Document:

exh4_8.htm

 

Exhibit 4.8

 

 

 

 

CANADIAN ZINC CORPORATION

as the Corporation

 

and

 

 

COMPUTERSHARE TRUST COMPANY OF CANADA

as the Warrant Agent

 

	 	 	 

 

 

WARRANT INDENTURE

 

Providing for the Issue of Warrants Dated as of July 31, 2014

 

	 	 	 

 

 

  

  

  

TABLE OF CONTENTS

 

	
Article 1.        INTERPRETATION

	
1

	
1.1

	
Definitions

	
1

	
1.2

	
Gender and Number

	
4

	
1.3

	
Headings, Etc.

	
4

	
1.4

	
Day not a Business Day

	
4

	
1.5

	
Time of the Essence

	
4

	
1.6

	
Monetary References

	
4

	
1.7

	
Language

	
4

	
1.8

	
Applicable Law

	
4

	
Article 2.        Issue of Warrants

	
4

	
2.1

	
Creation and Issue of Warrants

	
4

	
2.2

	
Terms of Warrants

	
4

	
2.3

	
Warrantholder not a Shareholder

	
5

	
2.4

	
Warrants to Rank Pari Passu

	
5

	
2.5

	
Form of Warrants and Certificated Warrants

	
5

	
2.6

	
Book Entry Warrants

	
5

	
2.7

	
Warrant Certificate

	
6

	
2.8

	
Legends

	
8

	
2.9

	
Register of Warrants

	
9

	
2.10

	
Issue in Substitution for Warrant Certificates Lost, etc

	
9

	
2.11

	
Exchange of Warrant Certificates

	
10

	
2.12

	
Transfer and Ownership of Warrants

	
10

	
2.13

	
Cancellation of Surrendered Warrants

	
10

	
Article 3.         EXERCISE OF WARRANTS

	
11

	
3.1

	
Right of Exercise

	
11

	
3.2

	
Warrant Exercise

	
11

	
3.3

	
Prohibition on Exercise by U.S. Persons; Legended Certificates

	
12

	
3.4

	
Transfer Fees and Taxes

	
13

	
3.5

	
Warrant Agency

	
13

	
3.6

	
Effect of Exercise of Warrant Certificates

	
13

	
3.7

	
Partial Exercise of Warrants; Fractions

	
14

	
3.8

	
Expiration of Warrants

	
14

	
3.9

	
Accounting and Recording

	
14

	
3.10

	
Securities Restrictions

	
14

 

 

  

  

  

 

	
Article 4.        ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE

	
14

	
4.1

	
Adjustment of Number of Common Shares and Exercise Price

	
14

	
4.2

	
Entitlement to Common Shares on Exercise of Warrant

	
17

	
4.3

	
No Adjustment for Certain Transactions

	
17

	
4.4

	
Determination by Auditors

	
17

	
4.5

	
Proceedings Prior to any Action Requiring Adjustment

	
17

	
4.6

	
Certificate of Adjustment

	
17

	
4.7

	
Notice of Special Matters

	
18

	
4.8

	
No Action after Notice

	
18

	
4.9

	
Other Action

	
18

	
4.10

	
Protection of Warrant Agent

	
18

	
4.11

	
Participation by Warrantholder

	
18

	
Article 5.        RIGHTS OF THE CORPORATION AND COVENANTS

	
18

	
5.1

	
Optional Purchases by the Corporation

	
18

	
5.2

	
General Covenants

	
19

	
5.3

	
Warrant Agent's Remuneration and Expenses

	
19

	
5.4

	
Performance of Covenants by Warrant Agent

	
19

	
5.5

	
Enforceability of Warrants

	
19

	
5.6

	
U.S. Securities Matters

	
20

	
Article 6.        ENFORCEMENT

	
20

	
6.1

	
Suits by Registered Warrantholders

	
20

	
6.2

	
Suits by the Corporation

	
20

	
6.3

	
Immunity of Shareholders, etc

	
20

	
6.4

	
Waiver of Default

	
20

	
Article 7.        MEETINGS OF REGISTERED WARRANTHOLDERS

	
20

	
7.1

	
Right to Convene Meetings

	
20

	
7.2

	
Notice

	
21

	
7.3

	
Chairman

	
21

	
7.4

	
Quorum

	
21

	
7.5

	
Power to Adjourn

	
21

	
7.6

	
Show of Hands

	
21

	
7.7

	
Poll and Voting

	
21

	
7.8

	
Regulations

	
22

	
7.9

	
Corporation and Warrant Agent May be Represented

	
22

	
7.10

	
Powers Exercisable by Extraordinary Resolution

	
22

	
7.11

	
Meaning of Extraordinary Resolution

	
23

	
7.12

	
Powers Cumulative

	
23

	
7.13

	
Minutes

	
23

	
7.14

	
Instruments in Writing

	
23

	
7.15

	
Binding Effect of Resolutions

	
24

	
7.16

	
Holdings by Corporation Disregarded

	
24

 

  

  

  

 

 

	
Article 8.        SUPPLEMENTAL INDENTURES

	
24

	
8.1

	
Provision for Supplemental Indentures for Certain Purposes

	
24

	
8.2

	
Successor Entities

	
24

	
Article 9.        CONCERNING THE WARRANT AGENT

	
25

	
9.1

	
Trust Indenture Legislation

	
25

	
9.2

	
Rights and Duties of Warrant Agent

	
25

	
9.3

	
Evidence, Experts and Advisers

	
25

	
9.4

	
Documents, Monies, etc. Held by Warrant Agent

	
26

	
9.5

	
Actions by Warrant Agent to Protect Interest

	
26

	
9.6

	
Warrant Agent Not Required to Give Security

	
26

	
9.7

	
Protection of Warrant Agent

	
26

	
9.8

	
Replacement of Warrant Agent; Successor by Merger

	
27

	
9.9

	
Conflict of Interest

	
27

	
9.10

	
Acceptance of Agency

	
28

	
9.11

	
Warrant Agent Not to be Appointed Receiver

	
28

	
9.12

	
Warrant Agent Not Required to Give Notice of Default

	
28

	
9.13

	
Anti-Money Laundering

	
28

	
9.14

	
Compliance with Privacy Code

	
28

	
Article 10.        GENERAL

	
29

	
10.1

	
Notice to the Corporation and the Warrant Agent

	
29

	
10.2

	
Notice to Registered Warrantholders

	
29

	
10.3

	
Ownership of Warrants

	
29

	
10.4

	
Satisfaction and Discharge of Indenture

	
29

	
10.5

	
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders

	
30

	
10.6

	
Common Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided

	
30

	
10.7

	
Severability

	
30

	
10.8

	
Force Majeure

	
30

	
10.9

	
Assignment, Successors and Assigns

	
30

	
10.10

	
     Counterparts

	
31

SCHEDULES

 

Schedule "A" – Warrant Certificate

 

Schedule "B" – Form of Declaration for Removal of Legend

 

  

  

  

  

 

WARRANT INDENTURE

THIS WARRANT INDENTURE is dated as of July 31, 2014

BETWEEN:

 

Canadian Zinc Corporation, a British Columbia company with a head office at Suite 1710, 650 West Georgia Street, Vancouver, British Columbia, V6B 4N9, Fax: 604-688-2043

 

(the "Corporation")

AND

 

Computershare Trust Company of Canada, a trust company existing under the laws of Canada and with an office at 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, E-mail: Corporatetrust.vancouver@computershare.com

 

(the "Warrant Agent")

WHEREAS the Corporation is proposing to issue up to 16,428,900 Warrants pursuant to the Offering and this Indenture;

AND WHEREAS pursuant to this Indenture, each Warrant shall, subject to adjustment, entitle the holder thereof to acquire one Common Share upon payment of the Exercise Price upon the terms and conditions herein set forth;

AND WHEREAS all acts and deeds necessary have been done and performed to make the Warrants, when created and issued as provided in this Indenture, legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture;

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

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Corporation hereby appoints the Warrant Agent as warrant agent to hold the rights, interests and benefits contained herein for and on behalf of those persons who from time to time become the holders of Warrants issued pursuant to this Indenture and the parties hereto agree as follows:

 

	
ARTICLE 1.   

	
INTERPRETATION

 

	
1.1

	
Definitions

 

In this Indenture, including the recitals and schedules hereto, and in all indentures supplemental hereto:

"Adjustment Period" means the period from the Effective Date up to and including the Expiry Time;

 

"Applicable Legislation" means any statute of Canada or a province thereof, and the regulations under any such named or other statute, relating to warrant indentures or to the rights, duties and obligations of warrant agents under warrant indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;

 

"Applicable Procedures" means (a) with respect to any transfer or exchange of beneficial ownership interests in, or the exercise of Warrants represented by, a CDS Global Warrant, the applicable rules, procedures or practices of CDS and the Warrant Agent in effect at the time being, and (b) with respect to any issuance, deposit or withdrawal of Warrants from or to an electronic position evidencing a beneficial ownership interest in Warrants represented by a CDS Global Warrant, the rules, procedures or practices followed by CDS and the Warrant Agent at the time being with respect to the issuance, deposit or withdrawal of such positions;

 

"Auditors" means a firm of chartered accountants duly appointed as auditors of the Corporation;

 

"Authenticated" means (a) with respect to the issuance of a Warrant Certificate, one which has been duly signed by the Corporation and authenticated by manual signature of an authorized officer of the Warrant Agent, (b) with respect to the issuance of an Uncertificated Warrant, one in respect of which the Warrant Agent has completed all Internal Procedures such that the particulars of such Uncertificated Warrant  as required by Section 2.7 are entered in the register of holders of Warrants; "Authenticate", "Authenticating" and "Authentication" have the appropriate correlative meanings;

 

 

  

1

  

 

 

"Book Entry Participants" means institutions that participate directly or indirectly in the Depository's book entry registration system for the Warrants;

 

"Book Entry Warrants" means Warrants that are to be held electronically or physically by or on behalf of the Depository;

 

"Business Day" means any day other than Saturday, Sunday or a statutory or civic holiday, or any other day on which the banks are open for business in the Province of British Columbia;

 

"CDS Global Warrants" means Warrants representing all or a portion of the aggregate number of Warrants issued in the name of the Depository represented by an Uncertificated Warrant, or if requested by the Depository or the Corporation, by a Warrant Certificate;

 

"Certificated Warrant" means a Warrant evidenced by a writing or writings substantially in the form of Schedule "A", attached hereto;

 

"Common Shares" means fully paid and non-assessable common shares of the Corporation as presently constituted;

 

"Counsel" means a barrister or solicitor or a firm of barristers and solicitors retained by the Warrant Agent or retained by the Corporation and acceptable to the Warrant Agent, which may or may not be counsel for the Corporation;

 

"Current Market Price" of the Common Shares at any date means the weighted average trading price per Common Share for such Common Shares for each day there was a closing price for the 10 consecutive Trading Days ending three Trading Days prior to such date on the Toronto Stock Exchange or such other stock exchange or over-the-counter market on which the Common Shares are trading on such date;

 

"Depository" means CDS Clearing and Depository Services Inc. or such other person as is designated in writing by the Corporation to act as depository in respect of the Warrants;

 

"Dividends" means any dividends paid by the Corporation;

 

"Effective Date" means the date of this Indenture;

 

"Exchange Rate" means the number of Common Shares subject to the right of purchase under each Warrant;

 

"Exercise Date" means, in relation to a Warrant, the Business Day on which such Warrant is validly exercised or deemed to be validly exercised in accordance with Article 3 hereof;

 

"Exercise Form" has the meaning set forth in Section 3.2(1);

 

"Exercise Price" at any time means the price at which a whole Common Share may be purchased by the exercise of a whole Warrant, which is initially $0.50 per Common Share, payable in Canadian funds, subject to adjustment in accordance with the provisions of Article 4;

 

"Expiry Date" means July 31, 2017;

 

"Expiry Time" means 4:30 p.m. (Vancouver time) on the Expiry Date;

 

"Extraordinary Resolution" has the meaning set forth in Section 7.11;

 

"Issue Date" means July 31, 2014;

 

"Internal Procedures" means in respect of the making of any one or more entries to, changes in or deletions of any one or more entries in the register at any time (including without limitation, original issuance or registration of transfer of ownership) the minimum number of the Warrant Agent's internal procedures customary at such time for the entry, change or deletion made to be completed under the operating procedures followed at the time by the Warrant Agent, it being understood that neither preparation and issuance, nor delivery to nor receipt by holders of Transaction Statements or Statements of Account shall constitute part of such procedures for any purpose of this definition;

 

"Offering" means the offering of 13,160,000 flow-through common shares and 28,572,000 units of the Corporation at a price of $0.38 per flow-through common share and $0.35 per unit, which flow-through common shares and units were originally qualified for distribution pursuant to a (final) short form prospectus of the Corporation dated July 23, 2014;

 

 

  

2

  

 

 

"Permitted Investments" means treasury bills guaranteed by the Government of Canada having a term to maturity not to exceed ninety (90) days, or term deposits or bankers' acceptances of a Canadian chartered bank having a term to maturity not to exceed ninety (90) days, or such other investments that is in accordance with the Warrant Agent's standard type of investments.

 

"Person" means an individual, body corporate, partnership, trust, warrant agent, executor, administrator, legal representative or any unincorporated organization;

 

"Qualified Institutional Buyer" means a "qualified institutional buyer" within the meaning of Rule 144A under the U.S. Securities Act;

 

"Qualified Institutional Buyer Letter" means the Qualified Institutional Buyer Letter in the form attached as Exhibit I to the U.S. Placement Memorandum;

 

"Register" means the one set of records and accounts maintained by the Warrant Agent pursuant to Section 2.9:

 

"Registered Warrantholders" means the persons who are registered owners of Warrants as such names appear on the register, and for greater certainty, shall include the Depository as well as the holders of Uncertificated Warrants appearing on the register of the Warrant Agent;

 

"Shareholders" means holders of Common Shares;

 

"Transaction Instruction" means a written order signed by the holder or the Depository, entitled to request that one or more actions be taken, or such other form as may be reasonably acceptable to the Warrant Agent, requesting one or more such actions to be taken in respect of an Uncertificated Warrant;

 

"this Warrant Indenture", "this Indenture", "this Agreement", "hereto" "herein", "hereby", "hereof" and similar expressions mean and refer to this indenture and any indenture, deed or instrument supplemental hereto; and the expressions "Article", "Section", "subsection" and "paragraph" followed by a number, letter or both mean and refer to the specified article, section, subsection or paragraph of this indenture;

 

"Trading Day" means, with respect to a stock exchange, a day on which such exchange is open for the transaction of business and with respect to the over-the-counter market means a day on which the Toronto Stock Exchange is open for the transaction of business;

 

"Uncertificated Warrant" means any Warrant which is not a Certificated Warrant;

 

"United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;

 

"U.S. Person" has the meaning set forth in Rule 902 of Regulation S under the U.S. Securities Act;

 

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

 

"U.S. Warrantholder" means any Warrantholder that (a) is a U.S. Person or, (b) acquired Warrants in the United States or for the account or benefit of any U.S. Person or Person in the United States;

 

"Warrants" means the Common Share purchase warrants created by and authorized by and issuable under this Indenture, to be issued and countersigned hereunder in certificated form and/or held through the book entry registration system on a no-certificate issued basis, entitling the holders thereof to purchase up to 16,428,900 Common Shares (subject to adjustment as herein provided) at the Exercise Price prior to the Expiry Time or means the Common Share purchase warrants issued and Authenticated hereunder, whether by way of Warrant Certificate or Uncertificated Warrant;

 

"Warrant Agency" means the principal office of the Warrant Agent in the City of Vancouver or such other place as may be designated in accordance with Section 3.5;

 

"Warrant Agent" means Computershare Trust Company of Canada, in its capacity as warrant agent of the Warrants, or its successors from time to time;

 

"Warrant Certificate" means a certificate, substantially in the form set forth in Schedule "A" hereto, to evidence those Warrants that will be evidenced by a certificate;

 

"Warrantholders", or "holders" without reference to Warrants, means the warrantholders in respect of Warrants registered in the name of the Depository, and includes owners of Warrants who beneficially hold securities entitlements in respect of the Warrants through a Book Entry Participant, or means, at a particular time, the persons entered in the register hereinafter mentioned as holders of Warrants outstanding at such time;

 

 

  

3

  

 

 

"Warrantholders' Request" means an instrument signed in one or more counterparts by Registered Warrantholders holding in the aggregate not less than 50% of the Warrants then unexercised and outstanding, requesting the Warrant Agent to take some action or proceeding specified therein; and "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 and certificate signed in the name of the Corporation by its Chief Operating Officer, Chief Financial Officer, or a person acting in any such capacity for the Corporation, and may consist of one or more instruments so executed.

 

	
1.2

	
Gender and Number

 

Words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa.

 

	
1.3

	
Headings, Etc.

 

The division of this Indenture into Articles and Sections, the provision of a Table of Contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture or of the Warrants.

 

	
1.4

	
Day not a Business Day

 

If any day on or before which any action or notice is required to be taken or given hereunder is not a Business Day, then such action or notice shall be required to be taken or given on or before the requisite time on the next succeeding day that is a Business Day.

 

	
1.5

	
Time of the Essence

 

Time shall be of the essence of this Indenture.

 

	
1.6

	
Monetary References

 

Whenever any amounts of money are referred to herein, such amounts shall be deemed to be in lawful money of Canada unless otherwise expressed.

 

	
1.7

	
Language

 

The parties hereto confirm their express wish that this Indenture and all documents and agreements directly or indirectly relating hereto be drawn up in the English language. Les parties reconnaissent leur volonté expresse que la présente convention de souscription ainsi que tous les documents et contrats s'y rattachant directement ou indirectement soient rédigés en anglais.

 

	
1.8

	
Applicable Law

 

This Indenture, the Warrants, the Warrant Certificates (including all documents relating thereto) shall be construed in accordance with the laws of the Province of British Columbia. and the federal laws applicable therein and shall be treated in all respects as contracts. Each of the parties hereto, which shall include the Warrantholders, irrevocably attorns to the exclusive jurisdiction of the courts of the Province of British Columbia with respect to all matters arising out of this Indenture and the transactions contemplated herein.

 

	
ARTICLE 2.   

	
ISSUE OF WARRANTS

 

	
2.1

	
Creation and Issue of Warrants

 

A maximum of 16,428,900 Warrants are hereby created and authorized to be issued in accordance with the terms and conditions hereof. By written order of the Corporation, the Warrant Agent shall deliver Warrant Certificates to Registered Warrantholders and record the name of the Registered Warrantholders on the Warrant register. Registration of interests in Warrants held by the Depository may be evidenced by a position appearing on the register for Warrants of the Warrant Agent for an amount representing the aggregate number of such Warrants outstanding from time to time.

 

 

  

4

  

 

 

	
2.2

	
Terms of Warrants

 

	
(1)

	
Subject to the applicable conditions for exercise set out in Article 3 having been satisfied and subject to adjustment in accordance with Article 4, each Warrant shall entitle each Warrantholder thereof, upon exercise at any time after the Issue Date and before the Expiry Time, to acquire one Common Share upon payment of the Exercise Price.

 

	
(2)

	
No fractional Warrants shall be issued or otherwise provided for hereunder and Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares.

 

	
(3)

	
Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture.

 

	
(4)

	
The number of Common Shares which may be purchased upon exercise of the Warrants may be adjusted upon the events and in the manner specified in Article 4.

 

	
2.3

	
Warrantholder not a Shareholder

 

Except as may be specifically provided herein, nothing in this Indenture or in the holding of a Warrant Certificate, entitlement to a Warrant or otherwise, shall, in itself, confer or be construed as conferring upon a Warrantholder any right or interest whatsoever as a Shareholder of the Corporation, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation, or the right to Dividends and other allocations.

 

	
2.4

	
Warrants to Rank Pari Passu

 

All Warrants shall rank equally and without preference over each other, whatever may be the actual date of issue thereof.

 

	
2.5

	
Form of Warrants and Certificated Warrants

 

The Warrants may be issued in both certificated and uncertificated form. All Warrants issued in certificated form shall be evidenced by the Warrant Certificates (including all replacements issued in accordance with this Indenture), substantially in the form set out in Schedule "A" hereto, which shall be dated as of the Issue Date, shall bear such distinguishing letters and numbers as the Corporation may, with the approval of the Warrant Agent, prescribe, and shall be issuable in any denomination excluding fractions. Each Warrant originally issued to a U.S. Warrantholder will be evidenced in certificated form only and bear the applicable legends as set forth in Schedule "A" hereto. All Warrants issued to the Depository may be in either a  certificated or uncertificated form, such uncertificated form being evidenced by a book position on the register of Warrantholders to be maintained by the Warrant Agent in accordance with Section 2.6.

 

	
2.6

	
Book Entry Warrants

 

	
(1)

	
Re-registration of beneficial interests in and transfers of Warrants held by the Depository shall be made only through the book entry registration system and no Warrant Certificates shall be issued in respect of such Warrants except where physical certificates evidencing ownership in such securities are required or as set out herein or as may be requested by a Depository, as determined by the Corporation, from time to time. Except as provided in this Section 2.6 and during the legend period in Section 2.8(1), owners of beneficial interests in any CDS Global Warrants shall not be entitled to have Warrants registered in their names and shall not receive or be entitled to receive Warrants in definitive form or to have their names appear in the register referred to in Section 2.9 herein while they are held as book entry only securities with the Depository. Notwithstanding any terms set out herein, Warrants having any legend set forth in Section 2.8 herein and held in the name of the Depository may only be held in the form of Uncertificated Warrants with the prior consent of the Warrant Agent.

 

	
(2)

	
Notwithstanding any other provision in this Indenture, no CDS Global Warrants may be exchanged in whole or in part for Warrants registered, and no transfer of a CDS Global Warrants in whole or in part may be registered, in the name of any Person other than the Depository for such CDS Global Warrants or a nominee thereof unless:

 

	
  

	
(a)

	
the Depository notifies the Corporation that it is unwilling or unable to continue to act as depository in connection with the Book Entry Warrants  and the Corporation is unable to locate a qualified successor;

 

 

  

5

  

 

 

	
  

	
(b)

	
the Corporation determines that the Depository is no longer willing, able or qualified to discharge properly its responsibilities as holder of the CDS Global Warrants and the Corporation is unable to locate a qualified successor;

 

	
  

	
(c)

	
the Depository ceases to be a clearing agency or otherwise ceases to be eligible to be a depository and the Corporation is unable to locate a qualified successor;

 

	
  

	
(d)

	
the Corporation determines that the Warrants shall no longer be held as Book Entry Warrants through the Depository;

 

	
  

	
(e)

	
such right is required by Applicable Law, as determined by the Corporation and the Corporation's  Counsel;

 

	
  

	
(f)

	
the Warrant is to be Authenticated to or for the account or benefit of a person in the United States; or

 

	
  

	
(g)

	
the Corporation so instructs the Warrant Agent in writing,

 

following which Warrants for those holders requesting such shall be issued to the beneficial owners of such Warrants or their nominees as directed by the holder. The Corporation shall provide an Officer's Certificate giving notice to the Warrant Agent of the occurrence of any event outlined in this Section 2.6(2), except in the case of Section 2.6(2)(g).

