIS
SUBSECTION 11.07(A) SHALL BE A CORPORATION AUTHORIZED TO CARRY ON THE BUSINESS
OF A TRUST COMPANY OR TRANSFER AGENT IN THE PROVINCE OF ONTARIO AND, IF REQUIRED
BY APPLICABLE LEGISLATION OF ANY OTHER PROVINCE IN CANADA, IN SUCH OTHER
PROVINCES.  ON ANY SUCH APPOINTMENT THE NEW WARRANT AGENT SHALL BE VESTED WITH
THE SAME POWERS, RIGHTS, DUTIES AND RESPONSIBILITIES AS IF IT HAD BEEN
ORIGINALLY NAMED HEREIN AS WARRANT AGENT WITHOUT ANY FURTHER ASSURANCE,
CONVEYANCE, ACT OR DEED, BUT THERE SHALL BE IMMEDIATELY EXECUTED, AT THE EXPENSE
OF THE CORPORATION, ALL SUCH CONVEYANCES OR OTHER INSTRUMENTS AS MAY, IN THE
OPINION OF COUNSEL, BE NECESSARY OR ADVISABLE FOR THE PURPOSE OF ASSURING THE
SAME TO THE NEW WARRANT AGENT, PROVIDED THAT, FOLLOWING ANY RESIGNATION OR
REMOVAL OF THE WARRANT AGENT AND APPOINTMENT OF A SUCCESSOR WARRANT AGENT, THE
SUCCESSOR WARRANT AGENT SHALL HAVE EXECUTED AN APPROPRIATE INSTRUMENT ACCEPTING
SUCH APPOINTMENT AND, AT THE REQUEST OF THE CORPORATION, THE PREDECESSOR WARRANT
AGENT SHALL EXECUTE AND DELIVER TO THE SUCCESSOR WARRANT AGENT AN APPROPRIATE
INSTRUMENT TRANSFERRING TO SUCH SUCCESSOR WARRANT AGENT ALL RIGHTS AND POWERS OF
THE WARRANT AGENT HEREUNDER SO CEASING TO ACT.

 

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(B)                                 NOTICE OF SUCCESSOR:  UPON THE APPOINTMENT
OF A SUCCESSOR WARRANT AGENT, THE CORPORATION SHALL PROMPTLY NOTIFY THE
WARRANTHOLDERS THEREOF IN THE MANNER PROVIDED FOR IN ARTICLE TWELVE HEREOF.

 

(C)                                  NO FURTHER ACT FOR MERGER:  ANY CORPORATION
INTO OR WITH WHICH THE WARRANT AGENT MAY BE MERGED OR CONSOLIDATED OR
AMALGAMATED, OR ANY CORPORATION RESULTING THEREFROM, OR ANY CORPORATION
SUCCEEDING TO THE TRUST OR TRANSFER AGENCY BUSINESS OF THE WARRANT AGENT SHALL
BE THE SUCCESSOR TO THE WARRANT AGENT HEREUNDER WITHOUT ANY FURTHER ACT ON ITS
PART OR ANY OF THE PARTIES HERETO, PROVIDED THAT SUCH CORPORATION WOULD BE
ELIGIBLE FOR APPOINTMENT AS A SUCCESSOR WARRANT AGENT UNDER SUBSECTION 11.07(A)
HEREOF.

 

(D)                                 CERTIFICATION:  ANY WARRANT CERTIFICATE
COUNTERSIGNED BUT NOT DELIVERED BY A PREDECESSOR WARRANT AGENT MAY BE DELIVERED
BY THE SUCCESSOR WARRANT AGENT IN THE NAME OF THE PREDECESSOR OR SUCCESSOR
WARRANT AGENT.

