Exhibit 10.34
CONVERTIBLE LOAN AGREEMENT #1
THIS CONVERTIBLE LOAN AGREEMENT dated effective the 9th day of April,
1998
BETWEEN:
XXXXXXXXXX FAMILY TRUST, 000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000
(the "Lender")
AND:
IDAHO CONSOLIDATED METALS CORPORATION, a company incorporated under
the laws of British Columbia, having its principal office at 000 Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxx, 00000
(the "Borrower")
WHEREAS the Borrower wishes to borrow and the Lender is willing to
lend to the Borrower the sum of U.S.$100,000 (the "Loan"), upon the terms and
subject to the conditions hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
ARTICLE 1
INTERPRETATION
1.1 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the laws prevailing in British Columbia.
1.2 Severability. If any one or more of the provisions contained in this
Agreement is found by a court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
1.3 Headings and Marginal References. The divisions of the Agreement into
articles, paragraphs, sub-paragraphs and other subdivisions and the insertion of
headings are for convenience of reference only and do not affect the
construction or interpretation of this Agreement.
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1.4 Currency. All sums of money to be paid or calculated pursuant to this
Agreement shall be paid or calculated in United States or Canadian currency, as
indicated throughout.
1.5 Number and Gender. All references to any party to this Agreement shall be
read with such changes in number and gender as the context may require.
ARTICLE 2
THE LOAN
2.1 Closing Date. The closing of the financing contemplated by this Agreement
will take place on the first business day following the date of receipt of final
acceptance by the Vancouver Stock Exchange (the "Exchange") of this Agreement
for filing (the "Closing Date") or such later date as the parties may agree upon
in writing.
2.2 Establishment of the Loan. On the terms and subject to the conditions set
forth in this Agreement, the Lender shall lend to the Borrower the sum of
U.S.$100,000, receipt of which is hereby acknowledged by the Borrower effective
January 23, 1998 (the "Payment Date").
2.3 Evidence of Indebtedness. In order to evidence the indebtedness of the
Borrower to the Lender in respect of the Loan, the Borrower shall execute and
deliver to the Lender a promissory note in substantially the form attached as
Schedule "A" hereto (the "Note").
2.4 Interest. Commencing on January 23, 1999, the Borrower shall pay to the
Lender annually on January 23, 1999 and January 23, 2000 while any amount of the
Loan remains outstanding, interest on the principal amount of the Loan at the
rate of 9% per annum, calculated annually in arrears, both before and after
maturity, default and judgment. In the event that any interest payment is not
made in a timely manner, a late payment fee of 9% of the amount of the interest
payment then due shall be paid to the Lender.
2.5 Repayment of the Loan. Subject to paragraphs 2.6 and 3.1, the Borrower shall
repay the Loan, together with any outstanding interest thereon, to the Lender on
or before January 23, 2000 (the "Maturity Date").
2.6 Prepayment of the Loan. Subject to paragraph 3.1, the Borrower may prepay
the Loan in whole or in part, together with any outstanding interest thereon to
the Lender at any time after January 23, 1999 until the Maturity Date without
penalty.
ARTICLE 3
CONVERSION
3.1 Conversion. During the period from June 18, 1998 until the Maturity Date,
the Lender may require the Borrower to convert all or any portion of the
principal amount of the Loan advanced and then outstanding into units ("Units"),
at a conversion price of one Unit for each Cdn.$0.26 of indebtedness until and
including January 23, 1999 and at a conversion price of one Unit for each
Cdn.$0.31 of indebtedness during the period from January 24, 1999 until the
Maturity Date. Each Unit consists of one common share in the capital stock of
the Borrower (the "Shares")
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and one non-transferable common share purchase warrant ("Warrant"). The Lender
shall give written notice of conversion to the Borrower specifying the part or
whole of the principal indebtedness of the Borrower to the Lender to be
converted and the number of Units to be issued on conversion, calculated in
accordance with the terms of this Agreement.
3.2 No Fractions. In converting the principal indebtedness of the Loan into
Units, the Borrower shall round fractions down to the nearest whole Unit, so
that the Lender will not be entitled to receive a fraction of a Unit.
3.3 Delivery. Three business days after the date a notice of conversion is
received by the Borrower from the Lender (the "Conversion Date"), the Lender
shall be deemed for all purposes to be the holder of record of that number of
Shares and Warrants designated in the notice of conversion, the outstanding
principal indebtedness of the Borrower to the Lender shall be deemed to be
reduced by the amount designated in the notice of conversion and the Borrower
shall deliver to the Lender on the Conversation Date a share certificate
representing the number of Shares and a certificate representing the number of
Warrants comprised in the Units as specified in the notice of conversion,
together with any unpaid interest which is due as at the Conversion Date.