 

	
(3)

	
Subject to the provisions of this Section 2.6, any exchange of CDS Global Warrants for Warrants which are not CDS Global Warrants may be made in whole or in part in accordance with the provisions of Section 2.11, mutatis mutandis.  All such Warrants issued in exchange for CDS Global Warrants or any portion thereof shall be registered in such names as the Depository for such CDS Global Warrants shall direct and shall be entitled to the same benefits and subject to the same terms and conditions (except insofar as they relate specifically to CDS Global Warrants) as the CDS Global Warrants or portion thereof surrendered upon such exchange.

 

	
(4)

	
Every Warrant Authenticated upon registration of transfer of a CDS Global Warrant, or in exchange for or in lieu of a CDS Global Warrant or any portion thereof, whether pursuant to this Section 2.6, or otherwise, shall be Authenticated in the form of, and shall be, a CDS Global Warrant, unless such Warrant is registered in the name of a person other than the Depository for such CDS Global Warrant or a nominee thereof.

 

	
(5)

	
Notwithstanding anything to the contrary in this Indenture, subject to Applicable Law, the CDS Global Warrant will be issued as an Uncertificated Warrant, unless otherwise requested in writing by the Depositary or the Corporation.

 

	
(6)

	
The rights of beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system shall be limited to those established by applicable law and agreements between the Depository and the Book Entry Participants and between such Book Entry Participants and the beneficial owners of Warrants who hold securities entitlements in respect of the Warrants through the book entry registration system, and such rights must be exercised through a Book Entry Participant in accordance with the rules and Applicable Procedures of the Depository.

 

	
(7)

	
Notwithstanding anything herein to the contrary, neither the Corporation nor the Warrant Agent nor any agent thereof shall have any responsibility or liability for:

 

	
  

	
(a)

	
the electronic records maintained by the Depository relating to any ownership interests or any other interests in the Warrants or the depository system maintained by the Depository, or payments made on account of any ownership interest or any other interest of any person in any Warrant represented by an electronic position in the book entry registration system (other than the Depository or its nominee);

 

	
  

	
(b)

	
for maintaining, supervising or reviewing any records of the Depository or any Book Entry Participant relating to any such interest; or

 

	
  

	
(c)

	
any advice or representation made or given by the Depository or those contained herein that relate to the rules and regulations of the Depository or any action to be taken by the Depository on its own direction or at the direction of any Book Entry Participant.

 

	
(8)

	
The Corporation may terminate the application of this 2.6 in its sole discretion in which case all Warrants shall be evidenced by Warrant Certificates registered in the name of a person other than the Depository.

 

 

  

6

  

 

 

	
2.7

	
Warrant Certificate

 

	
(1)

	
Until it has been Authenticated by the Warrant Agent, no Warrant, whether it is a Certificated Warrant or an Uncertificated Warrant, shall be considered issued, valid or obligatory nor entitle its holder to the benefits of this Indenture. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated are valid and binding obligations of the Corporation, have been duly issued hereunder and that the holder thereof is entitled to the benefits of this Indenture. Authentication by the Warrant Agent shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrants (except the due Authentication 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 Warrants or any of them or of the consideration thereof.

 

	
(2)

	
For Warrants issued in certificated form, the form of certificate representing Warrants shall be substantially as set out in Schedule "A" hereto or such other form as is authorized from time to time by the Warrant Agent. Each Warrant Certificate shall be Authenticated manually on behalf of the Warrant Agent. Each Warrant Certificate shall be signed by the Chief Operating Officer or the Chief Financial Officer of the Corporation, whose signature shall appear on the Warrant Certificate and may be printed, lithographed or otherwise mechanically reproduced thereon and, in such event, certificates so signed are as valid and binding upon the Corporation as if they had been signed manually. Any Warrant Certificate which has either of the two signatures as hereinbefore provided shall be valid notwithstanding that one or more of the persons whose signature is printed, lithographed or mechanically reproduced no longer holds office at the date of issuance of such certificate. The Warrant Certificates may be engraved, printed or lithographed, or partly in one form and partly in another, as the Warrant Agent may determine.

 

	
(3)

	
The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon original issuance, exchange, registration of transfer, partial payment, or otherwise) by completing its Internal Procedures and the Corporation shall, and hereby acknowledges that it shall, thereupon be deemed to have duly and validly issued such Uncertificated Warrants under this Indenture.  Such Authentication shall be conclusive evidence that such Uncertificated Warrants have been duly issued hereunder and that the holder or holders are entitled to the benefits of this Indenture.  The register shall be final and conclusive evidence as to all matters relating to Uncertificated Warrants with respect to which this Indenture requires the Warrant Agent to maintain records or accounts.  In case of differences between the register at any time and any other time, the register at the later time shall be controlling, absent manifest error, and any Uncertificated Warrants recorded therein shall be binding on the Corporation.

 

	
(4)

	
Any Warrant Certificate validly issued in accordance with the terms of this Indenture in effect at the time of issue of such Warrant Certificate shall, subject to the terms of this Indenture and applicable law, validly entitle the holder to acquire Common Shares, notwithstanding that the form of such Warrant Certificate may not be in the form then required by this Indenture.

 

	
(5)

	
No Warrant shall (a) be considered issued, valid, or obligatory; nor (b) entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by the Warrant Agent. Authentication by the Warrant Agent, including by way of entry on the register,  shall not be construed as a representation or warranty by the Warrant Agent as to the validity of this Indenture or of such Warrant Certificates or Uncertificated Warrants (except the due Authentication 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 Warrants or any of them or of the consideration thereof. Authentication by the Warrant Agent shall be conclusive evidence as against the Corporation that the Warrants so Authenticated have been duly issued hereunder and that the holder thereof is entitled to the benefits of this Indenture.

 

	
(6)

	
No Certificated Warrant (a) shall be considered issued and Authenticated nor (b) if Authenticated, shall be obligatory nor entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by manual signature by or on behalf of the Warrant Agent substantially in the form of the Warrant set out in Schedule “A” hereto. Such Authentication on any such Certificated Warrant shall be conclusive evidence that such Certificated Warrant is duly Authenticated and is valid and a binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture.

 

	
(7)

	
No Uncertificated Warrant shall (a) be considered issued or obligatory; nor (b) entitle the holder thereof to the benefits of this Indenture, until it has been Authenticated by entry on the register of the particulars of the Uncertificated Warrant. Such entry on the register of the particulars of an Uncertificated Warrant shall be conclusive evidence that such Uncertificated Warrant is a valid and binding obligation of the Corporation and that the holder is entitled to the benefits of this Indenture.

 

 

  

7

  

 

 

	
(8)

	
The Authentication by the Warrant Agent of any Warrants whether by way of entry on the register or otherwise shall not be construed as a representation or warranty by the Warrant Agent as to the validity of the Indenture or such Warrants (except the due Authentication 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 Warrants or any of them or the proceeds thereof.

 

	
2.8

	
Legends

 

	
(1)

	
Any Warrant Certificate representing CDS Global Warrants shall bear the following legend:

 

"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO CANADIAN ZINC CORPORATION (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE."

 

	
(2)

	
Notwithstanding any other provisions of this Indenture, in processing and registering transfers of Warrants, no duty or responsibility whatsoever shall rest upon the Warrant Agent to determine the compliance by any transferor or transferee with the terms of the legend on the Warrant Certificate, or with the relevant securities laws or regulations, including, without limitation, Regulation S of the U.S. Securities Act, and the Warrant Agent shall be entitled to assume that all transfers are legal and proper.

 

	
(3)

	
The Warrant Agent acknowledges that, upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act and state securities laws, the certificates representing the Warrants originally issued to U.S. Warrantholders, and in each case, all certificates issued in exchange therefor or in substitution thereof shall bear on the face of such certificates the following legend (in addition to any other legend that may be required under applicable securities laws):

 

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR U.S. STATE SECURITIES LAWS.  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO CANADIAN ZINC CORPORATION (THE "CORPORATION"), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY (I) RULE 144 OR (II) RULE 144A THEREUNDER, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C)(I) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

 

"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT").  THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE.  "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT."

 

 

  

8

  

 

 

	
2.9

	
Register of Warrants

 

	
(1)

	
The Warrant Agent shall maintain records and accounts concerning the Warrants, whether certificated or uncertificated, which shall contain the information called for below with respect to each Warrant, together with such other information as may be required by law or as the Warrant Agent may elect to record. All such information shall be kept in one set of accounts and records which the Warrant Agent shall designate (in such manner as shall permit it to be so identified as such by an unaffiliated party) as the register of the holders of Warrants.  The information to be entered for each account in the register of Warrants at any time shall include (without limitation):

 

	
  

	
(a)

	
the name and address of the holder of the Warrants, the date of Authentication thereof and the number of Warrants held by the subject holder;

 

	
  

	
(b)

	
whether such Warrant is a Certificated Warrant or an Uncertificated Warrant and, if a Certificated Warrant, the unique number or code assigned to and imprinted thereupon and, if an Uncertificated Warrant, the unique number or code assigned thereto if any;

 

	
  

	
(c)

	
whether such Warrant has been cancelled; and

 

	
  

	
(d)

	
a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered.

 

The register shall be available for inspection by the Corporation and/or any Warrantholder during the Warrant Agent's regular business hours on a Business Day and upon payment to the Warrant Agent of its reasonable fees.  Any Warrantholder exercising such right of inspection shall first provide an affidavit in form satisfactory to the Corporation and the Warrant Agent stating the name and address of the Warrantholder and agreeing not to use the information therein except in connection with an effort to call a meeting of Warrantholders or to influence the voting of Warrantholders at any meeting of Warrantholders.

 

	
(2)

	
Once an Uncertificated Warrant has been Authenticated, the information set forth in the register with respect thereto at the time of Authentication may be altered, modified, amended, supplemented or otherwise changed only to reflect exercise or proper instructions to the Warrant Agent from the holder as provided herein, except that the Warrant Agent may act unilaterally to make purely administrative changes internal to the Warrant Agent and changes to correct errors. Each person who becomes a holder of an Uncertificated Warrant, by his, her or its acquisition thereof shall be deemed to have irrevocably (a) consented to the foregoing authority of the Warrant Agent to make such error corrections and (b) agreed to pay to the Warrant Agent, promptly upon written demand, the full amount of all loss and expense (including without limitation reasonable legal fees of the Corporation and the Warrant Agent  plus interest, at an appropriate then prevailing rate of interest to the Warrant Agent, sustained by the Corporation or the Warrant Agent as a proximate result of such error if but only if and only to the extent that such present or former holder realized any benefit as a result of such error and could reasonably have prevented, forestalled or minimized such loss and expense by prompt reporting of the error or avoidance of accepting benefits thereof whether or not such error is or should have been timely detected and corrected by the Warrant Agent; provided, that no person who is a bona fide purchaser shall have any such obligation to the Corporation or to the Warrant Agent.

 

	
2.10

	
Issue in Substitution for Warrant Certificates Lost, etc

 

	
(1)

	
If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Warrant Agent shall certify and deliver, a new Warrant Certificate of like tenor, and bearing the same legends, if applicable, as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Warrant Agent and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder.

 

	
(2)

	
The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.10 shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issuance thereof, furnish to the Corporation and to the Warrant Agent such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to the Corporation and to the Warrant Agent, in their sole discretion, and such applicant shall also be required to furnish an indemnity and surety bond in amount and form satisfactory to the Corporation and the Warrant Agent, acting reasonably, and shall pay the reasonable charges of the Corporation and the Warrant Agent in connection therewith.

 

 

  

9

  

 

 

	
2.11

	
Exchange of Warrant Certificates

 

	
(1)

	
Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Warrant Agent (including compliance with applicable securities legislation), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants, and bearing the same legends, if applicable, as represented by the Warrant Certificate or Warrant Certificates so exchanged.

 

	
(2)

	
Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of the Warrant Agent. Any Warrant Certificate or duly executed Transaction Instruction from the holder (or such other instructions, in form reasonably satisfactory to the Warrant Agent), tendered for exchange shall be cancelled and surrendered by the Warrant Agency to the Warrant Agent.

 

	
2.12

	
Transfer and Ownership of Warrants

 

	
(1)

	
The Warrants may only be transferred on the register kept by the Warrant Agent at the Warrant Agency by the holder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution reasonably satisfactory to the Warrant Agent only upon: (a) in the case of a Warrant Certificate, surrendering to the Warrant Agent at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred together with a duly executed transfer form in the form attached to the Warrant Certificate as set out in Schedule "A"; (b) in the case of Book Entry Warrants, in accordance with Applicable Procedures prescribed by the Depository under the book entry registration system; (c) in the case of Uncertificated Warrants, surrendering to the Warrant Agent at the Warrant Agency, a duly executed Transaction Instruction from the holder (or such other instructions, in form reasonably satisfactory to the Warrant Agent);  and (d) upon compliance with:

 

	
  

	
(i)

	
the conditions herein;

 

	
  

	
(ii)

	
such reasonable requirements as the Warrant Agent may prescribe; and

 

	
  

	
(iii)

	
all applicable securities legislation and requirements of regulatory authorities;

 

and such transfer shall be duly noted in such register by the Warrant Agent. Upon compliance with such requirements, the Warrant Agent shall issue to the transferee of a Certificated Warrant, a Warrant Certificate, and to the transferee of an Uncertificated Warrant, an Uncertificated Warrant (or it shall Authenticate and deliver a Certificated Warrant instead, upon request), representing the Warrants transferred and the transferee of a Book Entry Warrant shall be recorded through the relevant Book Entry Participant in accordance with the book entry registration system as the entitlement holder in respect of such Warrants.  Transfers within the systems of the Depository are not the responsibility of the Warrant Agent and will not be noted on the register maintained by the Warrant Agent.

 

	
(2)

	
Unless a transfer is permitted in accordance with the legend set forth in Section 2.8(3) without the requirement for the delivery of an opinion of counsel, if a Warrant Certificate tendered for transfer is to be transferred to a U.S. Person or a person located in the United States, the Warrant Agent shall not register such transfer unless the transferor has provided the Warrant Agent with the Warrant Certificate and the transferor provides an opinion of counsel satisfactory to the Corporation in form and substance satisfactory to the Corporation that the transfer is being completed pursuant to an exemption from the registration requirements of the U.S. Securities Act of 1933 and in compliance with applicable state laws and the U.S. Securities Act of 1933.  The Corporation or the Warrant Agent may place a U.S. legend on the certificate(s) representing the Warrant Certificate transferred. The Warrant Agent shall be entitled to request any other documents that it may reasonably require in accordance with its internal policies for the removal of the legend for the purpose of complying with U.S. securities laws set forth in Section 2.8(3).

 

	
(3)

	
Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled to the rights and privileges attaching to the Warrants, and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Warrant Agent with respect to such Warrants and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder.

 

 

  

10

  

 

 

	
2.13

	
Cancellation of Surrendered Warrants

 

All Warrant Certificates surrendered pursuant to this Indenture shall be cancelled by the Warrant Agent and all Uncertificated Warrants surrendered pursuant to this Indenture shall be deemed cancelled and so noted on the register by the Warrant Agent. Upon request by the Corporation, the Warrant Agent shall furnish to the Corporation a cancellation certificate identifying the Warrant Certificates or Uncertificated Warrants so cancelled, the number of Warrants evidenced thereby, the number of Common Shares, if any, issued pursuant to such Warrants and, in the case of surrendered Warrant Certificates, the details of any Warrant Certificates issued in substitution or exchange for such Warrant Certificates cancelled.

 

	
ARTICLE 3.   

	
EXERCISE OF WARRANTS

 

	
3.1

	
Right of Exercise

 

Subject to the provisions hereof, each Registered Warrantholder may exercise the right conferred on such holder to subscribe for and purchase one Common Share for each Warrant after the Issue Date and prior to the Expiry Time and in accordance with the conditions herein.

 

	
3.2

	
Warrant Exercise

 

	
(1)

	
Registered Warrantholders of Certificated or Uncertificated Warrants who wish to exercise the Warrants held by them in order to acquire Common Shares must complete the exercise form (the "Exercise Form") attached to the Warrant Certificate attached hereto as Schedule "A" (which may be amended by the Corporation with the consent of the Warrant Agent from time to time), and deliver such certificate(s) (or be deemed to have delivered in respect of an Uncertificated Warrant), the executed Exercise Form and a certified cheque, bank draft or money order payable to or to the order of the Corporation for the Exercise Price to the Warrant Agent at the Warrant Agency. The Warrants represented by a Warrant Certificate or the Warrants represented by an Uncertificated Warrant shall be deemed to be surrendered upon personal delivery of such certificate, Exercise Form and Exercise Price or, if such documents are sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the office referred to above.

 

	
(2)

	
A beneficial holder of Uncertificated Warrants evidenced by a security entitlement in respect of Warrants in the book entry registration system who desires to exercise his or her Warrants must do so by causing a Book Entry Participant to deliver to the Depository on behalf of the entitlement holder, notice of the owner's intention to exercise Warrants in a manner acceptable to the Depository. Forthwith upon receipt by the Depository of such notice, as well as payment for the Exercise Price, the Depository shall deliver to the Warrant Agent confirmation of its intention to exercise Warrants ("Confirmation") in a manner acceptable to the Warrant Agent, including by electronic means through the book entry registration system, including CDSX .  An electronic exercise of the Warrants initiated by the Book Entry Participant through a book based registration system, including CDSX, shall constitute a representation to both the Corporation and the Warrant Agent that the beneficial owner at the time of exercise of such Warrants (a) is not in the United States; (b) is not a U.S. Person and is not exercising such Warrants on behalf of a U.S. Person or a Person in the United States; and (c) did not execute or deliver the notice of the owner’s intention to exercise such Warrants in the United States.  If the Book Entry Participant is not able to make or deliver the foregoing representation by initiating the electronic exercise of the Warrants, then such Warrants shall be withdrawn from the book based registration system, including CDSX, by the Book Entry Participant and an individually registered Warrant Certificate shall be issued by the Warrant Agent to such beneficial owner or Book Entry Participant and the exercise procedures set forth in Section 3.2(1) shall be followed.

 

	
(3)

	
Payment representing the Exercise Price must be provided to the appropriate office of the Book Entry Participant in a manner acceptable to it. A notice in form acceptable to the Book Entry Participant and payment from such beneficial holder should be provided to the Book Entry Participant sufficiently in advance so as to permit the Book Entry Participant to deliver notice and payment to the Depository and for the Depository in turn to deliver notice and payment to the Warrant Agent prior to the Expiry Time. The Depository will initiate the exercise by way of the Confirmation and forward the Exercise Price electronically to the Warrant Agent and the Warrant Agent will execute the exercise by issuing to the Depository through the book entry registration system the Common Shares to which the exercising Warrantholder is entitled pursuant to the exercise.   Any expense associated with the exercise process will be for the account of the entitlement holder exercising the Warrants and/or the Book Entry Participant exercising the Warrants on its behalf.

 

	
(4)

	
By causing a Book Entry Participant to deliver notice to the Depository, a Warrantholder shall be deemed to have irrevocably surrendered his or her Warrants so exercised and appointed such Book Entry Participant to act as his or her exclusive settlement agent with respect to the exercise and the receipt of Common Shares in connection with the obligations arising from such exercise.

 

 

  

11

  

 

 

	
(5)

	
Any notice which the Depository determines to be incomplete, not in proper form or not duly executed shall for all purposes be void and of no effect and the exercise to which it relates shall be considered for all purposes not to have been exercised thereby. A failure by a Book Entry Participant to exercise or to give effect to the settlement thereof in accordance with the Warrantholder's instructions will not give rise to any obligations or liability on the part of the Corporation or Warrant Agent to the Book Entry Participant or the Warrantholder.

 

	
(6)

	
Any exercise form or Exercise Form referred to in this Section 3.2 shall be signed by the Registered Warrantholder, or its executors or administrators or other legal representatives or an attorney of the Registered Warrantholder, duly appointed by an instrument in writing satisfactory to the Warrant Agent but such exercise form need not be executed by the Depository.

 

	
(7)

	
Any exercise referred to in this Section 3.2 shall require that the entire Exercise Price for Common Shares subscribed for must be paid at the time of subscription and such Exercise Price and original Exercise Form executed by the Registered Warrantholder or the Confirmation from the Depository must be received by the Warrant Agent prior to the Expiry Time.

 

	
(8)

	
Notwithstanding the foregoing in this Section 3.2, Warrants may only be exercised pursuant to this Section 3.2 by or on behalf of a Registered Warrantholder, except the Depository or Warrantholder, as applicable, who makes the certifications set forth on the Exercise Form attached to the form of Warrant Certificate in Schedule "A".

 

	
(9)

	
If the form of Exercise Form set forth in the Warrant Certificate shall have been amended, the Corporation shall cause the amended Exercise Form to be forwarded to all Registered Warrantholders.

 

	
(10)

	
Exercise Forms and Confirmations must be delivered to the Warrant Agent at any time during the Warrant Agent's actual business hours on any Business Day prior to the Expiry Time. Any Exercise Form or Confirmations received by the Warrant Agent after business hours on any Business Day other than the Expiry Date will be deemed to have been received by the Warrant Agent on the next following Business Day.

 

	
(11)

	
Any Warrant with respect to which a Confirmation is not received by the Warrant Agent before the Expiry Time on the Expiry Date shall be deemed to have expired and become void and all rights with respect to such Warrants shall terminate and be cancelled.

 

	
3.3

	
Prohibition on Exercise by U.S. Persons; Legended Certificates

 

	
(1)

	
Subject to Section 3.3(2) below: (a) Warrants may not be exercised within the United States or by or on behalf of any U.S. Person; and (b) no Common Shares issued upon exercise of Warrants may be delivered to any address in the United States.

 

	
(2)

	
Notwithstanding Section 3.3(1), Common Shares issued upon exercise of any such Warrants may be delivered to an address in the United States, provided that the person exercising the Warrants provides in form and substance satisfactory to the Corporation a legal opinion of counsel satisfactory to the Corporation which confirms that issuance of  shares is in compliance with the applicable state laws and the U.S. Securities Act of 1933 and further provided the Corporation or the Warrant Agent may place a U.S. legend on the certificate(s) representing the Common Shares issued on exercise of the Warrants provided however that in the case of a U.S. Warrantholder that is the original purchaser of Warrants and who delivered the Qualified Institutional Buyer Letter, in connection with its purchase of Units pursuant to the placement under which the Warrants were issued, such U.S. Warrantholder will not be required to deliver an opinion of counsel in connection with the due exercise of the Warrant at a time when the representations, warranties and covenants made by the U.S. Warrantholder in the Qualified Institutional Buyer Letter, as applicable, remain true and correct and the U.S. Warrantholder  represents to the Corporation as such. The Corporation shall be entitled to rely upon the registered address of the Warrantholder set forth in such Warrantholder's Qualified Institutional Buyer Letter under the Offering for the purchase of Units in determining whether the address is in the United States or the Warrantholder is a U.S. Person.

