Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2/A Amendment No. Four to SB-2 HTML 968K
2: EX-1.1 Form of Underwriting Agreement 64 277K
3: EX-1.2 Form of U.S. Selling Agent Agreement 6 18K
4: EX-4.1 Specimen Common Stock Certificate HTML 10K
5: EX-4.3 Form of Underwriters' Compensation Options 21 80K
6: EX-5.1 Opinion of United States Counsel 3 18K
7: EX-10.17 Form of Escrow Agreement 25 87K
8: EX-23.1 Consent of Ernst & Young LLP 1 6K
EX-4.3 — Form of Underwriters’ Compensation Options
Exhibit Table of Contents
EXHIBIT 4.3
UNDERWRITER OPTIONS TO ACQUIRE
SHARES OF COMMON STOCK
GRYPHON GOLD CORPORATION
NO. o
THIS CERTIFIES that, for value received, [NAME OF UNDERWRITER], [Address] (the
"Underwriter"), is the registered holder of o Underwriter options (the
"Underwriter Options") of Gryphon Gold Corporation (the "Corporation"), with
each Underwriter Option entitling the Underwriter, subject to the terms and
conditions set forth in this Certificate and subject to adjustment in certain
events, to acquire from the Corporation, one (1) Common Share of the Corporation
(an "Underwriter Share") at a price of $o per Underwriter Share (the "Exercise
Price") at any time, and from time to time, commencing on the date hereof and
continuing until 5:00 p.m. (Toronto time) on [ONE YEAR FROM CLOSING] (the "Time
of Expiry").
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the warrant indenture (the "Warrant Indenture")
dated as of o, 2005 among the Corporation and Computershare Trust Company of
Canada and the underwriting agreement (the "Underwriting Agreement") dated as of
o, 2005 amongst the Corporation and Desjardins Securities Inc., CIBC World
Markets Inc., Bolder Investment Partners Inc. and Orion Securities Inc.
(together, the "Underwriters"), pursuant to which the Underwriters agreed to
sell up to o Units in the capital of the Corporation (the "Offering"). This
Certificate is issued to the Underwriter pursuant to the Underwriting Agreement.
1. METHOD OF EXERCISE OF UNDERWRITER OPTIONS
(a) Subject to Section 1(b), the Underwriter may during the
Exercise Period exercise the right thereby conferred on such
holder to purchase the Underwriter Shares to which such
Underwriter Options entitles the Underwriter, by surrendering
this Certificate representing such Underwriter Options to the
Corporation at any time prior to the Time of Expiry at its
principal office in the City of Vancouver, British Columbia
(or at such additional place or places as may be decided by
the Corporation from time to time with the approval of the
Underwriter) (the "Notice"), with: (i) a duly completed and
executed exercise form substantially in the form as set out in
Schedule "A" attached (the "Election to Exercise Form") and an
Option Exercise Certification (in the form attached hereto as
Schedule "B") if no Registration Statement is available at the
time of exercise; and (ii) a certified cheque, bank draft or
money order payable at par to or to the order of Gryphon Gold
Corporation in an amount equal to the Exercise Price
multiplied by the number of Underwriter Shares subscribed for.
This Certificate with the duly completed and executed Election
to Exercise Form (and Option Exercise Certification, where
applicable) shall be deemed to be surrendered only upon
personal delivery thereof to, or if sent by mail or other
means of transmission upon actual receipt thereof by, the
Corporation. If the Underwriter subscribes for a lesser number
of Underwriter Shares than the aggregate number of Underwriter
Shares then issuable pursuant to the exercise of the
Underwriter Options represented by this Certificate
surrendered, the Underwriter shall be entitled to
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receive a further option certificate in respect of the
Underwriter Options represented by this Certificate that have
not been exercised. Any such surrender for exercise shall be
irrevocable.
(b) As promptly as possible and in any event within five (5)
business days after receipt of the Notice and payment in full
of the Exercise Price for the total number of Underwriter
Shares to be purchased, the Corporation shall cause the
Underwriter, or such person as may be designated by the
Underwriter, to be recorded in its register of shareholders as
the holder of the number of fully paid, non-assessable
Underwriter Shares so issued (the date upon which the
Underwriter is so recorded as registered holder being referred
to in this Section 1(b) as the "Registry Date"). The
Underwriter shall have full rights as a shareholder with
respect to the Underwriter Shares acquired pursuant to the
exercise of Underwriter Options on or after the Registry Date.
The Corporation agrees to issue share certificates in respect
of all Underwriter Shares so purchased as soon as possible
after the Registry Date, and in any event within five (5)
business days thereafter.
(c) Notwithstanding any provision to the contrary contained in
this Certificate, that the issuance of the Underwriter Shares
upon the exercise of Underwriter Options requires the
maintenance of an effective Registration Statement, with
respect to such Underwriter Shares under the 1933 Act, and in
no event shall such Underwriter Shares be issued unless the
Underwriter Shares are registered under the 1933 Act pursuant
to an effective Registration Statement and the Corporation
causes to be delivered to the Underwriter a U.S. Prospectus;
provided, however, that if the Registration Statement ceases
to be effective, prior to the Time of Expiry and for so long
as the Registration Statement is not effective, subject to
applicable law, the Underwriter may only exercise the right to
purchase Underwriter Shares in the circumstances noted below:
(i) exercise such Underwriter Options, if the Underwriter
is not a U.S. Purchaser and the Underwriter delivers
a duly completed and executed Underwriter Options
Exercise Certification (in the form attached hereto
as Schedule "B") certifying that the Underwriter:
(a)(1) is not in the United States; (2) is not a U.S.
