Document:

Exhibit 10.3

 

U.S. GOLD CORPORATION

 

- and -

 

 

EQUITY TRANSFER SERVICES INC.

 

 

WARRANT INDENTURE

 

 

Dated February 22, 2006

 

Fraser Milner Casgrain LLP

 

 

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

  

 

 

	
  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

 

	
  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

 

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;

 

 

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

 

(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

 

(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

 

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

 

(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.

 

6

 

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

 

7

 

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

 

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.

 

9

 

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.

 

10

 

(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

 

11

 

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

 

12

 

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.

 

13

 

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:

 

14

 

(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.”

 

15

 

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

 

16

 

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

 

17

 

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).

 

18

 

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

 

19

 

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).

 

20

 

(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

 

21

 

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

 

(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

 

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

 

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.

 

25

 

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

 

(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

 

(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

 

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

 

29

 

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

 

30

 

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:

 

31

 

(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

 

32

 

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.

 

33

 

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

 

34

 

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

 

35

 

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

 

36

 

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;

 

37

 

(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.

 

38

 

(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

 

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:

 

40

 

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.

 

41

 

(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.

 

42

 

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

  

 

 

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

  

 

 

 

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

 

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

 

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

  	
   

  

 

4

 

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.

 

5

 

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)

  

 

6

 

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.

 

7

 

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.

 

 

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)

  

 

2Exhibit 10.4

 

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 THAT THE
ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.

 

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 SECURITIES ACT.

 

AGENT’S COMPENSATION OPTIONS

 

agent’s compensation options
exercisable to acquire agent’s

warrants exercisable to purchase Common Shares and Warrants

 

of

 

U.S. GOLD CORPORATION

(existing under the laws of the State of
Colorado)

 

THIS IS TO CERTIFY THAT, for valuable
consideration, GMP SECURITIES L.P.,
Suite 1100, 145 King Street West, Toronto, Ontario, M5H 1J8 (the “Agent”) is the registered holder of
1,002,000 agent’s compensation options (the “Agent’s Compensation Options”) of
U.S. Gold Corporation (the “Corporation”), with each Agent’s Compensation
Option entitling the Agent, prior to the Time of Expiry on the Expiry Date,
each as defined in the subscription receipt indenture dated as of February 22,
2006 among the Corporation, the Agent and Equity Transfer Services Inc. (the “Subscription
Receipt Indenture”), upon and subject to the terms and conditions set forth
herein and in the schedules attached hereto which form an integral part hereof
and shall be deemed to be incorporated herein (the whole being referred to as
this “Agent’s Compensation Option Certificate”), to acquire, for no additional
consideration, agent’s warrants (the “Agent’s Warrants”) of the Corporation in
the form set forth in Schedule C attached hereto (together with the schedules
attached thereto, the “Agent’s Warrant Certificate”) entitling the Agent to
subscribe for one unit of the Corporation (a “Unit”) on the terms and subject
to the conditions set forth therein, by delivering to the Corporation at its
registered office this Agent’s Compensation Option Certificate with the
conversion form attached as Schedule B hereto duly completed and executed. Each
Unit will consist of one Common Share and one-half of one Warrant.

 

The Agent shall be entitled to convert up
to 501,000 of the Agent’s Compensation Options represented hereby at any time
prior to the Time of Expiry, provided that any Agent’s Compensation Options not
so converted and the remaining 501,000 Agent’s Compensation Options (the “Remaining
Options”) represented hereby will be deemed converted by the Agent, and the
Agent 

 

 

shall, without any action on the part of
the holder thereof (including the surrender of this Agent’s Compensation Option
Certificate), be deemed to have subscribed for the Agent’s Warrants, at the
Release Time. For greater certainty, in the event the Release Time does not
occur prior to the Time of Expiry, the Remaining Options shall be void and
deemed to be of no further effect. The Agent’s Warrants will be issued, and an
Agent’s Warrant Certificate will be delivered, to the Agent upon the conversion
or deemed conversion of the Agent’s Compensation Options.

 

The Agent’s Compensation
Options do not entitle the Agent to any rights or interest whatsoever as a
shareholder of the Corporation or any other rights or interest, except as
expressly provided in this Agent’s Compensation Option Certificate.