 

	
(3)

	
Any holder which exercises any Warrants shall provide/certify to the Corporation either:

 

	
  

	
(a)

	
the holder: (a) at the time of exercise of the Warrants is not in the United States; (b) is not a U.S. Person and is not exercising the Warrants on behalf of a U.S. Person; and (c) has in all other aspects complied with the terms of an "offshore transaction" within the meaning of Regulation S under the U.S. Securities Act;

 

 

  

12

  

 

 

	
  

	
(b)

	
the holder: (a) acquired the Warrants as the original purchaser of Warrants and who delivered the Qualified Institutional Buyer Letter, in connection with its purchase of Units pursuant to the placement under which the Warrants were issued; (b) is exercising the Warrants solely for its own account or for the benefit of a U.S. Person or a person in the United States for whose account such holder acquired the Warrants and for whose account such holder exercises sole investment discretion; (c) was, and any beneficial purchaser for whose account such holder acquired the Warrants and is exercising the Warrants was, a Qualified Institutional Buyer, both on the date the Warrants were purchased and on the date of exercise of the Warrants and (d) the representations and warranties made by the holder in the Qualified Institutional Buyer Letter remain true and correct and the Corporation is entitled to rely upon such representations and warranties as if made as of the date hereof; or

 

	
  

	
(c)

	
a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable on exercise of the Warrants.

 

	
(4)

	
Certificates representing Common Shares issued upon the exercise of Warrants which bear the legend set forth in 2.8(3) and which are issued and delivered pursuant to Section 3.3(3)(b), if applicable, and Sections 3.3(3)(c) shall bear the following legend:

 

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR U.S. STATE SECURITIES LAWS.  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO CANADIAN ZINC CORPORATION (THE "CORPORATION"), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY (I) RULE 144 OR (II) RULE 144A THEREUNDER, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C)(I) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

 

	
3.4

	
Transfer Fees and Taxes

 

If any of the Common Shares subscribed for are to be issued to a person or persons other than the Registered Warrantholder, the Registered Warrantholder shall execute the form of transfer and will comply with such reasonable requirements as the Warrant Agent may stipulate and will pay to the Corporation or the Warrant Agent on behalf of the Corporation, all applicable transfer or similar taxes and the Corporation will not be required to issue or deliver certificates evidencing Common Shares unless or until such Warrantholder shall have paid to the Corporation or the Warrant Agent on behalf of the Corporation, the amount of such tax or shall have established to the satisfaction of the Corporation and the Warrant Agent that such tax has been paid or that no tax is due.

 

	
3.5

	
Warrant Agency

 

To facilitate the exchange, transfer or exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation has appointed the Warrant Agency, as the agency at which Warrants may be surrendered for exchange or transfer or at which Warrants may be exercised and the Warrant Agent has accepted such appointment. The Corporation may from time to time designate alternate or additional places as the Warrant Agency (subject to the Warrant Agent's prior approval) and will give notice to the Warrant Agent of any proposed change of the Warrant Agency.  Branch registers shall also be kept at such other place or places, if any, as the Corporation, with the approval of the Warrant Agent, may designate. The Warrant Agent will from time to time when requested to do so by the Corporation or any Registered Warrantholder, upon payment of the Warrant Agent's reasonable charges, furnish a list of the names and addresses of Registered Warrantholders showing the number of Warrants held by each such Registered Warrantholder.

 

 

  

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3.6

	
Effect of Exercise of Warrant Certificates

 

	
(1)

	
Upon the exercise of Warrants Certificates pursuant to and in compliance with Section 3.2 and subject to Sections 3.3 and 3.4, the Common Shares to be issued pursuant to the Warrants exercised 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 such Common Shares within five Business Days and, in respect of Warrants, they will be deemed to become the holders of record on the Exercise Date, unless the transfer registers of the Corporation shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such transfer registers are reopened. It is hereby understood that in order for holders to be holders of Warrants on record on an Exercise Date,  beneficial holders must commence the exercise process sufficiently in advance so that the Warrant Agent is in receipt of all items of exercise at least one Business Day prior to such Exercise Date.

 

	
(2)

	
Within five Business Days after the Exercise Date, the Warrant Agent shall cause to be delivered or mailed to the person or persons in whose name or names the Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for, or any other appropriate evidence of the issuance of Common Shares to such person or persons in respect of Common Shares issued under the book-entry registration system.

 

	
3.7

	
Partial Exercise of Warrants; Fractions

 

	
(1)

	
The holder of any Warrants may exercise his right to acquire a number of whole Common Shares less than the aggregate number which the holder is entitled to acquire. In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s), bearing the same legend, if applicable, or other appropriate evidence of Warrants, in respect of the balance of the Warrants held by such holder after such partial exercise.

 

	
(2)

	
Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares nor to  pay cash in lieu of the issuance of factions of Common Shares. Warrants may only be exercised in a sufficient number to acquire whole numbers of Common Shares.

 

	
3.8

	
Expiration of Warrants

 

Immediately after the Expiry Time, all rights under any Warrant in respect of which the right of acquisition provided for herein shall not have been exercised shall cease and terminate and each Warrant shall be void and of no further force or effect.

 

	
3.9

	
Accounting and Recording

 

	
(1)

	
The Warrant Agent shall promptly account to the Corporation with respect to Warrants exercised. Any securities or other instruments, from time to time received by the Warrant Agent, shall be received in trust for the Warrantholders and the Corporation as their interests may appear, and shall accordingly be segregated and kept apart by the Warrant Agent.

 

	
(2)

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

 

	
3.10

	
Securities Restrictions

 

Notwithstanding anything herein contained, Common Shares will be issued upon exercise of a Warrant only in compliance with the securities laws of any applicable jurisdiction.

 

 

  

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ARTICLE 4.   

	
ADJUSTMENT OF NUMBER OF COMMON SHARES AND EXERCISE PRICE

 

 

	
4.1

	
Adjustment of Number of Common Shares and Exercise Price

 

The number of Common Shares issuable upon exercise of the Warrants shall be subject to adjustment from time to time as follows:

	
(a)

	
if, at any time during the Adjustment Period, the Corporation shall:

 

	
  

	
(i)

	
subdivide, re-divide or change its outstanding Common Shares into a greater number of Common Shares;

 

	
  

	
(ii)

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

 

	
  

	
(iii)

	
issue Common Shares or securities exchangeable for, or convertible into, Common Shares to all or substantially all of the holders of Common Shares by way of stock dividend, distribution or otherwise (other than a distribution of Common Shares upon the exercise of Warrants or other convertible securities);

 

the Exercise Price in effect on the effective date of such subdivision, re-division, change, reduction, combination, consolidation or on the record date of such stock dividend, distribution, as the case may be, shall in the case of the events referred to in (i) or (iii) above be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, re-division, change or distribution, or shall, in the case of the events referred to in (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this Section 4.1(a) shall occur. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(a), the Exchange Rate shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;

 

	
(b)

	
if and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) at a price per Common Share (or having a conversion or exchange price per Common Share) less than 95% of the Current Market Price on such record date (a "Rights Offering"), the Exercise Price shall be adjusted immediately after such record date so that it shall equal the amount determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered) by such Current Market Price, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase or into which the convertible or exchangeable securities so offered are convertible or exchangeable; any Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that no such rights or warrants are exercised prior to the expiration thereof, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or, if any such rights or warrants are exercised, to the Exercise Price which would then be in effect based upon the number of Common Shares (or securities convertible or exchangeable into Common Shares) actually issued upon the exercise of such rights or warrants, as the case may be.  Upon any adjustment of the Exercise Price pursuant to this Section 4.1(b), the Exchange Rate will, subject to approval of the Toronto Stock Exchange, be adjusted immediately prior to such record date so that it will equal the rate determined by multiplying the Exchange Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment.  Such adjustment will be made successively whenever such a record date is fixed, provided that if two or more such record dates or record dates referred to in this Section 4.1(b) are fixed within a period of 25 Trading Days, such adjustment will be made successively as if each of such record dates occurred on the earliest of such record dates;

 

 

  

15

  

 

 

	
(c)

	
if and whenever at any time during the Adjustment Period the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of (a) securities of any class, whether of the Corporation or any other trust (other than Common Shares); (b) rights, options or warrants to subscribe for or purchase Common Shares (or other securities convertible into or exchangeable for Common Shares), other than pursuant to a Rights Offering; (c) evidences of its indebtedness; or (d) any property or other assets then, in each such case, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date multiplied by the Current Market Price on such record date, less the excess, if any, of the fair market value on such record date, as determined by the Corporation (subject to the prior approval of the Toronto Stock Exchange or any stock exchange on which the Common Shares or Warrants may be listed for trading), of such securities or other assets so issued or distributed over the fair market value of any consideration received therefor by the Corporation from the holders of the Common Shares, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such Current Market Price; and Common Shares owned by or held for the account of the Corporation shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed. Upon any adjustment of the Exercise Price pursuant to this Section 4.1(c), the Exchange Rate will be adjusted immediately after such record date so that it will equal the rate determined by multiplying the Exchange Rate in effect on such record date by a fraction, of which the numerator shall be the Exercise Price in effect immediately prior to such adjustment and the denominator shall be the Exercise Price resulting from such adjustment;

 

	
(d)

	
if and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Section 4.1(a) or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, any Registered Warrantholder who has not exercised its right of acquisition prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, upon the exercise of such right thereafter, shall be entitled to receive upon payment of the Exercise Price and shall accept, in lieu of the number of Common Shares that prior to such effective date the Registered Warrantholder would have been entitled to receive, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the case may be, that such Registered Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement or merger, sale or conveyance, if, on the effective date thereof, as the case may be, the Registered Warrantholder had been the registered holder of the number of Common Shares to which prior to such effective date it was entitled to acquire upon the exercise of the Warrants. If determined appropriate by the Warrant Agent, relying on advice of Counsel,  to give effect to or to evidence the provisions of this Section 4.1(d), the Corporation, its successor, or such purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, sale or conveyance, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Registered Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which a Registered Warrantholder is entitled on the exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Warrant Agent pursuant to the provisions of this Section 4.1(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 8 hereof. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Warrant Agent shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive reclassifications, capital reorganizations, amalgamations, consolidations, mergers, sales or conveyances;

 

	
(e)

	
in any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the Registered Warrantholder of any Warrant exercised after such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such Registered Warrantholder an appropriate instrument evidencing such Registered Warrantholder's right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the relevant date of exercise or such later date as such Registered Warrantholder would, but for the provisions of this Section 4.1(e), have become the holder of record of such additional Common Shares pursuant to Section 4.1;

 

 

  

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(f)

	
in any case in which Section 4.1(a)(iii), 4.1(b) or 4.1(c) require that an adjustment be made to the Exercise Price, no such adjustment shall be made if the Registered Warrantholders of the outstanding Warrants receive, subject to the approval of the Toronto Stock Exchange if required, the rights or warrants referred to in Section 4.1(a)(iii), 4.1(b) or the shares, rights, options, warrants, evidences of indebtedness or assets referred to in Section 4.1(c), as the case may be, in such kind and number as they would have received if they had been holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record date or effective date, as the case may be;

 

	
(g)

	
the adjustments provided for in this Section 4.1 are cumulative, and shall, in the case of adjustments to the Exercise Price be computed to the nearest whole cent and shall apply to successive subdivisions, re-divisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 4.1, provided that, notwithstanding any other provision of this Section, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect; provided, however, that any adjustments which by reason of this Section 4.1(g) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and

 

	
(h)

	
after any adjustment pursuant to this Section 4.1, the term "Common Shares" where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Registered Warrantholder is entitled to receive upon the exercise of their Warrant, and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Registered Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant.

 

	
4.2

	
Entitlement to Common Shares on Exercise of Warrant

 

All Common Shares or shares of any class or other securities, which a Registered Warrantholder is at the time in question entitled to receive on the exercise of their Warrant, whether or not as a result of adjustments made pursuant to this Article 4, shall, for the purposes of the interpretation of this Indenture, be deemed to be Common Shares which such Registered Warrantholder is entitled to acquire pursuant to such Warrant.

 

	
4.3

	
No Adjustment for Certain Transactions

 

Notwithstanding anything in this Article 4, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue of Common Shares is being made pursuant to this Indenture or in connection with (a) any share incentive plan or restricted share plan or share purchase plan in force from time to time for directors, officers, employees, consultants or other service providers of the Corporation; or (b) the satisfaction of existing instruments issued at the date hereof.

 

	
4.4

	
Determination by Auditors

 

In the event of any question arising with respect to the adjustments provided for in this Article 4 such question shall be conclusively determined by an independent firm of recognized chartered accountants selected by the Warrant Agent acting reasonably (other than the Auditors), who shall have access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, the Warrant Agent, all holders and all other persons interested therein.

 

	
4.5

	
Proceedings Prior to any Action Requiring Adjustment

 

As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Warrants, including the number of Common Shares which are to be received upon the exercise thereof, the Corporation shall take any action which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shares which the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions hereof.

 

 

  

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4.6

	
Certificate of Adjustment

 

The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in this Article 4, deliver a certificate of the Corporation to the Warrant Agent specifying the nature of the event requiring the same and the amount of the adjustment or readjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate shall be supported by a certificate of the Corporation's Auditors verifying such calculation. The Warrant Agent shall rely, and shall be protected in so doing, upon the certificate of the Corporation or of the Corporation's Auditor and any other document filed by the Corporation pursuant to this Article 4 for all purposes.

 

	
4.7

	
Notice of Special Matters

 

The Corporation covenants with the Warrant Agent that, so long as any Warrant remains outstanding, it will give notice to the Warrant Agent and to the Registered Warrantholders of its intention to fix a record date that is prior to the Expiry Date for any matter for which an adjustment may be required pursuant to Section 4.1. Such notice shall specify the particulars of such event and the record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which the notice is given. The notice shall be given in each case not less than 14 days prior to such applicable record date. If notice has been given and the adjustment is not then determinable, the Corporation shall promptly, after the adjustment is determinable, file with the Warrant Agent a computation of the adjustment and give notice to the Registered Warrantholders of such adjustment computation.

 

	
4.8

	
No Action after Notice

 

The Corporation covenants with the Warrant Agent that it will not close its transfer books or take any other corporate action which might deprive the Registered Warrantholder of the opportunity to exercise its right of acquisition pursuant thereto during the period of 14 days after the giving of the certificate or notices set forth in Sections 4.6 and 4.7.

 

	
4.9

	
Other Action

 

If the Corporation, after the date hereof, shall take any action affecting the Common Shares other than actions described in this Article 4, which in the reasonable opinion of the directors of the Corporation would materially affect the rights of Registered Warrantholders, the Exercise Price and/or the Exchange Rate, there shall be an adjustment in such manner, if any, and at such time, by action of the directors, acting reasonably and in good faith, as they may reasonably determine to be equitable to the Registered Warrantholders in such circumstances, provided that no such adjustment will be made unless prior approval of any stock exchange on which the Common Shares or Warrants may be listed for trading has been obtained.

 

	
4.10

	
Protection of Warrant Agent

 

The Warrant Agent shall not:

	
(a)

	
at any time be under any duty or responsibility to any Registered Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;

 

	
(b)

	
be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Warrant;

 

	
(c)

	
be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article; and

 

	
(d)

	
incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation.

 

 

  

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4.11

	
Participation by Warrantholder

 

No adjustments shall be made pursuant to this Article 4 if the Registered Warrantholders are entitled to participate in any event described in this Article 4 on the same terms, mutatis mutandis, as if the Registered Warrantholders had exercised their Warrants prior to, or on the effective date or record date of, such event.

 

	
ARTICLE 5.   

	
RIGHTS OF THE CORPORATION AND COVENANTS

 

	
5.1

	
Optional Purchases by the Corporation

 

Subject to compliance with applicable securities legislation and approval of applicable regulatory authorities, the Corporation may from time to time purchase , by invitation for tender, in the open market, by private contract or otherwise any of the Warrants then outstanding. Any such purchase may be made in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may determine. In the case of Certificated Warrants, Warrant Certificates representing the Warrants purchased pursuant to this Section 5.1 shall forthwith be delivered to and cancelled by the Warrant Agent. In the case of Uncertificated Warrants, the Warrants purchased pursuant to this Section 5.1 shall be cancelled and reflected accordingly in accordance with Applicable Procedures prescribed by the Depository under the book entry registration system. No Warrants shall be issued in replacement thereof.

 

	
5.2

	
General Covenants

 

The Corporation covenants with the Warrant Agent that so long as any Warrants remain outstanding:

 

	
(a)

	
it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;

 

	
(b)

	
it will cause the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrants and the terms hereof;

 

	
(c)

	
all Common Shares which shall be issued upon exercise of the right to acquire provided for herein shall be fully paid and non-assessable;

 

	
(d)

	
it will use reasonable commercial efforts to ensure that the Common Shares issuable on the exercise of the Warrants continue to be or are listed and posted for trading on the Toronto Stock Exchange (or such other Canadian stock exchange acceptable to the Corporation), provided that this clause shall not be construed as limiting or restricting the Corporation to agree to a consolidation, amalgamation, arrangement, takeover bid or merger even if the consideration being offered are not securities that are so listed and posted for trading;

 

	
(e)

	
it will use reasonable commercial efforts to make all requisite filings under applicable Canadian and US securities legislation including those necessary to remain a reporting issuer not in default in each of the provinces and other jurisdictions where it is or becomes a reporting issuer; and

 

	
(f)

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

 

 

	
5.3

	
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 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 the trusts hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Warrant Agent hereunder shall be finally and fully performed, except for any expense, disbursement or advance that arises out of or results from the Warrant Agent's gross negligence, willful misconduct or bad faith. Any amount owing hereunder and remaining unpaid after 30 days from the invoice date will bear interest at the then current rate charged by the Warrant Agent against unpaid invoices and shall be payable upon demand. This Section shall survive the resignation of the Warrant Agent and/or the termination of this Indenture.

 

	
5.4

	
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 Registered Warrantholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it but, subject to Section 9.2, shall be under no obligation to perform said covenants or to notify the Registered Warrantholders of such performance by it. All sums expended or advanced by the Warrant Agent in so doing shall be repayable as provided in Section 5.3. No such performance, expenditure or advance by the Warrant Agent shall relieve the Corporation of any default hereunder or of its continuing obligations under the covenants herein contained.

 

 

  

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5.5

	
Enforceability of Warrants

 

The Corporation covenants and agrees that it is duly authorized to create and issue the Warrants to be issued hereunder and that the Warrants, when issued and Authenticated as herein provided, will be valid and enforceable against the Corporation in accordance with the provisions hereof and the terms hereof and that, subject to the provisions of this Indenture, the Corporation will cause the Common Shares from time to time acquired upon exercise of Warrants issued under this Indenture to be duly issued and delivered in accordance with the terms of this Indenture.

 

	
5.6

	
U.S. Securities Matters

 

The Corporation represents and warrants that it is filing with the U.S. Securities and Exchange Commission ("SEC") as a Foreign Private Issuer (as such term is defined in the Securities Exchange Act of 1934) and has delivered to the Warrant Agent an Officers' Certificate certifying such "reporting issuer" status and other information as the Warrant Agent has requested, including, but not limited to, the Central Index Key that has been assigned for filing purposes.  Should the Corporation cease to file as a Foreign Private Issuer, the Corporation covenants to deliver to the Warrant Agent an Officers' Certificate (in a form provided by the Warrant Agent) certifying a change in "reporting issuer" status and such other information as the Warrant Agent may require at such given time.  The Corporation understands that the Warrant Agent is relying upon the foregoing representation, warranty and covenants in order to meet certain SEC obligations with respect to those clients who are filing with the SEC.

 

	
ARTICLE 6.   

	
ENFORCEMENT

 

	
6.1

	
Suits by Registered Warrantholders

 

All or any of the rights conferred upon any Registered Warrantholder by any of the terms of this Indenture may be enforced by the Registered Warrantholder by appropriate 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 Registered Warrantholders.

 

	
6.2

	
Suits by the Corporation

 

The Corporation shall have the right to enforce full payment of the Exercise Price of all Common Shares issued by the Warrant Agent to a Registered Warrantholder hereunder and shall be entitled to demand such payment from the Registered Warrantholder or alternatively to instruct the Warrant Agent to cancel the share certificates and amend the securities register accordingly.

 

	
6.3

	
Immunity of Shareholders, etc

 

The Warrant Agent and the Warrantholders hereby waive and release any right, cause of action or remedy now or hereafter existing in any jurisdiction against any incorporator or any past, present or future shareholder, trustee, employee or agent of the Corporation or any successor Corporation on any covenant, agreement, representation or warranty by the Corporation herein.

 

	
6.4

	
Waiver of Default

 

Upon the happening of any default hereunder:

 

	
(a)

	
the Registered Warrantholders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in writing to instruct the Warrant Agent to waive any default hereunder and the Warrant Agent shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or

 

	
(b)

	
subject to Subsection 6.4 (a) the Warrant Agent shall have power to waive any default hereunder upon such terms and conditions as the Warrant Agent may deem advisable, on the advice of Counsel, if, in the Warrant Agent's opinion, based on the advice of Counsel, the same shall have been cured or adequate provision made therefor;

 

 

  

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provided that no delay or omission of the Warrant Agent or of the Registered Warrantholders to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either of the Warrant Agent or of the Registered Warrantholders in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.

 

	
ARTICLE 7.   

	
MEETINGS OF REGISTERED WARRANTHOLDERS

 

	
7.1

	
Right to Convene Meetings

 

The Warrant Agent may at any time and from time to time, and shall on receipt of a written request of the Corporation or of a Warrantholders' Request and upon being indemnified and funded to its reasonable satisfaction by the Corporation or by the Registered Warrantholders signing such Warrantholders' Request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Registered Warrantholders. If the Warrant Agent fails to so call a meeting within seven days after receipt of such written request of the Corporation or such Warrantholders' Request and the indemnity and funding given as aforesaid, the Corporation or such Registered Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Vancouver or at such other place as may be approved or determined by the Warrant Agent.

 

	
7.2

	
Notice

 

At least 21 days' prior written notice of any meeting of Registered Warrantholders shall be given to the Registered Warrantholders in the manner provided for in Section 10.2 and a copy of such notice shall be sent by mail to the Warrant Agent (unless the meeting has been called by the Warrant Agent) and to the Corporation (unless the meeting has been called by the Corporation). Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Registered Warrantholders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Section 7.2.

 

	
7.3

	
Chairman

 

An individual (who need not be a Registered Warrantholder) designated in writing by the Warrant Agent shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within fifteen minutes from the time fixed for the holding of the meeting, the Registered Warrantholders present in person or by proxy shall choose an individual present to be chairman.

 

	
7.4

	
Quorum

 

Subject to the provisions of Section 7.11, at any meeting of the Registered Warrantholders a quorum shall consist of Registered Warrantholder(s) present in person or by proxy and holding at least 25% of the aggregate number of the then outstanding Warrants. If a quorum of the Registered Warrantholders shall not be present within thirty minutes from the time fixed for holding any meeting, the meeting, if summoned by Registered Warrantholders or on a Warrantholders' Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day, in which case it shall be adjourned to the next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be entitled to acquire at least 50% of the aggregate number of Common Shares which may be acquired pursuant to all then outstanding Warrants.