Person and is not exercising the Underwriter Options
for, or on behalf or benefit of, a U.S. Person or
person in the United States; (3) did not execute or
deliver the Election to Exercise Form in the United
States; (4) agrees not to engage in hedging
transactions with regard to either the Underwriter
Options or the Underwriter Shares prior to the
expiration of the one-year distribution compliance
period set forth in Rule 903(b)(3) of Regulation S;
(5) acknowledges that the Underwriter Shares issuable
upon exercise of the Underwriter Options are
"restricted securities" as defined in Rule 144 of the
1933 Act and upon the issuance thereof, and until
such time as the same is no longer required under the
applicable requirements of the 1933 Act or applicable
U.S. state laws and regulations, the certificates
representing the Underwriter Shares will bear a
restrictive legend; and (6) acknowledges that the
Corporation shall refuse
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to register any transfer of either the Underwriter
Options or Underwriter Shares not made in accordance
with the provisions of Regulation S, pursuant to
registration under the 1933 Act, or pursuant to an
available exemption from registration under the 1933
Act; and (b) neither the Corporation nor the
Underwriter has engaged in any "directed selling
efforts" (as defined in Regulation S) in the United
States; or
(ii) exercise such Underwriter Options in a transaction
that does not require registration under the 1933 Act
or any applicable U.S. state laws and regulations and
the Underwriter has (a) delivered a duly completed
and executed Underwriter Options Exercise
Certification (in the form attached hereto as
Schedule "B") certifying that the holder is
exercising the Underwriter Options pursuant to such
exemptions and (b) furnished to the Corporation,
prior to such exercise, an opinion of counsel of
recognized standing in form and substance
satisfactory to the Corporation to such effect; or
(iii) if (a) the Current Market Price of one Common Share
is greater than the Exercise Price (at the date of
calculation as set forth below) and (b) a
Registration Statement is not then effective, in lieu
of exercising the Underwriter Options by payment of
cash, the Underwriter may exercise such Underwriter
Options to receive the number of Underwriter Shares
determined in accordance with the formula set out
below (and no more) by surrendering this Certificate
at any time at the Corporation's principal office in
the City of Vancouver, British Columbia (or at such
additional place or places as may be decided by the
Corporation from time to time with the approval of
the Underwriter), with a duly completed and executed
Underwriter Options Exercise Certification (in the
form attached hereto as Schedule B) electing to
exercise the Underwriter Options without payment of
the Exercise Price in cash (also referred to as a
"cashless" exercise). Upon such election, the
Corporation shall issue to the Underwriter a number
of Underwriter Shares computed using the following
formula:
X = Y (B-A)
-------
B
Where X = the number of Underwriter
Shares to be issued to the
Underwriter.
Y = the number of Underwriter
Shares purchasable upon
exercise of all of the
Underwriter Options or, if
only a portion of the
Underwriter Options are being
exercised, the portion of the
Underwriter Options being
exercised.
A = the Exercise Price.
B = the Current Market Price of
one Common Share.
If the Underwriter exercises the right provided for
in this Section 1(b)(iii) in respect of a lesser
number of Underwriter Options than the aggregate
number of Underwriter Options represented by this
Certificate, the
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Underwriter shall be entitled to receive a further
option certificate in respect of the Underwriter
Options represented by this Certificate that have not
been exercised. Any such surrender for cashless
exercise shall be irrevocable.
(d) Unless the Underwriter Options are exercised pursuant to an
effective Registration Statement or under the conditions set
forth in Section 1(b)(iii), the certificate representing the
Underwriter Shares issued upon exercise of the Underwriter
Options will bear legends restricting the transfer without
registration under the U.S. Securities Act and applicable
state securities laws and restricting transfer under the
Toronto Stock Exchange, substantially in the form set forth
below:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES AND MAY BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED ONLY (I) TO THE CORPORATION,
(II) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(III) IN COMPLIANCE WITH THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER, OR (IV) IN COMPLIANCE WITH
ANOTHER EXEMPTION FROM REGISTRATION, IN EACH CASE
AFTER PROVIDING A LEGAL OPINION OR OTHER EVIDENCE
SATISFACTORY TO THE CORPORATION THAT SUCH TRANSFER
MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH U.S. SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
LISTED ON THE TORONTO STOCK EXCHANGE ("TSX");
HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH
THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY
TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TSX.
(e) If any Underwriter Shares issuable upon the exercise of
Underwriter Options require the maintenance of a current
Registration Statement, with respect to such Underwriter
Shares under the 1933 Act, the Corporation shall have the
authority to suspend the exercise of any or all Underwriter
Options while such registration statement is not current.
Similarly, an Underwriter residing in a state where a required
registration or governmental approval of issuance of the
Underwriter Shares is not in effect as of or has not been
obtained within a reasonable time after the surrender date of
this Certificate for exercise shall not be entitled to
exercise Underwriter Options, unless in the opinion of counsel
to the Corporation such
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registration or approval in such state shall not be required
or the Corporation otherwise authorizes the issuance. In such
event, the Underwriter shall be entitled to transfer the
Underwriter Options to others, but only prior to the Time of
Expiry for the Underwriter Options being transferred. If no
Registration Statement is effective at any time when any
Underwriter Options is exercised, such Underwriter shall be
notified forthwith by the Corporation that such Underwriter is
entitled, at his or her option, to exercise the Underwriter
Options only in accordance with the conditions set forth in
Sections 1(b)(i)-(iii) and upon delivery of a Underwriter
Options Exercise Certification (in the form attached hereto as
Schedule "B") to the Corporation.
(f) Any exercise form referred to in Section 1(a) shall be signed
by the Underwriter and shall specify the person or persons in
whose name or names the Underwriter Shares to be issued upon
exercise are to be registered, such entity's, person's or
persons' address or addresses and the number of Underwriter
Shares to be issued to each entity or person if more than one
is so specified. If any of the Underwriter Shares issuable
upon the exercise of Underwriter Options by a holder are to be
issued to an entity, person or persons other than the
Underwriter, the signature(s) set out in the exercise form
referred to in Section 1(a) shall be guaranteed by an Eligible
Institution, and the Underwriter shall pay to the Corporation
all applicable transfer or similar taxes and the Corporation
shall not be required to issue or deliver certificates
evidencing Underwriter Shares unless or until such Underwriter
shall have paid to the Corporation on behalf of the
Corporation 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.
