EXHIBIT 4.50
UNDERWRITING AGREEMENT
March 22, 2005
Pine Valley Mining Corporation
Xxxxx 000-000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxxx Rip
Xxxx X. Xxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
The X. Xxxxxxxxx Xxxxx Foundation
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Dear Sirs:
The undersigned, Sprott Securities Inc., Salman Partners Inc. and Canaccord
Capital Corporation (collectively, the "UNDERWRITERS") understand that Pine
Valley Mining Corporation (the "COMPANY") proposes to issue and sell up to
1,250,000 treasury units of the Company (individually a "Treasury Unit" and,
collectively, the "TREASURY UNITS") subject to the terms and conditions set out
below. In addition, the Underwriters understand that Xxxx X. Xxxxx and the X.
Xxxxxxxxx Xxxxx Foundation (collectively, the "SELLING SHAREHOLDERS") propose to
sell an aggregate of 1,250,000 Secondary Shares (as hereinafter defined).
Upon and subject to the terms and conditions set forth herein, the Underwriters
hereby agree to purchase from the Company 1,250,000 Treasury Units at a price of
$5.60 per Treasury Unit for an aggregate purchase price of $7,000,000 (the
"TREASURY OFFERING"). Each Treasury Unit shall consist of one Treasury Share (as
hereinafter defined) (a "TREASURY UNIT SHARE") and one-half of one Treasury
Share purchase warrant (a "WARRANT"). Each whole Warrant will entitle the holder
thereof to purchase one Treasury Share (a "WARRANT SHARE") at a price of $6.25
per Warrant Share at any time prior to 5:00 p.m. (Vancouver time) on the date
that is 18 months following the Closing Date (as hereinafter defined). In
addition, the Underwriters hereby agree to purchase from the Selling
Shareholders 1,250,000 Secondary Shares at a price of $5.25 per Secondary Share
for an aggregate purchase price of $6,562,500 (the "Secondary Offering"). The
Underwriters, the Company and the Selling Shareholders agree that the
Underwriters may satisfy their obligations hereunder to purchase the Treasury
Units and Secondary Shares by presenting substituted purchasers in the Selling
Jurisdictions (as hereinafter defined).
The Underwriters shall have an option (the "OPTION"), which Option may be
exercised in the Underwriters' sole discretion and without obligation, to
purchase up to an additional 250,000 Treasury Units from the Company at a price
of $5.60 per Treasury Unit which, if subscribed for
hereunder, shall be deemed to form part of the Treasury Units for the purposes
hereof and up to an additional 250,000 Secondary Shares from the Selling
Shareholders at a price of $5.25 per Secondary Share which, if subscribed for
hereunder, shall be deemed to form part of the Secondary Shares for the purposes
hereof. In addition, the Underwriters shall have a second option (the "SECOND
OPTION"), which option may be exercised in whole or in part, in the
Underwriters' sole discretion and without obligation, to purchase up to an
additional 1,000,000 Secondary Shares from the Selling Shareholders at a price
of $5.25 per Secondary Share which, if subscribed for hereunder, shall be deemed
to form part of the Secondary Shares for the purposes hereof. The Option and the
Second Option shall be exercisable by the Underwriters in whole or in part at
any time up to the Closing Time by delivering written notice to the Company and
the Selling Shareholders, as applicable to that effect, after which time the
Option and the Second Option shall be void and of no further force and effect.
The Treasury Offering and Secondary Offering (which terms shall individually
include any additional Treasury Units and Secondary Shares to be purchased in
the event of the exercise of the Option and any additional Secondary Shares to
be purchased in the event of the exercise of the Second Option) by the Company
is hereinafter referred to as the "OFFERING". Unless the context otherwise
requires, all references to the "TREASURY UNITS", "TREASURY UNIT SHARES",
"WARRANTS", "WARRANT SHARES" and "SECONDARY SHARES" shall assume the exercise of
the Option and the Second Option.
The Company and the Selling Shareholders agree that the Underwriters will be
permitted to appoint other registered dealers (or other dealers duly licensed or
registered in their respective jurisdictions) as their agents to assist in the
Offering and that the Underwriters may determine the remuneration payable to
such other dealers appointed by them. Such remuneration shall be payable by the
Underwriters.
In consideration of the services to be rendered by the Underwriters in
connection with the Offering, the Company shall pay to the Underwriters at
Closing (as hereinafter defined) in cash a commission equal to 4.0% of the gross
proceeds realized by the Company in respect of the sale of Treasury Units, and
the Selling Shareholders shall pay to the Underwriters at Closing a cash
commission equal to 4.0% of the gross proceeds realized by the Selling
Shareholders in respect of the sale of Secondary Shares (collectively, the
"COMMISSION").
DEFINITIONS
In this Agreement, in addition to the terms defined above, the following terms
shall have the following meanings:
"AFFILIATES" has the meaning ascribed thereto in Section 10;
"AGREEMENT" means the agreement resulting from the acceptance by the Company and
the Selling Shareholders of the offer made hereby;
"BUSINESS DAY" means a day which is not a Saturday, Sunday or statutory or civic
holiday in the City of Vancouver, British Columbia, or Xxxxxxx, Xxxxxxx, as
applicable;
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"CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the
Canadian Selling Jurisdictions and the respective regulations made thereunder,
together with applicable published fee schedules, prescribed forms, policy
statements, notices, orders, blanket rulings and other regulatory instruments of
the securities regulatory authorities in such provinces and all rules and
policies of the TSXV;
"CLOSING" means the closing on the Closing Date of the transaction of purchase
and sale in respect of the Treasury Units and Secondary Shares as contemplated
by this Agreement and the Subscription Agreements;
"CLOSING DATE" means March 22, 2005 or such other date as the Underwriters, the
Selling Shareholders and the Company shall agree;
"CLOSING TIME" means 10:00 a.m. (Toronto time) on the Closing Date or such other
time on the Closing Date as the Company, the Selling Shareholders and the
Underwriters may agree;
"COMMON SHARE" means a common share in the capital of the Company;
"COMPANY'S AUDITORS" means Deloitte & Touche LLP, Chartered Accountants, or such
other firm of chartered accountants as the Company may have appointed or may
from time to time appoint as auditors of the Company;
"COMPANY'S KNOWLEDGE" means knowledge of members of the Company's Board of
Directors or senior management team'
"DEBT INSTRUMENT" means any loan, bond, debenture, promissory note or other
instrument evidencing indebtedness (demand or otherwise) for borrowed money or
other liability;
"ENVIRONMENTAL LAWS" has the meaning ascribed thereto in paragraph 4(a)(xxix);
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in paragraph 4(a)(v);
"FMCI" means Falls Mountain Coal Inc.;
"GMC" means Globaltex Gold Mining Corp.
"INCLUDING" means including without limitation;
"INFORMATION" has the meaning ascribed thereto in paragraph 4(a)(xxi);
"LEASED PREMISES" means the premises which are material to the Company and its
subsidiaries, taken as a whole and which the Company or its subsidiaries occupy
as a tenant;
"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in paragraph 4(a)(i);
"MATERIAL AGREEMENT" means any material Debt Instrument, indenture, contract,
commitment, agreement (written or oral), instrument, lease or other document, to
which the Company or its subsidiaries or the Selling Shareholders, as
applicable, are a party;
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"MATERIAL SUBSIDIARIES" means FMCI and PVCL;
"MISREPRESENTATION", "MATERIAL FACT", "MATERIAL CHANGE", "AFFILIATE",
"ASSOCIATE", and "DISTRIBUTION" have the respective meanings ascribed thereto in
the Securities Act (Ontario);
"NI 43-101" has the meaning ascribed thereto in paragraph 4(a)(xliii);
"PERSON" means any individual, corporation, partnership, joint venture,
association, trust or other legal entity;
"PERSONNEL" has the meaning ascribed thereto in Section 10;
"PVCL" means Pine Valley Coal Ltd.;
"PUBLIC DISCLOSURE DOCUMENTS" means, collectively, all of the documents which
have been filed by or on behalf of the Company prior to the Closing Time with
the relevant Securities Regulators pursuant to the requirements of Canadian
Securities Laws, including all press releases filed on SEDAR;
"PURCHASERS" means the persons (which may include the Underwriters) who, as
purchasers or beneficial purchasers acquire Treasury Units and/or Secondary
Shares by duly completing, executing and delivering Subscription Agreements and
any other required documentation and permitted assignees or transferees of such
persons from time to time;
"SECONDARY SHARES" means Common Shares sold by the Selling Shareholders;
"SELLING JURISDICTIONS" means the provinces of British Columbia and Ontario, and
such other jurisdictions inside or outside Canada, including the United States,
as mutually agreed to by the Company, the Selling Shareholders and the
Underwriters;
"SELLING SHAREHOLDERS" has the meaning ascribed to such term on the face page of
this Agreement;
"SECURITIES REGULATORS" means, collectively, the securities regulators or other
securities regulatory authorities in the Selling Jurisdictions;
"SPROTT" means Sprott Securities Inc.
"SUBSCRIPTION AGREEMENTS" means collectively the Canadian and U.S. subscription
agreements in the forms agreed upon by the Underwriters, the Company and the
Selling Shareholders, as applicable, pursuant to which Purchasers agree to
subscribe for and purchase the Treasury Units and/or the Secondary Shares herein
contemplated and shall include, for greater certainty, all schedules thereto;
"SUBSIDIARY" and "SUBSIDIARIES" shall have the meaning ascribed thereto in the
Canada Business Corporations Act;
"TAXES" shall have the meaning ascribed thereto in paragraph 4(a)(vii);
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"TRANSFER AGENT" means Computershare Trust Company of Canada, in its capacity as
transfer agent and registrar of the Company at its principal offices in the
cities of Vancouver, British Columbia and Toronto, Ontario;
"TREASURY SHARES" means the Common Shares issued from the treasury of the
Company;
"TREASURY UNIT" has the meaning ascribed to such term on the face page of this
Agreement;
"TREASURY UNIT SHARES" has the meaning ascribed to such term on the face page of
this Agreement;
"TSXV" means the TSX Venture Exchange;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"WARRANT CERTIFICATES" means the certificates evidencing the Warrants and
containing the terms of such Warrants;
"WARRANT SHARE" has the meaning ascribed to such term on the face page of this
Agreement; and
"WARRANT" has the meaning ascribed to such term on the face page of this
Agreement.
TERMS AND CONDITIONS
1. (A) SALE ON EXEMPT BASIS. The Underwriters shall offer for sale and sell the
Treasury Units and Secondary Shares in the Selling Jurisdictions on a private
placement basis in compliance with all applicable Canadian Securities Laws and
all applicable securities laws of other Selling Jurisdictions such that the
offer and sale of the Treasury Units and Secondary Shares does not obligate the
Company or the Selling Shareholders to file a prospectus, a registration
statement or other offering document under applicable securities legislation.
The Underwriters shall offer the Treasury Units and Secondary Shares for sale in
the United States through a U.S. registered broker-dealer affiliate pursuant to
exemptions from the registration requirements of the U.S. Securities Act and
applicable state securities laws, all such sales to be carried out and completed
in accordance with Schedule "A" annexed hereto, the particulars of which are
incorporated herein by reference.