 

All capitalized terms
used herein and not otherwise defined shall have the meaning ascribed to such
terms in the Subscription Receipt Indenture.

 

This Agent’s Compensation Option Certificate is non-assignable
and non-transferable.

 

If this Agent’s
Compensation Option Certificate or any replacement hereof becomes stolen, lost,
mutilated or destroyed, the Corporation shall, on such terms as it may in its
discretion impose, acting reasonably, issue and deliver a new certificate, in
form identical hereto, evidencing the conversion rights evidenced hereby to
replace the Agent’s Compensation Option Certificate so stolen, lost, mutilated
or destroyed.

 

By acceptance hereof, the
Agent hereby represents and warrants to the Corporation that the Agent is
registered under the Securities Act
(Ontario) or securities legislation in another jurisdiction in Canada as an
adviser or dealer (other than a limited market dealer) and, accordingly, the
Agent is an “accredited investor” within the meaning of applicable securities
legislation, and is acquiring the Agent’s Compensation Options as principal for
its own account, and not for the benefit of any other person.

 

This Agent’s Compensation
Option Certificate shall enure to the benefit of and shall be binding upon the
Agent and the Corporation and their respective successors.

 

This Agent’s Compensation
Option Certificate shall be governed by and construed in accordance with the
laws of the Province of Ontario
and the federal laws of Canada applicable therein and the parties hereto irrevocably attorn to the jurisdiction of the
courts of the Province of Ontario.

 

IN WITNESS WHERE OF, the
Corporation has caused this Agent’s Compensation Option Certificate to be
issued in its name by the signature of its duly 
authorized officer in that behalf.

 

DATED as of the 22nd   day of February, 2006.

 

 

	
   

  	
  U.S. GOLD CORPORATION

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  

 

2

 

SCHEDULE A

 

Additional Terms and Conditions of the Agent’s
Compensation Options

 

1.                                       The Corporation covenants and
agrees that sufficient Agent’s Warrants shall be created, allotted and reserved
for issuance to satisfy the conversion or deemed conversion of the Agent’s
Compensation Options herein provided for, and it will cause the Agent’s
Warrants, issuable hereunder to be issued and delivered as directed by the
Agent.

 

2.                                       The Corporation covenants and
agrees that, so long as the Agent’s Compensation Options are outstanding, it
will at all times reserve out of its unissued Common Shares against the
exercise by the Agent of the Agent’s Warrants a sufficient number of Common
Shares and will ensure that a sufficient number of Warrants shall be created,
allotted and reserved for issuance to enable the Agent to exercise in full its
subscription rights upon the basis and upon the terms and conditions provided
for by the Agent’s Compensation Option Certificate and the Agent’s Warrant
Certificate.

 

3.                                       The Corporation will do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered, all acts, deeds, assurances in law as may be reasonably required for
the better accomplishing and effecting of the intentions and provisions of the
Agent’s Compensation Options and the Agent’s Warrant Certificate.

 

4.                                       Any notice to be given
hereunder may be given by delivery to the Agent, or by prepaid registered mail
addressed to the Agent, at the following address:

 

GMP Securities
L.P.

Suite 1100

145 King Street West

Toronto, Ontario

M5H 1J8

 

Attention:  Mark Wellings

 

or to such
other address as the Agent may from time to time in writing notify the
Corporation.

 

 

SCHEDULE B

 

Conversion Form for the Agent’s
Compensation Options

 

TO:         U.S.
GOLD CORPORATION

 

The undersigned holder of
the Agent’s Compensation Options evidenced by this Agent’s Compensation Option
Certificate hereby converts, for no additional consideration, into
                          
Agent’s Warrants on and subject to the other terms and conditions specified in
the Agent’s Compensation Option Certificate.

 

 

	
   

  	
  GMP SECURITIES L.P.

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  

 

 

SCHEDULE C

 

Form of Agent’s Warrant Certificate

 

The Agent’s Warrants expire at 5:00 p.m. (Toronto
time) on August 22, 2007.