(g) No fractional Underwriter Share shall be issued upon exercise
of any Underwriter Options. If any fractional interest in an
Underwriter Share would, except for the provisions of the
first sentence of this subsection, be deliverable upon the
exercise of an Underwriter Option, the Corporation shall, in
lieu of delivering the fractional interest therefor, pay to
the Underwriter an amount in cash equal to the Current Market
Price of such fractional interest.
(h) Notwithstanding that the Corporation may not have maintained a
current Registration Statement in respect of Shares under the
1933 Act, the Underwriter (whether a U.S. Purchaser or
otherwise) shall not have any right to receive, and the
Corporation shall be under no obligation to pay to the
Underwriter (whether a U.S. Purchaser or otherwise), any cash
amount or other consideration or compensation upon exercise of
the Underwriter Options, other than as expressly provided by
this Certificate, and the Corporation shall not be under any
obligation to redeem or otherwise purchase any Underwriter
Options in any circumstance; provided, however, that nothing
in this clause shall limit or restrict any remedies of the
Underwriter in respect of a breach by the Corporation of a
representation, warranty or covenant hereunder, including
without limitation the covenants in Section 10 of this
Certificate.
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2. ADJUSTMENT IN UNDERWRITER SHARES SUBJECT TO THE UNDERWRITER OPTIONS.
The Exercise Price per Underwriter Option and the number of Underwriter
Shares which may be subscribed for upon exercise of an Underwriter Options shall
be subject to adjustment from time to time upon the occurrence of any of the
events and in the manner provided as follows:
(a) If and whenever at any time prior to the Time of Expiry the
Corporation shall:
(i) declare a dividend or make a distribution on its
Common Shares in each case payable in Common Shares
(or securities exchangeable for or convertible into
Common Shares), or
(ii) subdivide or change its outstanding Common Shares
into a greater number of Common Shares, or
(iii) reduce, combine or consolidate its outstanding Common
Shares into a lesser number,
(any of such events in these clauses 2(a)(i), (ii) and (iii)
being called a "SHARE REORGANIZATION"), then effective
immediately after the record date or effective date, as the
case may be, at which the holders of Common Shares are
determined for the purposes of the Share Reorganization, the
Exercise Price shall be adjusted to a price determined by
multiplying the applicable Exercise Price in effect on such
effective date or record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such
effective date or record date before giving effect to such
Share Reorganization and the denominator of which shall be the
number of Common Shares outstanding immediately after giving
effect to such Share Reorganization (including, in the case
where securities exchangeable for or convertible into Common
Shares are distributed, the number of additional Common Shares
that would have been outstanding had such securities been
exchanged for or converted into Common Shares immediately
after giving effect to such Share Reorganization).
(b) If and whenever at any time prior to the Time of Expiry the
Corporation shall fix a record date for the issuing of rights,
options or warrants to all or substantially all of the holders
of the Common Shares entitling them for a period expiring not
more than 45 days after such record date (the "RIGHTS PERIOD")
to subscribe for or purchase Common Shares (or securities
convertible into or exchangeable for Common Shares) at a price
per share (or having a conversion or exchange price per share)
which is less than 95% of the Current Market Price per Common
Share on the record date for such issue (any of such events
being called a "RIGHTS OFFERING"), then effective immediately
after the end of the Rights Period the Exercise Price shall be
adjusted to a price determined by multiplying the applicable
Exercise Price in effect at the end of the Rights Period by a
fraction the numerator of which shall be the sum of:
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(i) the number of Common Shares outstanding as of the
record date for the Rights Offering, and
(ii) a number determined by dividing (a) either the
product of (i) the number of Common Shares issued
during the Rights Period upon exercise of the rights,
warrants or options under the Rights Offering and
(ii) the price at which such Common Shares are
issued, or, as the case may be, the product of (iii)
the number of Common Shares for or into which the
convertible or exchangeable securities issued during
the Rights Period upon exercise of the rights,
warrants or options under the Rights Offering are
exchangeable or convertible and (iv) the exchange or
conversion price of the convertible or exchangeable
securities so issued, by (b) the Current Market Price
per Common Share as of the record date for the Rights
Offering, and
the denominator of which shall be the number of Common Shares
outstanding (including the number of Common Shares actually
issued or subscribed for during the Rights Period upon
exercise of the rights, warrants or options under the Rights
Offering) or which would be outstanding upon the conversion or
exchange of all convertible or exchangeable securities issued
during the Rights Period upon exercise of the rights, warrants
or options under the Rights Offering, as applicable, in each
case after giving effect to the Rights Offering.
Common Shares owned by or held (otherwise than as security)
for the account of the Corporation or any subsidiary of the
Corporation shall be deemed not to be outstanding for the
purpose of any such computation. In order to give effect to
the provisions of Section 2(f) in the circumstances described
below, any holder of Underwriter Options who shall have
exercised his right to purchase Underwriter Shares during the
period beginning immediately after the record date for a
Rights Offering and ending on the last day of the Rights
Period therefor, in addition to the Underwriter Shares to
which he is otherwise entitled upon such exercise, shall be
entitled to that number of additional Underwriter Shares equal
to the result obtained when the difference, if any, between
the Exercise Price per Underwriter Share in effect immediately
prior to the end of such Rights Offering and the Exercise
Price per Common Share, as adjusted for such Rights Offering
pursuant to this Section 2(b), is multiplied by the number of
Underwriter Shares purchased upon exercise of the Underwriter
Options held by such Underwriter during such period, and the
resulting product is divided by the Exercise Price per Common
Share, as adjusted for such Rights Offering pursuant to this
Section 2(b). Such additional Underwriter Shares shall be
deemed to have been issued to the Underwriter immediately
following the end of the Rights Period and a certificate for
such additional Underwriter Shares shall be delivered to such
holder within ten (10) Business Days following the end of the
Rights Period.