 

	
7.5

	
Power to Adjourn

 

The chairman of any meeting at which a quorum of the Registered 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.

 

 

  

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7.6

	
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 an Extraordinary Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

 

	
7.7

	
Poll and Voting

 

	
(1)

	
On every Extraordinary Resolution, and on any other question submitted to a meeting and after a vote by show of hands when demanded by the chairman or by one or more of the Registered Warrantholders acting in person or by proxy and holding in the aggregate at least 5% of the Warrants then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by Extraordinary Resolution shall be decided by a majority of the votes cast on the poll.

 

	
(2)

	
On a show of hands, every person who is present and entitled to vote, whether as a Registered Warrantholder or as proxy for one or more absent Registered Warrantholders, or both, shall have one vote. On a poll, each Registered Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each Warrant then held or represented by it. A proxy need not be a Registered 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.

 

	
7.8

	
Regulations

 

	
(1)

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

 

	
  

	
(a)

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

 

	
  

	
(b)

	
the form of the instrument of proxy; and

 

	
  

	
(c)

	
generally for the calling of meetings of Registered Warrantholders and the conduct of business thereat.

 

	
(2)

	
Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Registered Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Registered Warrantholders or proxies of Registered Warrantholders.

 

	
7.9

	
Corporation and Warrant Agent May be Represented

 

The Corporation and the Warrant Agent, by their respective directors, officers agents, and employees and Counsel for the Corporation and for the Warrant Agent may attend any meeting of the Registered Warrantholders.

 

	
7.10

	
Powers Exercisable by Extraordinary Resolution

 

In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Registered Warrantholders at a meeting shall, subject to the provisions of Section 7.11, have the power exercisable from time to time by Extraordinary Resolution:

	
(a)

	
to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Registered Warrantholders or the Warrant Agent in its capacity as warrant agent hereunder (subject to the Warrant Agent's prior consent, acting reasonably) or on behalf of the Registered Warrantholders against the Corporation whether such rights arise under this Indenture or otherwise;

 

	
(b)

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

 

	
(c)

	
to direct or to authorize the Warrant Agent, subject to Section 9.2(2) hereof, to enforce any of the covenants on the part of the Corporation contained in this Indenture or to enforce any of the rights of the Registered Warrantholders in any manner specified in such Extraordinary Resolution or to refrain from enforcing any such covenant or right;

 

 

  

22

  

 

 

	
(d)

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

 

	
(e)

	
to restrain any Registered Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or to enforce any of the rights of the Registered Warrantholders;

 

	
(f)

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

 

	
(g)

	
to assent to any change in or omission from the provisions contained in 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;

 

	
(h)

	
with the consent of the Corporation, such consent not to be unreasonably withheld, to remove the Warrant Agent or its successor in office and to appoint a new warrant agent or warrant agents to take the place of the Warrant Agent so removed; and

 

	
(i)

	
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.

 

	
7.11

	
Meaning of Extraordinary Resolution

 

	
(1)

	
The expression "Extraordinary Resolution" when used in this Indenture means, subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution proposed at a meeting of Registered Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there are present in person or by proxy Registered Warrantholders holding at least 25% of the aggregate number of Warrants then outstanding and passed by the affirmative votes of Registered Warrantholders holding not less than two-thirds of  the  Warrants then outstanding at the meeting and voted on the poll upon such resolution.

 

	
(2)

	
If, at the meeting at which an Extraordinary Resolution is to be considered, Registered Warrantholders holding at least 25% of the aggregate number of Warrants then outstanding are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Registered 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 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 14 days' prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Registered 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 Registered Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Section 7.11(1) shall be an Extraordinary Resolution within the meaning of this Indenture notwithstanding that Registered Warrantholders entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.

 

	
(3)

	
Subject to Section 7.14, 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.

 

	
7.12

	
Powers Cumulative

 

Any one or more of the powers or any combination of the powers in this Indenture stated to be exercisable by the Registered Warrantholders by Extraordinary Resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Registered Warrantholders to exercise such power or powers or combination of powers then or thereafter from time to time.

 

	
7.13

	
Minutes

 

Minutes of all resolutions and proceedings at every meeting of Registered Warrantholders shall be made and duly entered in books to be provided from time to time for that purpose by the Warrant Agent at the expense of the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had 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 duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.

 

 

  

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7.14

	
Instruments in Writing

 

All actions which may be taken and all powers that may be exercised by the Registered Warrantholders at a meeting held as provided in this Article may also be taken and exercised by Registered Warrantholders holding at least two-thirds of the aggregate number of Warrants then outstanding by an instrument in writing signed in one or more counterparts by such Registered Warrantholders in person or by attorney duly appointed in writing, and the expression "Extraordinary Resolution" when used in this Indenture shall include an instrument so signed.

 

	
7.15

	
Binding Effect of Resolutions

 

Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this Indenture at a meeting of Registered Warrantholders shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Registered Warrantholders in accordance with Section 7.14 shall be binding upon all the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution and instrument in writing.

 

	
7.16

	
Holdings by Corporation Disregarded

 

In determining whether Registered Warrantholders holding Warrants evidencing the entitlement to acquire the required number of Common Shares are present at a meeting of Registered Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, Extraordinary Resolution, Warrantholders' Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation shall be disregarded in accordance with the provisions of Section 10.6.

 

	
ARTICLE 8.   

	
SUPPLEMENTAL INDENTURES

 

	
8.1

	
Provision for Supplemental Indentures for Certain Purposes

 

From time to time, the Corporation (when authorized by action of the directors) and the Warrant Agent may, subject to the provisions hereof and they shall, when so directed in accordance with the provisions hereof, 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 any adjustments resulting from the application of the provisions of Article 4;

 

	
(b)

	
adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in the premises, provided that the same are not in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders;

 

	
(c)

	
giving effect to any Extraordinary Resolution passed as provided in Section 7.11 or Section 7.14;

 

	
(d)

	
making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining or maintaining a listing or quotation of the Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Warrant Agent, relying on the advice of Counsel, prejudicial to the interests of the Registered Warrantholders;

 

	
(e)

	
adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrants, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof;

 

	
(f)

	
modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such modification or relief in no way prejudices any of the rights of the Registered 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; and

 

	
(g)

	
for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Warrant Agent, relying on the advice of Counsel, the rights of the Warrant Agent and of the Registered Warrantholders are in no way prejudiced thereby.

 

 

  

24

  

 

 

	
8.2

	
Successor Entities

 

In the case of the consolidation, amalgamation, arrangement, merger or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to or with another entity ("successor entity"), the successor entity resulting from such consolidation, amalgamation, arrangement, merger 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 due and punctual performance and observance of each and every covenant and condition of this Indenture to be performed and observed by the Corporation.

 

	
ARTICLE 9.   

	
CONCERNING THE WARRANT AGENT

 

	
9.1

	
Trust Indenture Legislation

 

	
(1)

	
If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail.

 

	
(2)

	
The Corporation and the Warrant Agent agree that each will, at all times in relation to this Indenture and any action to be taken hereunder, observe and comply with and be entitled to the benefits of Applicable Legislation.

 

	
9.2

	
Rights and Duties of Warrant Agent

 

	
(1)

	
In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Warrant Agent shall act honestly and in good faith with a view to the best interests of the Warrantholders and shall exercise that degree of care, diligence and skill that a reasonably prudent warrant agent would exercise in comparable circumstances. No provision of this Indenture shall be construed to relieve the Warrant Agent from liability for its own gross negligent action, willful misconduct, bad faith or fraud under this Indenture.

 

	
(2)

	
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 Registered Warrantholders hereunder shall be conditional upon the Registered Warrantholders furnishing, when required by notice by the Warrant Agent, sufficient funds to commence or to continue such act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to protect and to hold harmless the Warrant Agent and its officers, directors, employees and agents, against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Warrant Agent to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified and funded as aforesaid.

 

	
(3)

	
The Warrant Agent may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Registered Warrantholders at whose instance it is acting to deposit with the Warrant Agent the Warrant Certificates held by them, for which the Warrant Agent shall issue receipts.

 

	
(4)

	
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.

 

	
9.3

	
Evidence, Experts and Advisers

 

	
(1)

	
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 be prescribed by Applicable Legislation or as the Warrant Agent may reasonably require by written notice to the Corporation.

 

	
(2)

	
In the exercise of its rights and duties hereunder, the Warrant Agent may, if it is acting in good faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Warrant Agent pursuant to a request of the Warrant Agent, provided that such evidence complies with Applicable Legislation, the Warrant Agent complies with Applicable Legislation and that the Warrant Agent examines the same and determines that such evidence complies with the applicable requirements of this Indenture.

 

 

  

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(3)

	
Whenever it is provided in this Indenture or under Applicable Legislation 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 and the facts and opinions stated in all such 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.

 

	
(4)

	
The Warrant Agent may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Warrant Agent.

 

	
(5)

	
The Warrant Agent may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Warrant Agent, in relation to any matter arising in the administration of the agency hereof.

 

	
9.4

	
Documents, Monies, etc. Held by Warrant Agent

 

	
(1)

	
Any monies, securities, documents of title or other instruments that may at any time be held by the Warrant Agent may be placed in the deposit vaults of the Warrant Agent or of any Canadian chartered bank listed in Schedule I of the Bank Act (Canada), or deposited for safekeeping with any such bank. Any monies held pending the application or withdrawal thereof under any provisions of this Indenture, shall be held, invested and reinvested amount in Permitted Investments as directed in writing by the Corporation.   Unless otherwise specifically provided herein, all interest or other income received by the Warrant Agent in respect of such deposits and investments shall belong to the Corporation.

 

	
(2)

	
Any written direction for the investment or release of funds received shall be received by the Warrant Agent by 9:00 a.m. (Toronto time) on the Business Day on which such investment or release is to be made, failing which such direction will be handled on a commercially reasonable efforts basis and may result in funds being invested or released on the next Business Day.

 

	
(3)

	
The Warrant Agent shall have no responsibility or liability for any diminution of any funds resulting from any investment made in accordance with this Indenture, including any losses on any investment liquidated prior to maturity in order to make a payment required hereunder.

 

	
(4)

	
In the event that the Warrant Agent does not receive a direction or only a partial direction, the Warrant Agent  may hold cash balances constituting part or all of such monies and may, but need not, invest same in its deposit department, the deposit department of one of its affiliates, or the deposit department of a Canadian chartered bank; but the Warrant Agent, its affiliates or a Canadian chartered bank shall not be liable to account for any profit to any parties to this Indenture or to any other person or entity.

 

	
9.5

	
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 interests and the interests of the Registered Warrantholders.

 

	
9.6

	
Warrant Agent Not Required to Give Security

 

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

 

	
9.7

	
Protection of Warrant Agent

 

By way of supplement to the provisions of any law for the time being relating to warrant agents it is expressly declared and agreed as follows:

	
(a)

	
the Warrant Agent shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9 or in the certificate of the Warrant Agent on the Warrant Certificates) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;

 

 

  

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(b)

	
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;

 

	
(c)

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

 

	
(d)

	
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 its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation; and

 

	
(e)

	
the Corporation hereby indemnifies and agrees to hold harmless the Warrant Agent, its affiliates, their current and former officers, directors, employees, agents, successors and assigns from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including legal fees and disbursements of whatever kind and nature which may at any time be imposed on or incurred by or asserted against the Warrant Agent, whether groundless or otherwise, arising from or out of any act, omission or error of the Warrant Agent, provided that the Corporation shall not be required to indemnify the Warrant Agent in the event of the gross negligence or willful misconduct of the Warrant Agent, and this provision shall survive the resignation or removal of the Warrant Agent or the termination or discharge of this Indenture.

 

Notwithstanding the foregoing or any other provision of this Indenture, any liability of the Warrant Agent shall be limited, in the aggregate, to the amount of annual retainer fees paid by the Corporation to the Warrant Agent under this Indenture in the twelve (12) months immediately prior to the Warrant Agent receiving the first notice of the claim. Notwithstanding any other provision of this Indenture, and whether such losses or damages are foreseeable or unforeseeable, the Warrant Agent shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages.

 

	
9.8

	
Replacement of Warrant Agent; Successor by Merger

 

	
(1)

	
The Warrant Agent may resign its agency and be discharged from all further duties and liabilities hereunder, subject to this Section 9.8, 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 Registered Warrantholders by Extraordinary Resolution shall have the power at any time to remove the existing Warrant Agent and to appoint a new warrant agent. In the event of the Warrant Agent resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new warrant agent unless a new warrant agent has already been appointed by the Registered Warrantholders; failing such appointment by the Corporation, the retiring Warrant Agent or any Registered Warrantholder may apply to a court of competent jurisdiction in the Province of British Columbia for the appointment of a new warrant agent; but any new warrant agent so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Registered Warrantholders. Any new warrant agent appointed under any provision of this Section 9.8 shall be an entity authorized to carry on the business of a trust company in the Province of British Columbia and, if required by the Applicable Legislation for any other provinces, 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 hereunder.

 

	
(2)

	
Upon the appointment of a successor warrant agent, the Corporation shall promptly notify the Registered Warrantholders thereof in the manner provided for in Section 10.2.

 

	
(3)

	
Any Warrant Certificates Authenticated but not delivered by a predecessor Warrant Agent may be Authenticated by the successor Warrant Agent in the name of the predecessor or successor Warrant Agent.

 

	
(4)

	
Any corporation into or with which the Warrant Agent may be merged or consolidated or amalgamated, or any corporation resulting therefrom to which the Warrant Agent shall be a party, or any corporation succeeding to substantially the corporate trust 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 successor Warrant Agent under Section 9.8(1).

 

 

  

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9.9

	
Conflict of Interest

 

	
(1)

	
The Warrant Agent represents to the Corporation that at the time of execution and delivery hereof no material conflict of interest exists between its role as a Warrant Agent hereunder and its role in any other capacity 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 agency hereunder to a successor Warrant Agent approved by the Corporation and meeting the requirements set forth in Section 9.8(1). Notwithstanding the foregoing provisions of this Section 9.9(1),  if any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Warrant Certificate shall not be affected in any manner whatsoever by reason thereof.

 

	
(2)

	
Subject to Section 9.9(1), the Warrant Agent, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation without being liable to account for any profit made thereby.

 

	
9.10

	
Acceptance of Agency

 

The Warrant Agent hereby accepts the agency in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth.

 

	
9.11

	
Warrant Agent Not to be Appointed Receiver

 

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

 

	
9.12

	
Warrant Agent Not Required to Give Notice of Default

 

The Warrant Agent shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall have been required so to do under the terms hereof; nor shall the Warrant Agent be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Warrant Agent and in the absence of any such notice the Warrant Agent may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given to the Warrant Agent to determine whether or not the Warrant Agent shall take action with respect to any default.

 

	
9.13

	
Anti-Money Laundering

 

	
(1)

	
Each party to this Agreement other than the Warrant Agent hereby represents to the Warrant Agent that any account to be opened by, or interest to be held by the Warrant Agent in connection with this Agreement, for or to the credit of such party, either (a) is not intended to be used by or on behalf of any third party; or (b) is intended to be used by or on behalf of a third party, in which case such party hereto agrees to complete and execute forthwith a declaration in the Warrant Agent's prescribed form as to the particulars of such third party.

 

	
(2)

	
The Warrant Agent shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Warrant Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering,  anti-terrorist legislation or economic sanctions legislation, regulation or guideline. Further, should the Warrant Agent, in its sole judgment, determine at any time that its acting under this Indenture has resulted in its being in non-compliance with any applicable anti-money laundering,  anti-terrorist legislation or economic sanctions legislation, regulation or guideline, then it shall have the right to resign on 10 days written notice to the other parties to this Indenture, provided (a) that the Warrant Agent's written notice shall describe the circumstances of such non-compliance; and (b) that if such circumstances are rectified to the Warrant Agent's satisfaction within such 10 day period, then such resignation shall not be effective.

 

	
9.14

	
Compliance with Privacy Code

 

The Corporation acknowledges that the Warrant Agent may, in the course of providing services hereunder, collect or receive financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:

 

 

  

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(a)

	
to provide the services required under this Indenture and other services that may be requested from time to time;

 

	
(b)

	
to help the Warrant Agent manage its servicing relationships with such individuals;

 

	
(c)

	
to meet the Warrant Agent's legal and regulatory requirements; and

 

	
(d)

	
if Social Insurance Numbers are collected by the Warrant Agent, to perform tax reporting and to assist in verification of an individual's identity for security purposes.

 

The Corporation acknowledges and agrees that the Warrant Agent may receive, collect, use and disclose personal information provided to it or acquired by it in the course of its acting as agent hereunder for the purposes described above and, generally, in the manner and on the terms described in its Privacy Code, which the Warrant Agent shall make available on its website or upon request, including revisions thereto.  Some of this personal information may be transferred to service providers in the United States for data processing and/or storage. Further, the Corporation agrees that it shall not provide or cause to be provided to the Warrant Agent any personal information relating to an individual who is not a party to this Indenture unless the Corporation has assured itself that such individual understands and has consented to the aforementioned uses and disclosures.

 

	
ARTICLE 10.   

	
GENERAL

 

	
10.1

	
Notice to the Corporation and the Warrant Agent

 

	
(1)

	
Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or the Warrant Agent shall be deemed to be validly given if delivered, sent by registered letter, postage prepaid or telecopied to the addresses of the parties as noted above, and any such notice delivered in accordance with the foregoing shall be deemed to have been received and given on the date of delivery or, if mailed, on the fifth Business Day following the date of mailing such notice or, if sent by facsimile, on the next Business Day following the date of transmission.

 

	
(2)

	
The Corporation or the Warrant Agent, as the case may be, may from time to time notify the other in the manner provided in Section 10.1(1) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Warrant Agent, as the case may be, for all purposes of this Indenture.

 

	
(3)

	
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrant Agent or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed, as provided in Section 10.1(1), or given by facisimile or other means of prepaid, transmitted and recorded communication.

 

	
10.2

	
Notice to Registered Warrantholders

 

	
(1)

	
Unless otherwise provided herein, notice to the Registered Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or sent by ordinary post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively received and given on the date of delivery or, if mailed, on the third Business Day following the date of postmark for such notice.  In the event that Warrants are held in the name of the Depository, a copy of such notice shall also be sent by electronic communication to the Depository and shall be deemed received and given on the day it is so sent.

 

	
(2)

	
If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Registered Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to such Registered Warrantholders to the address for such Registered Warrantholders contained in the register maintained by the Warrant Agent  or such notice may  be given, at the Corporation's expense, by means of publication in the Globe and Mail, National Edition, or any other English language daily newspaper or newspapers of general circulation in Canada, in each two successive weeks, and any so notice published shall be deemed to have been received and given on the latest date the publication takes place.

 

	
10.3

	
Ownership of Warrants

 

The Corporation and the Warrant Agent may deem and treat the Registered Warrantholders as the absolute owner thereof for all purposes, and the Corporation and the Warrant Agent shall not be affected by any notice or knowledge to the contrary except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction. The receipt of any such Registered Warrantholder of the Common Shares which may be acquired pursuant thereto shall be a good discharge to the Corporation and the Warrant Agent for the same and neither the Corporation nor the Warrant Agent shall be bound to inquire into the title of any such holder except where the Corporation or the Warrant Agent is required to take notice by statute or by order of a court of competent jurisdiction.

 

 

  

29

  

 

 

	
10.4

	
Satisfaction and Discharge of Indenture

 

Upon the earlier of:

 

	
(a)

	
the date by which there shall have been delivered to the Warrant Agent for exercise or cancellation all Warrants theretofore Authenticated hereunder, in the case of Certificated Warrants, or by way of a Transaction Instruction (or such other instructions, in a form satisfactory to the Warrant Agent), in the case of Uncertificated Warrants, or by way of standard processing through the book entry system in the case of a CDS Global Warrant; or

 

	
(b)

	
the Expiry Time;

 

and if all certificates or other entry on the register representing Common Shares required to be issued in compliance with the provisions hereof have been issued and delivered hereunder or to the Warrant Agent in accordance with such provisions, this Indenture shall cease to be of further 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 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. Notwithstanding the foregoing, the indemnities provided to the Warrant Agent by the Corporation hereunder shall remain in full force and effect and survive the termination of this Indenture.

 

	
10.5

	
Provisions of Indenture and Warrants for the Sole Benefit of Parties and Registered Warrantholders

 

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

 

	
10.6

	
Common Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided

 

For the purpose of disregarding any Warrants owned legally or beneficially by the Corporation in Section 7.16, the Corporation shall provide to the Warrant Agent, from time to time, a certificate of the Corporation setting forth as at the date of such certificate:

 

	
(a)

	
the names (other than the name of the Corporation) of the Registered Warrantholders which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation; and

 

	
(b)

	
the number of Warrants owned legally or beneficially by the Corporation;

 

	
and the Warrant Agent, in making the computations in Section 7.16, shall be entitled to rely on such certificate without any additional evidence.

 

	
10.7

	
Severability

 

If, in any jurisdiction, any provision of this Indenture or its application to any party or circumstance is restricted, prohibited or unenforceable, such provision will, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Indenture and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other parties or circumstances.

 

	
10.8

	
Force Majeure

 

No party shall be liable to the other, or held in breach of this Indenture, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Indenture shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section 10.8.

 

 

  

30

  

 

 

	
10.9

	
Assignment, Successors and Assigns

 

Neither of the parties hereto may assign its rights or interest under this Indenture, except as provided in Section 9.8 in the case of the Warrant Agent, or as provided in Section 8.2 in the case of the Corporation. Subject thereto, this Indenture shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

	
10.10

	
Counterparts

 

This 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 they shall be deemed to be dated as of the date hereof.

 

	
10.11

	
Rights of Rescission and Withdrawal for Holders

 

Should a holder of Warrants exercise any legal, statutory, contractual or other right of withdrawal or rescission that may be available to it, and the holder’s funds which were paid on exercise have already been released to the Corporation by the Warrant Agent, the Warrant Agent shall not be responsible for ensuring the exercise is cancelled and a refund is paid back to the holder. In such cases, the holder shall seek a refund directly from the Corporation and subsequently, the Corporation, upon surrender to the Corporation or the Warrant Agent of any underlying shares that may have been issued, or such other procedure as agreed to by the parties hereto, shall instruct the Warrant Agent in writing, to cancel the exercise transaction and any such underlying shares on the register, which may have already been issued upon the Warrant exercise.  In the event that any payment is received from the Corporation by virtue of the holder being a shareholder for such Warrants that were subsequently rescinded, such payment must be returned to the Corporation by such holder.  The Warrant Agent shall not be under any duty or obligation to take any steps to ensure or enforce that the funds are returned pursuant to this section, nor shall the Warrant Agent be in any other way responsible in the event that any payment is not delivered or received pursuant to this section.  Notwithstanding the foregoing, in the event that the Corporation provides the refund to the Warrant Agent for distribution to the holder, the Warrant Agent shall return such funds to the holder as soon as reasonably practicable, and in so doing, the Warrant Agent shall incur no liability with respect to the delivery or non-delivery of any such funds.