 

AGENT’S WARRANTS

 

agent’s warrants exercisable

to purchase Common Shares and Warrants

 

of

 

U.S. GOLD CORPORATION

(existing under the laws of the State of
Colorado)

 

THIS IS TO CERTIFY THAT,
for valuable consideration, GMP SECURITIES
L.P., Suite 1100, 145 King Street West, Toronto, Ontario, M5H
1J8 (the “Agent”) is the registered holder of 1,002,000 agent’s
warrants (the “Agent’s Warrants”) of U.S. Gold Corporation (the “Corporation”),
with each Agent’s Warrant entitling the Agent, at any time prior to
5:00 p.m. (Toronto time) on August 22, 2007, upon and subject to the terms
and conditions set forth herein and in the schedules attached hereto which form
an integral part hereof and shall be deemed to be incorporated herein (the
whole being referred to as this “Agent’s Warrant Certificate”), to subscribe
for one unit  of the Corporation (a “Unit”),
with each Unit consisting of one Common
Share as constituted on the date hereof and one-half of one Warrant, with each
whole Warrant entitling the Agent to acquire one Warrant Share upon the terms
and subject to the conditions set forth in the certificates representing the
Warrants to be issued upon any exercise of Agent’s Warrants.

 

The purchase price
payable for each Unit subscribed for upon the exercise of the Agent’s Warrants
shall be US$4.50, subject to adjustment in the events and in the manner set
forth herein.

 

This Agent’s Warrant
Certificate shall become wholly void and the unexercised portion of the Agent’s
Warrants evidenced hereby will expire and terminate at 5:00 p.m. (Toronto time)
on August 22, 2007.

 

This Agent’s Warrant Certificate is non-assignable and
non-transferable.

 

The Warrants issuable
upon any exercise of the Agent’s Warrants represented hereby shall be governed
by the Warrant Indenture and, upon any exercise of the Agent’s Warrants
represented hereby, all certificates representing Warrants issuable in
connection therewith shall be issued in the form attached as Schedule A to the
Warrant Indenture.

 

Certificates representing
fractional Common Shares or Warrants shall not be issued by the Corporation. If
the number of Common Shares or Warrants to which the Agent would otherwise be
entitled upon the exercise of Agent’s Warrants is not a whole number, then the
number of Common Shares or Warrants to be issued to the Agent shall be rounded
down to the next whole number and the Agent shall not be entitled to receive
fractional Common Shares or Warrants or any cash or other consideration in
respect thereof.

 

 

All Units which shall be
issued upon the exercise of Agent’s Warrants shall be issued to the Agent, upon
payment therefor of the amount at which the Units may at the time be purchased
pursuant to the provisions hereof, and the Agent shall be issued and shall be
deemed to have become the holder of record of such Common Shares and Warrants
comprising the Units on the date of delivery of this Agent’s Warrant
Certificate, together with payment for the Units subscribed for, unless the
transfer books of the Corporation shall be closed on such date, in which event
the Units so subscribed for shall be deemed to be issued, and the Agent shall
be deemed to have become the holder of record of such Common Shares and
Warrants comprising the Units, on the date on which such transfer books are
reopened, and such Units shall be issued at the purchase price in effect on the
date of delivery of this Agent’s Warrant Certificate, together with payment for
the Units subscribed for.

 

The Agent may purchase
less than the number of Units which the Agent is entitled to purchase hereunder
on delivery of this Agent’s Warrant Certificate, in which event a new agent’s
warrant certificate, in form identical hereto except for the number of Agent’s
Warrants represented by such agent’s warrant certificate, representing the
Units not purchased, will be issued to the Agent.

 

The Agent’s Warrants do
not entitle the Agent to any rights or interest whatsoever as a shareholder of
the Corporation or any other rights or interest, except as expressly provided
in this Agent’s Warrant Certificate.

 

All capitalized terms
used herein and not otherwise defined shall have the meaning ascribed to such
terms in the Subscription Receipt Indenture.

 

If this Agent’s Warrant
Certificate or any replacement hereof becomes stolen, lost, mutilated or
destroyed, the Corporation shall, on such terms as it may in its discretion
impose, acting reasonably, issue and deliver a new agent’s warrant certificate,
in form identical hereto, evidencing any unexercised portion of the
subscription rights evidenced hereby to replace the Agent’s Warrant Certificate
so stolen, lost, mutilated or destroyed.