3.4 Warrants. The Warrants shall be non-transferable and, if and when issued,
each Warrant shall entitle the Lender to purchase one common share in the
capital stock of the Borrower (the "Warrant Share") for a term commencing on the
Conversion Date and exercisable until the Maturity Date at a price of Cdn.$0.26
per Warrant Share until January 23, 1999 and thereafter at a price of Cdn.$0.31
per Warrant Share until the Maturity Date. The terms and conditions governing
the Warrants shall contain provisions, inter alia, for appropriate adjustment in
the class, number and price of the Shares issuable pursuant to any exercise
thereof upon the occurrence of certain events including any subdivision,
consolidation or reclassification of the Shares, the payment of stock dividends
or the amalgamation of the Company, as set forth in the form of warrant
certificate attached hereto as Schedule "B".
3.5 Adjustment. The terms and conditions set out in sections 1 and 2 of Schedule
"B" with respect to the adjustment in the class, number and price of the Warrant
Shares upon the occurrence of certain events apply, with the necessary changes,
to the Shares.
3.6 Reservation of Shares and Warrant Shares. For so long as any part of the
principal indebtedness of the Loan remains outstanding, the Borrower shall at
all times reserve out of its unissued common shares a sufficient number thereof
to accommodate the conversion of the principal indebtedness of the Loan into
Shares and the exercise of the Warrants into Warrant Shares, all as provided for
in this Agreement.
3.7 Questionnaire and Undertaking. The Lender shall execute and deliver to the
Borrower for filing with the Exchange the form of Private Placement
Questionnaire and Undertaking and such other documents and information as may be
required by the Exchange in connection with this transaction.
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ARTICLE 4
BORROWER'S REPRESENTATIONS AND WARRANTIES
4.1 The Borrower represents and warrants to the Lender that:
(a) the Borrower is a reporting issuer only in British Columbia and is not
in default of any requirement of the British Columbia Securities Act
and Rules promulgated thereto (the "Act");
(b) the Borrower is a corporation duly incorporated, validly existing and
in good standing with respect to filing of annual reports with the
Registrar of Companies for British Columbia;
(c) the Borrower has all requisite corporate power and authority to own
and use its property, to carry on its business as now being conducted,
to enter into this Agreement and to execute and deliver the Note and
to carry out the obligations contemplated herein and therein;
(d) all necessary corporate action of the directors of the Borrower to
authorize the execution, delivery and performance of this Agreement
has been taken;
(e) this Agreement has been duly executed and delivered on behalf of the
Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable by the Lender in accordance with its terms;
(f) the authorized capital of the Borrower consists of 100,000,000 common
shares without par value of which 7,104,208 common shares are validly
issued and outstanding as at April 9, 1998;
(g) the Shares to be allotted and issued pursuant to the due and valid
conversion, in whole or in part, of the principal indebtedness of the
Loan have been duly and validly authorized to be issued as fully paid
and non-assessable common shares upon receipt by the Borrower of a
notice of conversion;
(h) the Warrant Shares to be allotted and issued pursuant to the due and
valid exercise, in whole or in part, of the Warrants have been duly
and validly authorized to be issued as fully paid and non-assessable
common shares upon receipt by the Borrower of full payment therefor;
(i) the common shares of the Borrower are listed and posted for trading
only on the Exchange; and
(j) no Default (as defined below) or event which with the giving of notice
or the lapse of time would become a Default has occurred or is
continuing.
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ARTICLE 5
LENDER'S REPRESENTATIONS AND WARRANTIES
5.1 The Lender represents and warrants to the Borrower that:
(a) the Lender, if a corporation, is a valid and subsisting corporation
under the laws of its incorporating jurisdiction, has the necessary
corporate capacity and authority to execute and deliver this Agreement
and to observe and perform its covenants and obligations hereunder and
has taken all necessary corporate action in respect thereof, and this
Agreement constitutes a legal, valid and binding contract of the
Lender enforceable against the Lender in accordance with its terms;
(b) the Lender is a resident of the State of California;
(c) the Lender is entering into this Agreement and acquiring the Note as
principal for the Lender's own account, and not for the benefit of any
other person;
(d) the Lender is purchasing the Note in an aggregate acquisition cost of
not less than $97,000 and the Lender was not created solely, and is
not being used primarily, to permit a group of individuals to purchase
the Note without a prospectus; or
(e) the Lender is aware that this Agreement and the Note are being
distributed under an exemption from the registration and prospectus
requirements of the Act and states that this Agreement is not being
entered into as a result of any information about the affairs of the
Borrower that is not generally known to the public save knowledge of
this particular transaction;
(f) this Agreement and the Loan are not being used to settle prior
outstanding debts of the Borrower to the Lender or, if they are being
used to settle prior outstanding debt owing by the Borrower to the
Lender, then the Lender is not permitted to receive Warrants comprised
in the Units on that part of its Loan that corresponds to the amount
of the prior outstanding debt;
(g) the Lender is not presently a "control person" of the Borrower as
defined in the Act but may become a "control person" of the Borrower
by virtue of the purchase of the Note pursuant to this Agreement and
the conversion of the Note into units; and (h) the Lender has executed
and delivered to the Company herewith the additional representations
and warranties set out on Schedule "C" attached hereto.