(B) FILINGS. The Company and the Selling Shareholders, as applicable, undertake
to file, or cause to be filed, all forms or undertakings required to be filed by
the Company and the Selling Shareholders in connection with the issue and sale
of the Treasury Units and Secondary Shares respectively so that the distribution
of the Treasury Units and Secondary Shares to the Purchasers may lawfully occur
without the necessity of filing a prospectus, a registration statement or an
offering memorandum in Canada or the United States (but on terms that will
permit the Treasury Unit Shares, Warrants and Secondary Shares acquired by the
Purchasers in the Selling Jurisdictions to be sold by such Purchasers at any
time in the Selling Jurisdictions subject to applicable hold periods and other
restrictions under Canadian Securities Laws, the U.S. Securities Act and the
provisions of paragraph 2 of this Agreement), and the Underwriters undertake to
use their commercially reasonable best efforts to cause Purchasers of Treasury
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Units and Secondary Shares to complete any forms required by Canadian Securities
Laws or under other applicable securities laws. All fees payable in connection
with such filings shall be at the expense of the Company and the Selling
Shareholders, as applicable.
(C) NO OFFERING MEMORANDUM. Neither the Company, the Selling Shareholders nor
any of the Underwriters shall (i) provide to prospective purchasers any document
or other material that would constitute an offering memorandum or future
oriented financial information within the meaning of Canadian Securities Laws or
applicable securities laws of the United States or any state or territory
thereof; or (ii) engage in any form of general solicitation or general
advertising in connection with the offer and sale of the Treasury Units and
Secondary Shares, including causing the sale of the Treasury Units and Secondary
Shares to be advertised in any newspaper, magazine, printed public media,
printed media or similar medium of general and regular paid circulation,
broadcast over radio, television or telecommunications, including electronic
display, or conduct any seminar or meeting relating to the offer and sale of the
Treasury Units and Secondary Shares whose attendees have been invited by general
solicitation or advertising.
(D) UNITED STATES OFFERS AND SALES. Each of the Company, the Selling
Shareholders and the Underwriters (on their own behalf and on behalf of a U.S.
registered broker-dealer affiliate of the Underwriters) agree that the
representations, warranties and covenants contained in Schedule "A" to this
Agreement entitled "United States Offers and Sales" are incorporated by
reference in and shall form part of this Agreement with respect to offers and
sales of Treasury Units and Secondary Shares in the United States by a U.S.
registered broker-dealer affiliate of the Underwriters. The Underwriters agree,
on behalf of themselves and their United States affiliates, for the benefit of
the Company and the Selling Shareholders, as applicable, to comply with the U.S.
selling restrictions imposed by the laws of the United States and contained in
Schedule "A" to this Agreement. Notwithstanding the foregoing provisions of this
paragraph 1(d), an Underwriter will not be liable to the Company or the Selling
Shareholders under this paragraph or Schedule "A" to this Agreement with respect
to a violation by another Underwriter or by another member of the selling dealer
group.
2. (A) COVENANTS OF THE COMPANY. The Company hereby covenants to the
Underwriters, the Purchasers and their respective permitted assigns and
acknowledges that each of them is relying on such covenants in connection with
the purchase of the Treasury Units, that the Company shall:
(i) for a period of two years after the Closing Date, use its reasonable
best efforts subject to the reasonable discretion of the board of
directors of the Company to act in the best interest of the Company,
remain a reporting issuer under Canadian Securities Laws in the
provinces of British Columbia and Alberta not in default of any
requirement of such Canadian Securities Laws;
(ii) allow the Underwriters and their representatives the opportunity to
conduct all due diligence which the Underwriters may reasonably
require to be conducted prior to the Closing Date;
(iii) duly execute and deliver the Subscription Agreements and the Warrant
Certificates at the Closing Time and shall comply with and satisfy all
terms,
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conditions and covenants therein contained to be complied with or
satisfied by the Company;
(iv) fulfil or cause to be fulfilled, at or prior to the Closing Date, each
of the conditions applicable to the Company set out in Section 6;
(v) ensure that the Treasury Unit Shares shall, upon issuance in
accordance with their terms, be duly issued as fully paid and
non-assessable securities in the capital of the Company, and shall
have the attributes corresponding in all material respects to the
description thereof set forth in this Agreement and the Subscription
Agreements;
(vi) ensure that the Warrants shall be duly and validly created, authorized
and issued and shall have the attributes corresponding in all material
respects to the description thereof set forth in this Agreement and
the Warrant Certificates;
(vii) ensure that at all times prior to the expiry of the Warrants,
sufficient Warrant Shares are allotted and reserved for issuance upon
the due and proper exercise of the Warrants and, upon issuance in
accordance with the terms of the Warrant Certificates, shall be issued
as fully paid and non-assessable securities in the capital of the
Company;
(viii) use its best efforts to ensure that the Treasury Unit Shares and the
Warrant Shares are listed and remain listed for trading on the TSXV if
and when such securities are issued;
(ix) in connection with the issuance of the Treasury Units, execute and
file with the Securities Regulators all forms, notices and
certificates required to be filed pursuant to the Canadian Securities
Laws in the time required by the applicable Canadian Securities Laws,
including, for greater certainty, all forms, notices and certificates
set forth in the opinions delivered to the Underwriters pursuant to
Section 6 of this Agreement required to be filed by the Company; and
(x) for a period of 150 days from the Closing Date, not issue any
additional securities in the capital of the Company without the prior
written consent of Sprott, such consent not to be unreasonably
withheld, except in conjunction with: (i) the grant or exercise of
stock options to or by employees, officers or directors of, or
consultants to, the Company and other similar issuances pursuant to
the existing share incentive plan of the Company and other existing
share compensation arrangements of the Company, (ii) outstanding
warrants or obligations disclosed in the Public Disclosure Documents,
and (iii) a trade occurring 30 Business Days after the Closing Date
completed at a price per Common Share of $6.00 or greater.
(B) COVENANTS OF THE SELLING SHAREHOLDERS. The Selling Shareholders hereby
jointly and severally covenant to the Underwriters, the Purchasers and their
respective permitted assigns and acknowledge that each of them is relying on
such covenants in connection with the purchase of the Secondary Shares, that the
Selling Shareholders shall:
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(i) allow the Underwriters and their representatives the opportunity to
conduct all due diligence which the Underwriters may reasonably
require to be conducted prior to the Closing Date;
(ii) duly execute and deliver the Subscription Agreements at the Closing
Time and shall comply with and satisfy all terms, conditions and
covenants therein contained to be complied with or satisfied by the
Selling Shareholders;
(iii) fulfil or cause to be fulfilled, at or prior to the Closing Date,
each of the conditions applicable to them set out in Section 6;
(iv) ensure that the Secondary Shares shall have the attributes
corresponding in all material respects to the description thereof set
forth in this Agreement and the Subscription Agreements;
(v) in connection with the sale of Secondary Shares, execute and file with
the Securities Regulators all forms, notices and certificates required
to be filed pursuant to the Canadian Securities Laws in the time
required by the applicable Canadian Securities Laws, including, for
greater certainty, all forms, notices and certificates set forth in
the opinions delivered to the Underwriters pursuant to Section 6 of
this Agreement required to be filed by the Selling Shareholders; and
(vi) for a period of 150 days from the Closing Date, not sell any
additional securities of the Company without the prior written consent
of Sprott (such consent not to be unreasonably withheld), acting
reasonably except in conjunction with a trade occurring 30 Business
Days after the Closing Date completed at a price per Common Share of
$6.00 or greater.
3. (A) MATERIAL CHANGES DURING DISTRIBUTION. During the period from the date
hereof to the Closing Date, the Company shall promptly notify the Underwriters
(and, if requested by any of the Underwriters, confirm such notification in
writing) of any material change (actual, anticipated, contemplated or
threatened, financial or otherwise) in the business, affairs, operations,
assets, liabilities (contingent or otherwise) or capital of the Company and its
subsidiaries, taken as a whole.
During the period from the date hereof to the Closing Date, the Company shall
promptly, and in any event, within any applicable time limitation, comply with
all applicable filing and other requirements under Canadian Securities Laws as a
result of such change. The Company shall in good faith discuss with the
Underwriters any fact or change in circumstances (actual, anticipated,
contemplated or threatened, and financial or otherwise) which is of such a
nature that there is reasonable doubt as to whether notice in writing need be
given to the Underwriters pursuant to this paragraph 3.
(B) PRESS RELEASES. During the period from the date hereof to the Closing Date,
subject to applicable law (including the time limits imposed thereunder), the
Company shall obtain prior approval of the Underwriters as to the content and
form of any press release. In addition, until the Closing Date, any press
release announcing or otherwise referring to this Offering shall
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include an appropriate legend on each page as follows: "Not for distribution to
U.S. news wire services or dissemination in the United States."