 

The Agent acknowledges
that any Common Shares and Warrants issued upon the exercise of Agent’s
Warrants shall be restricted or unrestricted to the same extent, and shall bear
legends to the same extent, if any, as the Common Shares and Warrants issued
upon conversion of the Subscription Receipts pursuant to the terms of the
Subscription Receipt Indenture.

 

All amounts of money
referred to in this Agent’s Warrant Certificate are expressed in lawful money
of the United States.

 

This Agent’s Warrant Certificate
shall enure to the benefit of and shall be binding upon the Agent and the
Corporation and their respective successors.

 

This Agent’s Warrant
Certificate shall be governed by and construed in accordance with the laws of
the Province of Ontario and the
federal laws of Canada applicable therein and the parties hereto irrevocably attorn to the jurisdiction of the
courts of the Province of Ontario.

 

2

 

IN WITNESS WHEREOF the
Corporation has caused this Agent’s Warrant Certificate to be issued in its
name by the signature of its duly 
authorized officer in that behalf.

 

DATED as of the day of
                       
, 200     .

 

	
   

  	
  U.S. GOLD CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

3

 

SCHEDULE D

 

Additional Terms and Conditions of the
Agent’s Warrants

 

1.                                       The Corporation covenants and agrees that, so long as the within
Agent’s Warrants are outstanding, it will at all times reserve out of its
unissued Common Shares against the exercise by the Agent of the Agent’s
Warrants a sufficient number of Common Shares and will ensure that a sufficient
number of Warrants shall be created, allotted and reserved for issuance to
enable the Agent to exercise in full its subscription rights upon the basis and
upon the terms and conditions provided for by the Agent’s Warrant Certificate.

 

2.                                       In the event that, at any time prior to, or subsequent to, the issue
to the Agent of this Agent’s Warrant Certificate, there shall have occurred one
or more events which would require an adjustment or adjustments in accordance
with the provisions of section 4.06 of the Subscription Receipt Indenture,
then, notwithstanding anything to the contrary herein and notwithstanding that
the Agent’s Warrants represented hereby may not have been issued to the Agent
at the applicable time, at the time of the issue of Units upon any exercise of
this Agent’s Warrant, the same adjustment or adjustments in accordance with the
Subscription Receipt Indenture shall be made to the number of Units issuable
upon any exercise of the Agent’s Warrants represented hereby and/or the
exercise price of such Agent’s Warrants as is equitable, mutatis
mutandis, as if such Agent’s Warrants were Subscription Receipts
governed by the Subscription Receipt Indenture.

 

3.                                       The Corporation will do, execute, acknowledge and deliver or cause
to be done, executed, acknowledged or delivered, all acts, deeds, assurances in
law as may be reasonably required for the better accomplishing and effecting of
the intentions and provisions of the Agent’s Warrant Certificate.

 

4.                                       Any notice to be given hereunder may be given by delivery to the
Agent, or by prepaid registered mail addressed to the Agent, at the following
address:

 

GMP Securities L.P.

Suite 1100

145 King Street West

Toronto, Ontario

M5H 1J8

 

Attention:  Mark
Wellings

 

or to such
other address as the Agent may from time to time in writing notify the
Corporation.

 

 

SCHEDULE E

 

Subscription Form for the Agent’s Warrants

 

TO:         U.S.
GOLD CORPORATION

 

The undersigned hereby
subscribes for
                  
Units (or such number of Units or other securities to which such subscription
entitles it in lieu thereof or in addition thereto under the provisions of the
Agent’s Warrant Certificate dated as of the        
day of
                    
, 200         ) at the purchase
price per Unit of US$4.50 (or at such purchase price per share as may be in
effect under the provisions of the Agent’s Warrant Certificate) and on and
subject to the other terms and conditions specified in the Agent’s Warrant
Certificate and hereunder and encloses herewith the certified cheque, bank
draft or money order or has transmitted good same day funds by wire or other
similar transfer in lawful money of the United States payable to or to the
order of U.S. Gold Corporation in payment of the subscription price.

 

The undersigned hereby
directs that the Units subscribed for hereunder are to be issued and delivered
as follows:

 

	
  Name in Full

  	
   

  	
  Number of

  Common Shares

  	
   

  	
  Number of Warrants

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

DATED this
            day of
                     
, 200       .

 

 

	
   

  	
  GMP SECURITIES L.P.

  
	
   

  	
  By:

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