IN WITNESS WHEREOF the parties hereto have executed this Indenture under the hands of their proper officers in that behalf as of the date first written above.

 

 

	  	
Canadian Zinc Corporation

	 	 
	  	
"Trevor L. Cunningham" 

	 	Per: Trevor L. Cunningham, Chief Financial Officer

	  	
Computershare Trust Company of Canada

	 	"Jennifer Wong"
	  	
Per: Jennifer Wong                           

	 	Title: Corporate Trust Officer
	 	 
	 	"Yasmin Ali"
	  	
Per: Yamin Ali

	 	Title: Associate Trust Officer

 

 

  

31

  

 

Schedule "A"

Form of Warrant

 

The Warrants evidenced hereby are exercisable on or before 4:30 p.m. (Vancouver time) on July 31, 2017, after which time the warrants evidenced hereby shall be deemed to be void and of no further force or effect.

 

[If Warrant Certificate issued to CDS, include the following legend.]

 

"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO CANADIAN ZINC CORPORATION (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE."

 

[If Warrant Certificate issued to U.S. Warrantholder, include the following legend.]

 

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR U.S. STATE SECURITIES LAWS.  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO CANADIAN ZINC CORPORATION (THE "CORPORATION"), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY (I) RULE 144 OR (II) RULE 144A THEREUNDER, IF AVAILABLE, AND IN EACH CASE IN ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT, IN THE CASE OF TRANSFERS PURSUANT TO (C)(I) OR (D) ABOVE, THE HOLDER HAS, PRIOR TO SUCH TRANSFER, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA."

 

"THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT").  THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE.  "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT."

 

 

  

A-1

  

 

 

WARRANT CERTIFICATE

 

OF

 

CANADIAN ZINC CORPORATION

(Incorporated under the laws of British Columbia)

 

	
CUSIP: ●

	
ISIN:  ●    

	
No. ●

	
●

WARRANTS entitling the Holder (as defined below) to acquire, subject to adjustment, one Common Share (as defined below) of Canadian Zinc Corporation (the "Corporation") for each Warrant  (as defined below) represented hereby.

 

THIS WARRANT CERTIFICATE IS TO CERTIFY that, for value received,

 

●

 

(herein referred to as the "Holder")

 

is the registered holder of the number of common share purchase warrants of the Corporation (the "Warrants") stated above and, subject to adjustment as set forth in the Warrant Indenture (as defined below), is entitled for each Warrant represented hereby to purchase one fully-paid and non-assessable common share of the Corporation (a "Common Share") at a price of $0.50 (the "Exercise Price") at any time prior to 4:30 p.m. (Vancouver time) on July 31, 2017 (the "Expiry Time"), all in the manner and subject to the restrictions and adjustments set forth in the Warrant Indenture.

 

Any capitalized term in this Warrant Certificate that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.

 

The Warrants represented by this Warrant Certificate are issued under the provisions of the warrant indenture (which warrant indenture together with all other instruments ancillary thereto is referred to herein as the "Warrant Indenture") dated as of July 31, 2014 between the Corporation and Computershare Trust Company of Canada (the "Warrant Agent").  Reference is hereby made to the Warrant Indenture for a full description of the rights of the holders of the Warrants, the Corporation and the Warrant Agent in respect thereof, and the terms and conditions upon which the Warrants evidenced hereby are, or are to be, issued, held, exchanged and surrendered all to the same effect as if the provisions of the Warrant Indenture were herein set forth. By acceptance of this Warrant Certificate, the Holder assents to all provisions of the Warrant Indenture. To the extent that the terms and conditions set forth in this Warrant Certificate conflict with the terms and conditions of the Warrant Indenture, the Warrant Indenture shall prevail. The Corporation will furnish to the Holder, upon request and without charge, a copy of the Warrant Indenture.

 

Upon exercise, the Warrants so exercised shall be void and of no value or effect.

 

The right to acquire the Common Shares may only be exercised by the Holder until the Expiry Time by:

 

	
  

	
(a)

	
duly completing and executing the Exercise Form attached hereto; and

 

	
  

	
(b)

	
surrendering this Warrant Certificate to the Warrant Agent at the principal transfer offices of the Warrant Agent in Vancouver, British Columbia, together with a certified cheque, bank draft or money order in lawful money of Canada, payable to the order of the Corporation equal to the Exercise Price multiplied by the number of Common Shares subscribed for.

 

 

  

A-2

  

 

 

The Warrants represented by this Warrant Certificate shall be deemed to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Warrant Agent at the offices referred to above.

 

Upon surrender of these Warrants, the person or persons in whose name or names the Common Shares are to be issued shall be deemed for all purposes (except as provided in the Warrant Indenture) to be the holder or holders of record of such Common Shares and the Corporation has covenanted that it will (subject to the provisions of the Warrant Indenture) cause a certificate or certificates representing the Common Shares to be delivered or mailed to the person or persons at the address or addresses specified in the Exercise Form within five Business Days.

 

The Warrant Indenture provides for adjustments to certain rights of holders, including the Exercise Price and/or the number of Common Shares issuable upon exercise of the Warrants, upon subdivision, consolidation or reclassification of the Common Shares or any reclassification, capital reorganization, amalgamation or merger of the Corporation and certain distributions of securities, including rights, options or warrants to purchase Common Shares or securities convertible or exchangeable into Common Shares or assets of the Corporation. The Holder should refer to the Warrant Indenture which provides for adjustments in certain other events.

 

The terms and conditions relating to the Warrants and this Warrant Certificate may be modified, changed or added to in accordance with the provisions of the Warrant Indenture. The Warrant Indenture contains provisions making binding upon all holders of Warrants outstanding thereunder resolutions passed at meetings of such holders held in accordance with such provisions and instruments in writing signed by the holders holding a specific percentage of the then outstanding Warrants.

 

The holding of the Warrants evidenced by this Warrant Certificate shall not constitute, or be construed as conferring upon the Holder, any right or interest whatsoever as a shareholder of the Corporation except such rights as may be provided in the Warrant Indenture or in this Warrant Certificate.

 

The Holder may, upon compliance with the reasonable requirements of the Warrant Agent and upon surrender of this Warrant Certificate, exchange this Warrant Certificate for another warrant certificate or warrant certificates entitling the Holder thereof to receive, in the aggregate, the same number of Common Shares as are issuable under this Warrant Certificate.

 

The Warrants evidenced by this Warrant Certificate may only be transferred in accordance with applicable securities laws and upon due execution and delivery to the Warrant Agent of a Transfer Form in the form attached hereto and in compliance with all the conditions prescribed in the Warrant Indenture and compliance with such other reasonable requirements as the Warrant Agent may prescribe.

 

The Warrants and the Common Shares issuable upon exercise of the Warrants have not been and will not be registered under the U.S. Securities Act or any applicable state securities laws. Subject to the conditions set forth in the immediately succeeding sentence, these Warrants may not be exercised in the United States or by or on behalf of a "U.S. person" (a "U.S. Person"), as such term is defined in Rule 902(k) of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), unless an exemption from registration is available under the U.S. Securities Act and any applicable state securities laws and the Corporation and Warrant Agent have received an opinion of counsel of recognized standing to such effect in form and substance reasonably satisfactory to the Corporation, or such other documentation as permitted by the Warrant Indenture. Notwithstanding the preceding sentence, no opinion of counsel shall be required in connection with the exercise of the Warrants by the original purchaser of Warrants,  who delivered a Qualified Institutional Buyer Letter in connection with its purchase of Units pursuant to the placement under which the Warrants were issued; (b) who is exercising the Warrants solely for its own account or for the benefit of a U.S. Person or a person in the United States for whose account such holder acquired the Warrants and for whose account such holder exercises sole investment discretion; (c) was, and any beneficial purchaser for whose account such holder acquired the Warrants and is exercising the Warrants was, a Qualified Institutional Buyer, both on the date the Warrants were purchased and on the date of exercise of the Warrants and (d) the representations and warranties made by the holder in the Qualified Institutional Buyer Letter remain true and correct and the Corporation is entitled to rely upon such representations and warranties as if made as of the date hereof.

 

 

  

A-3

  

 

 

This Warrant Certificate shall not be valid unless and until it has been countersigned by or on behalf of the Warrant Agent.

 

The Holder expressly acknowledges and consents to, the drawing in the English language only of this Warrant Certificate evidencing the Warrants registered in the Holder's name and all documents relating to such Warrants.

 

Time shall be of the essence hereof.

 

 

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed by its duly authorized officer as of the _____ day of ______ July, 2014.

	
 

	 
	 	CANADIAN ZINC CORPORATION	 
	  	  	 
	
By:   

	  	 
	  	
Authorized Signing Officer

	 

 

This Warrant Certificate represents Warrants referred to in the Warrant Indenture within mentioned.

 

Countersigned by:

	 
	
COMPUTERSHARE TRUST COMPANY OF CANADA

	  	  
	
By:

	  	  
	  	
Authorized Signing Officer

	  
	  	  	  
	
Date:

	  	  

 

  

A-4

  

 

 

TRANSFER FORM

 

ANY TRANSFER OF WARRANTS WILL REQUIRE COMPLIANCE WITH APPLICABLE SECURITIES LEGISLATION. TRANSFERORS AND TRANSFEREES ARE URGED TO CONTACT LEGAL COUNSEL BEFORE EFFECTING ANY SUCH TRANSFER.

	
TO:        Canadian Zinc Corporation

c/o Computershare Trust Company of Canada

3rd Floor, 510 Burrard Street

Vancouver, BC, V6C 3B9

	  

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:

	  
	
(name)

	 
	  
	
(address)

 

_____________________ of the Warrants registered in the name of the undersigned represented by this Warrant Certificate and hereby appoints  _________________  (leave space blank) as its attorney with full power of substitution to transfer the said Warrants on the appropriate register of the Warrant Agent.

 

In the case of a warrant certificate that contains a U.S. restrictive legend, the undersigned hereby represents, warrants and certifies that (one (only) of the following must be checked):

 

	o	
(A)

	
the transfer is being made only to the Corporation;

 

	
o

	
(B)

	
the transfer is being made outside the United States in accordance with Rule 904 of Regulation S under the U.S. Securities Act, and in compliance with any applicable local securities laws and regulations and the holder has provided herewith the Declaration for Removal of Legend attached as Schedule "B" to the Indenture or has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation that the transfer does not require registration under the U.S. Securities Act or any applicable state securities laws,

 

	
o

	
(C)

	
the transfer is being made within the United States or to, or for the account or benefit of, U.S. Persons, in accordance with a transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws in circumstances described in the legend set forth in Section 2.8(3) of the Warrant Indenture that do not require the delivery of an opinion of counsel, or

 

	
o

	
 (D)

	
the transfer is being made within the United States or to, or for the account or benefit of, U.S. Persons, in accordance with a transaction that does not require registration under the U.S. Securities Act or any applicable state securities laws and the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

 

In the case of a warrant certificate that does not contain a U.S. restrictive legend, if the proposed transfer is to, or for the account or benefit of a U.S. Person or to a person in the United States, the undersigned hereby represents, warrants and certifies that the transfer of the Warrants is being completed pursuant to an exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws, in which case the undersigned has furnished to the Corporation and the Warrant Agent an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect.

 

 

  

A-5

  

 

 

REASON FOR TRANSFER – For US Residents only (where the individual(s) or corporation receiving the securities is a US resident).  Please select only one (see instructions below).

 

o Gift                     o Estate              o Private Sale             o Other (or no change in ownership)

 

        

	Date of Event (Date of gift, death or sale):    	Value per Warrant on the date of event:	o	o
		 	CAD   OR   	USD
	 	 	 	 

o    If transfer is to a U.S. Person or a person located in the United States, check this box.

 

DATED this ______ day of ____________, 20______

 

	  	  	  
	
Signature Guaranteed

	  	
Name of Warrantholder

	  	  	  
	  	  	  
	
Name of Authorized Representative

	  	
Signature of Warrantholder or Authorized Representative

	  	  	  
	  	  	  
	
Title or Capacity of Authorized Representative

	  	
Daytime Phone Number of Warrantholder or Authorized Representative

 

Instructions:

CERTAIN REQUIREMENTS RELATING TO TRANSFERS – READ CAREFULLY

The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever.  All securityholders or a legally authorized representative must sign this form.  The signature(s) on this form must be guaranteed in accordance with the warrant agent’s then current guidelines and requirements at the time of transfer.  Notarized or witnessed signatures are not acceptable as guaranteed signatures.  As at the time of closing, you may choose one of the following methods (although subject to change in accordance with industry practice and standards):

•           Canada and the USA:  A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP).  Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program.  The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct prefix covering the face value of the certificate.

•           Canada:  A Signature Guarantee obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust.  The Guarantor must affix a stamp bearing the actual words “Signature Guaranteed”, sign and print their full name and alpha numeric signing number.  Signature Guarantees are not accepted from Treasury Branches, Credit Unions or Caisse Populaires unless they are members of a Medallion Signature Guarantee Program. For corporate holders, corporate signing resolutions, including certificate of incumbency, are also required to accompany the transfer, unless there is a “Signature & Authority to Sign Guarantee” Stamp affixed to the transfer (as opposed to a “Signature Guaranteed” Stamp) obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a Medallion Signature Guarantee with the correct prefix covering the face value of the certificate.

•           Outside North America:  For holders located outside North America, present the certificates(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program.  The corresponding affiliate will arrange for the signature to be over-guaranteed.

 

 

  

A-6

  

 

OR

The signature(s) of the transferor(s) must correspond with the name(s) as written upon the face of this certificate(s), in every particular, without alteration or enlargement, or any change whatsoever.  The signature(s) on this form must be guaranteed by an authorized officer of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample signature(s) are on file with the transfer agent, or by a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP).  Notarized or witnessed signatures are not acceptable as guaranteed signatures.  The Guarantor must affix a stamp bearing the actual words:  “SIGNATURE GUARANTEED”, “MEDALLION GUARANTEED” OR “SIGNATURE & AUTHORITY TO SIGN GUARANTEE”, all in accordance with the transfer agent’s then current guidelines and requirements at the time of transfer.  For corporate holders, corporate signing resolutions, including certificate of incumbency, will also be required to accompany the transfer unless there is a “SIGNATURE & AUTHORITY TO SIGN GUARANTEE” Stamp affixed to the Form of Transfer obtained from an authorized officer of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a “MEDALLION GUARANTEED” Stamp affixed to the Form of Transfer, with the correct prefix covering the face value of the certificate.

 

REASON FOR TRANSFER – FOR US RESIDENTS ONLY

Consistent with US IRS regulations, Computershare is required to request cost basis information from US securityholders.  Please indicate the reason for requesting the transfer as well as the date of event relating to the reason.  The event date is not the day in which the transfer is finalized, but rather the date of the event which led to the transfer request (i.e. date of gift, date of death of the securityholder, or the date the private sale took place).

 

 

  

A-7

  

 

 

EXERCISE FORM

	
TO:        Canadian Zinc Corporation

c/o Computershare Trust Company of Canada

3rd Floor, 510 Burrard Street

Vancouver, BC, V6C 3B9

	  

The undersigned holder of the within Warrants hereby irrevocably subscribes for Common Shares of Canadian Zinc Corporation (the "Corporation") on the terms and conditions set forth in the attached Warrant Certificate and the Warrant Indenture.

Any capitalized term in this Warrant Certificate that is not otherwise defined herein, shall have the meaning ascribed thereto in the Warrant Indenture.

The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

	
  

	o	
(A)

	
the undersigned holder at the time of exercise of the Warrants is not in the United States, is not a "U.S. person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and is not exercising the Warrants on behalf of, or for the account or benefit of, a U.S. person or a person in the United States, and did not execute or deliver this exercise form in the United States; OR

 

	
  

	
o

	
(B)

	
the undersigned holder: (a) was the original purchaser of Warrants, who delivered a Qualified Institutional Buyer Letter, in connection with its purchase of Units pursuant to the placement under which the Warrants were issued; (b) is exercising the Warrants solely for its own account or for the benefit of a U.S. Person or a person in the United States for whose account such holder acquired the Warrants and for whose account such holder exercises sole investment discretion; (c) was, and any beneficial purchaser for whose account such holder acquired the Warrants and is exercising the Warrants was, a Qualified Institutional Buyer, both on the date the Warrants were purchased and on the date of exercise of the Warrants and (d) the representations and warranties made by the holder in the Qualified Institutional Buyer Letter remain true and correct and the Corporation is entitled to rely upon such representations and warranties as if made as of the date hereof; or

 

	
  

	o	
(C)

	
a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Common Shares issuable on exercise of the Warrants.

 

	
  

	
Notes:

	
(1)

	
Certificates will not be registered or delivered to an address in the United States unless Box B or C above is checked.

 

	
  

	
(2)

	
If Box C above is checked, holders are encouraged to consult with the Corporation and the Warrant Agent in advance to determine that the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the Corporation.

 

	
  

	
(3)

	
A Qualified Institutional Buyer who checks off Box B above, may enter their Common Shares issued upon exercise of their Warrants into CDS.

 

"United States" and "U.S. person" are as defined in Rule 902 of Regulation S under the U.S. Securities Act.

 

 

  

A-8

  

 

 

	
  

	
The undersigned hereby directs that the said Common Shares be issued as follows:

 

	
NAME(S) IN FULL

	
ADDRESS(ES)

	
NUMBER OF

COMMON SHARES

	  	  	  
	  	  	  
	  	  	  

 

(Please print.)

 

DATED this _____ day of ____________, 20______

 

	  	  	  
	
Signature Guaranteed*

	  	
Name of Warrantholder

	  	  	  
	
Name of Authorized Representative

	  	
Signature of Warrantholder or Authorized Representative

	  	  	  
	
Title or Capacity of Authorized Representative

	  	
Daytime Phone Number of Warrantholder or Authorized Representative

 

	o	
Please check this box if the securities are to be picked up at the office where the Warrant Certificate is surrendered, failing which the securities will be mailed to the address shown on the register.

 

Instructions:

 

The signature of the Holder must be the signature of the registered holder appearing on the face of the Warrant Certificate without alteration or enlargement or any change whatsoever.

 

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

 

*If the Common Shares are to be issued to a person other than to the registered Holder, then the signature on this Exercise Form must be guaranteed by a Schedule 1 Canadian chartered bank, medallion guaranteed by a recognized medallion signature guarantee program or in any other manner satisfactory to the Warrant Agent.  The guarantor must affix a stamp bearing the actual words "Signature Guaranteed".  Signature guarantees are not accepted from Treasury Branches or credit unions unless they are members of the Stamp Medallion Program.  In the United States, signature guarantees must be done by members of the "Medallion Signature Guarantee Program" only.

 

If securities are to be issued to a person other than the registered Holder, the Transfer Form must be completed and the Holder must pay or cause to be paid to the Corporation or the Warrant Agent all applicable transfer or similar taxes, if any, and the Corporation shall not be required to issue or deliver certificates evidencing the Common Shares and Warrants unless and until such Holder shall have paid to the Corporation or the Warrant Agent the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid or that no tax is due.

 

 

  

A-9

  

 

SCHEDULE "B"

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO:           Computershare Trust Company of Canada, as registrar and transfer agent for the Warrants and Common Shares issuable upon exercise of the Warrants of Canadian Zinc Corporation.

The undersigned (A) acknowledges that the sale of _______________________ of the Corporation represented by certificate number _____________ to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and (B) certifies that (1) the undersigned is not (a) an "affiliate" of the Corporation (as that term is defined in Rule 405 under the U.S. Securities Act), (b) a "distributor" as defined in Regulation S or (c) an affiliate of a distributor; (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (b) the transaction was executed on or through the facilities of a designated offshore securities market (such as the TSX Venture Exchange or the Toronto Stock Exchange) and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States or a U.S. person; (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the securities are "restricted securities" (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace securities sold in reliance on Rule 904 of Regulation S with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

 

	 Dated: 	 	 	 
	 	 	 	X	 
	 	 	 	Authorized signatory
	 	 	 	 
	 	 	 	 
	 	 	 	Name of Seller (please print)
	 	 	 	 
	 	 	 	 
	 	 	 	Name of authorized signatory (please print)
	 	 	 	 
	 	 	 	 
	 	 	 	Title of authorized signatory (please print)
	
 

 

	 	  	
 

 

  

B-1

  

 

 

Affirmation By Seller's Broker-Dealer (required for sales in accordance with Section (B)(2)(b) above)

 

We have read the foregoing representations of our customer, _________________________ (the "Seller") dated _______________________, with regard to our sale, for such Seller's account, of the securities of the Corporation described therein, and on behalf of ourselves we certify and affirm that (A) we have no knowledge that the transaction had been prearranged with a buyer in the United States, (B) the transaction was executed on or through the facilities of designated offshore securities market, (C) neither we, nor any person acting on our behalf, engaged in any directed selling efforts in connection with the offer and sale of such securities, and (D) no selling concession, fee or other remuneration is being paid to us in connection with this offer and sale other than the usual and customary broker's commission that would be received by a person executing such transaction as agent.  Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act.

 

	 	 
	Name of Firm	 
	 	 
	By:	 	 
	 	Authorized officer	 
	 	 
	 	 
	Date:	 

 

 

B-2Unassociated Document

 

Exhibit 4.9

 

EXECUTION VERSION (Redacted for filing) 

 

THIS BASE METAL AND PRECIOUS METAL NET SMELTER RETURNS ROYALTIES AGREEMENT dated as of the 31 day of May, 2013.