ARTICLE 6
ACKNOWLEDGMENTS AND COVENANTS OF THE LENDER
6.1 The Lender hereby acknowledges and covenants that:
(a) the Note that is being issued and the Units, Shares, Warrants and
Warrant Shares that may be issued pursuant to this Agreement (together
the "Securities") will be issued
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under an exemption from the registration and prospectus requirements
of the Act and under the policies of the Exchange and that the sale by
the Lender in British Columbia of the Securities is, unless otherwise
exempted under the Act and approved by the Exchange, deemed to be a
distribution to the public unless:
(i) if the Lender is an insider of the Borrower, other than a
director or senior officer of the Borrower, the Lender has filed
all records required to be filed under section 87 (insider
reports) and section 90 (personal information form) of the Act;
(ii) if the Lender is a director or senior officer of the Borrower,
the Lender has filed all records required to be filed under
section 87 (insider reports) and section 90 (personal information
form) of the Act and the Borrower has filed all records required
to be filed under part 12 of the Act and of the Rules promulgated
to the Act (continuous disclosure);
(iii) a twelve-month period has elapsed from the Payment Date or, if
on the Conversion Date the Company is an AIF Issuer as defined in
the policies of the Exchange, a four month period has elapsed
from the Payment Date;
(iv) the trade is not a distribution from the holdings of a control
person;
(v) no unusual effort is made to prepare the market or to create a
demand for the Securities; and
(vi) no extraordinary commission or consideration is paid in respect
of the trade;
(b) the foregoing is a summary based on the provisions of the Act as at
the date hereof and is subject to amendment and the Lender covenants
that, prior to trading in the Securities in British Columbia, the
Lender will consult with the Lender's own legal counsel in connection
with the applicable resale rules;
(c) the Lender will complete, execute and deliver to the Borrower the
Private Placement Questionnaire and Undertaking attached as Schedule
"D" hereto as required by the Exchange for filing with the Exchange in
connection with the Loan;
(d) if the Lender is an individual, the Lender will complete, execute and
deliver to the Borrower a Form 20A(IP), Acknowledgement and
Undertaking as required under the Act; and
(e) the certificates representing the Securities will contain a legend
denoting the restrictions on transfer imposed by the Act or, if
applicable, by the policies of the Exchange, to the effect that the
securities represented by the certificate are subject to a hold period
and may not be traded in British Columbia until one year from the
Payment Date, or, if on the Conversion Date the Company is an AIF
Issuer, until four months from the Payment Date.
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ARTICLE 7
COVENANTS OF THE BORROWER
7.1 The Borrower covenants and agrees with the Lender that at all times during
the currency of this Agreement it will:
(a) take all reasonable steps to remain in good standing under the Act;
(b) pay the principal sum of the Loan, interest and all other monies
required to be paid to the Lender pursuant to this Agreement in the
manner set forth herein;
(c) observe and perform each of its covenants and agreements set forth in
this Agreement and the Note; and
(d) provide the Lender with immediate notice of any Default.
7.2 The Borrower shall assume and pay all costs, charges and expenses, including
reasonable legal fees and expenses, which may be incurred by the Lender in
respect of this Agreement or the Note in any proceedings taken or things done by
the Lender or on its behalf in connection therewith to collect, protect, realize
or enforce the Note.
ARTICLE 8
DEFAULT
8.1 It is a Default if:
(a) the Borrower defaults in any payment when the same is due under this
Agreement;
(b) the Borrower becomes insolvent or makes a general assignment for the
benefit of its creditors, or if an order is made or effective
resolutions are passed for the winding-up, merger or amalgamation of
the Borrower or if the Borrower is declared bankrupt or if a custodian
or receiver is appointed for the Borrower under any bankruptcy
legislation, or if a compromise or arrangement is proposed by the
Borrower to its creditors or any class of its creditors, or if a
receiver or other officer with like powers is appointed for the
Borrower; or
(c) the Borrower defaults in observing or performing any other covenant or
agreement of this Agreement on its part to be observed or performed
and such default has continued for a period of seven days after notice
in writing has been given by the Lender to the Borrower specifying
such default.
8.2 In the event of a Default, unless it is waived in writing by the Lender, the
principal balance of the Loan, costs and any other money owing to the Lender
under this Agreement shall immediately become payable by the Borrower.