4. (A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Underwriters, the U.S. registered broker-dealer affiliate of the
Underwriters, and the Purchasers, and acknowledges that each of them is relying
upon such representations and warranties in purchasing the Treasury Units, that:
(i) the Company and each of its Material Subsidiaries has been duly
incorporated and is validly existing under the laws of their
respective jurisdictions of existence, has all requisite corporate
power and authority and is duly qualified and possess all material
certificates, authority, permits and licenses issued by the
appropriate provincial, municipal, federal regulatory agencies or
bodies necessary (and has not received or is not aware of any
modification or revocation to such licenses, authority, certificates
or permits, except such modifications or amendments as are necessary
for the conduct of their business) to carry on their businesses as now
conducted and to own their properties and assets, except for those
certificates, authority, permits and licenses which the failure to
obtain would not, individually or in the aggregate, have a material
adverse effect on the business, results of operations or financial
condition of the Company and its Material Subsidiaries, considered as
a whole (a "MATERIAL ADVERSE EFFECT"), has all requisite corporate
power and authority to carry out its obligations under this Agreement,
the Subscription Agreements and the Warrant Certificates;
(ii) the Company has no material subsidiaries other than as listed below
and the Company beneficially owns, directly or indirectly, the
percentage indicated below of the issued and outstanding shares in the
capital of the Material Subsidiaries, free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances, claims or
demands of any kind whatsoever except as set out in the Public
Disclosure Documents, all of such shares have been duly authorized and
validly issued and are outstanding as fully paid and non-assessable
shares and no person has any right, agreement or option, present or
future, contingent or absolute, or any right capable of becoming a
right, agreement or option, for the purchase from the Company of any
interest in any of such shares or for the issue or allotment of any
unissued shares in the capital of any of the Material Subsidiaries or
any other security convertible into or exchangeable for any such
shares:
JURISDICTION OF INCORPORATION BENEFICIAL EQUITY/VOTING
NAME OR CONTINUANCE OWNERSHIP
---- ----------------------------- ---------------------
Falls Mountain Coal Inc. British Columbia 100%
Pine Valley Coal Ltd. Alberta 100%
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GMC and Pine Valley Coal Pty. Limited are inactive wholly-owned
subsidiaries of the Company and are not material to the Company;
(iii) at the Closing Time, all consents, approvals, permits, authorizations
or filings as may be required under Canadian Securities Laws necessary
for the execution and delivery of this Agreement, the Warrant
Certificates and the Subscription Agreements, the issuance and sale of
the Treasury Unit Shares, the Warrants comprising the Treasury Units
and the Warrant Shares and the consummation of the transactions
contemplated hereby and thereby have been made or obtained, as
applicable;
(iv) each of the execution and delivery of this Agreement, the Warrant
Certificates and the Subscription Agreements, the performance by the
Company of its obligations hereunder or thereunder, the issue and sale
of the Treasury Unit Shares, the issue and sale of the Warrants
comprising the Treasury Units and the issue and sale of Warrant Shares
upon the exercise of the Warrants and the consummation of the
transactions contemplated hereby and thereby do not and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, (whether after notice
or lapse of time or both), (A) any statute, rule or regulation
applicable to the Company or its subsidiaries including Canadian
Securities Laws and the securities laws of any other Selling
Jurisdiction; (B) the constating documents, by-laws or resolutions of
the Company or its subsidiaries which are in effect at the date
hereof; (C) any Debt Instrument, Material Agreement, mortgage,
indenture, contract, agreement, instrument, lease or other document to
which the Company or its subsidiaries are a party or by which any one
of them is bound; or (D) any judgment, decree or order binding the
Company or its subsidiaries or the property or assets of the Company
or its subsidiaries;
(v) the audited consolidated financial statements of the Company as at and
for the year ended March 31, 2004 and the unaudited consolidated
financial statements of the Company as at and for the nine months
ended December 31, 2004 (collectively, the "Financial Statements")
have been prepared in accordance with generally accepted accounting
principles in Canada consistently applied throughout the period
referred to therein and present fairly, in all material respects, the
financial position (including the assets and liabilities, whether
absolute, contingent or otherwise) of the Company and its subsidiaries
(on a consolidated basis) as at such dates and results of operations
of the Company and its subsidiaries (on a consolidated basis) for the
periods then ended and there has been no change in accounting policies
or practices of the Company and its subsidiaries since March 31, 2004;
(vi) there has been no adverse material change (actual, proposed or
prospective, whether financial or otherwise) in the business, results
of operations, assets, liabilities (contingent or otherwise) or
capital or financial condition of the Company or its Material
Subsidiaries, since March 31, 2004, which has not been generally
disclosed to the public and, except as disclosed in the Public
Disclosure
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Documents, the business of the Company and its subsidiaries has been
carried on in the usual and ordinary course consistent with past
practice since March 31, 2004 to the extent that such past practice is
consistent with the current business direction of the Company and its
subsidiaries except for the proposed increase in coal production of
the Willow Creek Mine from 900,000 tonnes per annum to 2,200,000
tonnes per annum;
(vii) all taxes (including income tax, capital tax, payroll taxes, employer
health tax, workers' compensation payments, property taxes, customs
duties and land transfer taxes), duties, royalties, levies, imposts,
assessments, deductions, charges or withholdings and all liabilities
with respect thereto including any penalty and interest payable with
respect thereto (collectively, "TAXES") due and payable or required to
be collected or withheld and remitted, by the Company or its
subsidiaries have been paid, collected or withheld and remitted as
applicable, except for where the failure to pay such Taxes would not
have a Material Adverse Effect or result in an adverse material change
to the Company and its subsidiaries, taken as a whole. All tax
returns, declarations, remittances and filings required to be filed by
the Company or its subsidiaries have been filed with all appropriate
governmental authorities and all such returns, declarations,
remittances and filings are complete and accurate and no material fact
or facts have been omitted therefrom which would make any of them
misleading or result in an adverse material change to the Company and
its subsidiaries, taken as a whole. To the best knowledge of the
Company, no examination of any tax return of the Company or its
subsidiaries is currently in progress and there are no issues or
disputes outstanding with any governmental authority respecting any
taxes that have been paid, or may be payable, by the Company or its
subsidiaries. There are no agreements, waivers or other arrangements
with any taxation authority providing for an extension of time for any
assessment or reassessment of taxes with respect to the Company.
(viii) the auditors of the Company who audited the consolidated financial
statements of the Company for the year ended March 31, 2004 and who
provided their audit report thereon are independent public accountants
as required under applicable Canadian Securities Laws;
(ix) there has never been a reportable event (within the meaning of
National Instrument 51-102) with the present or former auditors of the
Company;
(x) no holder of outstanding securities of the Company is entitled to any
pre-emptive or any similar rights to subscribe for any Common Shares
or other securities of the Company and no rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, any
security in the capital of the Company are outstanding other than as
set forth in Schedule "B" hereto;
(xi) except as set out in the Public Disclosure Documents, there is not, in
the constating documents, by-laws or in any Debt Instrument, Material
Agreement, agreement, mortgage, indenture or other instrument or
document to which the
11
Company is a party, any restriction upon or impediment to, the
declaration or payment of dividends by the directors of the Company or
the payment of dividends by the Company to the holders of its Common
Shares;
(xii) neither the Company nor any of its subsidiaries are a party to or
bound or affected by any commitment, agreement or document containing
any covenant which expressly limits the freedom of the Company or any
of its subsidiaries to compete in any line of business, transfer or
move any of their respective assets or operations or which materially
or adversely affects the business practices, operations or condition
of the Company and its subsidiaries, taken as a whole except as set
out in the Public Disclosure Documents and except that the Project
Approval Certificate issued on March 3, 1998 for the Willow Creek Mine
approves a project with a production of 900,000 tonnes per annum;
(xiii) to the best of the Company's knowledge, no legal or governmental
proceedings are pending to which the Company or its Material
Subsidiaries are a party or to which their property is subject that
would result individually or in the aggregate in any material adverse
change in the operation, business or condition of the Company and its
subsidiaries, taken as a whole, and to the best knowledge of the
Company no such proceedings have been threatened against or are
contemplated with respect to the Company or its subsidiaries or their
properties except for the current government review of the Company's
application for an amendment to its mining permit to allow an increase
in coal production at the Willow Creek Mine from 900,000 tonnes per
annum to 2,200,000 tonnes per annum;
(xiv) the Company and its Material Subsidiaries have conducted and are
conducting their business in material compliance with all applicable
laws and regulations of each jurisdiction in which they carry on
business (including all applicable federal, provincial, municipal and
local environmental, anti-pollution and licensing laws, regulations
and other lawful requirements of any governmental or regulatory body,
including relevant exploration and exploitation permits and
concessions) except where the failure to so comply would not have a
Material Adverse Effect and have not received a notice of
non-compliance, nor know of, nor has reasonable grounds to know of,
any facts that could give rise to a notice of non-compliance with any
such laws, regulations or permits which would have a Material Adverse
Effect;
(xv) the Company is not aware of any pending or contemplated change to any
applicable law or regulation or governmental position that would
materially adversely affect the business of the Company and its
subsidiaries or the business or legal environment under which the
Company or its subsidiaries operate;
(xvi) this Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms;
12
(xvii) upon the execution and delivery thereof, the Subscription Agreements
and the Warrant Certificates shall constitute valid and binding
obligations of the Company and each shall be enforceable against the
Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting the rights of creditors
generally and except as limited by the application of equitable
principles when equitable remedies are sought, and by the fact that
rights to indemnity, contribution and waiver, and the ability to sever
unenforceable terms, may be limited by applicable law;
(xviii) at the Closing Time, all necessary corporate action will have been
taken by the Company to: (a) validly issue the Treasury Unit Shares as
fully paid and non-assessable securities in the capital of the
Company; (b) validly create, authorize and issue the Warrants; and (c)
allot, reserve and authorize the issuance of Warrant Shares, as fully
paid and non-assessable securities in the capital of the Company upon
the due exercise of the Warrants;
(xix) at the Closing Date (and prior to giving effect to this Offering) the
authorized capital of the Company consists of an unlimited number of
Common Shares of which 67,386,858 Common Shares are issued and
outstanding as fully paid and non-assessable;
(xx) the Company is a reporting issuer in the provinces of British Columbia
and Alberta. The Company is not currently in default of any
requirement of the Canadian Securities Laws of such jurisdictions,
except for such defaults as would not have a Material Adverse Effect
and the Company is not included on a list of defaulting reporting
issuers maintained by any of the securities regulators of such
jurisdictions;
(xxi) all information which has been prepared by the Company relating to
the Company and its subsidiaries and their business, property and
liabilities and either publicly disclosed or provided to the
Underwriters, including all financial, marketing, sales and
operational information provided to the Underwriters and all Public
Disclosure Documents (collectively, the "INFORMATION") is, as of the
date of such information, true and correct in all material respects,
and no fact or facts have been omitted therefrom which would make such
information materially misleading;
(xxii) all filings and fees required to be made and paid by the Company
pursuant to the Canadian Securities Laws and general corporate law
have been made and paid, and such disclosure and filings were true and
accurate in all material respects as at the respective dates thereof
and the Company has not filed any confidential material change
reports;
(xxiii) the Company and its subsidiaries are in compliance with all laws
respecting employment and employment practices, terms and conditions
of employment, occupational health and safety, pay equity and wages,
except for such failures to
13
comply as would not have a Material Adverse Effect. There is not
currently any, or any reasonably foreseeable, labour disruption or
conflict involving the Company or its subsidiaries;
(xxiv) except as disclosed in the Public Disclosure Documents, none of the
Company or its subsidiaries have any loans or other indebtedness
outstanding which has been made to any of their respective
shareholders, officers, directors or employees, past or present, or
any person not dealing at "arm's length" (as such term is defined in
the Income Tax Act (Canada)) with the Company or its subsidiaries;
(xxv) the assets of the Company and its subsidiaries and their business and
operations are insured against loss or damage with responsible
insurers on a basis consistent with insurance obtained by reasonably
prudent participants in comparable businesses, and such coverage is in
full force and effect, and the Company or its subsidiaries have not
breached the terms of any policies in respect thereof nor failed to
promptly give any notice or present any material claim thereunder;
(xxvi) the Transfer Agent, at its principal offices in the city of
Vancouver, British Columbia has been duly appointed as transfer agent
and registrar in respect of the Common Shares;
(xxvii) other than the Underwriters, there are no persons acting or