 

B E T W E E N :

 

CANADIAN ZINC CORPORATION, a corporation incorporated and existing under the laws of the Province of British Columbia

 

(the “Owner”)

 

- and -

 

SANDSTORM METALS & ENERGY LTD., a corporation incorporated and existing under the laws of the Province of British Columbia

 

(the “Royalty Holder”)

 

WHEREAS the Owner owns 100% of the Prairie Creek property, comprising mining leases, surface leases and staked mineral claims, covering 8,218 hectares of land and located in the Northwest Territories, Canada, all as more particularly described and shown on a map in Schedule “A” attached hereto and forming a part hereof (the “Property”). For clarity, for the purposes of this Agreement, the Property shall include any and all renewals, extensions and replacements of the said mining leases, surface leases and staked mineral claims and shall also include any and all new mineral and real property tenures of the Owner within the map area shown on Schedule “A”, including without limitation, mining leases, surface leases, mineral claims, or similar claims and any and all renewals, extensions and replacements thereof;

 

AND WHEREAS the Owner is planning to develop, construct and operate a zinc, silver and lead project at the Property;

 

AND WHEREAS the Property is free and clear of any and all liens, charges, security interests, claims, mortgages and other encumbrances, save and except for the permitted encumbrances which are set forth in Schedule “B” attached hereto and forming a part hereof;

 

AND WHEREAS the Owner seeks to grant to the Royalty Holder a certain base metal net smelter returns royalty and a certain precious metal net smelter returns royalty, all on and subject to the terms and conditions herein contained;

 

AND WHEREAS the Parties are therefore desirous of executing and delivering this Agreement, all on and subject to the terms and conditions contained herein;

 

 

 

 

 

 

 

 

 

AND WHEREAS capitalized terms when used in these preambles shall have the respective meanings set forth in Article 1;

 

NOW THEREFORE in consideration of the premises and the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, the Parties mutually agree as follows:

 

ARTICLE 1

INTERPRETATION 

 

	
 1.1

	
Definitions

 

In this Agreement, unless otherwise provided:

 

“Affiliate” means with respect to a Person, any other Person that directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with, the subject Person;

 

“Ag” means silver;

 

“Agreement” means this Base Metal and Precious Metal Net Smelter Returns Royalties Agreement;

 

“Allowable Deductions” means, all costs, charges, deductions and expenses paid or incurred by the Owner for or with respect to Products comprising:

 

	
  

	
(i)

	
charges for treatment in the smelting, refining or other beneficiation processes (including handling, tertiary treatment, provisional settlement fees, weighing, sampling, concentrate leaching, assaying  umpire and representation fees and costs, treatment penalties, including without limitation, metal losses, and other processor deductions), but excluding costs of mining, mine site processing, handling, tertiary treatment and other beneficiation, and mine site smelting, refining and concentrating;

 

	
  

	
(ii)

	
costs of transporting (including loading, freight, insurance, security, surveyor fees, non-refundable transaction taxes, handling, port fees, demurrage, delay, and forwarding expenses incurred by reason of or in the course of transportation), securing and insuring Products to a smelter, refinery or other purchaser of Products, including without limitation, in the case of Ag, Pb or Zn or other metal concentrates, offsite security costs;

 

	
  

	
(iii)

	
costs or charges for or in connection with insurance, storage, or representation at a smelter or refinery for Products;

 

	
  

	
(iv)

	
any deductible required to be paid in connection with insurance proceeds paid to the Owner in respect of a Loss; and

 

	
  

	
(v)

	
non-refundable sales, use, severance, excise, government royalties, and ad valorem taxes and any tax on or measured by mineral production, but not including income taxes of the Owner or the Royalty Holder;

 

 

 

 

 

  

2

  

 

provided that where Products are processed on or off the Property in a facility wholly or partially owned by the Owner, a shareholder of the Owner or an Affiliate of the Owner or an Affiliate of a shareholder of the Owner, Allowable Deductions will not include any costs that are in excess of those which would be incurred on an arm’s length basis or which would not be Allowable Deductions if those Products were processed by an independent third party. There will be no Allowable Deductions from Gross Proceeds received as a result of a Loss;

 

“Annual Report” means a written report, in relation to any calendar year, detailing:

 

	
  

	
(i)

	
the number of ounces or pounds, as the case may be, of Minerals produced from the Property, on a Month by Month basis, in the applicable calendar year;

 

	
  

	
(ii)

	
if applicable, the names and addresses of each Offtaker to which the Minerals referred to in subsection (i) were delivered;

 

	
  

	
(iii)

	
the Gross Proceeds, the Allowable Deductions which were applied against the Gross Proceeds and the Net Smelter Returns for each Product which have resulted or which are estimated to result from the Minerals referred to in subsection (i), on a Month by Month basis;

 

	
  

	
(iv)

	
the amount of the Base Metal Royalty and the Precious Metal Royalty which have been paid to the Royalty Holder with respect to the Minerals referred to in subsection (i) on a Month by Month basis, in accordance with the provisions of this Agreement;

 

	
  

	
(v)

	
an updated mine operating and development plan and budget which includes updated reserves and resources, forecasted production during the upcoming annual period and any planned drilling and exploration activities within the Property during the upcoming annual period; and

 

	
  

	
(vi)

	
until the mine at the Property achieves commercial production, a summary of the status of any and all material permit and permit applications with respect to the Property and mining operations to be conducted thereon during the upcoming annual period;

 

 

“Audit Dispute Notice” has the meaning set forth in section 3.11;

 

“BCICAC” has the meaning set forth in section 8.1;

 

“Base Metals” means Refined Pb and Refined Zn and any other minerals generally considered to be a base metal;

  

 

 

 

 

  

3

  

 

  

“Base Metal Royalty” means 1.2% of the Net Smelter Returns from Base Metals;

 

  

“Base Metal Royalty Purchase Agreement” has the meaning set forth in section 2.1;

 

“Business Day” means a day that is not a Saturday, Sunday or any other day which is a statutory holiday or a bank holiday in the place where an act is to be performed or a payment is to be made;

 

“Cash Equivalent” has the meaning set forth in section 2.3;

 

“Charge” means a general mortgage and charge, in respect of the Base Metal Royalty and the Precious Metal Royalty, in a standard form that could reasonably be expected by a financial party to secure obligations, over the Mining Leases, which shall be in form and substance satisfactory to the Royalty Holder, acting reasonably;

“Confidential Information” has the meaning set forth in section 10.2;

“Control” or “Controlled” means, when used as a verb:

 

	
  

	
(i)

	
with respect to an entity, the ability, directly or indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of the entity through the legal or beneficial ownership of voting securities or the right to appoint managers, directors or corporate management or by contract, operating agreement, voting trust or otherwise;

 

	
  

	
(ii)

	
with respect to a natural person, the actual or legal ability to control the actions of another, through family relationship, agency, contract or otherwise; and

 

	
  

	
(iii)

	
when used as a noun, an interest that gives the holder the ability to exercise any of the powers described in subsections (i) and (ii) of this definition;

 

“Effective Date” means the date of the execution and delivery of this Agreement by the Parties.

 

“Gross Proceeds” means, proceeds received or deemed to be received by the Owner from the Sale of Products from the Property, whether processed on or off of the Property, determined as follows, subject to the provisions of section 3.5:

 

 

 

 

 

  

4

  

 

	
  

	
(i)

	
if Products are sold by the Owner in the form of ore, doré, concentrates or metals, then the Gross Proceeds in respect of such ore, doré concentrates or metals will be equal to the amount of the proceeds actually received by the Owner from the sale of such ore, doré, concentrates or metals;

 

	
  

	
(ii)

	
if Products are sold by the Owner in the form of Refined Ag, then such Ag will be deemed to have been sold at the Monthly Average Silver Price for the Month in which such Ag was refined and the Gross Proceeds in respect of Ag will be determined by multiplying Silver Production for the Month by the Monthly Average Silver Price for the Month;

 

	
  

	
(iii)

	
if Products are sold by the Owner in the form of Refined Pb, then such Pb will be deemed to have been sold at the Monthly Average Lead Price for the Month in which such Pb was refined and the Gross Proceeds in respect of Pb will be determined by multiplying Lead Production for the Month by the Monthly Average Lead Price for the Month;

 

	
  

	
(iv)

	
if Products are sold by the Owner in the form of Refined Zn, then such Zn will be deemed to have been sold at the Monthly Average Zinc Price for the Month in which such Zn was refined and the Gross Proceeds in respect of Zn will be determined by multiplying Zinc Production for the Month by the Monthly Average Zinc Price for the Month; and

 

	
  

	
(v)

	
if there is a Loss of Products then the Gross Proceeds will be equal to the sum of the insurance proceeds actually received in respect of such Loss;

 

“Intercreditor Agreement” means an agreement to be entered into by the Royalty Holder, the Owner and the Senior Lenders, in each case on terms and conditions satisfactory to the Royalty Holder, acting reasonably, containing, among other things, the Intercreditor Principles and whereby the Royalty Holder agrees to subordinate the Charge created hereunder in favour of any change granted to the Senior Lenders;

 

“Intercreditor Principles” means the following terms:1 

 

	
  

	
(i)   

	

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;

 

	 	
(ii)

	
 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;

 

 

 

 

 

1 Deleted specific details deemed confidential by both parties for competitive and commercial reasons. 

  

5

  

 

	
  

	
(iii)  

	
  

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;

 

	
  

	
(iv)  

	
 

 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;

 

	
  

	
(v)   

	
  

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;and

 

	 	
(vi)

	
 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;2

 

“Lead Production” means either: (i) the quantity of Refined Pb measured in pounds that is outturned to the Owner’s account by a refinery; or (ii) the recoverable and saleable quantity of Pb contained in Pb bearing ores, metals (metals shall include bullion, concentrates or other forms) derived from operating the Property as a mine to which has been applied the least number of treatments or processes necessary to render the minerals into a substance or state for which there is a commercially significant market of arm’s length sales or purchases between unrelated parties;

 

 

 

 

 

2 Deleted specific details deemed confidential by both parties for competitive and commercial reasons. 

  

6

  

 

“Loss” means a loss of, theft of or damage to Products, whether or not occurring on or off the Property and whether the Products are in the possession of the Owner or otherwise;

“Losses” means all damages, claims, losses, liabilities, fines, penalties and expenses;

 

“Materials” has the meaning set forth in section 2.5;

 

“Metals” means Refined Ag, Refined Pb and Refined Zn;

“Minerals” means any and all economic, marketable metal bearing material, in whatever form or state, produced from the Property;

“Mining Leases” has the meaning set forth in Schedule “A” attached hereto;

“Month” means a calendar month;

“Monthly Average Lead Price” means the average London Metal Exchange – “First Session second ring” for Pb in United States dollars (or, should that quotation cease, another similar quotation acceptable to the Parties or, if they cannot agree, determined by arbitration hereunder), calculated by dividing the sum of all such prices reported for the Month by the number of days for which such prices were reported;

 

“Monthly Average Silver Price” means the average London Bullion Market Association “P.M. Silver Fix” in United States dollars (or, should that quotation cease, another similar quotation acceptable to the Parties or, if they cannot agree, determined by arbitration hereunder), calculated by dividing the sum of all such prices reported for the Month by the number of days for which such prices were reported;

 

“Monthly Average Zinc Price” means the average London Metal Exchange – First Session second ring” for Zn in United States dollars (or, should that quotation cease, another similar quotation acceptable to the Parties or, if they cannot agree, determined by arbitration hereunder), calculated by dividing the sum of all such prices reported for the Month by the number of days for which such prices were reported;

“Net Smelter Returns” means for any Product for which there has been a Sale, the Gross Proceeds from the Sale of such Product less Allowable Deductions related to such Product;

“Notice” has the meaning set forth in section 10.8;

“Offer” has the meaning set forth in section 2.3;

“Offtaker” means the counterparty to an Offtake Agreement;

 

 

 

 

 

  

7

  

 

“Offtake Agreement” means any refining, smelting, brokering, sale, marketing and/or processing agreement entered into by the Owner or its Affiliates with respect to Minerals produced from the Property;

 

“Owned Claims” has the meaning set forth in Schedule “A” attached hereto;

“Owner” has the meaning set forth in the preambles to this Agreement;

“Owner Indemnified Parties” has the meaning set forth in section 6.2;

 

“Party” or “Parties” means one or more of the parties to this Agreement;

 

“Pb” means lead;

“Permitted Encumbrance” means an encumbrance described in Schedule “B”;

“Person” means and includes any individual, corporation, limited liability company, partnership, firm, joint venture, syndicate, association, trust, governmental agency or board or commission or authority and any other form of entity or organization;

“Precious Metals” means Refined Ag and any other minerals generally considered to be a precious metal;

“Precious Metal Royalty” means 1.2% of the Net Smelter Returns from Precious Metals;

“Precious Metal Royalty Purchase Price” has the meaning set forth in section 2.1;

Products” means all metal bearing ores mined from the Property and all concentrates and other mineral products, metals or minerals which are derived therefrom, whether so derived on or off the Property, and includes for greater certainty and without limitation, Silver Production, Lead Production and Zinc Production;

“Property” has the meaning ascribed thereto in the preambles to this Agreement;

“Proposed Metal Stream” has the meaning set forth in section 2.3, but for greater certainty and without limitation, a Proposed Metal Stream does not include a Ag, Pb or Zn loan, forward sale or similar arrangement where the Owner is obligated to make physical delivery of Products from the Property and where that delivery obligation does not last for more than five years;

 

“Refined Ag” means the Ag portion of marketable metal bearing material in the form of Ag that meets the specifications for Good Delivery Silver Bars under the Good Delivery Rules as published by the London Bullion Market Association from time to time being in any case of a purity of at least 99.9%;

 

 

 

 

 

  

8

  

 

“Refined Pb” means the Pb portion of marketable metal bearing material in the form of Pb that is refined to standards meeting or exceeding commercial standards for the sale of refined Pb, being in any case of a purity of at least 99.9%;

“Refined Zn” means the Zn portion of marketable metal bearing material in the form of Zn that is refined to standards meeting or exceeding commercial standards for the sale of refined Zn, being in any case of a purity of at least 98.5%;

 

“Released Property” has the meaning set forth in section 2.7;

 

“Relinquishment Event” has the meaning set forth in section 2.7;

 

“Responding Party” has the meaning set forth in section 8.1;

 

“Royalty Holder Indemnified Parties” has the meaning set forth in section 6.1;

 

“Royalty Notice Documents” has the meaning set forth in section 2.4;

 

“Royalty Statement” has the meaning set forth in section 3.4;

 

“Sale” means a sale or transfer of title of a Product by or on behalf of the Owner or any Affiliate of the Owner to a Person, whether or not an Affiliate of the Owner and is deemed to include a deemed transfer of title to Products transported off the Property that the Owner elects to have credited to or held for its account by an Offtaker and is also deemed to include any Loss prior to any transfer or deemed transfer of title to Products;

 

“Selling Party” has the meaning set forth in section 2.3;

“Senior Lenders” means lenders arranged by the Owner or its Affiliates who provide senior secured project financing to the Owner or its Affiliates;

 

“Senior Security” means any encumbrance granted in favour of a Senior Lender;

“Silver Production” means either: (i) the quantity of Refined Ag measured in ounces that is outturned to the Owner’s account by a refinery; or (ii) the recoverable and saleable quantity of Ag contained in Ag bearing ores, metals (metals shall include bullion, concentrates or other forms) derived from operating the Property as a mine to which has been applied the least number of treatments or processes necessary to render the minerals into a substance or state for which there is a commercially significant market of arm’s length sales or purchases between unrelated parties;

“Surface Leases” has the meaning set forth in Schedule “A” attached hereto;

“Third Party” has the meaning set forth in section 2.3;

“Third-Party Offer” has the meaning set forth in section 2.3;

 

 

 

 

 

  

9

  

 

“Third Party Share Consideration” has the meaning set forth in section 2.3;

 

“trading activities” has the meaning set forth in section 3.9;

 

“Transfer” when used as a verb, means to sell, grant, assign, encumber, hypothecate, pledge or otherwise dispose of or commit to dispose of, directly or indirectly, including through mergers, arrangements, amalgamations, consolidations, asset sales or spin-out transactions.  When used as a noun, “Transfer” means a sale, grant, assignment, pledge or disposal or the commitment to do any of the foregoing, directly or indirectly, including through mergers, arrangements, amalgamations, consolidations, asset sale or spin-out transaction;

 

“Zn” means zinc; and

“Zinc Production” means either: (i) the quantity of Refined Zn measured in pounds that is outturned to the Owner’s account by a refinery; or (ii) the recoverable and saleable quantity of Zn contained in Zn bearing ores, metals (metals shall include bullion, concentrates or other forms) derived from operating the Property as a mine to which has been applied the least number of treatments or processes necessary to render the minerals into a substance or state for which there is a commercially significant market of arm’s length sales or purchases between unrelated parties.

 

	
 1.2

	
 Governing Law

 

Except for matters of title to the Property or the assignment or transfer of the Property, which will be governed by the law of the situs of the Property, this Agreement shall be construed, interpreted and enforced in accordance with, and the respective obligations of the Parties shall be governed by, the laws of the Province of British Columbia and the federal laws of Canada applicable therein and each Party hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of such province and all courts competent to hear appeals therefrom.

 

	
 1.3

	
 Severability

 

If any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect under the laws of any jurisdiction, the validity, legality and enforceability of such provision will not in any way be affected or impaired thereby under the laws of any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

	
 1.4  

	
Calculation of Time

 

If any time period set forth in this Agreement ends on a day of the week which is not a Business Day, then notwithstanding any other provision of this Agreement, such period will be extended until the end of the next following day which is a Business Day.

 

 

 

 

 

  

10

  

 

	
 1.5 

	
Headings

 

The headings to the articles and sections of this Agreement are inserted for convenience only and will not affect the construction hereof.

 

	
 1.6

	
Other Matters of Interpretation

 

In this Agreement:

 

	
  

	
(i)

	
the singular includes the plural and vice versa;

 

	
  

	
(ii)

	
the masculine includes the feminine and vice versa;

 

	
  

	
(iii)

	
references to “article,” “section” and “subsection” are to articles, sections and subsections of this Agreement, respectively;

 

	
  

	
(iv)

	
all provisions requiring a Party to do or refrain from doing something will be interpreted as the covenant of that Party with respect to that matter notwithstanding the absence of the words “covenants” or “agrees” or “promises”;

 

	
  

	
(v)

	
all provisions requiring a Party to do something will be interpreted as including the covenant of that Party to cause that thing to be done when the Party cannot directly perform the covenant but can indirectly cause that covenant to be performed, whether by an Affiliate under its control or otherwise; and

 

	
  

	
(vi)

	
the words “hereto,” “herein,” “hereby,” “hereunder,” “hereof” and similar expressions when used in this Agreement refer to the whole of this Agreement and not to any particular article, part, section, exhibit or portion thereof.

 

ARTICLE 2

ROYALTY DESCRIPTION, RIGHT OF FIRST REFUSAL ETC.

 

	
 2.1 

	
Net Smelter Returns Royalties

 

In consideration of the payment of the sum of US$6.8 million (the “Base Metal Royalty Purchase Price”): (i) the Owner does hereby grant the Base Metal Royalty to the Royalty Holder; and (ii) commencing on the Effective Date the Owner agrees to pay to the Royalty Holder the Base Metal Royalty; all on the terms and conditions specified in this Agreement.

 

In consideration of the payment of the sum of US$3.2 million (the “Precious Metal Royalty Purchase Price”): (i) the Owner does hereby grant the Precious Metal Royalty to the Royalty Holder; and (ii) commencing on the Effective Date the Owner agrees to pay to the Royalty Holder the Precious Metal Royalty; all on terms and conditions specified in this Agreement.

 

 

 

 

 

 

  

11

  

 

The Base Metal Royalty and the Precious Metal Royalty shall rank pari passu.

 

In the event a court of competent jurisdiction determines that any provision of this Agreement violates the statutory or common law Rule Against Perpetuities, then such provision shall automatically be revised and reformed as necessary to comply with the Rule Against Perpetuities and this Agreement shall not be terminated solely as a result of a violation of the Rule Against Perpetuities.

 

	
 2.2

	
Sale of Products Other Than to a Smelter or Refinery

 

If the Owner sells or causes the Sale of Products other than to a smelter or refinery, the Base Metal Royalty and the Precious Metal Royalty, as the case may be, shall be, without duplication, 1.2% of the gross value of recoverable Minerals contained in such Products without deductions except for such costs, charges, deductions and expenses that would have been applicable had the Owner processed the Minerals at a third party smelter or refinery.  The amount of recoverable Minerals contained in Products removed from the Property shall be calculated and determined based upon assays, metallurgical tests and such other analyses as are customary in the industry which are conducted in a manner satisfactory to the Owner and the Royalty Holder, acting reasonably.  If the Parties are unable to agree on the manner of conducting such assays, tests and analyses or the amount of the applicable costs, charges, deductions and expenses that would have been applicable, for a period of 30 days, either Party may refer the question to arbitration hereunder and the decision of the arbitrator shall be final and binding upon the Parties.  The gross value of such Minerals shall be determined by multiplying the amount of such recoverable Minerals by the Monthly Average Silver Price, the Monthly Average Lead Price or the Monthly Average Zinc Price or the monthly average price for the applicable other Products (that are not Ag, Pb or Zn) as the case may be for the Month of such sale.

 

	
 2.3

	
Right of First Refusal3

 

Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.

 

 

 

 

 

3 Deleted specific details deemed confidential by both parties for competitive and commercial reasons. 

  

12

  

 

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2.4

	
Interest in Land

 

The Parties agree that, subject to the provisions of sections 2.7 and 2.8, the Base Metal Royalty and the Precious Metal Royalty on the Property will each be a covenant running with the Property, will be enforceable as an in rem interest in land which shall run with the Property and will be binding upon and enure to the benefit of the Parties and their respective successors and assigns, provided that for the Property that comprise Mining Leases;

 

	
  

	
(i)

	
the Base Metal Royalty and the Precious Metal Royalty thereon will be a covenant running with the Owner's leasehold interest in the Mining Leases for the entire term of the applicable lease and any and all renewals and extensions thereof; and

 

	
  

	
(ii)

	
any assignment or sublease of the Mining Leases shall include a provision requiring the assignee or sublessee to pay the Base Metal Royalty and the Precious Metal Royalty on the Mining Leases;

 

and further provided that for the Property that are the Owned Claims any conveyance by the Owner of the Property shall include a provision requiring the transferee to pay the Base Metal Royalty and the Precious Metal Royalty on the Owned Claims. 

 

It is the intention of the Parties that to the extent permissible at law, both the Base Metal Royalty and the Precious Metal Royalty on the Owned Claims and the Mining Leases shall be registerable or otherwise recordable in all public places where interests in a royalty are recordable and the Owner shall execute and deliver such further documents as may be necessary for the timely and effective recording or registration of a caution, notice or caveat in respect of the Base Metal Royalty and the Precious Metal Royalty on the Owned Claims and the Mining Leases created by this Agreement, in such public places (the “Royalty Notice Documents”).

 

	
 2.5 

	
Tailings and Residue

 

All tailing, residues, waste rock, spoiled leach materials, and other materials (collectively the “Materials”) resulting from the Owner’s operations and activities on the Property shall be the sole property of the Owner, but shall remain subject to the obligation to pay the Base Metal Royalty and the Precious Metal Royalty should the same be processed or reprocessed, as the case may be, in the future and result in Products.  The Owner shall have the right to dispose of Materials from the Property, whether on or off of the Property, and to commingle the same with Materials from other properties.  In the event Materials are processed or reprocessed, as the case may be, the Royalty applicable thereto shall be determined on a pro rata basis as determined by using such reasonable and customary engineering and technical practices as are then available.

 

 

 

 

 

  

15

  

 

	
 2.6

	
 Ore Processing

 

All determinations with respect to: (a) whether ore from the Property will be beneficiated, processed or milled by the Owner or sold in a raw state; (b) the methods of beneficiating, processing or milling any such ore; (c) the constituents to be recovered therefrom; and (d) the purchasers to whom any ore, minerals or mineral substances derived from the Property may be sold, shall be made by the Owner in its sole and absolute discretion.

 

	
 2.7

	
Abandonment, Relinquishment or Non-Renewal

 

If the Owner or an affiliate of the Owner or any person related thereto wishes to abandon, relinquish or terminate or not renew (the “Relinquishment Event”): (a) all or any portion of the Owned Claims; or (b) all or any portion of the Mining Leases or the Surface Leases (the property in (a) and (b), being the “Released Property”), then the Owner shall provide the Royalty Holder with a minimum of 30 days prior written notice of such intended Relinquishment Event.