 

Section 11.08                     Conflict of Interest:

 

(A)                                  REPRESENTATION:  THE WARRANT AGENT
REPRESENTS TO THE CORPORATION THAT AT THE TIME OF THE EXECUTION AND DELIVERY
HEREOF NO MATERIAL CONFLICT OF INTEREST EXISTS IN THE WARRANT AGENT’S ROLE AS A
FIDUCIARY HEREUNDER AND AGREES THAT IN THE EVENT OF A MATERIAL CONFLICT OF
INTEREST ARISING HEREAFTER IT WILL, WITHIN 90 DAYS AFTER ASCERTAINING THAT IT
HAS SUCH MATERIAL CONFLICT OF INTEREST, EITHER ELIMINATE THE SAME OR ASSIGN ITS
DUTIES AND OBLIGATIONS HEREUNDER TO A SUCCESSOR WARRANT AGENT APPROVED BY THE
CORPORATION AND MEETING THE REQUIREMENTS SET FORTH IN SUBSECTION 11.07(A)
HEREOF.

 

Section 11.09                     Acceptance of Duties and Obligations:

 

The Warrant Agent hereby accepts the duties and obligations in this Indenture
declared and provided for and agrees to perform the same upon the terms and
conditions hereinbefore set forth unless and until discharged therefrom.

 

Section 11.10                     Actions by Warrant Agent to Protect Interest:

 

The Warrant Agent shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interest and the interests of the Warrantholders.

 

Section 11.11                     Documents, Moneys, etc. Held by Warrant Agent:

 

Any securities, documents of title or other instruments that may at any time be
held by the Warrant Agent subject to the duties and obligations hereof may be
placed in the deposit vaults of the Warrant Agent or of any bank listed in
Schedule I of the Bank Act (Canada), as amended, or deposited for safekeeping
with any such bank.  Unless herein otherwise expressly provided, any moneys so
held pending the application or withdrawal thereof under any provisions of this
Indenture, may be deposited in the name of the Warrant Agent in any such bank at
the rate of interest, if any, then current on similar deposits or, with the
consent of the Corporation, may be deposited in the deposit department of the
Warrant Agent or any other loan or trust company or chartered bank authorized to
accept deposits under the laws of Canada or a province thereof.  All interest or
other income received by the Warrant Agent in respect of such deposits and
investments shall belong to the Corporation.

 

39

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Section 11.12                     Warrant Agent Not to be Appointed Receiver:

 

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

 

ARTICLE TWELVE

NOTICE TO WARRANTHOLDERS

 

Section 12.01                     Notice:

 

(A)                                  NOTICE:  UNLESS HEREIN OTHERWISE EXPRESSLY
PROVIDED, A NOTICE TO BE GIVEN HEREUNDER TO WARRANTHOLDERS WILL BE DEEMED TO BE
VALIDLY GIVEN IF THE NOTICE IS SENT BY ORDINARY SURFACE OR AIR MAIL, POSTAGE
PREPAID, ADDRESSED TO THE WARRANTHOLDERS OR DELIVERED (OR SO MAILED TO CERTAIN
WARRANTHOLDERS AND SO DELIVERED TO THE OTHER WARRANTHOLDERS) AT THEIR RESPECTIVE
ADDRESSES APPEARING ON THE REGISTERS OF HOLDERS DESCRIBED IN SECTION 2.08
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 NEWSPAPER.

 

(B)                                 DATE OF NOTICE:  A NOTICE SO GIVEN BY MAIL
OR SO DELIVERED WILL BE DEEMED TO HAVE BEEN GIVEN ON THE FIRST BUSINESS DAY
AFTER IT HAS BEEN MAILED OR ON THE DAY ON WHICH IT HAS BEEN DELIVERED, AS THE
CASE MAY BE, AND A NOTICE SO GIVEN BY PUBLICATION WILL BE DEEMED TO HAVE BEEN
GIVEN ON THE SECOND 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 FAILURE OR
OMISSION IN GIVING NOTICE OR ACCIDENTAL FAILURE TO MAIL NOTICE TO ANY
WARRANTHOLDER WILL NOT INVALIDATE ANY ACTION OR PROCEEDING FOUNDED THEREON.