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ARTICLE 9
GENERAL
9.1 Waiver or Modification. No consent or waiver, express or implied, by any
party to or of any breach or default by any other party of any or all of its
obligations under this Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this section;
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this section in any other or subsequent instance.
9.2 Further Assurances. The parties hereto will do, execute and deliver or will
cause to be done, executed and delivered all such further acts, documents and
things as may be reasonably required for the purpose of giving effect to this
Agreement.
9.3 Assignment. No party may assign its interest herein or any part thereof
without the consent of the other party which neither party will unreasonably
withhold. In the case of an assignment by the Borrower, the Borrower must comply
with all applicable securities laws and obtain the consent of the Vancouver
Stock Exchange.
9.4 Notices. Any notice, demand or other document required or permitted to be
given hereunder shall be deemed to have been well and sufficiently given if
telecopied to or delivered at the address of the intended recipient set forth on
the first page hereof or at such other address as the intended recipient may
from time to time direct in writing, and any such notice, demand or document
shall be deemed to have been received.
9.5 Exchange Acceptance for Filing. It is acknowledged and agreed between the
parties that the Loan made hereunder is subject to acceptance for filing by the
Exchange. If final acceptance is not obtained within 120 days of the date of
this Agreement, unless the parties agree otherwise, the Agreement shall
automatically be terminated and of no further force or effect and the borrower
shall repay the outstanding principal amount of the Loan and accrued interest to
the Borrower.
9.6 Amendments. No provision of this Agreement may be amended, waived,
discharged or terminated orally, but only by instrument in writing signed by the
party against whom enforcement of the amendment, waiver, discharge or
termination is sought.
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9.7 Parties in Interest. This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective personal representatives,
successors and permitted assigns.
9.8 Counterparts. This Agreement may be executed in counterparts and by
facsimile with the same effect as if all parties had signed the same document
and all such counterparts will be construed together and will constitute one and
the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
THE CORPORATE SEAL of IDAHO )
CONSOLIDATED METALS CORPORATION was )
hereunto affixed in the presence of: )
)
Per: /s/ Xxxxxxx Xxxxxxx )
---------------------------------- ) C/S
Authorized Signatory )
)
Per: /s/ Xxxx Xxx )
---------------------------------- )
Authorized Signatory )
XXXXXXXXXX FAMILY TRUST
Per: /s/ Xxxxxxxx X. Xxxxxxxxxx, Trustee
-----------------------------------
Authorized Signatory
SCHEDULE "A"
FORM OF
CONVERTIBLE PROMISSORY NOTE #1
U.S.$100,000 January 23, 1998
FOR VALUE RECEIVED, the undersigned, Idaho Consolidated Metals Corporation,
a British Columbia, corporation ("ICMC" or "the Company"), hereby promises to
pay to the Xxxxxxxxxx Family Trust ("Xxxxxxxxxx"), the principal sum of U.S. One
Hundred Thousand Dollars (U.S.$100,000) plus interest at 9% per annum. All
unpaid principal and interest shall be due and payable in full on January 23,
2000. Unpaid principal and interest under this Note may be prepaid without
penalty after the first anniversary hereof. Interest to be paid annually. In the
event that any interest payment is not made in a timely manner, a late payment
fee of 9% of the amount of the interest payment then due shall be paid to
Xxxxxxxxxx.
Said note shall be convertible to units in the Company at the sole election
of Xxxxxxxxxx. Each unit shall consist of one (1) share and one (1)
non-transferable share purchase warrant at a unit price of Cdn.$0.26
representing the closing share price on the day prior to the execution of this
Note less 15%. Said price shall be valid for 1 year. Conversion in the 2nd year
of the note shall be at Cdn.$0.31 per unit. Any election for conversion shall
not be made any earlier than June 18, 1998. Any conversion shares will have a
hold period commencing on the date hereof until the lesser of one (1) year or
four (4) months if ICMC is an "AIF Issuer" as defined in the policies of the
Vancouver Stock Exchange ("VSE") at the time of conversion.
All payments on this Note, as well as any notices, are to be made or given
to Xxxxxxxxxx whose address for this purpose is 000 Xxxxxxxx Xxxx., Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx, 00000, or to such other place as Xxxxxxxxxx may from
time to time direct by written notice to ICMC.
All amounts payable hereunder are payable in lawful money of the United
States. If any suit or action be instituted to enforce this Note, ICMC promises
to pay, in addition to the costs and disbursements otherwise allowed by law, all
other costs including actual attorneys' fees incurred by Xxxxxxxxxx if such suit
or action is successful.
The parties hereto recognize that there may be other VSE requirements other
than notice concerning this Note. ICMC shall fulfill all of said requirements
which shall be met prior to payment to or conversion by the lender hereof.