purporting to act at the request or on behalf of the Company, that are
entitled to any brokerage or finder's fee in connection with the
transactions contemplated by this Agreement;
(xxviii) other than the Company and the Selling Shareholders, there is no
person that is or will be entitled to the proceeds from the sale of
the Treasury Units pursuant to this Offering under the terms of any
Debt Instrument, Material Agreement, mortgage, indenture, contract,
instrument, lease agreement (written or unwritten);
(xxix) the Company and its subsidiaries are in material compliance with
each material license and permit held by them and they are not in
material violation of, or in material default under, the applicable
statutes, ordinances, rules, regulations, orders or decrees (including
"ENVIRONMENTAL LAWS" as defined below) of any governmental entities,
regulatory agencies or bodies having, asserting or claiming
jurisdiction over them or over any part of their operations or assets;
(xxx) the Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, provincial, state and local laws and
regulations relating to the protection of human health and safety,
conservation, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), except for
such failures to comply as would not have a Material Adverse Effect,
(ii) have received all material permits, licenses or other approvals
required of any of them under applicable Environmental Laws to conduct
their business, and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except in each
case for such permits,
14
licenses, approvals or failures to comply that would not have a
Material Adverse Effect;
(xxxi) there have been no past, and there are no pending or, to the best
knowledge of the Company, threatened claims, complaints, notices or
requests for information received by the Company or its subsidiaries
with respect to any alleged violation of any Environmental Law and no
conditions exist at, on or under any property now or previously owned,
operated, leased or contracted to perform work by the Company or its
subsidiaries which, with the passage of time, or the giving of notice
or both, would give rise to liability under any Environmental Law
that, individually or in the aggregate, has or may reasonably be
expected to have a Material Adverse Effect, except complaints from
neighbouring property owners concerning the migration of dust from the
Willow Creek Mine;
(xxxii) except as set out in the Public Disclosure Documents, the Company
is not party to any agreement, nor is the Company aware of any
agreement, which in any manner affects the voting control of any of
the securities of the Company or its subsidiaries;
(xxxiii) other than as disclosed in or contemplated by the Public
Disclosure Documents or in the Information, the Company is not party
to any Debt Instrument or any agreement, contract or commitment to
create, assume or issue any Debt Instrument other than of the ordinary
cause of business;
(xxxiv) neither the Company, nor any of its subsidiaries, nor, to the
knowledge of the Company, any other person is in default in the
observance or performance of any term or obligation to be performed by
any one of them under any Material Agreement, except for such defaults
as would not have a Material Adverse Effect and no event has occurred
which with notice or lapse of time or both would constitute such a
default;
(xxxv) the minute books and records of the Company and its Material
Subsidiaries which the Company has made available to the Underwriters
and their counsel, Xxxxxxx Xxxxx & Xxxxxxxxx LLP, in connection with
their due diligence investigation of the Company for the period from
inception to the date of examination thereof, are all of the minute
books and substantially all the records of the Company and its
Material Subsidiaries for such period and contain copies of all
proceedings (or certified copies thereof) of the shareholders, the
board of directors and all committees of the board of directors of the
Company and its subsidiaries to the date of review of such corporate
records and minute books. There have been no other meetings,
resolutions or proceedings of the shareholders, board of directors or
any committees of the board of directors of the Company and its
Material Subsidiaries during such period not reflected in such minute
books and other records;
(xxxvi) with respect to each of the Leased Premises, the Company or its
subsidiaries occupy the Leased Premises and have the exclusive right
to occupy and use the
15
Leased Premises and each of the leases pursuant to which the Company
or its subsidiaries occupy the Leased Premises is in good standing and
in full force and effect. The performance of obligations pursuant to
and in compliance with the terms of this Agreement and the completion
of the transactions described herein by the Company, will not afford
any of the parties to such leases or any other person the right to
terminate such lease or result in any additional or more onerous
obligations under such leases;
(xxxvii) there are no actions, suits, proceedings or inquiries pending or,
to the best knowledge of the Company, threatened against or affecting
the Company its subsidiaries or their respective property or assets at
law or in equity or before or by any federal, provincial, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality other than those that would not have a Material
Adverse Effect, except complaints from neighbouring property owners
concerning the migration of dust from the Willow Creek Mine;
(xxxviii) there are no judgments against the Company or its subsidiaries,
which are unsatisfied, nor are there any consent decrees or
injunctions to which the Company are subject;
(xxxix) the Company and its Material Subsidiaries are the absolute legal
and beneficial owners of, and have good and marketable title to or
leasehold interest in, all of the material property or assets thereof
as described in the Information, free of all mortgages, liens,
charges, pledges, security interests, encumbrances, claims or demands
whatsoever, other than those described in the Information, and no
other property rights are necessary for the conduct of the business of
the Company and its subsidiaries (taken as a whole) as currently
conducted or contemplated to be conducted, the Company knows of no
claim or basis for any claim that might or could adversely affect the
right of the Company and its subsidiaries to use, transfer or
otherwise exploit such property rights, other than those described in
the Public Disclosure Documents, and the Company and its Subsidiaries
have no responsibility or obligation to pay any commission, royalty,
license fee or similar payment to any person with respect to the
property rights thereof, expect as described in the Public Disclosure
Documents;
(xl) the Company and its Material Subsidiaries hold either freehold title,
mining leases, mining claims, coal licenses, coal leases, or other
conventional property, proprietary or contractual interests or rights,
recognized in the jurisdiction in which a particular property is
located in respect of the coal deposits, ore bodies and minerals
located in properties in which the Company and its Material
Subsidiaries have an interest as described in the Information under
valid, subsisting and enforceable title documents or other recognized
and enforceable agreements or instruments, sufficient to permit the
Company and its Material Subsidiaries to explore the coal deposits,
ore bodies or other minerals relating thereto, all such property,
leases or claims and all property, leases or claims in which the
Company or its Material Subsidiaries have any interest or right have
been validly located and recorded in accordance with all applicable
laws and are
16
valid and subsisting, the Company or its Material Subsidiaries have
all necessary surface rights, access rights and other necessary rights
and interest relating to the properties in which the Company or its
Material Subsidiaries have an interest as described in the Information
granting the Company or its Material Subsidiaries the right and
ability to explore for minerals, ore and metals for development
purposes as are appropriate in view of their respective rights and
interests therein, and each of the proprietary interests or rights and
each of the documents, agreements and instruments and obligations
relating thereto referred to above are currently in good standing in
the name of the Company or its Material Subsidiaries;
(xli) any and all of the agreements and other documents and instruments
pursuant to which the Company and its subsidiaries hold their property
and assets (including any interest in, or right to earn an interest
in, any property) are valid and subsisting agreements, documents or
instruments in full force and effect, enforceable in accordance with
the terms thereof, the Company and its subsidiaries are not in default
of any of the provisions of any such agreements, documents or
instruments nor has any such default been alleged. None of the
properties (or any interest in, or right to earn an interest in, any
property) of the Company and its subsidiaries are subject to any right
of first refusal or purchase or acquisition rights which are not
disclosed in the Information;
(xlii) the Company has disclosed all material information relating to the
Willow Creek coal project in the Public Disclosure Documents in
compliance with Canadian Securities Laws and such disclosure was true
and complete and accurate in all material respects;
(xliii) the Company has duly filed with the applicable regulatory
authorities in compliance with Canadian Securities Laws all reports
required by National Instrument 43-101 ("NI 43-101"), and all such
reports comply with the requirements of NI 43-101;
(xliv) the currently issued and outstanding common shares of the Company
are listed and posted for trading on the TSXV and no order ceasing or
suspending trading in any securities of the Company or prohibiting the
trading of the Company's issued securities has been issued and no
proceedings for such purpose are pending or, to the knowledge of the
Company, threatened; and
(xlv) neither the Company nor any of its subsidiaries shall take any action
which would be reasonably expected to result in the delisting or
suspension of its Common Shares on or from the TSXV or on or from any
securities exchange, market or trading or quotation facility on which
its Common Shares are then listed or quoted and the Company shall
comply with the rules and regulations thereof.
(B) REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each of the
Selling Shareholders hereby severally represents, warrants and covenants to the
Underwriters, the U.S. registered broker-dealer affiliate of the Underwriters,
and the Purchasers, and
17
acknowledges that each of them is relying upon such representations and
warranties in purchasing the Secondary Shares, that:
(i) if the Selling Shareholder is
(A) an individual, the Selling Shareholder has attained the age of
majority and is legally competent and has full authority to enter
into, execute and deliver this Agreement and the Subscription
Agreements, to take all actions required pursuant hereto and
thereto, and to otherwise perform and comply with its obligations
herein and therein;
(B) a corporation, the Selling Shareholder is duly incorporated and
is validly subsisting under the laws of its jurisdiction of
incorporation and has all requisite legal and corporate power and
authority to enter into, execute and deliver this Agreement and
the Subscription Agreements, to take all actions required
pursuant hereto and thereto, and to otherwise perform and comply
with its obligations herein and therein;
(C) a partnership, syndicate, trust, or other form of unincorporated
organization, the Selling Shareholder has the necessary legal
capacity and authority to enter into, execute and deliver this
Agreement and the Subscription Agreements, to take all actions
required pursuant hereto and thereto, and to otherwise perform
and comply with its obligations herein and therein;
(ii) all of the Secondary Shares are owned by the Selling Shareholder as
the beneficial owner of record, with good and marketable title
thereto, free and clear of all mortgages, liens, charges, security
interests, adverse claims, pledges, encumbrances and demands
whatsoever;
(iii) no person, firm, corporation or other entity has any agreement,
option, commitment, right or privilege (whether by law, pre-emptive or
contractual) entitling such person or entity to, or which is capable
of becoming an entitlement, option or agreement for the purchase from
the Selling Shareholder of any of the Secondary Shares;
(iv) the Selling Shareholders have no reasonable grounds to believe that
the Company is in default of Canadian Securities Laws;
(v) at the Time of Closing, all consents, approvals, permits,
authorizations or filings as may be required by the Selling
Shareholder under Canadian Securities Laws necessary for the execution
and delivery of this Agreement and the Subscription Agreements, the
sale of the Secondary Shares and the consummation of the transactions
contemplated hereby and thereby have been made or obtained, as
applicable;
(vi) each of the execution and delivery of this Agreement and the
Subscription Agreements, the performance by the Selling Shareholder of
his or its obligations
18
hereunder or thereunder, the sale of the Secondary Shares and the
consummation of the transactions contemplated hereby and thereby do
not and will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, as
applicable: (A) any statute, rule or regulation applicable to the
Selling Shareholders including Canadian Securities Laws and the
securities laws of any other Selling Jurisdiction; (B) the constating
documents of any Selling Shareholder that is not an individual; (C)
any Debt Instrument, Material Agreement, mortgage, indenture,
contract, instrument, lease or other document to which any Selling
Shareholder is a party or by which any one of them is bound; or (D)
any judgment, decree or order binding the Selling Shareholder or his
or its property or assets;
(vii) other than the Underwriters, there are no persons acting or
purporting to act at the request of or on behalf of the Selling
Shareholder that are entitled to any brokerage or finder's fee in
connection with the transactions contemplated by this Agreement;
(viii) other than the Selling Shareholder, there is no person that is or
will be entitled to the proceeds received from the sale of the
Secondary Shares by the Selling Shareholder pursuant to this Offering
under the terms of any Debt Instrument, Material Agreement, mortgage,
indenture, contract, instrument, or lease agreement (written or
unwritten);
(ix) the Selling Shareholder is not a party to any shareholder agreement,
pooling agreement or any other agreement which in any manner affects
the voting control or disposition of the Secondary Shares;
(x) there are no actions, suits, judgments, investigations or proceedings
of any kind whatsoever outstanding, pending, to the knowledge of the
Selling Shareholder, or threatened against or affecting the Selling
Shareholder or at law or in equity or before any governmental or
regulatory authority which would affect the ability of the Selling
Shareholder to complete the sale of Secondary Shares and otherwise
carry out the transactions contemplated by this Agreement and the
Subscription Agreements;
(xi) the Selling Shareholder is not in breach of any laws of any kind
whatsoever the failure to comply with which could affect the ability
of the Selling Shareholder to complete the sale of Secondary Shares
and otherwise carry out the transactions contemplated by this
Agreement and the Subscription Agreements; and
(xii) this Agreement has been duly authorized, executed and delivered by
the Selling Shareholder and constitutes a valid and binding obligation
of the Selling Shareholder enforceable against the Selling Shareholder
in accordance with its terms.