 

ARTICLE THIRTEEN

GENERAL

 

Section 13.01                     Notice to the Corporation and the Warrant
Agent:

 

(A)                                  NOTICES:  UNLESS HEREIN OTHERWISE EXPRESSLY
PROVIDED, ANY NOTICE TO BE GIVEN HEREUNDER TO THE CORPORATION OR TO THE WARRANT
AGENT SHALL BE DEEMED TO BE VALIDLY GIVEN IF DELIVERED BY PREPAID COURIER, IF
TRANSMITTED BY TELECOPIER OR OTHER MEANS OF PREPAID, TRANSMITTED, RECORDED
COMMUNICATION OR IF SENT BY REGISTERED MAIL, POSTAGE PREPAID:

 

(I)                                     TO THE CORPORATION:

 

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

 

Attention:  Robert R. McEwen
Facsimile:  (647) 258-0408

 

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

 

Attention: William Pass
Facsimile: (303) 238-1724

 

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

 

(II)                                  TO THE WARRANT AGENT:

 

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

 

Attention:                                         President

Telecopier:                                     416-361-0470

 

and any such notice delivered or transmitted in accordance with the foregoing
shall be deemed to have been received on the date of delivery or transmission
or, if mailed, on the third Business Day following the date of the postmark on
such notice. The original of any notice sent by facsimile transmission to the
Warrant Agent shall be subsequently mailed to the Warrant Agent.

 

(B)                                 CHANGE OF ADDRESS:  THE CORPORATION OR THE
WARRANT AGENT MAY FROM TIME TO TIME NOTIFY THE OTHER IN THE MANNER PROVIDED IN
SUBSECTION 13.01(A) HEREOF OF A CHANGE OF ADDRESS WHICH, FROM THE EFFECTIVE DATE
OF SUCH NOTICE AND UNTIL CHANGED BY LIKE NOTICE, SHALL BE THE ADDRESS OF THE
CORPORATION OR THE WARRANT AGENT, AS THE CASE MAY BE, FOR ALL PURPOSES OF THIS
INDENTURE.

 

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(C)                                  POSTAL DISRUPTION:  IF, BY REASON OF A
STRIKE, LOCKOUT OR OTHER WORK STOPPAGE, ACTUAL OR THREATENED, INVOLVING POSTAL
EMPLOYEES, ANY NOTICE TO BE GIVEN TO THE WARRANT AGENT OR TO THE CORPORATION
HEREUNDER COULD REASONABLY BE CONSIDERED UNLIKELY TO REACH ITS DESTINATION, SUCH
NOTICE SHALL BE VALID AND EFFECTIVE ONLY IF IT IS DELIVERED BY PREPAID COURIER
OR TRANSMITTED BY TELECOPIER OR OTHER MEANS OF PREPAID, TRANSMITTED, RECORDED
COMMUNICATION, SUCH NOTICE TO BE DEEMED TO HAVE BEEN RECEIVED ON THE DATE OF
DELIVERY OR TRANSMISSION.

 

Section 13.02                     Time of the Essence:

 

Time shall be of the essence of this Indenture.

 

Section 13.03                     Counterparts:

 

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

 

Section 13.04                     Satisfaction and Discharge of Indenture:

 

Upon all Common Shares required to be issued in respect of Warrant Certificates
delivered to the Warrant Agent prior to the Expiry Date having been issued, this
Indenture shall cease to be of further force or effect and the Warrant Agent, on
demand of and at the cost and expense of the Corporation and upon delivery to
the Warrant Agent of a certificate of the President or any Vice-President of the
Corporation stating that all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.

 

Section 13.05                     Provisions of Indenture and Warrant
Certificate for the Sole Benefit of Parties and Warrantholders:

 

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

 

Section 13.06                     Stock Exchange Consents:

 

Any action provided for in this Indenture requiring the prior consent of any
stock exchange upon which the Common Shares or Warrants may be listed shall not
be completed until the requisite consent is obtained.

 

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

 

 

 

U.S. GOLD CORPORATION 

 

By:

 

 

 

 

 

 

Robert R. McEwen

 

Chairman and Chief Executive Officer

 

 

 

 

 

EQUITY TRANSFER SERVICES INC. 

 

By:

 

 

 

 

 

 

Richard M. Barnowski

 

President

 

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SCHEDULE A TO THE WARRANT

 

INDENTURE DATED FEBRUARY 22, 2006 BETWEEN

 

U.S. GOLD CORPORATION AND EQUITY TRANSFER SERVICES INC.