This Note is given pursuant to the Convertible Loan Agreement #1 dated
effective April 9, 1998 between Xxxxxxxxxx and ICMC and is to be construed and
enforced in accordance therewith.
This Note shall be governed by and construed according to the laws of the
Province of British Columbia and meet all requirements of the VSE.
IDAHO CONSOLIDATED METALS CORPORATION
a British Columbia Corporation
By: __________________________________
Xxxxxxx Xxxxxxx, President
SCHEDULE "B"
FORM OF WARRANT CERTIFICATE
THIS WARRANT WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 4:30
P.M. (VANCOUVER TIME) ON JANUARY 23, 2000.
THIS WARRANT AND THE SHARE CERTIFICATES REPRESENTING ANY COMMON SHARES ISSUED ON
EXERCISE OF ALL OR A PART OF THE RIGHTS REPRESENTED BY THIS WARRANT ARE SUBJECT
TO A HOLD PERIOD AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL JANUARY 23,
1999 [MAY 23, 1998 IF IDAHO IS AN AIF ISSUER ON CONVERSION DATE] EXCEPT AS
PERMITTED BY THE BRITISH COLUMBIA SECURITIES ACT AND RULES MADE THEREUNDER (THE
"HOLD PERIOD").
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") AND MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, OR (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A
UNDER THE U.S. SECURITIES ACT OR (2) RULE 144 UNDER THE U.S. SECURITIES ACT, IF
APPLICABLE, OR (3) WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT (THE "U.S. LEGEND").
NON-TRANSFERABLE WARRANTS
IDAHO CONSOLIDATED METALS CORPORATION
(Incorporated under the laws of British Columbia)
Warrant Certificate No.: W*/* Right to Purchase * Common Shares
WARRANT CERTIFICATE FOR PURCHASE OF COMMON SHARES
THIS IS TO CERTIFY THAT, for value received, Xxxxxxxxxx Family Trust
of 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000
(hereinafter called the "holder") is entitled to subscribe for and purchase *
fully paid and non-assessable Common Shares in the capital of Idaho Consolidated
Metals Corporation (hereinafter called the "Corporation") at any time prior to
4:30 p.m. (Vancouver Time) on January 23, 2000 and at a price of Cdn.$0.26 per
share until January 23, 1999 and at price of Cdn.$0.31 per share from January
24, 1999 to January 23, 2000 subject, however, to the provisions and upon the
terms and conditions hereinafter set forth.
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The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part (but not as to a fractional share of Common Shares),
by completing the subscription form attached hereto as Schedule "A" and
surrendering this Warrant at the office of the Transfer Agent of the
Corporation, Montreal Trust Company of Canada, of 4th Floor - 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, together with a certified cheque payable to
or to the order of the Corporation in payment of the purchase price of the
number of Common Shares subscribed for.
In the event of any exercise of the right represented by this Warrant,
certificates for the Common Shares so purchased shall be delivered to the holder
hereof within a reasonable time, not exceeding three business days after the
rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of Common
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time.
The Corporation covenants and agrees that all Common Shares which may
be issued upon the exercise of the right represented by this Warrant will, upon
issuance, be fully paid and non-assessable and free of all liens, charges and
encumbrances. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Corporation will at all times have authorized and reserved, a sufficient number
of Common Shares to provide for the exercise of the rights represented by this
Warrant.
THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO IN THIS
WARRANT:
1. In case the Corporation shall at any time subdivide its outstanding Common
Shares into a greater number of shares, the Warrant purchase price shall be
proportionately reduced and the number of subdivided Common Shares entitled to
be purchased proportionately increased, and conversely, in case the outstanding
Common Shares of the Corporation shall be consolidated into a smaller number of
shares, the Warrant purchase price shall be proportionately increased and the
number of consolidated Common Shares entitled to be purchased hereunder shall be
proportionately decreased.
If any capital reorganization or reclassification of the capital stock
of the Corporation, or the merger, amalgamation or arrangement of the
Corporation with another corporation shall be effected, then as a condition of
such reorganization, reclassification, merger, amalgamation or arrangement,
adequate provision shall be made whereby the holder hereof shall have the right
to purchase and receive upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the Common Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, or other securities as may be issued
with respect to or in exchange for such number of outstanding Common Shares
equal to the number of Common Shares purchasable and receivable upon the
exercise of this Warrant had such reorganization, reclassification, merger,
amalgamation or arrangement not taken place. The Corporation shall not effect
any merger, amalgamation or arrangement unless prior to or simultaneously with
the consummation thereof the successor corporation (if other than the
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Corporation) resulting from such merger, amalgamation or arrangement shall
assume by written instrument executed and mailed or delivered to the holder of
this Warrant the obligation to deliver to such holder such shares of stock or
securities in accordance with the foregoing provisions, such holder may be
entitled to purchase.