(C) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITERS. Each of
the Underwriters hereby severally represent, warrant and covenant to the Company
and
19
acknowledges that the Company and the Selling Shareholders are relying upon such
representations and warranties, that:
(i) in respect of the offer and sale of the Treasury Units and Secondary
Shares, it will comply with all Canadian Securities Laws and all
applicable laws of the jurisdictions outside Canada in which it offers
the Treasury Units and Secondary Shares and will offer the Treasury
Units and Secondary Shares in the United States only on a basis exempt
from the registration requirements under the U.S. Securities Act in
accordance with the provisions of Schedule "A" to this Agreement;
(ii) it and its representatives have not engaged in or authorized, and will
not engage in or authorize, any form of general solicitation or
general advertising in connection with or in respect of the Treasury
Units and Secondary Shares in any newspaper, magazine, printed media
of general and regular paid circulation or any similar medium, or
broadcast over radio or television or otherwise or conducted any
seminar or meeting concerning the offer or sale of the Treasury Units
and Secondary Shares whose attendees have been invited by any general
solicitation or general advertising; and
(iii) it has not and will not solicit offers to purchase or sell the
Treasury Units and Secondary Shares so as to require the filing of a
prospectus or offering memorandum with respect thereto or the
provision of a contractual right of action (as defined in Ontario
Securities Commission Rule 14-501) under the laws of any jurisdiction,
including the United States of America or any state thereof
5. CLOSING DELIVERIES. The purchase and sale of the Treasury Units and Secondary
Shares shall be completed at the Closing Time at the offices of Xxxxxxx Xxxxx &
Xxxxxxxxx LLP in Xxxxxxx, Xxxxxxx, or at such other place as Sprott (on behalf
of the Underwriters) and the Company may agree upon. At or prior to the Closing
Time: (a) the Company shall, subject to the provisions of Section 6 of this
Agreement, duly and validly deliver to the Underwriters certificates in
definitive form representing the Treasury Unit Shares and Warrants comprising
the Treasury Units in the names of the Purchasers or as indicated on their
respective Subscription Agreements in the City of Toronto, against payment at
the direction of the Company of the subscription price therefor, in lawful money
of Canada; and (b) the Selling Shareholders shall, subject to the provisions of
Section 6 of this Agreement, duly and validly deliver to the Underwriters
certificates in definitive form representing the Secondary Shares in the names
of the Purchasers or as indicated on their respective Subscription Agreements in
the City of Toronto, against payment at the direction of the Selling
Shareholders of the subscription price therefor, in lawful money of Canada. The
Underwriters, the Company and the Selling Shareholders may discharge their
respective payment obligations by delivery by the Underwriters of a bank draft,
certified cheque or by transfer of funds by electronic wire transfer to the
designated bank account of each of the Company and the Selling Shareholders.
Such payment to the Company shall be solely in respect of the sale of Treasury
Units and shall be equal to the aggregate purchase price for the Treasury Units,
less the Commission payable in respect of the sale of Treasury Units and the
reasonable out-of-pocket costs and expenses of the Underwriters of the Offering,
including reasonable fees and disbursements of counsel expenses
20
(subject to the maximum amount set out and as more particularly described in
paragraph 8 hereof). Such payment to the Selling Shareholders shall be solely in
respect of the sale of Secondary Shares and shall be equal to the aggregate
purchase price for the Secondary Shares, less the Commission payable in respect
of the sale of Secondary Shares and the reasonable out-of-pocket costs and
expenses of the Underwriters of the Offering, including reasonable fees and
disbursements of counsel (subject to the maximum amount set out and as more
particularly described in paragraph 8 hereof). The out-of-pocket costs and
expenses of the Offering will be allocated among the Selling Shareholders and
the Company on the basis that 39% will be allocated to the Company, 55% will be
allocated to Xxxx Xxxxx and 6% will be allocated to the X. Xxxxxxxxx Xxxxx
Foundation.
6. CLOSING CONDITIONS. Each Purchaser's obligation to purchase the Treasury
Units at the Closing Time shall be conditional upon the fulfilment at or before
the Closing Time of the following conditions:
(A) the Underwriters shall have received a certificate, dated as of the Closing
Date, signed by the Chief Executive Officer and Chief Financial Officer of
the Company, or such other officers of the Company as the Underwriters may
agree, certifying for and on behalf of the Company, to the best of their
knowledge, information and belief after due injury, that:
(i) no order, ruling or determination having the effect of suspending the
sale or ceasing the trading in any securities of the Company
(including the Common Shares) has been issued by any regulatory
authority and is continuing in effect and no proceedings for that
purpose have been instituted or are pending or, are contemplated or
threatened by any regulatory authority;
(ii) the Company has duly complied with all the terms, covenants and
conditions of this Agreement on its part to be complied with up to the
Closing Time; and
(iii) the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Time with the same
force and effect as if made at and as of the Closing Time after giving
effect to the transactions contemplated by this Agreement.
(B) the Underwriters shall have received a certificate, dated as of the Closing
Date, from each of the Selling Shareholders, signed by the Selling
Shareholder in question or an authorized signatory thereof, as applicable,
certifying for on behalf of such Selling Shareholder, that:
(i) no order, ruling or determination having the effect of suspending the
sale or ceasing the trading in the securities held by the Selling
Shareholders (including the Secondary Shares) has been issued by any
regulatory authority and is continuing in effect and no proceedings
for that purpose have been instituted or are pending or are
contemplated or threatened by any regulatory authority;
(ii) the Selling Shareholder has duly complied with all the terms,
covenants and conditions of this Agreement on its part to be complied
with up to the Closing Time; and
21
(iii) the representations and warranties of the Selling Shareholder
contained in this Agreement are true and correct as of the Closing
Time with the same force and effect as if made at and as of the
Closing Time after giving effect to the transactions contemplated by
this Agreement.
(C) the Underwriters shall have received at the Closing Time certificates dated
the Closing Date, signed by appropriate officers of the Company addressed
to the Underwriters and their counsel, with respect to the articles and
by-laws of the Company, all resolutions of the Company's board of directors
relating to this Agreement and the transactions contemplated hereby and
thereby, the incumbency and specimen signatures of signing officers, the
constating documents of the Company and such other matters as the
Underwriters may reasonably request;
(D) the Underwriters shall have received at the Closing Time, evidence that all
requisite approvals, consents and acceptances of the shareholders, the
appropriate regulatory authorities and the TSXV required to be made or
obtained by the Company and the Selling Shareholders in order to complete
the Offering have been made or obtained;
(E) the Subscription Agreements, the Warrant Certificates and the certificates
representing the Treasury Unit Shares, the Warrants and the Secondary
Shares shall have been executed or endorsed, as applicable and delivered by
the parties thereto in form and substance satisfactory to the Underwriters
and their counsel, acting reasonably;
(F) the TSXV shall have issued its conditional acceptance for the issuance of
the Treasury Unit Shares and the Warrant Shares;
(G) the Underwriters shall have received favourable legal opinions addressed to
the Underwriters dated the Closing Date, from Bull, Housser & Xxxxxx,
counsel for the Company (it being understood that such counsel may rely to
the extent appropriate in the circumstances, (i) as to matters of fact, on
certificates of the Company executed on its behalf by a senior officer of
the Company and on certificates of the Transfer Agent, as to the issued
capital of the Company; (ii) as to matters of fact not independently
established, on certificates of the Company's auditors or a public
official); and (iii) as to matters of law with respect to consulting
counsel in the applicable local jurisdictions) with respect to the
following matters:
(i) as to the incorporation and subsistence of the Company under the laws
of British Columbia and as to the corporate power of the Company to
carry out its obligations under this Agreement, the Subscription
Agreements and the Warrant Certificates and to issue the Treasury Unit
Shares, the Warrants and the Warrant Shares;
(ii) as to the authorized and issued capital of the Company;
(iii) that the Company has all requisite corporate power and authority
under the laws of its jurisdiction of incorporation to carry on its
business as presently carried on and to own its properties;
22
(iv) that none of the execution and delivery of this Agreement, the
Subscription Agreements and the Warrant Certificates, the performance
by the Company of its obligations hereunder and thereunder, or the
sale or issuance of the Treasury Unit Shares, the Warrants and the
Warrant Shares will conflict with or result in any breach of the
constating documents or by-laws of the Company or the resolutions of
the directors and shareholders of the Company;
(v) that each of this Agreement, the Subscription Agreements and the
Warrant Certificates have been duly authorized and executed and
delivered by the Company, and constitute a valid and legally binding
obligation of the Company enforceable against it in accordance with
its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or similar laws
affecting the rights of creditors generally and except as limited by
the application of equitable principles when equitable remedies are
sought, and the qualification that the enforceability of rights of
indemnity and contribution may be limited by applicable law;
(vi) that the Treasury Unit Shares have been validly issued as fully paid
and non-assessable securities in the capital of the Company;
(vii) that the Warrants have been duly and validly created and issued;
(viii) that the Warrant Shares have been reserved and authorized and
allotted for issuance to the Purchasers and, upon the due exercise of
the Warrants in accordance with the provisions thereof and of the
Warrant Certificates, will be validly issued as fully paid and
non-assessable securities in the capital of the Company;
(ix) that the issuance and sale by the Company of the Treasury Unit Shares
and Warrants to the Purchasers are exempt from the prospectus and
registration requirements of applicable Canadian Securities Laws in
the Canadian Selling Jurisdictions and no documents are required to be
filed (other than specified forms accompanied by requisite filing
fees), proceedings taken or approvals, permits, consents or
authorizations obtained under the applicable Canadian Securities Laws
to permit such issuance and sale;
(x) that the issuance of the Warrant Shares upon the due exercise of the
Warrants will be exempt from the prospectus and registration
requirements of applicable Canadian Securities Laws subject to certain
provisos and specified resale restrictions;
(xi) that no other documents will be required to be filed, proceedings
taken or approvals, permits, consents or authorizations obtained under
the applicable Canadian Securities Laws in connection with the first
trade of the Treasury Unit Shares, the Warrants or the Warrant Shares,
as the case may be, provided that four months and a day have lapsed
since the Closing Date, subject to the usual qualifications;
23
(xii) that the issuance of the Treasury Unit Shares, the Warrants and the
Warrant Shares has been conditionally accepted for filing by the TSXV
and the Common shares of the Company are listed on the TSXV;
(xiii) as to such other matters as the Underwriters' legal counsel may
reasonably request prior to the Closing Time.