 

FORM OF WARRANT CERTIFICATE

 

[Certificates representing Warrants issued prior to the earlier of the
Qualification Date and the date that is four months and one day after the later
of (i) the date hereof; and (ii) the date the Corporation became a reporting
issuer in any province or territory of Canada shall bear the following legend:]

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITY MAY
NOT TRADE THIS SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER
THE LATER OF (I) [INSERT DISTRIBUTION DATE], AND (II) THE DATE THE ISSUER BECAME
A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.

 

[Certificates issued if the Registration Statement is not effective shall bear
the following legend:]

 

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.

 

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 “1933
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 1933 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.

 

EXERCISABLE ONLY PRIOR TO 5:00 P.M., DENVER TIME, ON THE EXPIRY DATE AFTER WHICH
TIME THIS WARRANT CERTIFICATE SHALL BE NULL AND VOID.

 

NUMBER

 

CERTIFICATE FOR <>

 

 

 

CUSIP

 

WARRANTS

 

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WARRANT

 

TO PURCHASE COMMON SHARES OF U.S. GOLD CORPORATION

 

THIS IS TO CERTIFY THAT, for value received, <> (the “holder”) is entitled to
subscribe for and to purchase, AT ANY TIME PRIOR TO 5:00 P.M., DENVER TIME, ON
THE EXPIRY DATE (as hereinafter defined),                      fully paid and
non-assessable common shares (“Common Shares”) of U.S. Gold Corporation (the
“Corporation”) as constituted on the date hereof (as hereinafter defined), on
the basis of one Common Share for each one Warrant (subject to adjustment in
certain circumstances), at an exercise price of US$10.00 per Common Share
(subject to adjustment in certain circumstances), by surrendering this Warrant
Certificate to the warrant agent specified below with a subscription form (FORM
1) properly completed and executed, and a certified cheque, bank draft or money
order in lawful money of the United States payable to or to the order of the
Warrant Agent (as hereinafter defined), for the total purchase price of the
Common Shares so subscribed for and purchased.

 

The Expiry Date is February 22, 2011.

 

The holder of this Warrant Certificate may subscribe for and purchase less than
the number of Common Shares entitled to be subscribed for and purchased on
surrender of this Warrant Certificate.  If the subscription does not exhaust the
Warrants represented by this Warrant Certificate, a Warrant Certificate
representing the balance of the Warrants will be issued to the holder. No
Warrant Certificate representing fractional Warrants will be issued and the
holder hereof understands and agrees that such holder will not be entitled to
any cash payment or other form of compensation in respect of a fractional
Warrant.  By acceptance hereof, the holder expressly waives any right to receive
fractional Common Shares upon exercise hereof.  If the number of Common Shares
to which a Warrantholder would otherwise be entitled upon the exercise of this
Warrant Certificate is not a whole number, then the number of Common Shares to
be issued will be rounded down to the next whole number.

 

The principal office of Equity Transfer Services Inc. (the “Warrant Agent”) in
the City of Toronto, Ontario, has been appointed the warrant agent to receive
subscriptions for Common Shares and payments from holders of Warrant
Certificates.  This Warrant Certificate, the subscription form (FORM 1), and a
certified cheque, bank draft or money order shall be deemed to be surrendered to
the Warrant Agent only upon personal delivery thereof or, if sent by post or
other means of transmission, upon receipt thereof by the Warrant Agent at the
office specified above.  The Corporation may also provide for other places at
which this Warrant Certificate may be surrendered for exchange or exercise.  If
mail is used for delivery of a Warrant Certificate, for the protection of the
holder, registered mail should be used and sufficient time should be allowed to
avoid the risk of late delivery.

 

Certificates representing Common Shares subscribed for and purchased will be
mailed to the persons specified in the subscription form (FORM 1) at the
respective addresses specified therein or, if so specified in the subscription
form (FORM 1), delivered to such persons at the office of the Warrant Agent
where the applicable Warrant Certificate was surrendered, when the transfer
books of the Corporation have been opened for three Business Days after the due
surrender of such Warrant Certificate and payment as aforesaid, including any
applicable taxes.