2. In case at any time:
(a) the Corporation shall pay any dividend payable in stock upon its
Common Shares or make any distribution to the holders of its Common
Shares;
(b) the Corporation shall offer for subscription pro rata to the holders
of its Common Shares any additional shares of stock of any class or
other rights;
(c) there shall be any capital reorganization, or reclassification of the
capital stock of the Corporation, or consolidation or merger,
amalgamation or arrangement of the Corporation with, or sale of all or
substantially all of its assets to, another corporation; or
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation;
then, and in any one or more of such cases, the Corporation shall give to the
holder of this Warrant, at least twenty days' prior written notice of the date
on which the books of the Corporation shall close or a record shall be taken for
such dividend, distribution or subscription rights, or for determining rights to
vote with respect to such reorganization, reclassification, consolidation,
merger, amalgamation, arrangement, sale, dissolution, liquidation or winding-up
and in the case of any such reorganization, reclassification, consolidation,
merger, amalgamation, arrangement, sale, dissolution, liquidation or winding-up,
at least twenty days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause, shall also specify,
in the case of any such dividend, distribution or subscription rights, the date
on which the holders of Common Shares shall be entitled thereto, and such notice
in accordance with the foregoing shall also specify the date on which the
holders of Common Shares shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, amalgamation, arrangement, sale,
dissolution, liquidation or winding-up as the case may be. Each such written
notice shall be given by first class mail, registered postage prepaid, addressed
to the holder of this Warrant at the address of such holder, as shown on the
books of the Corporation.
3. As used herein, the term "Common Shares" shall mean and include the
Corporation's presently authorized Common Shares and shall also include any
capital stock of any class of the Corporation hereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends and in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation.
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4. This Warrant shall not entitle the holder hereof to any rights as a
shareholder of the Corporation, including without limitation, voting rights.
5. This Warrant and all rights hereunder are not transferable.
6. This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at the office of the Transfer Agent of the Corporation, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of Common Shares as shall be designated by such holder hereof at the time
of such surrender.
IN WITNESS WHEREOF the Corporation has caused this Warrant to be
signed by its duly authorized officers under its corporate seal, and this
Warrant to be dated __________________________,__________.
Idaho Consolidated Metals Corporation
Per: _________________________________
Director
COUNTERSIGNED BY:
Montreal Trust Company of Canada
Per: _________________________________
SCHEDULE "A"
To
WARRANT CERTIFICATE
SUBSCRIPTION FORM - TO BE COMPLETED
ON EXERCISE OF WARRANTS
TO: Idaho Consolidated Metals Corporation
(the "Corporation")
The undersigned hereby exercises the right to purchase and hereby subscribes for
_______________ Common Shares in the capital stock of the Corporation referred
to in the attached Warrant Certificate according to the conditions thereof and
herewith makes payment by certified cheque of the purchase price in full for the
said shares. The undersigned acknowledges that the share certificates
representing any Common shares issued on exercise of all or a part of the rights
represented by this Warrant ("Warrant Shares") are subject to the Hold Period
noted on page one of this Warrant Certificate, and may not be traded in British
Columbia except as permitted by the British Columbia Securities Act and Rules
made thereunder. The undersigned also acknowledges that the share certificates
representing any Warrant Shares will be endorsed with the U.S. Legend.
Please issue a certificate for the shares being purchased as follows:
(Note: Until the expiry of the Hold Period, the certificate must be issued in
the name of the undersigned.)
Name: __________________________________________________________
(please print)
Address: __________________________________________________________
__________________________________________________________
__________________________________________________________
If applicable, please deliver a Warrant Certificate in respect of the balance of
the Common Shares referred to in the attached Warrant Certificate but not
presently subscribed for, to the undersigned.
DATED this _______ day of _____________________, _______.
___________________________________
SCHEDULE "C"
ONLY U.S. SUBSCRIBERS NEED TO COMPLETE AND SIGN
(Capitalized terms not specifically defined herein shall have
the meaning ascribed to them in the Convertible Loan Agreement to
which this Schedule is attached.)