(H) the Underwriters shall have received favourable legal opinions addressed to
the Underwriters and the Underwriters' counsel, dated the Closing Date,
from legal counsel for the Selling Shareholders (it being understood that
such counsel may rely to the extent appropriate in the circumstances, as to
matters of fact, on certificates provided by the Selling Shareholders or
the authorized officers thereof and as to matters of law with respect to
consulting counsel in the applicable local jurisdictions) with respect to
the following matters:
(i) that each of the Selling Shareholders have all requisite power and
authority to carry out their respective obligations under this
Agreement and the Subscription Agreements;
(ii) that each of this Agreement and the Subscription Agreement have been
duly authorized and executed and delivered by the Selling
Shareholders, and constitute a valid and legally binding obligation of
the Selling Shareholders enforceable against each Selling Shareholder
in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, liquidation, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and except as limited by the application of equitable principles when
equitable remedies are sought, and the qualification that the
enforceability of rights of indemnity and contribution may be limited
by applicable law;
(iii) that the sale by the Selling Shareholders of the Secondary Shares to
the Purchasers is exempt from the prospectus and registration
requirements of Canadian Securities Laws applicable in the Canadian
Selling Jurisdictions and no documents are required to be filed (other
than specified forms accompanied by requisite filing fees),
proceedings taken or approvals, permits, consents or authorizations
obtained under applicable Canadian Securities Laws to permit such
sale;
(iv) that no other documents will be required to be filed, proceedings
taken or approvals, permits, consents or authorizations obtained under
the applicable Canadian Securities Laws in connection with the first
trade of the Secondary Shares, provided a period of four months and a
day has lapsed since the Closing Date, subject to the usual
qualifications;
(v) that the Secondary Shares are listed on the TSXV;
(vi) as to such other matters as the Underwriters' legal counsel may
reasonably request prior to the Closing Time.
24
(I) the Underwriters shall have received certificates of status or similar
certificates with respect to the jurisdiction in which the Company is
incorporated;
(J) the Underwriters shall have received a legal opinion addressed to the
Underwriters and the Purchasers from special United States counsel to the
Company and the Selling Shareholders, dated as of the Closing Date, in form
and substance satisfactory to the Underwriters and their counsel, acting
reasonably, with respect to the initial sale of the Treasury Units and
Secondary Shares by the Company and the Selling Shareholders in the United
States or to U.S. persons (as such term is defined in Regulation S under
the U.S. Securities Act).
(K) the Underwriters shall have received a favourable legal opinion addressed
to the Underwriters and the Purchasers dated as of the Closing Date, in
form and substance satisfactory to the Underwriters and its counsel, acting
reasonably, as to (i) the incorporation and subsistence of the Material
Subsidiaries; (b) the corporate power and authority of the Material
Subsidiaries; (iii) the ability of each of the Material Subsidiaries to
carry on its business as presently carried on and to own it assets; (iv)
the authorized capital, issued and outstanding share capital of the
Material Subsidiaries; and (v) as to the ownership of the issued and
outstanding securities of the Material Subsidiaries;
(L) the Underwriters shall have received a favourable legal opinion addressed
to the Underwriters, the Purchasers and the Underwriters' counsel, as to
the title to the coal licenses and coal leases issued pursuant to the Coal
Act (British Columbia) and constituting the Willow Creek coal project,
dated as of the Closing Date, in form and substance satisfactory to the
Underwriters and its counsel, acting reasonably;
(M) the Underwriters shall, in their sole discretion, be satisfied with their
due diligence review with respect to the business, assets, financial
condition, affairs and prospects of the Company; and
(N) each of Xxxx Xxxx and Xxxxxx XxxXxxxxx shall have entered into a
stand-still agreement in favour of the Underwriters agreeing not to sell,
assign or otherwise transfer any Common Shares for a period of 150 days
from the Closing Date other than in connection with: (i) the sale of an
aggregate of 1,000,000 Common Shares; and (ii) a trade of the Common Shares
occurring 30 business days after the Closing Date completed at a price per
Common Share of $6.00 or greater.
7. RIGHTS OF TERMINATION
(A) DUE DILIGENCE OUT. In the event that the due diligence investigations
performed by the Underwriters and/or their representatives reveal any material
information or fact not generally known to the public which might, in the sole
opinion of the Underwriters (or any one of them), acting reasonably, adversely
affect the market price of the Common Shares, quality of the investment or
marketability of the Offering, the Underwriters (or any one of them) shall be
entitled, at their sole option and in accordance with subparagraph 7(g) of this
Agreement, to terminate their obligations under this Agreement (and the
obligations of the Purchasers arranged
25
by them to purchase the Treasury Units and Secondary Shares) by notice to that
effect given to the Company and the Selling Shareholders any time prior to the
Closing Time.
(B) LITIGATION. If any inquiry, action, suit, investigation or proceeding
whether formal or informal (including matters of regulatory transgression or
unlawful conduct and including any inquiry or investigation by the TSXV, any
securities commission, or the U.S. Securities Exchange Commission) is commenced,
announced or threatened in relation to the Selling Shareholders, the Company or
its Material Subsidiaries, or any of their respective officers, directors or
principal shareholders, the Underwriters (or any one of them) shall be entitled,
at their sole option and in accordance with subparagraph 7(g) of this Agreement,
to terminate their obligations under this Agreement (and the obligations of the
Purchasers arranged by them to purchase the Treasury Units and Secondary Shares)
by notice to that effect given to the Company and the Selling Shareholders any
time prior to the Closing Time.
(C) DISASTER OUT. In the event that prior to the Closing Time, there should
develop, occur or come into effect any event of any nature, including terrorism,
accident, a new or change in any governmental law or regulation, or other
condition or major financial occurrence of national or international
consequence, which, in the sole opinion of the Underwriters (or any one of
them), materially adversely affects, or may adversely affect, the financial
markets generally or the business, operations, affairs or profitability of the
Company and its Material Subsidiaries, taken as a whole, or on the market price
or value of the Common Shares, the Underwriters (or any one of them) shall be
entitled at their sole option, in accordance with subparagraph 7(g) of this
Agreement, to terminate their obligations under this Agreement (and the
obligations of the Purchasers arranged by them to purchase the Treasury Units
and Secondary Shares) by written notice to that effect given to the Company and
the Selling Shareholders prior to the Closing Time.
(D) CHANGE IN MATERIAL FACT. In the event that prior to the Closing Time, the
Underwriters or the Underwriters' representatives, through their due diligence
investigations, or otherwise discover or there should occur a material change or
a change in any material fact or new material fact shall arise, which, in the
sole opinion of the Underwriters (or any one of them), has or could be expected
to have a material adverse change or material adverse effect on the business,
affairs or profitability of the Company and its Material Subsidiaries, taken as
a whole, or on the market price or value of the Common Shares, the Underwriters
(or any one of them) shall be entitled, at their sole option, in accordance with
subparagraph 7(g), to terminate their obligations under this Agreement (and the
obligations of the Purchasers arranged by them to purchase the Treasury Units
and Secondary Shares) by written notice to that effect given to the Company and
the Selling Shareholders prior to the Closing Time.
(E) NON-COMPLIANCE WITH CONDITIONS. The Company and Selling Shareholders agree
that all terms, conditions and covenants in this Agreement shall be construed as
conditions and complied with so far as the same relate to acts to be performed
or caused to be performed by the Company and/or the Selling Shareholders, as
applicable, that they will each use its best efforts to cause such conditions to
be complied with, and any breach or failure by the Company or the Selling
Shareholders to comply with any of such conditions or in the event that any
representation or warranty given by the Company or the Selling Shareholders
becomes false and is not rectified as at the Closing Time, shall entitle the
Underwriters (or any one of them), at their
26
sole option in accordance with subparagraph 7(g), to terminate their obligations
under this Agreement (and the obligations of the Purchasers arranged by them to
purchase the Treasury Units and Secondary Shares) by notice to that effect given
to the Company and the Selling Shareholders at or prior to the Closing Time. The
Underwriters may waive, in whole or in part, or extend the time for compliance
with, any terms and conditions without prejudice to their rights in respect of
any other of such terms and conditions or any other or subsequent breach or
non-compliance, provided that any such waiver or extension shall be binding upon
the Underwriters only if the same is in writing and signed by them.
(F) CEASE TRADE ORDER. In the event that any order to cease trading in
securities of the Company or in respect of the Selling Shareholders is made or
threatened by a Securities Regulator, which, in the sole opinion of the
Underwriters (or any one of them), acting reasonably, operates or could operate
to prevent or restrict trading in the Common Shares or distribution or sale of
the Treasury Units or Secondary Shares in the Selling Jurisdictions, or any
other jurisdiction where Purchasers are resident the Underwriters (or any one of
them) shall be entitled, at their sole option, in accordance with subparagraph
7(g) of this Agreement, to terminate their obligations under this Agreement (and
the obligations of the Purchasers arranged by them to purchase the Treasury
Units and the Secondary Shares) by written notice to that effect given to the
Company and the Selling Shareholders prior to the Closing Time.
(G) EXERCISE OF TERMINATION RIGHTS. The rights of termination contained in
subparagraphs 7(a), (b), (c), (d), (e) and (f) may be exercised by the
Underwriters and are in addition to any other rights or remedies the
Underwriters may have in respect of any default, act or failure to act or
non-compliance by the Company or the Selling Shareholders in respect of any of
the matters contemplated by this Agreement or otherwise. In the event of any
such termination by the Underwriters, there shall be no further liability on the
part of the Underwriters to the Company or the Selling Shareholders or on the
part of the Company or the Selling Shareholders to the Underwriters except in
respect of any liability which may have arisen or may arise after such
termination in respect of acts or omissions prior to such termination under
paragraphs 8 and 10.
8. EXPENSES. Whether or not the Offering is completed, the Company and the
Selling Shareholders will pay all reasonable expenses and fees in connection
with the Offering, including all expenses of or incidental to the issue, sale or
distribution of the Treasury Units and Secondary Shares including, the fees and
expenses of the Company's counsel and counsel to the Selling Shareholders; all
costs incurred in connection with the preparation of documents relating to the
Offering; and all reasonable expenses and fees incurred by the Underwriters
which shall include the reasonable fees (to a maximum of $75,000, exclusive of
GST) and disbursements of the Underwriters' counsel. All reasonable fees and
expenses incurred by the Underwriters or on their behalf shall be payable by the
Company immediately upon receiving an invoice therefor from the Underwriters and
shall be payable whether or not the Offering is completed.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All terms, warranties,
representations, covenants and agreements herein contained or contained in any
documents submitted pursuant to this Agreement and in connection with the
transactions herein contemplated shall survive the purchase and sale of the
Treasury Unit Shares and Warrants comprising the Treasury Units and Secondary
Shares and continue in full force and effect for the benefit of the Underwriters
and the Purchasers and shall not be limited or prejudiced by any investigation
made by or on behalf of
27
the Underwriters in connection with the purchase and sale of the Treasury Unit
Shares and Warrants comprising the Treasury Units and/or Secondary Shares.