 

This Warrant Certificate may, upon compliance with the reasonable requirements
and charges of the Warrant Agent, be divided by completing and executing FORM 2
and delivering the Warrant Certificate to the Warrant Agent.

 

2

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

 

If any Common Shares issuable upon the exercise of Warrants require the
maintenance of a current Registration Statement, with respect to such Common
Shares under the Securities Act of 1933, as amended (the “1933 Act”), in no
event shall such Common Shares be issued unless the Common Shares are registered
under the 1933 Act pursuant to an effective Registration Statement and the
Company causes to be delivered to the holder a U.S. Prospectus; provided,
however that, if the Registration Statement ceases to be effective, prior to the
Expiry Time and for so long as the Registration Statement is not effective,
subject to applicable law, a holder of any Warrant may, at its option: (i)
exercise such Warrants, if the holder is not a U.S. Purchaser and the holder
delivers a duly completed and executed Warrant Exercise Certification (in the
form attached as Schedule B to the Indenture) certifying that the holder: (A)(1)
is not in the United States; (2) is not a U.S. Person and is not exercising the
Warrants for, or on behalf or benefit of, a U.S. Person or person in the United
States; (3) did not execute or deliver the Warrant Subscription Form in the
United States; (4) agrees not to engage in hedging transactions with regard to
the Securities prior to the expiration of the one-year distribution compliance
period set forth in Rule 903(b)(3) of Regulation S; (5) acknowledges that the
Common Shares issuable upon exercise of the Warrants are “restricted securities”
as defined in Rule 144 of the 1933 Act and upon the issuance thereof, and until
such time as the same is no longer required under the applicable requirements of
the 1933 Act or applicable U.S. state laws and regulations, the certificates
representing the Common Shares will bear a restrictive legend; and (6)
acknowledges that the Corporation shall refuse to register any transfer of the
Common Shares not made in accordance with the provisions of Regulation S,
pursuant to registration under the 1933 Act, or pursuant to an available
exemption from registration under the 1933 Act; and (B) neither the Corporation
nor the holder has engaged in any “directed selling efforts” (as defined in
Regulation S) in the United States; or (ii) exercise such Warrants in a
transaction that does not require registration under the 1933 Act or any
applicable U.S. state laws and regulations and the holder has (A) delivered a
duly completed and executed Warrant Exercise Certification (in the form attached
hereto as Schedule B) certifying that the holder is exercising the Warrants
pursuant to such exemptions and (B) furnished to the Corporation, prior to such
exercise, an opinion of counsel of recognized standing in form and substance
satisfactory to the Corporation to such effect. If no Registration Statement is
effective at any time when any Warrant is exercised, the holder shall deliver a
completed Warrant Exercise Certification (attached as Schedule B to the
Indenture) to the Transfer Agent and the Corporation.

 

This Warrant Certificate represents warrants of the Corporation issued or
issuable under the provisions of an indenture (which indenture together with all
other instruments supplemental or ancillary thereto is herein referred to as the
“Warrant Indenture”) dated as of February 22, 2006, between the Corporation and
the Warrant Agent, to which reference is hereby made for particulars of the
rights of the holders of the Warrant Certificates, the Corporation and the
Warrant Agent in respect thereof and the terms and conditions upon which the
Warrants represented hereby are issued and held, all to the same effect as if
the provisions of the Warrant Indenture were herein set forth in full, to all of
which the holder of this Warrant Certificate by acceptance hereof assents, it
being expressly understood that the provisions of the Warrant Indenture and this
Warrant Certificate are for the sole benefit of the Corporation, the

 

3

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Warrant Agent and the Warrantholders.  A copy of the Warrant Indenture may be
obtained on request without charge from the secretary of the Corporation, at
U.S. Gold Corporation, 99 George Street, 3rd Floor, Toronto, Ontario, M5A 2N4,
telephone: (647) 258-0395.  Words and terms in this Warrant Certificate with the
initial letter or letters capitalized and not defined herein shall have the
meanings ascribed to such capitalized words and terms in the Warrant Indenture.