(c) If and whenever at any time prior to the Time of Expiry the
Corporation shall fix a record date for the payment, issue or
distribution to all or substantially all of the holders of the
Common Shares of (i) a dividend, (ii) cash or assets
(including evidences of the Corporation's indebtedness), or
(iii) rights, options, warrants or
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other securities (including securities convertible into or
exchangeable for Common Shares), and such payment, issue or
distribution does not constitute a Dividend Paid in Ordinary
Course, a Share Reorganization or a Rights Offering (any of
such non-excluded events being herein called a "SPECIAL
DISTRIBUTION" ), the Exercise Price shall be adjusted
effective immediately after such record date to a price
determined by multiplying the applicable Exercise Price in
effect on such record date by a fraction:
(i) the numerator of which shall be:
A. the product of the number of Common Shares
outstanding on such record date and the
Current Market Price per Common Share on
such record date; less
B. the fair market value, as determined in good
faith by action of the directors (based on
the advice of an independent valuator with
recognized expertise in the valuation of the
type of property that is the subject matter
of the Special Distribution), whose
determination shall be conclusive, to the
holders of the Common Shares of such
dividend, cash, assets, rights or securities
so paid, issued or distributed less the fair
market value, as determined in good faith by
action of the directors (based on the advice
of an independent valuator with recognized
expertise in the valuation of the type of
property that is the subject matter of the
Special Distribution), whose determination
shall be conclusive, of the consideration,
if any, received therefor by the
Corporation, and
(ii) the denominator of which shall be the number of
Common Shares outstanding on such record date
multiplied by the Current Market Price per Common
Share on such record date.
Such adjustment shall be made successively whenever such a
record date is fixed. To the extent that such payment,
issuance or distribution is not so made, the Exercise Price
shall be readjusted effective immediately to the Exercise
Price which would then be in effect based upon such payment,
issuance or distribution actually made.
(d) If and whenever at any time prior to the Time of Expiry an
issuer bid or a tender or exchange offer (other than an odd
lot offer or a normal course issuer bid) made by the
Corporation or a subsidiary of the Corporation to all or
substantially all of the shareholders of the Corporation for
all or any portion of the Common Shares where the cash and the
value of any other consideration included in such payment per
Common Share exceeds the Current Market Price per Common Share
on the Trading Day immediately preceding the commencement of
the issuer bid or tender or exchange offer (any such issuer
bid or tender or exchange offer being called an "ISSUER BID"),
the Exercise Price shall be adjusted to a price determined by
multiplying the applicable Exercise Price in effect on the
date of the completion of such Issuer Bid by a fraction, the
numerator of which shall be the product of (i)
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the number of Common Shares outstanding immediately prior to
the completion of the Issuer Bid (without giving effect to any
reduction in respect of any tendered or exchanged shares) and,
(ii) the Current Market Price per Common Share on the Trading
Day immediately preceding the commencement of the Issuer Bid,
and the denominator of which shall be the sum of (i) the fair
market value (determined in good faith by the board of
directors of the Corporation whose determination shall be
conclusive and described in a resolution of the board of
directors of the Corporation) of the aggregate consideration
paid by the Corporation or subsidiary to holders of Common
Shares upon the completion of such Issuer Bid, and (ii) the
product of (a) the difference between the number of Common
Shares outstanding immediately prior to the completion of the
Issuer Bid (without giving effect to any reduction in respect
of tendered or exchanged shares) and the number of Common
Shares actually purchased by the Corporation or subsidiary
pursuant to the Issuer Bid, and (a) the Current Market Price
Per Common Share on the Trading Day immediately preceding the
commencement of the Issuer Bid.
(e) If and whenever at any time prior to Time of Expiry there
shall be a reorganization, reclassification or other change of
Common Shares outstanding at such time or change of the Common
Shares into other shares or into other securities (other than
a Share Reorganization), or a consolidation or merger of the
Corporation with or into any other corporation or other entity
(other than a consolidation or merger which does not result in
any reclassification of the outstanding Common Shares or a
change of the Common Shares into other shares), or a sale,
conveyance or transfer of the undertaking or assets of the
Corporation as an entirety or substantially as an entirety to
another corporation or entity in which the holders of Common
Shares are entitled to receive shares, other securities or
property, including cash (any of such events being herein
called a "CAPITAL REORGANIZATION"), any Underwriter who
exercises his right to subscribe for and purchase Underwriter
Shares pursuant to the exercise of Underwriter Options after
the effective date of such Capital Reorganization shall be
entitled to receive, and shall accept for the same aggregate
consideration in lieu of the number of Underwriter Shares to
which such Underwriter was theretofore entitled upon such
exercise, the aggregate number of shares, other securities or
other property which such Underwriter would have received as a
result of such Capital Reorganization had he exercised his
right to acquire Underwriter Shares immediately prior to the
effective date or record date, as the case may be, of the
Capital Reorganization and had he been the registered holder
of such Underwriter Shares on such effective date or record
date, as the case may be, subject to adjustment thereafter in
accordance with provisions the same, as nearly as may be
possible, as those contained in Sections 2(b) and (c) hereof.
If determined appropriate by the directors of the Corporation,
acting in good faith, appropriate adjustments shall be made as
a result of any such Capital Reorganization in the application
of the provisions set forth in this Section 2, with respect to
the rights and interests thereafter of the holder of an
Underwriter Options to the end that the provisions set forth
in this Section 2 shall thereafter correspondingly be made
applicable as nearly as may be reasonably possible in relation
to any shares, other securities or other property thereafter
deliverable upon the exercise of the
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Underwriter Options. Any such adjustment shall be made by and
set forth in an agreement supplemental hereto approved by
action of the directors, acting in good faith, and shall for
all purposes be conclusively deemed to be an appropriate
adjustment.