10. (A) INDEMNITY. The Company and the Selling Shareholders hereby severally
agree to indemnify and hold the Underwriters and/or any of their respective
affiliates (the "AFFILIATES") and each of the directors, officers, employees and
shareholders of the Underwriters and/or the Affiliates (hereinafter collectively
referred to as the "PERSONNEL") harmless from and against any and all expenses,
losses (other than loss of profits), claims, actions, damages or liabilities,
whether joint or several (including the aggregate amount paid in reasonable
settlement of any actions, suits, proceedings or claims), and the reasonable
fees and expenses of their counsel that may be incurred in advising with respect
to and/or defending any claim that may be made against the Underwriters and/or
the Affiliates, to which the Underwriters and/or the Affiliates and/or the
Personnel may become subject or otherwise involved in any capacity under any
statute or common law or otherwise insofar as such expenses, losses, claims,
damages, liabilities or actions arise out of or are based, directly or
indirectly, upon the performance of professional services rendered to the
Company and the Selling Shareholders by the Underwriters and/or the Affiliates
and the Personnel hereunder or otherwise in connection with the matters referred
to in this Agreement, provided, however, that this indemnity shall not apply to
the extent that a court of competent jurisdiction in a final judgment that has
become non-appealable shall determine that:
(i) the Underwriters and/or the Affiliates or the Personnel have been
grossly negligent or dishonest or have committed any fraudulent act in
the course of such performance;
(ii) the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly caused by the gross
negligence, dishonesty or fraud referred to in (i).
If for any reason (other than the occurrence of any of the events itemized in
(i) and (ii) above), the foregoing indemnification is unavailable to the
Underwriters and/or the Affiliates or insufficient to hold them harmless, then
the Company and the Selling Shareholders shall contribute to the amount paid or
payable by the Underwriters and/or the Affiliates as a result of such expense,
loss, claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by the Company and/or the Selling
Shareholders on the one hand and the Underwriters and/or the Affiliates on the
other hand but also the relative fault of the Company, the Selling Shareholders
and the Underwriters and/or the Affiliates, as well as any relevant equitable
considerations; provided that the Company and the Selling Shareholders shall, in
any event, contribute to the amount paid or payable by the Underwriters and/or
the Affiliates as a result of such expense, loss, claim, damage or liability,
any excess of such amount over the amount of the fees received by the
Underwriters and/or the Affiliates hereunder pursuant to this Agreement.
The Company and the Selling Shareholders agree that in case any legal proceeding
shall be brought against the Company, the Selling Shareholders and/or the
Underwriters and/or the Affiliates by any governmental commission or regulatory
authority or any stock exchange or other entity having regulatory authority,
either domestic or foreign, shall investigate the Company, the Selling
Shareholders and/or the Underwriters and/or the Affiliates and any
28
Personnel shall be required to testify in connection therewith or shall be
required to respond to procedures designed to discover information regarding, in
connection with, or by reason of the performance of professional services
rendered to the Company and/or the Selling Shareholders by the Underwriters
and/or the Affiliates under this Agreement, the Underwriters and/or the
Affiliates shall have the right to employ its own counsel in connection
therewith, and the reasonable fees and expenses of such counsel as well as the
reasonable costs (including an amount to reimburse the Underwriters and/or the
Affiliates for time spent by its Personnel in connection therewith) and
out-of-pocket expenses incurred by its Personnel in connection therewith shall
be paid by the Company and the Selling Shareholders as they occur. Provided
that, notwithstanding the foregoing, the Underwriters and/or the Affiliates and
the Personnel shall utilize counsel to the Company and/or the Selling
Shareholders unless in the opinion of the Underwriters and/or the Affiliates,
based on counsel, there is an actual, potential or apparent conflict between the
interests of such parties and the interests of the Company and/or the Selling
Shareholders such that joint representation would be inappropriate.
Promptly after receipt of notice of the commencement of any legal proceeding
against the Underwriters and/or the Affiliates or any of the Personnel or after
receipt of notice of the commencement of any investigation, which is based,
directly or indirectly, upon any matter in respect of which indemnification may
be sought from the Company and/or the Selling Shareholders, the Underwriters
and/or the Affiliates (or any one of them) will notify the Company and the
Selling Shareholders in writing of the commencement thereof and, throughout the
course thereof, will provide copies of all relevant documentation to the Company
and the Selling Shareholders, will keep the Company and the Selling Shareholders
advised of the progress thereof and will discuss with the Company and the
Selling Shareholders all significant actions proposed.
The indemnity and contribution obligations of the Company and the Selling
Shareholders shall be in addition to any liability which the Company and the
Selling Shareholders may otherwise have, shall extend upon the same terms and
conditions to those of the Underwriters and/or the Affiliates and the Personnel
who are not signatories hereto and shall be binding upon and enure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Selling Shareholders, the Underwriters and/or the Affiliates and
any of the Personnel of the Underwriters and/or the Affiliates. The foregoing
provisions shall survive the completion of professional services rendered under
this Agreement or any termination of the authorization given by this Agreement.
(B) RIGHT OF INDEMNITY IN FAVOUR OF OTHERS. With respect to any party who may be
indemnified by paragraph 10(a) above and is not a party to this Agreement, the
Underwriters shall obtain and hold the rights and benefits of this paragraph 10
in trust for and on behalf of such Indemnified Party.
11. ACTION BY UNDERWRITERS. All steps which must or may be taken by the
Underwriters in connection with this Agreement, with the exception of the
matters relating to termination contemplated by Section 7 or matters relating to
indemnity and contribution contemplated by Section 10, may be taken by Sprott on
behalf of itself and the Underwriters and the execution and delivery of this
Agreement by the Company, the Selling Shareholders and the Underwriters shall
constitute the authority of the Company and the Selling Shareholders for
accepting
29
notification of any such steps from, and for delivery of the definitive
documents constituting the Treasury Units and/or Secondary Shares to, Sprott
Securities Inc. Sprott Securities Inc. agrees to consult with the other
Underwriters with respect to all material matters.
12. LIABILITY OF UNDERWRITERS. The obligations of the Underwriters to purchase
the Treasury Units and Secondary Shares in connection with the Offering at the
Closing Time shall be several (and not joint or joint and several) and shall be
as to the following percentages of the Treasury Units and Secondary Shares to be
purchased at that time:
Name of Underwriter Percentage
------------------- ----------
Sprott Securities Inc. 65%
Salman Partners Inc. 25%
Canaccord Capital Corporation 10%
Nothing in this Agreement shall oblige any U.S. broker dealer affiliate of
any of the Underwriters to purchase the Treasury Units and/or Secondary Shares.
Any U.S. broker dealer affiliate who makes any offers or sales of the Treasury
Units and/or Secondary Shares to U.S. persons will do so solely as an agent for
an Underwriter.
If any of the Underwriters shall fail to purchase its applicable percentage
of the total number of Treasury Units and Secondary Shares at the Closing Time
pursuant to the Offering and such failure shall constitute a default in its
obligations under this Agreement, then, notwithstanding the provisions of this
paragraph, any Underwriter not in default of its obligations under this
Agreement may, but shall not be obligated to, purchase the Treasury Units and
Secondary Shares which the Underwriter in default was to have purchased.
13. ADVERTISEMENTS. The Company and the Selling Shareholders acknowledge that
the Underwriters shall have the right, subject always to clauses 1(a) and (c)
and 4(b) of this Agreement, at their own expense, to place such advertisement or
advertisements relating to the sale of the Treasury Units and Secondary Shares
contemplated herein as the Underwriters may consider desirable or appropriate
and as may be permitted by applicable law. The Company, the Selling Shareholders
and the Underwriters each agree that they will not make or publish any
advertisement in any media whatsoever relating to, or otherwise publicize, the
transaction provided for herein so as to result in any exemption from the
prospectus and registration requirements of applicable Canadian Securities Laws
or the securities legislation in any other jurisdiction in which the Treasury
Units and/or Secondary Shares shall be offered or sold being unavailable in
respect of the sale of the Treasury Units and/or Secondary Shares to prospective
purchasers.
14. NOTICES. Unless otherwise expressly provided in this Agreement, any notice
or other communication to be given under this Agreement (a "NOTICE") shall be in
writing addressed as follows:
30
(A) If to the Company, to:
Pine Valley Mining Corporation
Suite 501 -- 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxxx Rip, Vice President, Finance and Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Bull, Housser & Xxxxxx
3000 -- 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
If to the Selling Shareholders, to each of:
Xxxx X. Xxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
The X. Xxxxxxxxx Xxxxx Foundation
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx
Fax: (000) 000-0000
If to the Underwriters, to:
Sprott Securities Inc.
Xxxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx 0000
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
31
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
Suite 2100, Scotia Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxx
Telecopier: (000) 000-0000
or to such other address as any of the parties may designate by notice given to
the others.
Each notice shall be personally delivered to the addressee or sent by facsimile
transmission to the addressee and (i) a notice which is personally delivered
shall, if delivered on a Business Day, be deemed to be given and received on
that day and, in any other case, be deemed to be given and received on the first
Business Day following the day on which it is delivered; and (ii) a notice which
is sent by facsimile transmission shall be deemed to be given and received on
the first Business Day following the day on which it is sent.
15. TIME OF THE ESSENCE. Time shall, in all respects, be of the essence hereof.
16. CANADIAN DOLLARS. All references herein to dollar amounts are to lawful
money of Canada.
17. HEADINGS. The headings contained herein are for convenience only and shall
not affect the meaning or interpretation hereof.
18. SINGULAR AND PLURAL, ETC. Where the context so requires, words importing the
singular number include the plural and vice versa, and words importing gender
shall include the masculine, feminine and neuter genders.
19. ENTIRE AGREEMENT. This Agreement constitutes the only agreement between the
parties with respect to the subject matter hereof and shall supersede any and
all prior negotiations and understandings, including the engagement letter dated
February 25, 2005. This Agreement may be amended or modified in any respect by
written instrument only.
20. SEVERABILITY. The invalidity or unenforceability of any particular provision
of this Agreement shall not affect or limit the validity or enforceability of
the remaining provisions of this Agreement.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein.
22. SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement shall be
binding upon and enure to the benefit of the Company, the Selling Shareholders,
the Underwriters and the Purchasers and their respective executors, heirs,
successors and permitted assigns; provided that, except as provided herein or in
the Subscription Agreements, this Agreement shall not be assignable by any party
without the written consent of the others.
32
23. FURTHER ASSURANCES. Each of the parties hereto shall do or cause to be done
all such acts and things and shall execute or cause to be executed all such
documents, agreements and other instruments as may reasonably be necessary or
desirable for the purpose of carrying out the provisions and intent of this
Agreement.
24. EFFECTIVE DATE. This Agreement is intended to and shall take effect as of
the date first set forth above, notwithstanding its actual date of execution or
delivery.
25. LANGUAGE. The parties hereby acknowledge that they have expressly required
this Agreement and all notices, statements of account and other documents
required or permitted to be given or entered into pursuant hereto to be drawn up
in the English language only. Les parties reconnaissent avoir expressment
demandees que la presente Convention ainsi que tout avis, tout etat de compte et
tout autre document a etre ou pouvant etre donne ou conclu en vertu des
dispositions des presentes, soient rediges en langue anglaise seulement.