 

Nothing contained in this Warrant Certificate, the Warrant Indenture or
otherwise shall be construed as conferring upon the holder hereof any right or
interest whatsoever as a holder of Common Shares or other shareholder of the
Corporation or any other right or interest except as herein and in the Warrant
Indenture expressly provided.

 

The Warrant Indenture provides for adjustments to the exercise price of the
Warrants and to the number and kind of securities purchasable upon exercise upon
the happening of certain stated events including the subdivision or
consolidation of the Common Shares, certain distributions of Common Shares or
securities exchangeable for or convertible into Common Shares or of other assets
or property of the Corporation, certain offerings of rights, warrants or options
and certain reorganizations.

 

The Warrant Indenture provides for the giving of notice by the Corporation prior
to taking certain actions specified therein.  The Corporation may from time to
time purchase any of the Warrants by private contract or otherwise.  Any such
Warrants purchased by the Corporation shall be cancelled.

 

This Warrant Certificate, the Warrants represented by this Warrant Certificate
and the Warrant Indenture shall be governed by and performed, construed and
enforced in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein.

 

This Warrant Certificate shall not be valid for any purpose until it has been
countersigned by or on behalf of the Warrant Agent for the time being under the
Warrant Indenture.

 

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be
signed by its proper officers.

 

 

 

U.S. GOLD CORPORATION

 

By:

 

 

 

 

 

 

 

 

 

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

 

 

 

EQUITY TRANSFER SERVICES INC.

 

By:

 

 

 

 

 

 

 

 

Authorized Officer

 

 

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SUBSCRIPTION FORM

 

(FORM 1)

 

THE HOLDER HEREBY SUBSCRIBES FOR                              Common Shares of
U.S. Gold Corporation at US$10.00 per Common Share and on the other terms set
out in the Warrant Certificate and Warrant Indenture and encloses herewith a
certified cheque, bank draft or money order in U.S. dollars payable to “U.S.
Gold Corporation” in payment of the aggregate subscription price therefor.

 

The undersigned hereby irrevocably directs that the Common Shares be delivered,
subject to the conditions set out in this certificate and the provisions of the
Warrant Indenture, and that the said Common Shares be registered as follows:

 

Name(s) in Full and Social
Insurance Number(s)

 

Address(es) (include postal
code)

 

Number of Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL:

 

 

Please print full name in which certificate(s) are to be issued.  If any of the
Common Shares are to be issued to a person or persons other than the
Warrantholder, the Warrantholder must pay to the Warrant Agent all requisite
taxes or other government charges, if any.

 

DATED this        day of                     , 20      .

 

 

 

 

 

Signature of Warrantholder

Signature Guaranteed

 

Print Name and Address in full below:

 

Name

 

 

 

 

 

Address

 

 

 

 

 

 

 

(Include Postal Code)

 

o                                    Please check box if certificates
representing the Common Shares are to be delivered at the office of the Warrant
Agent where this Warrant Certificate is surrendered, failing which the
certificates will be mailed to the address set forth above.

 

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TO DIVIDE OR COMBINE WARRANT CERTIFICATES

(FORM 2)

 

Fill in and sign this FORM 2 and surrender this Warrant Certificate to the
Warrant Agent in ample time for new Warrant Certificates to be issued and used.

Deliver to the undersigned Warrantholder, at the address mentioned below, new
certificates as follows:

 

 

 

 

 

 

 

 

Certificate(s)

 

for

 

Warrants each

 

 

 

 

 

 

 

Certificate(s)

 

 

 

 

for

 

Warrants each

 

 

 

 

 

 

 

Certificate(s)

 

 

 

 

for

 

Warrants each

 

 

 

 

Dated this      day of                  , 20      .

 

 

 

 

 

 

Signature of Warrantholder

 

Print name and address in full below.