(f) If and whenever at any time prior to the Time of Expiry there
shall occur a Share Reorganization, a Rights Offering, a
Special Distribution or an Issuer Bid and any such event
results in an adjustment to the Exercise Price pursuant to the
provisions of this Section 2, the number of Underwriter Shares
purchasable upon the exercise of each Underwriter Option (at
the adjusted Exercise Price) shall be adjusted
contemporaneously with the adjustment of the Exercise Price by
multiplying the number of Underwriter Shares theretofore
purchasable on the exercise thereof by a fraction, the
numerator of which shall be the applicable Exercise Price in
effect immediately prior to such adjustment and the
denominator of which shall be the applicable Exercise Price
resulting from such adjustment.
(g) In case the Corporation after the date of issue of the
Underwriter Options shall take any action affecting the Common
Shares, other than action described in this Section 2, which
in the opinion of the directors, acting reasonably, would
materially adversely affect the rights of the Underwriter, the
Exercise Price or the number of Underwriter Shares purchasable
upon the exercise of the Underwriter Options shall be adjusted
in such manner, if any, and at such time, by action of the
directors, acting reasonably, as they may determine to be
equitable in the circumstances, but subject in all cases to
any necessary regulatory approvals.
3. ADJUSTMENT RULES.
For the purposes of Section 2, any adjustment shall be made
successively whenever an event referred to therein shall occur, subject to the
following provisions:
(a) all calculations shall be made to the nearest 1/100th of a
Underwriter Share;
(b) no adjustment to an Exercise Price shall be required unless
such adjustment would result in a change of at least one per
cent in the prevailing Exercise Price and no adjustment shall
be made in the number of Underwriter Shares which may be
subscribed for upon exercise of the Underwriter Options unless
it would require a change of at least 1/100th of a Underwriter
Share; provided, however, that any adjustments which, except
for the provisions of this Section 3(b) would otherwise have
been required to be made shall be carried forward and taken
into account in any subsequent adjustment;
(c) if any question shall arise with respect to adjustments
provided for in Section 2, such question shall, absent
manifest error, be conclusively determined by a firm of
chartered accountants appointed by the Corporation (who may be
the Corporation's auditors) and acceptable to the Underwriter,
acting reasonably; such chartered accountants shall have
access to all necessary records of the Corporation and such
determination shall be binding on the Corporation and the
Underwriter, absent manifest error. In the event that any such
determination is made, the
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Corporation shall deliver a certificate to the Underwriter
describing and confirming such determination;
(d) if the Corporation shall set a record date to determine the
holders of its Common Shares for the purpose of entitling them
to receive any dividend or distribution or any subscription or
purchase rights, options or warrants and shall thereafter and
before the distribution to such shareholders of any such
dividend, distribution or subscription or purchase rights
legally abandon its plan to pay or deliver such dividend,
distribution or subscription or purchase rights, then no
adjustment in the Exercise Price or the number of Underwriter
Shares purchasable upon exercise of the Underwriter Options
shall be required by reason of the setting of such record
date; and
(e) as a condition precedent to the taking of any action which
would require any adjustment in any of the subscription rights
pursuant to any of the Underwriter Options, the Corporation
shall take any corporate action which may, in the opinion of
counsel, be necessary in order that the Corporation have
unissued and reserved in its authorized capital, and may
validly and legally issue as fully paid and non-assessable,
all of the Underwriter Shares that the Underwriter is entitled
to receive on full exercise thereof in accordance with the
provisions hereof.
(f) upon any adjustment of the number of Underwriter Shares and
upon any adjustment of the Exercise Price, then and in each
such case the Corporation shall give written notice thereof to
the Underwriter, which notice shall state the Exercise Price
and the number of Underwriter Shares or other securities
subject to the unexercised Underwriter Options resulting from
such adjustment, and shall set forth in reasonable detail the
method of calculation and the facts upon which such
calculation is based. Upon the request of the Underwriter,
there shall be transmitted promptly to the Underwriter a
statement of the firm of independent chartered accountants
retained to audit the financial statements of the Corporation
to the effect that such firm concurs in the Corporation's
calculation of the change.
(g) the Corporation will at all times keep available, and reserve
if necessary under applicable law, out of its authorized
Common Shares, solely for the purpose of issue upon the
exercise of the Underwriter Options, such number of
Underwriter Shares as shall then be issuable upon the exercise
of the Underwriter Options. The Corporation covenants and
agrees that all Underwriter Shares which shall be so issuable
will, upon payment of the Exercise Price and proper exercise
of the Underwriter Options, be duly authorized and issued as
fully paid and non-assessable. The Corporation will take all
such actions as may be necessary to ensure that all such
Underwriter Shares may be so issued without violation of any
applicable law or of any applicable requirements of any
exchange upon which the Underwriter Shares may be listed or in
respect of which the Underwriter Shares are qualified for
unlisted trading privileges.
-12-
(h) The issuance of certificates for Underwriter Shares upon the
exercise of Underwriter Options shall be made without charge
to the Underwriter for any issuance tax in respect thereto.
4. RIGHTS ISSUED IN RESPECT OF THE UNDERWRITER SHARES ISSUED ON EXERCISE
Each Underwriter Share issued on the exercise of an Underwriter Option shall be
entitled to receive the appropriate number of purchase rights ("Rights"), if
any, that all Common Shares are entitled to receive, and the certificates
representing such Underwriter Shares shall bear such legends, if any, in each
case as may be provided by the terms of any shareholder rights agreement adopted
by the Corporation, as the same may be amended from time to time (a "Rights
Agreement") provided that such Rights Agreement requires that each Underwriter
Share issued on exercise of an Underwriter Options at any time prior to the
distribution of separate certificates representing the Rights be entitled to
receive such Rights, then, not withstanding anything else to the contrary in
this Certificate, there shall not be any adjustment made pursuant to Section 2
as a result of the issuance of Rights, the distribution of separate certificates
representing the Rights, the exercise or redemption of such Rights in accordance
with any such Rights Agreement, or the termination or invalidation of such
Rights.