 

Upon receipt of the said notice, the Royalty Holder shall have a period of 10 days within which to advise the Owner in writing that it desires: (a) to take an assignment of the Mining Leases or the Surface Leases comprising Released Property; or (b) to acquire the Owned Claims comprising Released Property, by quitclaim deed, for consideration equal to US$10.

 

If the Royalty Holder shall forward such written notice to the Owner within the said 10 day period, the Owner shall thereafter do all such acts and things or shall cause all such acts and things to be done, at the  Royalty Holder’s own sole cost and expense, to assign or convey, as appropriate, the Released Property to the Royalty Holder for the said US$10 and to have the Released Property recorded or registered into the name of the Royalty Holder.  The Parties acknowledge and agree that any assignment of the Mining Leases or the Surface Leases to the Royalty Holder under this section 2.7 may require the consent of the lessor thereunder.

 

If the Royalty Holder does not forward the said written notice to the Owner within the said 10 day period, then the Owner or the affiliate of the Owner or the person related thereto shall have the right to complete the Relinquishment Event with respect to the applicable Released Property.

 

If a Relinquishment Event is completed and thereafter, the Owner or any Affiliate of the Owner or any person related to the Owner subsequently reacquires a direct or indirect beneficial interest in the Released Property then such Released Property will once again be subject to the obligation to pay the Base Metal Royalty and the Precious Metal Royalty with respect thereto.

 

 

 

 

 

  

16

  

 

	
 2.8 

	
Purchase of Base Metal Royalty and the Precious Metal Royalty

 

	
  

	
(a)

	
At any time between the Effective Date and the 30 month anniversary thereof, if and only if the Owner shall have entered into one or more metal stream agreements with respect to the Property with the Royalty Holder or any Affiliate of the Royalty Holder that have an aggregate upfront deposit of at least US$90.0 million (or such other smaller amount, in the Royalty Holder's sole discretion), the Owner shall have the exclusive and irrevocable right and option to purchase the Base Metal Royalty and the Precious Metal Royalty, without the exclusion of the other, by making a payment in cash by wire transfer to the Royalty Holder in the amount of US$6.8 million in respect of the Base Metal Royalty and US$3.2 million in respect of the Precious Metal Royalty.

 

	
  

	
(b)

	
If the Owner elects to purchase the Base Metal Royalty and the Precious Metal Royalty pursuant to section 2.8(a), payment by the Owner to the Royalty Holder shall be made with a minimum of 30 days prior written notice to the Royalty Holder.  Upon receipt of such payment set forth in section 2.8(a), without set off, deduction or defalcation, the Royalty Holder shall convey and /or cancel and surrender the Base Metal Royalty and the Precious Metal Royalty to the Owner by way of a mutually agreeable deed in recordable form, and such conveyance shall be made free and clear of all liens, claims and encumbrances arising by, through or under the Royalty Holder.  If the Royalty Holder fails to timely deliver such a deed within a further period of 30 days after receipt of the said aggregate US$10.0 million in cash by wire transfer (provided that the condition set forth in section 2.8(a) has been satisfied), the Base Metal Royalty and the Precious Metal Royalty shall be deemed to be cancelled without any further or other act by any Party hereto.

 

ARTICLE 3

PAYMENTS, TRADING ACTIVITIES AND BOOKS AND RECORDS

 

	
3.1 

	
Payment Obligation

 

The obligation to pay the Base Metal Royalty and the Precious Metal Royalty will accrue when there has been a Sale (provided that any Base Metal Royalty and the Precious Metal Royalty due in respect of a Loss will accrue when the insurance proceeds are received by the Owner) and on the following bases:

 

	
  

	
(a)

	
there will be deemed to have been a Sale of treated metals upon the outturn of metals from such Products by the treatment facility to the account of the Owner;

 

	
  

	
(b)

	
the obligation to pay the Base Metal Royalty and the Precious Metal Royalty will accrue upon any Sale by the Owner to an unrelated third party that is not captured by section 3.1(a) and for which the Owner receives Gross Proceeds; and

 

	
  

	
(c)

	
any Base Metal Royalty and the Precious Metal Royalty due in respect of a Loss will accrue when the insurance proceeds are received by the Owner.

 

	
  

	
(d)

	
For greater certainty and without limitation, the Parties anticipate that 90% or more of the Base Metal Royalty and the Precious Metal Royalty shall be payable out of, or from the proceeds of, the production from the Property.

 

 

 

 

 

 

  

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3.2 

	
Provisional Settlements

 

Where the outturn of treated metals or a Sale (including an insurance settlement in respect of a Loss) is made on a provisional basis, the amount of the Base Metal Royalty and the Precious Metal Royalty payable will be based upon the amount of metal or other Products (or the value of the Loss) credited by such provisional settlement, but will be adjusted in the next quarterly payment due thereafter to account for the amount of metal or other Products (or the value of the Loss) established by final settlement with the treatment facility or with the purchaser or insurer of other Products, as the case may be. If production has ceased, settlement will be made between the Parties by cash payment.

 

	
3.3 

	
Due Date

 

Base Metal Royalty payments and Precious Metal Royalty payments will be due and payable quarterly on the last day of the first Month after the end of the calendar quarter in which the same accrued.

 

	
3.4 

	
Royalty Statements

 

Base Metal Royalty payments and Precious Metal Royalty payments will be accompanied by a statement (the “Royalty Statement”) showing in reasonable detail on a Product by Product basis, as applicable, for the relevant quarter:

 

	
  

	
(a)

	
the quantities and grades of Products produced and for which there was a Sale in the quarter;

 

	
  

	
(b)

	
the Gross Proceeds of Sale received in the quarter (including without limitation by reason of a Loss);

 

	
  

	
(c)

	
the Allowable Deductions in the quarter;

 

	
  

	
(d)

	
any adjustments to provisional settlements; and

 

	
  

	
(e)

	
other pertinent information in sufficient detail to explain the calculation of the Royalty payment.

 

	
3.5 

	
Adjustments

 

Subject to section 3.2, all Base Metal Royalty payments and Precious Metal Royalty payments will be considered final and in full satisfaction of all obligations of the Owner with respect thereto, unless the Royalty Holder gives the Owner written notice describing and setting forth a specific objection to the determination thereof within 12 months after the receipt by the Royalty Holder of the quarterly Royalty Statement.  Such notice will specify the basis for the objection in reasonable detail.  In addition to the provisions of section 3.10 and 3.11, if the Royalty Holder objects to a particular quarterly Royalty Statement as herein provided, then:

 

 

 

 

 

 

  

18

  

 

	
  

	
(a)

	
the Royalty Holder will have the right, for a period of 90 days after the Owner receives notice of such objection, upon reasonable notice and at a reasonable time, and for a reasonable period of duration, to have the Owner's accounts and records relating to the calculation of the Base Metal Royalty and/or the Precious Metal Royalty, as the case may be, in question audited by a chartered accountant selected by the Royalty Holder and who enters into a confidentiality undertaking in favour of the Owner;

 

	
  

	
(b)

	
if such audit determines that there has been a deficiency or an excess in the payment made to the Royalty Holder, such deficiency or excess will be resolved by adjusting the next quarterly Base Metal Royalty payment and/or Precious Metal Royalty payment, as the case may be, due hereunder.  If production has ceased, settlement will be made between the Parties by cash payment; and

 

	
  

	
(c)

	
the Royalty Holder will pay all costs of such audit unless a deficiency of two percent or more of the amount due to the Royalty Holder is determined to exist.  The Owner will pay the costs of such audit if a deficiency of two percent or more of the amount due is determined to exist.

 

Failure on the part of the Royalty Holder to make a claim on the Owner for adjustment in such 12 month period will establish the correctness of the payment and preclude the filing of exception thereto or the making of claims for adjustment thereon.

 

	
3.6 

	
Conversion of Currency

 

All payments in respect of the Base Metal Royalty and the Precious Metal Royalty will be made in U.S. dollars.

 

	
3.7 

	
Wire Transfer

 

Payments made under or pursuant to this Agreement will be made by wire transfer in good, immediately available funds, to such account or accounts as the Royalty Holder may designate pursuant to wire instructions provided by the Royalty Holder to the Owner not less than three Business Days prior to the dates upon which such payments are to be made.  The date the wire transfer process is initiated shall be the date of such payment, provided that the Royalty Holder receives such payment, and the Owner shall have no duty to otherwise apportion any payment to the Royalty Holder or its successors or assigns.

 

	
3.8 

	
Payments in Kind

 

In the event that the Royalty Holder determines that it wishes to receive Base Metal Royalty payments and Precious Metal Royalty payments in the physical product in kind, the Royalty Holder shall provide written notice of such election including details of the Royalty Holder’s account at the final refiner or other processor of the applicable Minerals.  Upon timely receipt of such notice, the Owner shall direct any Offtaker that is the final refiner or other processor of the applicable Minerals to pay the Base Metal Royalty and/or the Precious Metal Royalty directly to the account of the Royalty Holder at the Offtaker.

 

 

 

 

 

 

  

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All costs incurred by the Owner with respect to arranging for such payment in kind shall be for the account of the Royalty Holder and may be deducted from any subsequent payment of the Base Metal Royalty and/or the Precious Metal Royalty, as the case may be. The Royalty Holder shall be responsible for all costs associated with the transportation of and insurance relating to Base Metal Royalty payments and/or Precious Metal Royalty payments delivered in kind to the Royalty Holder and if such transportation costs are paid for by the Royalty Holder the same shall not be included as one of the Allowable Deductions pursuant to section (ii) of the definition of Allowable Deductions.

 

For greater certainty and without limitation, the Owner shall not be obligated to deliver Base Metal Royalty payments and/or Precious Metal Royalty payments in physical product in kind if the Owner shall suffer an adverse tax consequence thereby.  Title to Product delivered to the Royalty Holder set forth in this section 3.8 shall pass to the Royalty Holder at the time the Product is credited to the Royalty Holder at the Offtaker.

 

If the Royalty Holder has provided written notice that it wishes to receive Base Metal Royalty payments and/or Precious Metal Royalty payments in the physical product in kind, the Owner shall notify the Royalty Holder in writing at least three weeks prior to any change of Offtaker.

 

	
3.9 

	
Trading Activities of Owner

 

The Owner will have the right to market and sell refined Products in any manner it may elect, and will have the right to engage in forward sales, futures trading or commodity options trading and other price hedging, price protection, and speculative arrangements (the “trading activities”) which may involve the possible physical delivery of Products. The Base Metal Royalty and the Precious Metal Royalty will not apply to, and the Royalty Holder will not be entitled to participate in, the proceeds generated by the Owner, a shareholder of the Owner or an Affiliate of either in trading activities.  In determining the net proceeds from any Products subject to the Base Metal Royalty and the Precious Metal Royalty, the Owner will not be entitled to deduct from Gross Proceeds any Losses suffered by the Owner, a shareholder or an Affiliate in trading activities.

 

 

 

 

 

 

  

20

  

 

If the Owner engages in trading activities, the Base Metal Royalty and the Precious Metal Royalty will be determined on the basis of the value of the Products produced and without regard to the price or proceeds actually received by the Owner, for or in connection with the sale, or the manner in which a sale to a third party is made by the Owner. The aforementioned value will be determined through reference to the Monthly Average Silver Price, the Monthly Average Lead Price or the Monthly Average Zinc Price, or the monthly average price for the applicable other Products (that are not Ag, Pb or Zn), as the case may be, for the Month during which Products are credited to the Owner’s account with a smelter or refiner, or, if the Owner engages in trading activities in respect of Products other than refined metals, the Gross Proceeds will be determined on basis of the value of such Products at the time such Products or ores are actually delivered to third parties.

 

The Parties agree that the Royalty Holder is not a participant in the trading activities of the Owner, and therefore the Base Metal Royalty and the Precious Metal Royalty will not be diminished or improved by losses or gains of the Owner in any such trading activities.

 

	
3.10 

	
Books and Records

 

The Owner shall keep true, complete and accurate books and records of all of its operations and activities with respect to the Property, including the mining of Minerals therefrom and the mining, stockpiling, treatment, processing, refining and transportation of Minerals, prepared in accordance with good mining industry practice, consistently applied.  The Royalty Holder and/or its authorized representatives shall be entitled, upon delivery of three Business Days advance notice, during the normal business hours of the Owner, in a manner that does not unreasonably interfere with the Owner’s business, to perform audits or other reviews and examinations of the Owner’s books and records relevant to the calculation and payment of the Base Metal Royalty and the Precious Metal Royalty pursuant to this Agreement to confirm compliance with the terms of this Agreement, including without limitation, calculations of Net Smelter Returns.

 

Without limiting the generality of the foregoing, the Royalty Holder shall have the right to audit all invoices and other records relating to the transportation of Minerals from the Property to any mill, refinery or other processor at which Minerals from the Property may be milled, smelted, concentrated, refined or otherwise treated or processed and relating to the transportation of Minerals in the form of concentrates, doré, slag or other waste products from any mill at which Minerals from the Property may be milled, to a processor.  The Royalty Holder shall diligently complete any audit or other examination permitted hereunder.  All expenses of any audit or other examination permitted hereunder shall be paid by the Royalty Holder, unless the results of such audit or other examination permitted hereunder disclose a deficiency in respect of any Base Metal Royalty payments and/or the Precious Metal Royalty payments paid to the Royalty Holder hereunder in respect of the period being audited or examined in an amount greater than two percent of the amount of the Royalty properly payable with respect to such period, in which event all expenses of such audit or other examination shall be paid by the Owner.

 

 

 

 

 

 

  

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In performing such audit the Royalty Holder and/or its agents shall have reasonable access to all sampling, assay, weighing, and production records, including all mining, stockpile and milling records of the Owner relating to the Property and any Minerals derived from the Property (and the Royalty Holder shall be allowed to make notes or a photocopy thereof, subject to the provisions of section 10.2), all of which such records shall be kept and retained by the Owner in accordance with good mining industry practice.

 

	
3.11 

	
Annual Report

 

The Owner shall deliver to the Royalty Holder an Annual Report on or before 60 days after the last day of each fiscal year of the Owner.  With respect to the information referenced as item (v) in the definition of and included in any Annual Report, the Owner does not make or will not make any representation or warranty as to the accuracy, reliability or completeness of the same, and the Royalty Holder shall rely on the same at its sole risk.  The Parties agree that the Owner shall have no obligation to comply with or abide by any of the forecasts or schedules included in the information referenced as items (vi) and (vii) in the definition of and included in any Annual Report, and the Owner shall not have any liability to the Royalty Holder or any third party with respect to a failure to do so.

 

With respect to any Annual Report, the Royalty Holder shall have the right to dispute any information of the kind referenced as items (i) and (v) in the definition of Annual Report in accordance with the provisions of this section.  If the Royalty Holder disputes any of that information in an Annual Report:

 

	
  

	
(a)

	
the Royalty Holder shall notify the Owner in writing within 90 days from the date of delivery of the applicable Annual Report that it disputes the accuracy of that Annual Report (or any part thereof) (the "Audit Dispute Notice");

 

	
  

	
(b)

	
the Royalty Holder on the one hand and the Owner on the other hand shall have 90 days from the date the Audit Dispute Notice is delivered by the Royalty Holder to resolve the dispute.  If the Royalty Holder and the Owner have not resolved the dispute within the said 90 day period, a mutually agreed independent third-party expert will be appointed to prepare a report with respect to the dispute in question (the "Expert's Report").  If the Royalty Holder and the Owner have not agreed upon such expert within a further 10 days after the said 90 day period, then the dispute as to the expert shall be resolved by the dispute mechanism procedures set forth in Article 8;

 

	
  

	
(c)

	
if the Expert's Report concludes that the amount of the Base Metal Royalty and/or the Precious Metal Royalty which was to have been paid to the Royalty Holder was deficient by two percent or less from the Base Metal Royalty and/or the Precious Metal Royalty set out in the Annual Report, then the cost of the Expert's Report shall be borne by the Royalty Holder;

 

	
  

	
(d)

	
if the Expert's Report concludes that the amount of the Base Metal Royalty and/or the Precious Metal Royalty which was to have been paid to the Royalty Holder was deficient by more than two percent from the Base Metal Royalty and/or the Precious Metal Royalty set out in the Annual Report, then the cost of the Expert's Report shall be borne by the Owner; and

 

	
  

	
(e)

	
if the Royalty Holder or the Owner disputes the Expert's Report and such dispute is not resolved between the Parties within ten days after the date of delivery of the Expert's Report, then such dispute shall be resolved by the dispute mechanism procedures set forth in Article 8.

 

 

 

 

 

 

  

22

  

 

If the Owner does not deliver an Annual Report as required pursuant to this Article, the Royalty Holder shall have the right to perform or to cause its representatives or agents to perform, at the cost and expense of the Owner, an audit of the books and records of the Owner relevant to the Base Metal Royalty and the Precious Metal Royalty in conjunction with the provisions of section 3.10.  The Owner shall grant the Royalty Holder and its agents access to all such books and records on a timely basis during normal business hours. In order to exercise this right, the Royalty Holder must provide not less than three Business Days’ written notice to the Owner of its intention to conduct the said audit.  If within seven days of receipt of such notice, the Owner delivers the applicable Annual Report, then the Royalty Holder shall have no right to perform the said audit. If the Owner delivers the Annual Report before the delivery of the report prepared in connection with the said audit, the applicable Annual Report shall be taken as final and conclusive, subject to the rights of the Royalty Holder as set forth in Article 8.  Otherwise, absent any manifest or gross error in the Royalty Holder’s audit report, the Royalty Holder’s report shall be final and conclusive, subject to the provisions of Article 8.

 

	
3.12 

	
Rights to Monitor Processing of Minerals

 

Subject at all times to the workplace rules and supervision of the Owner, the Royalty Holder shall at all reasonable times and upon reasonable notice and at its sole risk and expense, have:

 

	
  

	
(a)

	
a right of access by its representatives to the Property and to any mill used by the Owner to process Minerals derived from the Property (provided that in the event such mill is not owned or controlled by the Owner, such right of access shall only be the same as any such right of access of the Owner); and

 

	
  

	
(b)

	
the right:

 

	
  

	
(i)

	
to monitor the Owner's stockpiling and milling of ore or minerals derived from the Property and to take samples from the Property or from any mill or processor for the purposes of assay verifications; and

 

	
  

	
(ii)

	
to weigh or to cause the Owner to weigh or otherwise calculate the weight of all trucks transporting minerals from the Property to any mill processing Minerals from the Property prior to dumping of such ore and immediately following such dumping.

 

 

 

 

 

 

  

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The Royalty Holder shall defend, indemnify and hold the Owner harmless from and against any Losses for damage to property or injury to or death of persons arising from any such inspection, or any inspection conducted pursuant to the provisions of section 9.2, except to the extent the same are caused by the gross negligence or wilful misconduct of the Owner.

 

ARTICLE 4

COVENANTS

	
4.1 

	
Covenant Regarding Approvals

 

The Owner does hereby covenant and agree that it shall do all such acts and things and they shall not omit to do any acts or things as shall be necessary in order to obtain all necessary approvals as shall be required in order each of them to be able to execute, deliver and perform its obligations under this Agreement. This covenant shall not merge on the execution and delivery of this Agreement. A breach of this covenant shall be deemed to be a breach of this Agreement.

 

	4.2	Covenant Regarding Senior Security

 

The Owner does hereby covenant and agree that if any of the Owner or its Affiliates shall seek to provide security to the Senior Lenders, then a minimum of 10 Business Days prior thereto, the Owner and the Senior Lenders shall execute and deliver to and in favour of the Royalty Holder, an Intercreditor Agreement.

 

 

	 4.3	Covenant Regarding Charge

 

 

The Owner does hereby covenant and agree that within 45 days of the Effective Date the Owner shall execute and deliver to and in favour of the Royalty Holder the Charge and shall provide the Royalty Holder with proof, to the reasonable satisfaction of the Royalty Holder, of submission of the Charge for registration or recordation in the Office of the Mining Recorder of the Northwest Territories and shall provide the Royalty Holder with proof, to the reasonable satisfaction of the Royalty Holder, of due registration or recordation of the Charge as soon as same can be obtained from the Mining Recorder. In addition, the Owner’s counsel will provide a written legal opinion to the Royalty Holder, which shall be satisfactory in form and substance to the Royalty Holder, acting reasonably, opining that, subject to reasonable qualifications and based on reasonable assumptions, that no charge or security is registered on the Mining Leases ranking in priority to the Charge, other than one which would constitute a Permitted Encumbrance.

The Owner does hereby additionally covenant and agree that it shall forthwith provide written notice to the Royalty Holder of the Owner’s receipt of amendments, revisions and/or expansions with respect to the Property. The Owner additionally covenants that it shall not, amend, supplement, waive, restate, supersede, terminate, cancel or release or otherwise consent to a breach of the provisions of the Charge without the prior written consent of the Royalty Holder, such consent not to be unreasonably withheld.

The Royalty Holder will agree to subordinate the Charge to security granted by the Owner or its Affiliates to any Senior Lenders but only if the Senior Lenders execute and deliver to and in favour of the Royalty Holder an Intercreditor Agreement.

 

 

 

 

 

  

24

  

 

 

	4.4	Covenant Regarding Registration or Recordation of Royalties

 

The Owner does hereby covenant and agree that within 60 days after the Effective Date (or such other later date as the Royalty Holder may agree), the Owner shall provide the Royalty Holder with proof, to the reasonable satisfaction of the Royalty Holder, of the due registration or recordation of the Royalty Notice Documents in the Office of the Mining Recorder of the Northwest Territories.  If the Royalty Holder does not receive such proof within the said 60 days after the Effective Date (or such other later date as the Royalty Holder may agree), then the Royalty Purchase Price shall be due and owing by the Owner to the Royalty Holder and the Owner shall immediately forward to the Royalty Holder, in cash by wire transfer, the Base Metal Royalty Purchase Price and the Precious Metal Royalty Purchase Price, without setoff, deduction or defalcation.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE 

OWNER AND THE ROYALTY HOLDER

 

	5.1	Representations and Warranties of the Owner

 

The Owner hereby represents and warrants to and in favour of the Royalty Holder and acknowledges and agrees that the Royalty Holder is entering into this Agreement on the basis of such representations and warranties, namely, that the Owner has the corporate power, capacity and authority to execute, deliver and perform this Agreement and the execution, delivery and performance of this Agreement by the Owner have been duly authorized by all required corporate or limited liability company action of the Owner and this Agreement represents a valid and binding obligation of the Owner duly enforceable against the Owner in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws or by equitable principles generally.

 

	 5.2	Representations and Warranties of Royalty Holder

 

The Royalty Holder represents and warrants to and in favour of the Owner and acknowledges and agrees that the Owner is entering into this Agreement on the basis of such representations and warranties, namely, that it has the corporate power, capacity and authority to execute, deliver and perform this Agreement and the execution, delivery and performance of this Agreement by it has been duly authorized by all required corporate action and this Agreement represents a valid and binding obligation of the Royalty Holder duly enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws or by equitable principles generally.