In connection with the execution of the Convertible Loan Agreement #1 made
effective April 9, 1998 (the "Agreement") to which this Schedule is attached,
the undersigned (the "Lender") covenants, represents and warrants to the
Borrower that:
(a) it has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment
in the Securities and it is able to bear the economic risk of loss of
its entire investment;
(b) it is acquiring the Securities for its own account, for investment
purposes only and not with a view to any resale, distribution or other
disposition of the Securities in violation of the United States
securities laws;
(c) it understands that the Securities have not been and will not be
registered under the United States Securities Act of 1933, as amended
(the "1933 Act") or the securities laws of any state of the United
States and that the sale contemplated hereby is being made in reliance
of an exemption from such registration requirements;
(d) it satisfies one or more of the categories indicated below (please
place an "X" on the appropriate lines):
____ Category 1. An organization described in Section 501(c)(3) of the
United States Internal Revenue Code, a corporation, a Massachusetts or
similar business trust or partnership, not formed for the specific
purpose of acquiring the Securities, with total assets in excess of
U.S.$5,000,000;
____ Category 2. A natural person whose individual net worth, or joint
net worth with that person's spouse, at the date hereof exceeds
U.S.$1,000,000;
____ Category 3. A natural person who had an individual income in
excess of U.S.$200,000 in each of the two most recent years or joint
income with that person's spouse in excess of U.S.$300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
____ Category 4. A trust that (a) has total assets in excess of
U.S.$5,000,000, (b) was not formed for the specific purpose of
acquiring the Securities and (c) is directed
-7-
in its purchases of securities by a person who has such knowledge and
experience in financial and business matters that he/she is capable of
evaluating the merits and risks of an investment in the Securities;
____ Category 5. An investment company registered under the Investment
Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act;
____ Category 6. A Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958;
____ Category 7. A private business development company as defined in
Section 202(a)(22) of the Investment Advisors Acts of 1940; or
____ Category 8. An entity in which all of the equity owners satisfy
the requirements of one or more of the foregoing categories.
(e) it has not purchased the Securities as a result of any form of general
solicitation or general advertising, including advertisements,
articles, notices or other communications published in any newspaper,
magazine or similar media or broadcast over radio, or television, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising;
(f) if it decides to offer, sell or otherwise transfer any of the
Securities, it will not offer, sell or otherwise transfer any of such
Securities directly or indirectly, unless:
(i) the sale is to the Borrower;
(ii) the sale is made outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S under the
1933 Act and in compliance with applicable local laws and
regulations;
(iii)the sale is made pursuant to the exemption from the registration
requirements under the 1933 Act provided by Rule 144 thereunder
and in accordance with any applicable state securities or "Blue
Sky" laws; or
(iv) the Securities are sold in a transaction that does not require
registration under the 1933 Act or any applicable state laws and
regulations governing the offer and sale of securities, and it
has prior to such sale furnished to the Borrower an opinion of
counsel reasonably satisfactory to the Borrower;
(g) the certificates representing the Securities will bear a legend
stating that such shares have not been registered under the 1933 Act
or the securities laws of any state of the
-8-
United States and may not be offered for sale or sold unless
registered under the 1933 Act and the securities laws of all
applicable states of the United States or an exemption from such
registration requirements is available;
(h) it understands and agrees that the Warrants may not be exercised in
the United States or by or on behalf of a "U.S. Person" or a person in
the United States unless registered under the 1933 Act and any
applicable state securities laws or unless an exemption from such
registration requirements is available and that certificates
representing the Warrants will bear a legend to such effect;
(i) it understands and agrees that there may be material tax consequences
to the Lender of an acquisition or disposition of the Securities. The
Borrower gives no opinion and makes no representation with respect to
the tax consequences to the Lender under United States, state, local
or foreign tax law of the undersigned's acquisition or disposition of
such Securities. In particular, no determination has been made whether
the Borrower will be a "passive foreign investment company" ("PFIC")
within the meaning of Section 1291 of the United States Internal
Revenue Code;
(j) it understands and agrees that the financial statements of the
Borrower have been prepared in accordance with Canadian generally
accepted accounting principles, which differ in some respects from
United States generally accepted accounting principles, and thus may
not be comparable to financial statements of United States companies;
and
(k) it consents to the Borrower making a notation on its records or giving
instructions to any transfer agent of the Borrower in order to
implement the restrictions on transfer set forth and described herein.
ONLY U.S. SUBSCRIBERS NEED TO COMPLETE AND SIGN
Dated this ______ day of ______________________, _________.
-------------------------------------------------
(Name of Subscriber - please print)
By: --------------------------------------------
(Authorized Signature)
-------------------------------------------------
(Official Capacity or Title - please print)
-9-
-------------------------------------------------
(Please print name of individual whose signature
appears above if different than the name of the
Subscriber printed above)
SCHEDULE "D"
VSE
APPENDIX 16A
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
1. DESCRIPTION OF TRANSACTION
a) Name of issuer of the securities
Idaho Consolidated Metals Corporation
b) Number and description of securities to be purchased
U.S.$100,000 convertible loan, the outstanding principal of the loan being
convertible into Units on the basis of one unit for each Cdn.$0.26 in the
first year and Cdn.$0.31 in the second year
c) Purchase price
U.S.$100,000
2. DETAILS OF PURCHASER
a) Name of Purchaser Xxxxxxxxxx Family Trust
b) Address 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000
c) If the purchaser is a corporation, state the jurisdiction of incorporation
N/A
d) Names and addresses of persons having a greater than 10% beneficial
interest in the purchaser, if a corporation or trust
Xxxxxxxx Xxxxxxxxxx, of 000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx, 00000
-2-
3. RELATIONSHIP TO LISTED COMPANY
a) State if the purchaser will become a control person with over 20% of the
company's issued share capital as a result of the purchase in section 1
above.