5. POSTPONEMENT OF SUBSCRIPTION
In any case where the application of Section 2 results in an increase in the
number of Underwriter Shares issuable upon the exercise of the Underwriter
Options taking effect immediately after the record date for a specific event, if
any Underwriter Option is exercised after that record date and prior to
completion of the event, the Corporation may postpone the issuance to the holder
of the Underwriter Options of the Underwriter Shares to which such Underwriter
is entitled by reason of such adjustment, but such Underwriter Shares shall be
so issued and delivered to the Underwriter upon completion of that event, with
the number of such Underwriter Shares calculated on the basis of the number of
Underwriter Shares on the date that the Underwriter Options were adjusted for
completion of that event and the Corporation shall deliver to the person or
persons in whose name or names the Underwriter Shares are to be issued an
appropriate instrument evidencing the right of such person or persons to receive
such Underwriter Shares and the right to receive any dividends or other
distributions which, but for the provisions of this Section 5, such person or
persons would have been entitled to receive in respect of such Underwriter
Shares from and after the date that the Underwriter Options were exercised in
respect thereof.
6. EXPIRATION OF UNDERWRITER OPTIONS
After the Time of Expiry, all rights under any Underwriter Options in respect of
which the right of subscription and purchase herein and therein provided for
shall not theretofore have been exercised shall wholly cease and terminate, and
such Underwriter Options shall be void and of no effect.
-13-
7. NOTICE OF ADJUSTMENT OF EXERCISE RIGHTS
(a) At least 10 days prior to the effective date or record date,
as the case may be, of any event that requires or that may
require an adjustment in any of the exercise rights pursuant
to any of the Underwriter Options, including the number of
Underwriter Shares that may be acquired upon the exercise
thereof, the Corporation shall file with the Underwriter a
certificate of the Corporation specifying the particulars of
such event (including the record date or the effective date
for such event) and, if determinable, the required adjustment
and the computation of such adjustment;
(b) In case any adjustment for which a notice in Section 18 has
been given is not then determinable, the Corporation shall
promptly after such adjustment is determinable, file a
certificate of the Corporation with the Underwriter showing
how such adjustment was computed; and
(c) The Underwriter may act and rely for all purposes upon any
certificates and any other filed by the Corporation pursuant
to this Section 7.
8. NO ACTION AFTER NOTICE
The Corporation shall not take any other corporate action that might deprive the
Underwriter of the opportunity to exercise its Underwriter Options during the 10
day period after the giving of the notice set forth in Section 7.
9. 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
Underwriter Options, including the number of Underwriter Shares which are to be
received upon the exercise thereof, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Corporation or a successor corporation has unissued and reserved in its
authorized capital and may validly and legally issue as fully paid and
non-assessable all the securities which the holders of such Underwriter Options
are entitled to receive on the full exercise thereof in accordance with the
provisions hereof.
10. GENERAL COVENANTS
The Corporation covenants with the Underwriter that so long as any Underwriter
Options remain outstanding:
(a) It will at all times maintain its corporate existence and
carry on and conduct its business in a proper and
business-like manner;
(b) It will reserve a sufficient number of Underwriter Shares to
satisfy the rights of acquisition provided for herein.
-14-
(c) It will cause the Underwriter Shares from time to time
subscribed and paid for pursuant to the exercise of the
Underwriter Options in the manner herein provided and the
certificates representing such Underwriter Shares to be duly
issued and delivered in accordance with the Underwriter
Options and the terms hereof.
(d) All Underwriter Shares that shall be issued upon exercise of
the right to purchase provided for herein, upon payment of the
Exercise Price, shall be issued as fully paid and
non-assessable.
(e) It will use its commercially reasonable efforts to maintain
the listing of the Common Shares on the TSX.
(f) It will use its commercially reasonable efforts to maintain
its status as a reporting issuer or equivalent not in default,
and not be in default in any material respect of the
applicable requirements of, the applicable securities laws of
each of the provinces of Canada and the federal securities
laws of the United States.
(g) If at any time no Registration Statement is effective, the
Corporation will give notice to the Underwriter forthwith and
will give notice, in accordance with the provisions set out in
Section 18, as soon as reasonably practicable, but in any
event within 5 Business Days, after learning that no
Registration Statement is effective.
(h) It will use its commercially reasonable efforts to maintain
the Registration Statement continuously effective under the
1933 Act.
(i) If, in the opinion of outside counsel, any instrument is
required to be filed with, or any permission, order or ruling
is required to be obtained from any securities administrator,
regulatory agency or governmental authority in Canada or the
United States or any other step is required under any federal
or provincial law of Canada or any federal or state law of the
United States before the Underwriter Shares may be issued or
delivered to an Underwriter, the Corporation will use its
reasonable efforts to file such instrument, obtain such
permission, order or ruling or take all such other actions, at
its expense, as are required.
(j) It will perform all its covenants and carry out all of the
acts or things to be done by it as provided in this
Certificate.
The Corporation and the Underwriter acknowledge and agree that: (i)
none of the foregoing covenants shall be interpreted or applied so as to
prohibit or restrict or otherwise limit the Corporation's ability, right and
authority to implement one or more of the actions contemplated by Section 2; and
(ii) the foregoing covenants shall be interpreted and applied following each
such action with reference to any successor to the Corporation and with
reference to any securities into which the Underwriter Options and/or the
Underwriter Shares may be changed or for which they may be exercisable as a
result of such action or actions.
-15-
11. REPLACEMENT
Upon receipt of evidence satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Certificate and, if requested by the
Corporation, upon delivery of a bond of indemnity satisfactory to the
Corporation (or, in the case of mutilation, upon surrender of this Agreement),
the Corporation will issue to the Underwriter a replacement certificate
(containing the same terms and conditions as this Certificate).