 

 

 

 

 

 

  

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ARTICLE 6

INDEMNITIES

 

	6.1	 Indemnity by the Owner

 

The Owner does hereby agree to defend, indemnify, reimburse and hold harmless the Royalty Holder, its officers, directors, shareholders, employees and its successors and assigns (collectively, the “Royalty Holder Indemnified Parties”), and each of them, from and against any and all Losses that the Royalty Holder Indemnified Parties may sustain, suffer or incur as a result of:

 

	
  

	
(a)

	
a breach of this Agreement by the Owner; and

 

	
  

	
(b)

	
operations conducted on or in respect of the Property by or on behalf of the Owner that result from or relate to the mining, handling, transportation, smelting or refining of the Products, including without limitation, Losses, in any way arising from or connected with any non-compliance with environmental laws or any contaminants or hazardous substances on, in or under the Property or the soil, sediment, water or groundwater forming part thereof, whether in the past, present or future, or any contaminants or hazardous substances on any other lands or areas having originated or migrated from the Property or the soil, sediment, water or groundwater forming part thereof.

 

 

	6.2	Indemnity by the Royalty Holder

 

The Royalty Holder does hereby agree to defend, indemnify, reimburse and hold harmless the Owner, its officers, directors, members, managers, shareholders, employees and their successors and assigns (collectively, the “Owner Indemnified Parties”), and each of them, from and against any and all Losses that the Owner Indemnified Parties may sustain, suffer or incur as a result of a breach of this Agreement by the Royalty Holder or arising from any  inspection conducted pursuant to the provisions of sections 3.12 or 9.2, except to the extent the same are caused by the gross negligence or wilful misconduct of the Owner.

 

ARTICLE 7

TRANSFER RIGHTS

 

	7.1	Restricted Transfer Rights of the Owner

 

The Owner may Transfer, in whole or in part: (i) the Property; or (ii) its rights and obligations under this Agreement, the Charge and any Intercreditor Agreement; in either case so long as the following conditions are satisfied:

 

	
  

	
(a)

	
the Owner provides the Royalty Holder with at least 20 day's prior written notice of the intent to Transfer of the Owner;

 

	
  

	
(b)

	
any purchaser, merged company, transferee or assignee, as a condition to completion of the Transfer, agrees in writing in favour of the Royalty Holder to be bound by the terms of this Agreement, including without limitation, this section and the Royalty Holder does not suffer a material adverse effect in relation to the transactions set forth in this Agreement; and

 

	
  

	
(c)

	
any transferee of the Owner that is a mortgagee, chargeholder or encumbrancer obtains an agreement in writing in favour of the Royalty Holder from any subsequent purchaser or transferee of such mortgagee, chargeholder or encumbrancer that such subsequent mortgagee, chargeholder or encumbrancer will be bound by the terms of this Agreement, the Charge and the Intercreditor Agreement (with respect to the latter, if applicable).

 

 

 

 

 

 

  

26

  

 

 

	7.2	Transfer Rights of the Royalty Holder

 

The Royalty Holder shall have the right to Transfer or encumber, in whole or in part, its rights and obligations under this Agreement to another Person upon the delivery to the Owner of ten Business Days prior written notice.  In such a case, provided that such other Person has agreed in writing with the Owner to be bound by such transferred or encumbered obligations under this Agreement, the Royalty Holder shall be released from such transferred obligations under this Agreement.

 

Notwithstanding the foregoing, the Royalty Holder shall have the right to Transfer by way of encumbrance, in whole or in part, its rights and obligations under this Agreement to one or more lenders providing financing to the Royalty Holder without notice to, or the consent of, the Owner.   Provided such transferee has agreed in writing with the Owner that if it enforces such encumbrance it will provide notice to the Owner and upon delivery of such notice, (which notice shall confirm that such transferee agrees to be bound by such transferred obligations under this Agreement,) such transferee shall become a party to this Agreement with all of the rights and obligations of the Royalty Holder. In the case of a Transfer by way of encumbrance which is subsequently enforced by such transferee, the Royalty Holder shall not be released from its obligations under this Agreement

 

 

	7.3	Project Financing of the Owner

 

The Owner covenants to and in favour of the Royalty Holder that the terms of any project financing arranged with respect to the Property shall not allow for the lenders to prohibit or interfere with any Base Metal Royalty payments or Precious Metal Royalty payments due to the Royalty Holder hereunder or allow for cash sweeps or payments of excess cash flow to the lenders in priority to any Base Metal Royalty payments or Precious Metal Royalty payments due to the Royalty Holder hereunder.

 

In connection with any such project financing the Owner shall obtain at the closing of such project financing a certificate executed by an authorized officer of each lending institution or any other third party to the project financing, acknowledging the validity and existence of this Agreement and the Base Metal Royalty obligations and the Precious Metal Royalty obligations under this Agreement and agreeing that it will not object to or attempt to prohibit payment of any of the payments of the Base Metal Royalty and/or Precious Metal Royalty hereunder.

 

 

 

 

 

 

  

27

  

 

ARTICLE 8

DISPUTE RESOLUTION

 

	8.1	Arbitration

 

In the event of a dispute in relation to this Agreement, including without limitation, the existence, validity, performance, breach or termination hereof or any matter arising hereunder, including whether any matter is subject to arbitration, the Parties agree to negotiate diligently and in good faith in an attempt to resolve such dispute. Failing resolution satisfactory to either Party, within ten days of the time frame specified herein or if no time frame is specified within ten days of the delivery of notice by either Party of the said dispute, which shall be after the dispute remains open for a period of 90 days, either Party may request that the dispute be resolved by binding arbitration, conducted in English, in Vancouver, British Columbia, pursuant to the domestic commercial arbitration rules of the British Columbia International Commercial Arbitration Centre (the “BCICAC”).  The appointing authority shall be the BCICAC and the case shall be administered by the BCICAC in accordance with its Domestic Commercial Arbitration Rules of Procedure, subject to the following:

 

	
  

	
(a)

	
To demand arbitration, either Party (the "Demanding Party") shall give written notice (the "Dispute Notice") to the other Party (the "Responding Party"), which Dispute Notice shall toll the running of any applicable limitations of actions by law or under this Agreement.  The Dispute Notice shall specify the nature of the allegation and the issues in dispute, the amount or value involved (if applicable) and the remedy requested.  Within 15 Business Days of receipt of the Dispute Notice, the Responding Party shall answer the demand in writing, responding to the allegations and issues that are disputed.

 

	
  

	
(b)

	
The Demanding Party and the Responding Party shall mutually agree upon one single qualified arbitrator within seven Business Days of the Responding Party's answer, failing which either the Demanding Party or the Responding Party may request the BCICAC to appoint one qualified arbitrator within five Business Days of the Responding Party's answer.  The arbitrator shall be a disinterested person qualified by experience to hear and determine the issues to be arbitrated.

 

	
  

	
(c)

	
No later than 15 Business Days after hearing the representations and evidence of the Parties, the arbitrator shall make its determination in writing in English and shall deliver one copy to each of the Parties. The written decision of the arbitrator shall be final and binding upon the Parties in respect of all matters relating to the arbitration, the procedure, the conduct of the Parties during the proceedings and the final determination of the issues in the arbitration. There shall be no appeal from the determination of the arbitrator to any court. The decision rendered by the arbitrator may be entered into any court for enforcement purposes.

 

 

  

 

 

 

  

28

  

 

	
  

	
(d)

	
The arbitrator may determine all questions of law and jurisdiction (including questions as to whether or not a dispute is arbitratable) and all matters of procedure relating to the arbitration.

 

	
  

	
(e)

	
The arbitrator shall have the right to grant legal and equitable relief and to award costs (including reasonable legal fees and the costs of arbitration) and interest. The costs of any arbitration shall be borne by the Parties in the manner specified by the arbitrator in its determination, if applicable. The arbitrator may make an interim order, including injunctive relief and other provisional, protective or conservatory measures, as well as orders seeking assistance from a court in taking or compelling evidence or preserving and producing documents regarding the subject matter of the dispute.

 

	
  

	
(f)

	
All papers, notices or process pertaining to an arbitration hereunder may be served on a Party as provided in this Agreement.

 

	
  

	
(g)

	
The Parties agree to treat as Confidential Information, in accordance with the provisions of section 10.2, the following: the existence of the arbitral proceedings; written notices, pleadings and correspondence in relation to the arbitration; reports, summaries, witness statements and other documents prepared in respect of the arbitration; documents exchanged for the purposes of the arbitration; and the contents of any award or ruling made in respect of the arbitration. Notwithstanding the foregoing part of this section, a Party may disclose such Confidential Information in judicial proceedings to enforce, nullify, modify or correct an award or ruling and as permitted under section 10.2 or where that disclosure is necessary to comply with its disclosure obligations and requirements under any securities law, rules or regulations or stock exchange listing agreements,

 

ARTICLE 9

OPERATION OF THE PROPERTY

 

 

	9.1	Owner to Determine Operations

 

The Owner will have complete discretion concerning the nature, timing and extent of all exploration, development, mining and other operations conducted on or for the benefit of the Property and may suspend operations and production on the Property at any time it considers prudent or appropriate to do so.

  

The Owner may, but will not be obligated to treat, mill, heap leach, sort, concentrate, refine, smelt, or otherwise process, beneficiate or upgrade the ores, concentrates, and other Product at sites located on or off the Property, prior to sale, transfer, or conveyance to a purchaser, user, or consumer. The Owner will not be liable for mineral values lost in processing under sound practices and procedures, and no Base Metal Royalty or Precious Metal Royalty will be due on any such lost mineral values.

 

 

 

 

 

 

29

 

  

 

The Owner shall be entitled to temporarily stockpile, store or place ores, concentrates or other Product produced from the Property in any locations owned, leased, rented or otherwise controlled by the Owner or its Affiliates, provided the same are appropriately identified as to ownership and origin and secured from loss, theft, tampering and contamination.

  

 

The Owner will owe the Royalty Holder no duty to explore, develop or mine the Property, or to do so at any rate or in any manner other than that which the Owner may determine in its sole and unfettered discretion.

 

	9.2	Commingling

 

Commingling of Products from the Property with other ores, doré, concentrates, metals, minerals or mineral by-products produced elsewhere is permitted, provided that reasonable and customary procedures are established for the weighing, sampling, assaying and other measuring or testing necessary to fairly allocate valuable metals contained in such Products and in the other ores, doré, concentrates, metals, minerals and mineral by-products.  The Royalty Holder will have the right, during reasonable business hours and upon prior notice to the Owner, to enter upon the Property and to inspect the plant and procedures followed by the Owner with respect to allocations made under this section, provided that such entry will be at the sole risk and cost of the Royalty Holder, and in compliance with applicable safety rules and regulations.

 

 

	9.3	Nature of Royalty Holder’s Interest

 

The Base Metal Royalty payable and Precious Metal Royalty payable to the Royalty Holder shall be payable only on production of Products from the Property, and not production from any other properties adjacent to or in the vicinity of the Property.  The Royalty Holder shall not have any possessory or working interest in the Property, nor any of the incidents of such interest.

 

ARTICLE 10

MISCELLANEOUS

 

 

	10.1	Other Activities and Interests

 

This Agreement and the rights and obligations of the Parties hereunder are strictly limited to the Property.  Save and except as herein specifically provided, each Party will have the free and unrestricted right to enter into, conduct and benefit from any and all business ventures of any kind whatsoever, whether or not competitive with the activities undertaken pursuant hereto, without disclosing such activities to the other Party or inviting or allowing the other to participate therein including activities involving mineral claims or mineral leases adjoining the Property.

 

 

	10.2	Confidentiality

 

All information, data, reports, records, analyses, economic and technical studies and test results relating to the Property and the activities of the Owner or any other party thereon and the terms and conditions of this Agreement, all of which will hereinafter be referred to as “Confidential Information,” will be treated by the Royalty Holder as confidential and will not be disclosed to any person not a party to this Agreement, except in the following circumstances:

 

 

 

 

 

 

  

30

  

 

	
  

	
(a)

	
the Royalty Holder may disclose Confidential Information to its auditors, legal counsel, tax and financial advisors, institutional lenders, brokers, underwriters and investment bankers, provided that such non-party users are advised of the confidential nature of the Confidential Information, undertake to maintain the confidentiality thereof and are strictly limited in their use of the Confidential Information to those purposes necessary for such non-party users to perform the services for which they were retained by the Royalty Holder;

 

	
  

	
(b)

	
the Royalty Holder may disclose Confidential Information to prospective purchasers of the Royalty Holder's right to receive the Base Metal Royalty and/or Precious Metal Royalty, provided that each such prospective purchaser first agrees in writing to hold such information confidential in accordance with this section and to use it exclusively for the purpose of evaluating its interest in purchasing such right;

 

	
  

	
(c)

	
the Royalty Holder and the Owner may disclose Confidential Information where that disclosure is necessary to comply with its disclosure obligations and requirements under any securities law, rules or regulations or stock exchange listing agreements, policies or requirements or in relation to proposed credit arrangements, and the Owner agrees to provide to the Royalty Holder all such information as the Royalty Holder, acting reasonably, determines is necessary or desirable to fulfill the Royalty Holder's disclosure obligations and requirements under applicable securities laws, provided that prior to making any such disclosure the Royalty Holder shall give the Owner three Business Days' prior written notice and the opportunity to comment on such disclosure. Additionally, the Owner agrees to use its reasonable efforts to ensure that the "qualified person" of the Owner (for the purposes of National Instrument 43 101) reviews and comments upon all requisite securities documents of the Royalty Holder that contain and disclose scientific and technical information with respect to the Base Metal Royalty and Precious Metal Royalty, including without limitation, annual information forms and press releases and to ensure that the Royalty Holder may quote and rely upon such "qualified person" in any such document, all as required by requisite securities laws, provided that any additional cost incurred by the Owner or such "qualified person" in any such review will be for the account of the Royalty Holder; or

 

	
  

	
(d)

	
with the prior written approval of the Owner.

 

Any Confidential Information that becomes a part of the public domain by no act or omission in breach of this section will cease to be confidential information for the purposes of this section.  The Royalty Holder agrees that any Confidential Information it discloses under section 10.2(c) shall be accompanied by public-company standard disclaimers regarding reliance on forward-looking statements.

 

 

 

 

 

  

31

  

 

 

	10.3	No Partnership

 

This Agreement is not intended to, and will not be deemed to, create any partnership relation between the Parties including without limitation, a joint venture, mining partnership or commercial partnership. The obligations and liabilities of the Parties will be several and not joint and neither of the Parties will have or purport to have any authority to act for or to assume any obligations or responsibility on behalf of an other Party.  Nothing herein contained will be deemed to constitute a Party the partner, agent, joint venturer or legal representative of another Party.

 

	10.4	No Waivers

 

No waiver of or with respect to any term or condition of this Agreement shall be effective unless it is in writing and signed by the waiving Party, and then such waiver shall be effective only in the specific instance and for the purpose for which given.  No course of dealing between the Parties, nor any failure to exercise, nor any delay in exercising, on the part of a Party hereunder, any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any specific waiver of any right, power or privilege hereunder preclude any other or further exercise thereof of the exercise of any other right, power or privilege.

 

 

	10.5	Time of the Essence

 

Time shall be of the essence in the performance of any and all of the obligations of the Parties hereunder, including without limitation, the payment of monies.

 

	10.6	Further Assurances

 

Each Party will, at the request of another Party and at the requesting Party’s expense, execute all such documents and take all such actions as may be reasonably required to effect the purposes and intent of this Agreement.

 

	 10.7	Entire Agreement

 

This Agreement, including the Schedules hereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof, all previous agreements and promises in respect thereto being hereby expressly rescinded and replaced hereby. No modification or alteration of this Agreement will be effective unless in writing executed subsequent to the date hereof by both Parties.  No prior written or contemporaneous oral promises, representations or agreements are binding upon the Parties.  There are no implied covenants contained herein.

 

 

 

 

 

 

  

32

  

 

 

	10.8	Notice

 

Any notice, demand, consent or other communication (“Notice”) given or made under the Agreement:

 

	
  

	
(a)

	
must be in writing and signed by a person duly authorised by the sender;

 

	
  

	
(b)

	
must be delivered to the intended recipient by hand, by overnight courier, or fax or email to the address or fax number below or the address, email address or fax number last notified by the intended recipient to the sender:

 

	
If to the Owner:

 

	
650 West Georgia Street

	
Suite 1710, P. O. Box 11644

	
Vancouver, BC  V6B 4N9

	
Attention:

	
President and Chief Executive

	
Fax No.:

	
(604) 688-2043

	
Email:

	
info@canadainzinc.com

 

	
If to the Royalty Holder, to:

	  
	
Suite 1400, 400 Burrard Street

	
Vancouver, BC V6C 3A6

 

	
Attention:

	
President and Chief Executive Officer

	
Fax No.:

	
(604) 689-7317

	
Email:

	
NWatson@sandstormltd.com

 

	
with a copy to:

	  
	
Cassels Brock & Blackwell LLP

	
Suite 2200, HSBC Building

	
885 West Georgia Street

	
Vancouver, BC  V6C 3E8

 

	
Attention:

	
Jennifer Traub

	
Fax No.:

	
(604) 691-6120

	
Email:

	
jtraub@casselsbrock.com

 

	
  

	
(c)

	
will be deemed to be duly given or made when delivered;

 

but if the result is that a Notice would be deemed to be given or made on a day which is not a Business Day in the place to which the Notice is sent or is later than 4:00 pm (local time) it will be deemed to have been duly given or made at the commencement of business on the next Business Day in that place.

 

 

 

 

 

 

  

33

  

 

 

	10.9	Counterparts

 

This Agreement may be executed in multiple counterparts, by original, pdf or telefacsimile signature, each of which will constitute an original, but all of which together will constitute one and the same instrument.

 

 

	10.10	Parties in Interest

 

This Agreement will enure to the benefit of and be binding on the Parties and their respective successors and permitted assigns.

 

	10.11	Tax Laws

 

Following the execution and delivery of this Agreement, each of the Parties will co-operate reasonably with the other Party in implementing any reasonable proposed adjustments to the structure of this Agreement to facilitate tax planning, provided that such adjustments have no material adverse impact on the non-proposing Party and that such adjustments shall not or would not be reasonably likely to result in the non-proposing Party incurring any significant costs or liabilities.

 

 

 

 

 

 

  

34

  

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date and year first above written.

 

	 	CANADIAN ZINC CORPORATION
	 	
Per:

	
 

SIGNED

	
Authorized Signing Officer

	  
	 	
SANDSTORM METALS & ENERGY LTD.

	 	
Per:

	
 

SIGNED

	
Authorized Signing Officer

	  

 

 

 

 

 

 

  

35

  

 

SCHEDULE “A”

 

DESCRIPTION OF PRAIRIE CREEK PROPERTY

 

The Prairie Creek Property is located in the Northwest Territories, 500 kilometres west of Yellowknife and comprises 8,218 hectares of land. The Prairie Creek Property consists of a 100 percent interest in the mining leases, surface leases and staked mineral claims described below and shown on a map on the following page, which map forms a part of this Schedule “A”.

 

	
l

	
Mining Leases Numbers 2854, 2931, 2932, 2933, 3313, 3314, 3315 and 3338; (8,749.4 acres), expiring from July 17, 2019 to August 5, 2020; and Gate mining leases Numbers 5113, 5114, 5115 and 5116 (9,245.4 acres) expiring September 9, 2030 (the “Mining Leases”)

 

	
l

	
Surface Leases Numbers 95 F/10-5-5 and 95 F/10-7-4; (325.81 acres) (the “Surface Leases”)

 

	
l

	
Mineral Claims: Way 5 claim (1,807.75 hectares) is in good standing until November 1, 2013 (the “Owned Claims”)

 

 

 

 

 

 

  

 

  

 

SCHEDULE “A” Continued

 

 

 

 

  

 

  

 

SCHEDULE “B”

 

PERMITTED ENCUMBRANCES

 

 

The following encumbrances are deemed to be Permitted Encumbrances:

 

	
  

	
(i)

	
any security interest, bond or deposit under workers' compensation, social security, environmental, development, mining or similar legislation or in connection with permitting, tenders, leases, contracts or expropriation proceedings or to secure public or statutory obligations, surety and appeal bonds or costs of litigation, all where required by law;

 

	
  

	
(ii)

	
any security interest, or privilege imposed by law, such as builders', mechanics', material men's, carriers', warehousemen's and landlords' liens and privileges; or any security interest or privilege arising out of judgments or awards with respect to the Property which the Owner at the time is prosecuting an appeal or proceedings for review and with respect to which it has secured a stay of execution pending such appeal or proceedings for review; or any security interest for taxes, assessments or governmental charges or levies against the Property not at the time due and delinquent or the validity of which is being contested at the time by the Owner in good faith; or any undetermined or inchoate security interest or privilege incidental to current operations that has not been filed pursuant to law against the Owner or that relates to obligations not due or delinquent; or the deposit of cash or securities in connection with any security interest or privilege referred to in this paragraph;

 

	
  

	
(iii)

	
any right reserved to or vested in any municipality or governmental or other public authority by the terms of any lease, license, franchise, grant or permit held or acquired by the Owner in respect of the Property or by any statutory provision, to terminate the lease, license, franchise, grant or permit or to purchase assets used in connection therewith or to require annual or other periodic payments as a condition of the continuance thereof;

 

	
  

	
(iv)

	
any security interest created or assumed by the Owner in favour of a public utility or any municipality or governmental or other public authority when required by the utility, municipality or other authority in connection with the operations of the Property;

 

	
  

	
(v)

	
any reservations, limitations, provisos and conditions expressed in original grants of the mining leases, surface leases and staked mineral claims from the Crown, the Territorial or federal government or agencies thereof and any reservations and exceptions contained in, or implied by statute;

 

 

 

 

 

 

  

 

  

	
  

	
(vi)

	
any easements, rights-of-way, servitudes or other similar rights in land granted to or reserved by other Persons, rights-of-way for sewers, electric lines, telegraph and telephone lines, oil and natural gas pipelines and other similar purposes, or zoning or other restrictions applicable to the property's use of real property within the Property that do not in the aggregate materially detract from the value of such property or materially impair its use in the operation of the Property;

 

	
  

	
(vii)

	
Encumbrances in favour of governmental authorities securing reclamation obligations of the Property;

 

	
  

	
(viii)

	
any municipal by-laws or regulations affecting the Property or its respective use and any other municipal land use instruments including, without limitation, official plans and zoning and building by-laws, as well as decisions of the Committee of Adjustment or any other competent authority permitting variances therefrom, and all applicable building codes;

 

	
  

	
(ix)

	
any security interest granted to or in favour of a vendor of an asset or assets purchased or to be purchased by the Owner as security for the whole or any part of the purchase consideration, or any royalty or other interest retained by such vendor, secured only on such purchased assets;

 

	
  

	
(x)

	
all rights to royalties arising pursuant to applicable laws;

 

	
  

	
(xi)

	
all other Encumbrances that have been accepted in writing by the Royalty Holder;  and

 

	
  

	
(xii)

	
the Base Metal Royalty and the Precious Metal Royalty.

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