 

Name

 

 

 

 

 

Address

 

 

 

 

 

 

 

(Include Postal Code)

 

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FORM OF TRANSFER

(FORM 3)

 

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers the
Warrants represented by this Warrant Certificate to:

 

Name

 

 

 

 

 

Address

 

 

 

 

 

 

 

(Include Postal Code)

 

 

 

Social Insurance Number(s)

 

 

 

and hereby irrevocably constitutes and appoints

 

 

 

(leave this space blank)

 

 

as the attorney of the undersigned with full power of substitution to transfer
the Warrants on the appropriate register of the Warrant Agent.

 

DATED this      day of             , 20       .

 

 

 

 

 

Signature Guaranteed

Signature of Transferor

 

 

 

 

 

 

Name of Transferor

 

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

 

1.                                       In the case of any transfer of Warrants
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 Warrant Indenture contains certain
other requirements relating to the transfer of Warrants, 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

 

WARRANT EXERCISE CERTIFICATION

 

(TO BE COMPLETED ONLY IF A REGISTRATION STATEMENT
IS NOT EFFECTIVE)

 

To:

 

U.S. GOLD CORPORATION

 

 

 

And To:

 

EQUITY TRANSFER SERVICES INC.

 

The undersigned holder of the within Warrant Certificate, pursuant to the
Warrant Indenture mentioned therein, hereby exercises certain Warrants (the
“Exercised Warrants”) evidenced thereby and hereby subscribes for a number of
Common Shares of U.S. Gold Corporation equal to such number of Common Shares or
number or amount of other securities or property, or combination thereof, to
which such exercise entitles him under the provisions of the Warrant Indenture
at an aggregate price equal to the product of the Exercise Price and the number
of Exercised Warrants, and on the terms specified in such Warrant Certificate
and the Warrant Indenture, and in payment therefor, delivers herewith a bank
draft, certified cheque or money order payable to U.S. Gold Corporation. 
Capitalized terms not defined herein shall have the definitions set forth in the
Warrant Indenture.

 

The undersigned represents that it (A) has had access to such current public
information concerning U.S. Gold Corporation as it considered necessary in
connection with its investment decision and (B) understands that the securities
issuable upon exercise hereof have not been registered under the United States
Securities Act of 1933, as amended (the “1933 Act”).

 

The undersigned represents and warrants that it: [CHECK ONE ONLY]

 

o                                    A.                                   is not
a U.S. Purchaser and it (1) is not in the United States; (2) is not a U.S.
Person and is not exercising the Warrants for, or on behalf or benefit of, a
U.S. Person or person in the United States; (3) did not execute or deliver the
Subscription Form in the United States; (4) agrees not to engage in hedging
transactions with regard to the Common Shares prior to the expiration of the
one-year distribution compliance period set forth in Rule 903(b)(3) of
Regulation S; (5) acknowledges that the Common Shares issuable upon exercise of
the Warrants are “restricted securities” as defined in Rule 144 of the 1933 Act
and upon the issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the 1933 Act or applicable U.S.
state laws and regulations, the certificates representing the Common Shares will
bear a restrictive legend; and (6) acknowledges that the Corporation shall
refuse to register any transfer of the Common Shares not made in accordance with
the provisions of Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration under the 1933 Act; and (B)
it holder has not engaged in any “directed selling efforts” (as defined in
Regulation S) in the United States.

 

o                                    B.                                     the
undersigned is delivering a written opinion of United States Counsel or a
written confirmation from the Corporation to the effect that the Common Shares
to be delivered upon exercise hereof have been registered under the 1933 Act or
are exempt from registration thereunder.

 

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The undersigned holder understands that the certificate representing the
Corporation’s Common Shares to be issued upon exercise of this Warrant will bear
a legend restricting the transfer without registration under the 1933 Act and
applicable state securities laws substantially the form set forth in Section
4.01(c) of the Warrant Indenture.

 

Name:

 

 

Please print or type name and address (including postal code)

 

 

 

Address:

 

 

Number of Warrants being Exercised:

 

 

 

DATED this                        day of                 ,

 

Signature guaranteed by:

 

 

 

Name of registered holder (please print)

 

 

 

 

 

 

 

Signature of or on behalf of

 

registered holder

 

 

 

 

 

 

Office, Title or other Authorization (if

 

holder not an individual)

 

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