12. NO FURTHER RIGHTS
Upon the exercise of the Underwriter Options in accordance with the
terms herein, the Underwriter Options so exercised will be void and of no value
or effect and the Underwriter shall have no further rights under this
Certificate, other than the right to receive the Underwriter Shares duly
exercised in accordance with the terms herein. The Underwriter will not have any
rights under this Certificate after the Time of Expiry and this Certificate
shall be deemed surrendered, shall be void and of no value or effect and the
Underwriter shall have no further rights under this Certificate and this
Certificate shall be cancelled by the Corporation.
13. TRANSFEREE ENTITLED TO REGISTRATION
The Underwriter Options may be transferred, in whole or in part, at any time or
from time to time prior to the Time of Expiry, to any one or more affiliates of
the Underwriter. The transferee of Underwriter Options shall, after the transfer
form printed on an option certificate and any other form of transfer acceptable
to the Corporation and the Underwriter is duly completed and the Underwriter
Options are lodged with the transferee (or at such additional place or places as
may be designated by the Corporation from time to time with the approval of the
Underwriter) and upon compliance with all other conditions in that regard
required by this Certificate or by law, be entitled to have his name entered on
the register of holders as the owner of such Underwriter Options free from all
equities or rights of set-off or counterclaim between the Corporation and the
transferor or any previous holder of such Underwriter Option, save in respect of
equities of which the Corporation or the transferee is required to take notice
by statute or by order of a court of competent jurisdiction.
14. EXCHANGE OF UNDERWRITER OPTIONS
(a) This Certificate may be exchanged for another certificate(s)
in any other authorized denomination representing in the
aggregate the same number of Underwriter Options. The
Corporation shall sign and certify, all certificates necessary
to carry out the exchanges contemplated herein.
(b) Any certificate contemplated in Section 14(a) may be exchanged
at the Corporation's principal office in the City of
Vancouver, British Columbia or at any other place that is
designated by the Corporation with the approval of the
Underwriter. Once tendered for exchange, these certificates
shall be surrendered to the Corporation and cancelled.
-16-
(c) No charge will be levied by the Corporation upon a presenter
of this Certificate for the transfer of any Underwriter
Options or for the exchange of any option certificate but
reimbursement to the Corporation for any and all taxes or
governmental or other charges required to be paid shall be
made by the person requesting such exchange as a condition
precedent to such exchange.
15. OWNERSHIP OF UNDERWRITER OPTIONS
The Corporation shall deem and treat the registered holder of this Certificate
as the absolute owner of the Underwriter Options represented thereby for all
purposes, and the Corporation shall not be affected by any notice or knowledge
to the contrary except where such person is required to take notice by statute
or by order of a court of competent jurisdiction.
16. NO RIGHTS AS SHAREHOLDER
The holding of the Underwriter Options evidenced by this Certificate
shall not constitute the Underwriter as a shareholder of the Corporation or
entitle the Underwriter to any right or interest in respect thereof until such
time as the Underwriter Options are duly exercised in accordance with the terms
herein and the Underwriter Shares are issued.
17. UNDERWRITERS OPTIONS TO RANK PARI PASSU
All Underwriters Options shall rank pari passu, whatever may be the actual date
of issue of the certificates evidencing the same.
18. NOTICE
(a) Unless herein otherwise expressly provided, any notice,
document or thing required or permitted to be given or
delivered hereunder shall be deemed to be properly given or
delivered if:
(i) delivered in person to the address set out below and
acknowledged by written receipt signed by the person
receiving such notice;
(ii) telecopied and confirmed by prepaid registered letter
addressed to the party receiving such notice at its
respective addresses set out below; or
(iii) sent by prepaid registered letter (provided that any
notice to be so given is not unlikely to reach its
destination as a result of any actual or threatened
interruption of mail services) or courier delivery
addressed to the party receiving such notice at its
respective address set out below:
the Corporation: Gryphon Gold Corporation
Suite 810, Box 36
1130 West Pender Street
Vancouver, B.C. V6E 4A4
Attention: Chief Financial Officer
Fax: (604) 608-3262
-17-
with a copy to: Gryphon Gold Corporation
390 Union Boulevard, Suite 360
Lakewood, Colorado
80228
Attention: Chief Financial Officer
the Underwriter: o
Attention: o
Fax: o
(b) Any notice or delivery given in accordance with this Section
18 shall be deemed to have been given and received:
(i) if delivered in person in accordance with Section
18(a)(i), on the day of delivery in person (provided
that such day is a Business Day at the place of
receipt and delivery occurs prior to 4:00 p.m. (local
time of the recipient) and, if it is not, on the next
following Business Day);
(ii) if telecopied in accordance with Section 18(a)(ii)
during the business hours of the recipient, on the
date of receipt of the telecopy (provided that such
day is a Business Day at the place of receipt and, if
it is not, on the next following Business Day) and if
telecopied other than during business hours, on the
next following Business Day; and
(iii) if sent by prepaid registered letter or courier
delivery in accordance with Section 18(a)(iii), on
the date the letter is actually received by the
addressee.
(c) For greater certainty, a letter delivered by courier where
such courier obtains a written acknowledgment of receipt from
the party receiving the letter shall be considered a delivery
in person in accordance with Section 18(a)(i) rather than the
sending of a letter in accordance with Section 18(a)(iii).
(d) The Company or the Underwriter as the case may be, may from
time to time by notice in writing delivered in accordance with
Section 19 change its address for purposes hereof.
19. SUCCESSORS AND ASSIGNS.
This Certificate shall enure to the benefit of and be binding upon the
Corporation, its successors and assigns, the Underwriter and, subject as
hereinbefore provided, its permitted successors and assigns.
-18-
20. BUSINESS DAY
In the event that any day on or before which any action is required or permitted
to be taken hereabove is not a Business Day, then such action shall be required
or permitted to be taken on or before the requisite time on the next succeeding
day that is a Business Day.