If the Convertible Promissory Notes are converted into Units, it is
possible the purchaser may then be a control person
b) Does the purchaser own any securities of the issuer at the date hereof, if
so, give particulars. State the number of securities of the listed company
held by the purchaser not including the purchase in section 1 above.
1,548,611 shares; warrants to purchase 927,062 shares
4. PAYMENT DATE
a) State the date the purchaser has advanced full payment.
January 23, 1998
b) If the purchase funds are held in trust pending receipt of final
regulatory approval identify the trustee and give particulars of the
condition(s) required for release of the funds.
N/A
c) If the purchaser is an institutional investor and the funds have not yet
been advanced, give particulars of the condition(s) required for the
advance of funds.
N/A
5. UNDERTAKING
*Last amended January 1998
TO: THE VANCOUVER STOCK EXCHANGE
The undersigned has subscribed for and agreed to purchase as principal, the
securities described in section 1 of this Private Placement Questionnaire and
Undertaking. (The purchase funds may be deposited in trust with advancement to
the Company subject only to receipt of all necessary regulatory approvals).
-3-
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of
twelve months (four months if the issuer is an AIF Issuer as defined in the
Definitions Section of the Manual) from the payment day, without the prior
consent of the Vancouver Stock Exchange and any other regulatory body having
jurisdiction. The undersigned acknowledges that all certificates representing
the said securities will bear a legend to the effect that the certificates are
subject to the applicable hold period.
The undersigned hereby certifies that the said securities are not being
purchased as a result of any material information about the Company's affairs
that has not been publicly disclosed. The undersigned acknowledges that it is
aware that the removal from the securities of any resale restriction after the
applicable twelve or four months that is imposed solely as a requirement of the
Vancouver Stock Exchange will not entitle it to sell the securities if such sale
would contravene any other applicable securities legislation or regulation.
6. ADDITIONAL UNDERTAKING AND CERTIFICATION
- PORTFOLIO MANAGER
If the undersigned is a portfolio manager purchasing as agent for accounts that
are fully managed by it, the undersigned acknowledges that it is bound by the
provisions of the Securities Act (British Columbia) (the "Act"), and undertakes
to comply with all provisions of the Act relating to ownership of, and trading
in, securities including, without limitation, the filing of insider reports and
reports pursuant to Section 111 of the Act.
If the undersigned carries on business as a portfolio manager in a jurisdiction
outside of Canada, the undersigned certifies that:
a) it is purchasing securities of the Issuer on behalf of managed accounts
over which it has absolute discretion as to purchasing and selling, and in
respect of which it receives no instructions from any person beneficially
interested in such accounts or from any other person;
b) it carries on the business of managing the investment portfolio of clients
through discretionary authority granted by those clients (a "portfolio
manager" business) in ________________________ [jurisdiction], and it is
permitted by law to carry on a portfolio manager business in that
jurisdiction;
c) it was not created solely or primarily for the purpose of purchasing
securities of the Issuer;
d) the total asset value of the investment portfolios it manages on behalf of
clients is not less than $20,000,000;
-4-
e) it does not believe, and has no reasonable grounds to believe, that any
resident of British Columbia has a beneficial interest in any of the
managed accounts for which it is purchasing; and
f) the Issuer has provided it with a list of the directors, senior officers
and other insiders of the Issuer, and the persons that carry on investor
relations activities for the Issuer (which list is attached as a schedule
to this Appendix), and it does not believe, and has no reasonable grounds
to believe, that any of those persons has a beneficial interest in any of
the managed accounts for which it is purchasing, except as follows:
----------------------------------------------
(name of insider(s) or person(s) carrying on
investor relations activities for the Issuer
that have a beneficial interest in an account)
The undersigned acknowledges that it is bound by the provisions of the British
Columbia Securities Act including, without limitation, sections 87 and 111
concerning the filing of insider reports and reports of acquisitions.
Dated at Los Angeles, California
this _____ day of _________________, 1998
Xxxxxxxxxx Family Trust
-----------------------------------------------
Name of Purchaser - please print)
-----------------------------------------------
(Authorized Signature)
-----------------------------------------------
(Official Capacity - please print)
-----------------------------------------------
(please print name of individual whose
signature appears above, if different from name
of purchaser printed above)