21. TIME OF THE ESSENCE
Time shall be of the essence in all respects in this Certificate and the
Underwriter Options.
22. APPLICABLE LAW.
This Certificate (and any amendments hereto and instruments supplemental
hereto), and the Underwriter Options shall be governed by and construed and
enforced in accordance with the laws of the Province of Ontario, subject to the
Nevada General Business Corporation Law of the State of Nevada. The parties
irrevocably attorn and submit to the non-exclusive jurisdiction of the courts of
the Province of Ontario with respect to any matter arising under or related to
this Certificate.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be
signed by a duly authorized officer.
DATED as of o
GRYPHON GOLD CORP.
Per:
-------------------------------
Authorized Signing Officer
-19-
SCHEDULE "A"
ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise the number of Underwriter
Options of Gryphon Gold Corp. set out below for the number of Underwriter Shares
as set forth below:
(a) Number of Underwriter Options to be Exercised
________
(b) Number of Underwriter Shares to be Acquired
________
(c) Exercise Price (per Underwriter Option)
________
(d) Aggregate Purchase Price [(a) MULTIPLIED BY (c)]
________
and hereby tenders a certified cheque, bank draft or cash for such aggregate
purchase price, and hereby directs that certificate(s) evidencing such
Underwriter Shares to be registered as indicated below.
Please check the applicable box:
[ ] (i) the undersigned is not a U.S. person and these
Underwriter Options are not being exercised within
the United States or on behalf of a U.S. person; or
[ ] (ii) the undersigned has delivered herewith to the
Corporation a written opinion of counsel acceptable
to the Corporation and its United States counsel, to
the effect that the exercise of this Underwriter
Options, including the registration of the
Underwriter Shares as directed below, is in
compliance with United States federal securities laws
and any applicable securities laws of any state of
the United States.
DATED this ___________ day of ______________________.
[APPLICABLE UNDERWRITER]
Per:
-----------------------------------
Name:
Title:
DIRECTION AS TO REGISTRATION
Name of Registered Holder:
-----------------------------------
Address of Registered Holder:
-----------------------------------
-----------------------------------
-20-
SCHEDULE "B"
UNDERWRITER OPTIONS EXERCISE CERTIFICATION
(TO BE COMPLETED ONLY IF A REGISTRATION STATEMENT
IS NOT EFFECTIVE)
TO: GRYPHON GOLD CORPORATION
The undersigned holder of the within Certificate, pursuant to the Underwriting
Agreement mentioned therein, hereby exercises certain Underwriter Options (the
"Exercised Options") evidenced thereby and hereby subscribes for a number of
Underwriter Shares of GRYPHON GOLD CORPORATION equal to such number of
Underwriter Shares or number or amount of other securities or property, or
combination thereof, to which such exercise entitles him under the provisions of
the Underwriter Option Certificate at an aggregate price equal to the product of
the Exercise Price and the number of Exercised Options, and in payment therefor,
delivers herewith a bank draft, certified cheque or money order payable to
GRYPHON GOLD CORPORATION. Capitalized terms not defined herein shall have the
definitions set forth in the Underwriting Agreement and the Warrant Indenture.
The undersigned represents that it (A) has had access to such current public
information concerning GRYPHON GOLD CORPORATION as it considered necessary in
connection with its investment decision and (B) understands that the securities
issuable upon exercise hereof have not been registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act").
The undersigned represents and warrants that it: [CHECK ONE ONLY]
[ ] A. is not a U.S. Purchaser and it (1) is not in the United
States; (2) is not a U.S. Person and is not exercising the
Underwriter Options for, or on behalf or benefit of, a U.S.
Person or person in the United States; (3) did not execute or
deliver the Exercise Form in the United States; (4) agrees not
to engage in hedging transactions with regard to the
Securities prior to the expiration of the one-year
distribution compliance period set forth in Rule 903(b)(3) of
Regulation S; (5) acknowledges that the Underwriter Shares
issuable upon exercise of the Underwriter Options are
"restricted securities" as defined in Rule 144 of the 1933 Act
and upon the issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the
1933 Act or applicable U.S. state laws and regulations, the
certificates representing the Underwriter Shares will bear a
restrictive legend; and (6) acknowledges that the Corporation
shall refuse to register any transfer of the Underwriter
Shares not made in accordance with the provisions of
Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration under the
1933 Act; and (B) it holder has not engaged in any "directed
selling efforts" (as defined in Regulation S) in the United
States.
[ ] B. the undersigned is delivering a written opinion of U.S.
Counsel or a written confirmation from the Corporation to the
effect that the Underwriter Options and
-21-
the Underwriter Shares to be delivered upon exercise hereof
have been registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") or are exempt
from registration thereunder.
[ ] C. the undersigned elects to exercise its the "cashless" exercise
right in accordance with the terms hereof and Section
1(b)(iii) of the Underwriter Option Certificate with respect
to ________ Exercised Options. The undersigned will receive
that number of Underwriter Shares equal to the product of (x)
the number of Exercised Options as to which is being exercised
multiplied by (y) a fraction, the numerator of which is the
Current Market Price per Common Share (as defined in the
Warrant Indenture) less the Exercise Price and the denominator
of which is such Current Market Price per Common Share.
Unless Box C above is checked, the undersigned holder understands that the
certificate representing the Underwriter Shares issued upon exercise of this
Underwriter Option will bear a legend restricting the transfer without
registration under the U.S. Securities Act and applicable state securities laws
substantially the form set forth in Section 1(d) of the Underwriter Option
Certificate.
Name:
-----------------------------------------------------------------------
Please print or type name and address (including postal code)
Address:
Number of Warrants being Exercised:
--------------------------------------------
--------------------------------------------
DATED this _______________ day of ________, _______.
Signature guaranteed by:
----------------------------------------------
Name of registered holder (please print) --
----------------------------------------------
Signature of or on behalf of registered holder
----------------------------------------------
Office, Title or other Authorization (if
holder not an individual)
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