[INTENTIONALLY LEFT BLANK]
33
26. COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by facsimile, each of which so executed shall constitute an original and all
of which taken together shall form one and the same agreement. If the Company
and the Selling Shareholders are in agreement with the foregoing terms and
conditions, please so indicate by executing a copy of this letter where
indicated below and delivering the same to the Underwriters.
Yours very truly,
SPROTT SECURITIES INC.
Per: /s/ Xxxx Xxxxxxx
-----------------------------------
Authorized Signing Officer
SALMAN PARTNERS INC.
Per: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------------
Authorized Signing Officer
CANACCORD CAPITAL CORPORATION
Per:
-----------------------------------
Authorized Signing Officer
The foregoing is hereby accepted on the terms and conditions therein set forth.
DATED as of March 22, 2005.
PINE VALLEY MINING CORPORATION
Per: /s/ Xxxxxxx Xxxx
-----------------------------------
Authorized Signing Officer
THE X. XXXXXXXXX XXXXX FOUNDATION
Per: /s/ Xxxx X. Xxxxx
-----------------------------------
Authorized Signing Officer
Xxxx X. Xxxxx
------------------------------------- ----------------------------------------
Witness Xxxx X. Xxxxx
34
SCHEDULE "A"
UNITED STATES OFFERS AND SALES
As used in this Exhibit A, capitalized terms used herein and not defined herein
shall have the meaning ascribed thereto in the Underwriting Agreement to which
this Exhibit is annexed and the following terms shall have the meanings
indicated:
(a) "Directed Selling Efforts" means directed selling efforts as that term
is defined in Regulation S. Without limiting the foregoing, but for
greater clarity in this Exhibit, it means, subject to the exclusions
from the definition of directed selling efforts contained in
Regulation S, any activity undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the
market in the United States for any of the Treasury Units and
Secondary Shares and includes the placement of any advertisement in a
publication with a general circulation in the United States that
refers to the offering of the Treasury Units; and Secondary Shares
(b) "Foreign Issuer" means a foreign issuer as that term is defined in
Regulation S. Without limiting the foregoing, but for greater clarity
in this Exhibit, it means any issuer which is (a) the government of
any foreign country or of any political subdivision of a foreign
country; or (b) a corporation or other organization incorporated under
the laws of any foreign country, except an issuer meeting the
following conditions: (1) more than 50 percent of the outstanding
voting securities of such issuer are held of record either directly or
through voting trust certificates or depositary receipts by residents
of the United States; and (2) any of the following: (i) the majority
of the executive officers or directors are United States citizens or
residents, (ii) more than 50 percent of the assets of the issuer are
located in the United States, or (iii) the business of the issuer is
administered principally in the United States;
(c) "Qualified Institutional Buyer" means a "qualified institutional
buyer" as that term is defined in Rule 144A;
(d) "Regulation D" means Regulation D adopted by the SEC under the U.S.
Securities Act;
(e) "Regulation S" means Regulation S adopted by the SEC under the U.S.
Securities Act;
(f) "Rule 144" means Rule 144 adopted by the SEC under the U.S. Securities
Act;
(g) "Rule 144A" means Rule 144A adopted by the SEC under the U.S.
Securities Act;
(h) "Rule 701" means Rule 701 adopted by the SEC under the U.S. Securities
Act;
(i) "SEC" means the United States Securities and Exchange Commission;
35
(j) "Selling Dealer Group" means dealers or brokers other than the
Underwriters and their U.S. affiliates who participate in the offer
and sale of the Treasury Units and/or Secondary Shares pursuant to the
Underwriting Agreement;
(k) "Substantial U.S. Market Interest" means substantial U.S. market
interest as that term is defined in Regulation S;
(l) "U.S. Exchange Act" means the United States Securities Exchange Act of
1934, as amended;
(m) "U.S. Person" means a U.S. person as that term is defined in
Regulation S; and
(n) "U.S. Securities Act" means the United States Securities Act of 1933,
as amended;
(o) "United States" means the United States of America, its territories
and possessions, any state of the United States, and the District of
Columbia.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITERS
The Underwriters acknowledge that the Treasury Units, Treasury Unit Shares,
Warrants, Warrant Shares and Secondary Shares have not been and will not be
registered under the U.S. Securities Act and may be offered and sold within the
United States or to, or for the account or benefit of, U.S. persons only in
transactions exempt from or not subject to the registration requirements of the
U.S. Securities Act. Accordingly, the Underwriters represent, warrant and
covenant to and with the Company that:
1. They have not offered or sold, and will not offer or sell, any Treasury
Units or Secondary Shares except (a) in an offshore transaction in
accordance with Rule 903 of Regulation S or (b) within the United States as
provided in paragraphs 2 through 10 below. Accordingly, none of the
Underwriters, their affiliates, any persons acting on their behalf, or any
member of the Selling Dealer Group have made or will make (except as
permitted in paragraphs 2 through 10 below) (i) any offer to sell or any
solicitation of an offer to buy, any Treasury Units or Secondary Shares to
any U.S. Person or any person in the United States, (ii) any sale of
Treasury Units or Secondary Shares to any purchaser unless, at the time the
buy order was or will have been originated, the purchaser was outside the
United States, or such Underwriters, affiliate or person acting on behalf
of either, reasonably believed that such purchaser was outside the United
States, or (iii) any Directed Selling Efforts in the United States with
respect to the Treasury Units or Secondary Shares. Terms used in this
paragraph have the meanings given to them by Regulation S.
2. They have not entered and will not enter into any contractual arrangement
with respect to the distribution of the Treasury Units and/or the Secondary
Shares, except with their affiliates, any members of the Selling Dealer
Group or with the prior written consent of the Company and/or the Selling
Shareholders. They shall require each selling group member to agree, for
the benefit of the Company and the Selling Shareholders, to comply with,
and shall use their best efforts to ensure that each selling group member
complies
36
with, the same provisions of this Exhibit as apply to the Underwriters as
if such provisions applied to such selling group member.
3. All offers and sales of Treasury Units and Secondary Shares in the United
States shall be made through a U.S. registered broker dealer affiliate in
compliance with all applicable U.S. broker-dealer requirements. Each of the
Underwriters and the U.S. registered broker-dealer affiliate is an
Institutional Accredited Investor and a Qualified Institutional Buyer.
4. Offers and sales of Treasury Units and Secondary Shares in the United
States shall not be made (i) by any form of general solicitation or general
advertising (as those terms are used in Regulation D), 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 had been invited by
general solicitation or general advertising or (ii) in any manner involving
a public offering within the meaning of Section 4(2) of the U.S. Securities
Act.
5. Any offer, sale or solicitation of an offer to buy Treasury Units and
Secondary Shares that has been made or will be made in the United States
was or will be made only to Qualified Institutional Buyers in accordance
with the requirements of Rule 144A in transactions that are exempt from
registration under the U.S. Securities Act and applicable state securities
laws.
6. The Underwriters acting through a U.S. registered broker dealer affiliate,
may offer the Treasury Units and Secondary Shares in the United States only
to offerees with respect to which any of the Underwriters has a
pre-existing relationship and has reasonable grounds to believe are
Qualified Institutional Buyers and immediately prior to making any such
offer and, based on the institutional accredited investor certificates
attached as a schedule to the Subscription Agreement for Purchasers
purchasing as Qualified Institutional Buyers, had reasonable grounds to
believe and did believe that each offeree was a Qualified Institutional
Buyer, and on the date hereof, they continue to believe that each U.S.
Purchaser is a Qualified Institutional Buyer.
7. Prior to any sales of Treasury Units or Secondary Shares in the United
States, they shall cause each U.S. Purchaser thereof to sign and deliver a
Subscription Agreement containing such representations, warranties and
acknowledgements as may be necessary to ensure compliance with U.S.
securities laws.
8. Prior to completion of any sale to the Closing Time, they will provide the
Company and the Selling Shareholders with a list of all purchasers of the
Treasury Units and Secondary Shares in the United States.
9. At least one business day prior to the Closing Time, they will provide the
Company and the Selling Shareholders with a list of all purchasers of the
Treasury Units and Secondary Shares in the United States.
10. They will inform, and cause the U.S. registered broker dealer affiliate to
inform, all purchasers of the Treasury Units and Secondary Shares in the
United States that the
37
Treasury Units and Secondary Shares have not been and will not be
registered under the U.S. Securities Act and are being sold to them without
registration under the U.S. Securities Act in reliance on Rule 506 of
Regulation D, in the case of Treasury Units and Rule 144A, in the case of
Secondary Shares.
11. The Underwriters agree that at the Closing Time, they, together with the
U.S. registered broker dealer affiliate, will provide a certificate,
substantially in the form of Annex I to this Exhibit A, relating to the
manner of the offer and sale of the Treasury Units and the Secondary Shares
in the United States.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
1. The Company is a Foreign Issuer within the meaning of Regulation S and
reasonably believes that there is no Substantial U.S. Market Interest in
the Treasury Units.
2. The Company is not, and as a result of the sales of the Treasury Units
contemplated hereby will not be, an "investment company" as defined in the
United States Investment Company Act of 1940, as amended.
3. Except with respect to offers and sales within the United States to
accredited investors (within the meaning of Rule 501(a) of Regulation D)
who are Qualified Institutional Buyers, in reliance upon any exemption from
registration under Regulation D, neither the Company nor any of its
affiliates, nor any person acting on its behalf, has made or will make: (A)
any offer to sell, or any solicitation of an offer to buy, any Treasury
Units to a U.S. Person or a person in the United States; or (B) any sale of
Treasury Units unless, at the time the buy order was or will have been
originated, the purchaser is (i) outside the United States or (ii) the
Company, its affiliates, and any person acting on their behalf reasonably
believes that the purchaser is outside the United States.
4. During the period in which the Treasury Units are offered for sale, neither
it nor any of its affiliates, nor any person acting on its or their behalf
(i) has engaged in or will engage in any form of general solicitation or
general advertising (as those terms are used in Regulation D) with respect
to offers or sales of the Treasury Units in the United States, 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; or (ii) or in any manner
involving a public offering within the meaning of Section 4(2) of the U.S.
Securities Act.
5. Except with respect to the offer and sale of the Treasury Units offered
hereby and offers and sales of Common Shares to accredited investors only
pursuant to the Company's employee benefit plans in accordance with Rule
506 of the U.S. Securities Act, the Company has not, for a period of six
months prior to the date hereof sold, offered for sale or solicited any
offer to buy any of its securities in the United States.
38
6. The Treasury Units satisfy the requirements set out in Rule 144A(d)(3) of
the U.S. Securities Act.
7. So long as any Treasury Units and Secondary Shares which have been sold in
the United States are outstanding and are "restricted securities" within
the meaning of Rule 144(a)(3) under the U.S. Securities Act, the Company
shall either: (i) furnish to the SEC all information required to be
furnished in accordance with Rule 12g3-2(b) under the U.S. Exchange Act;
(ii) file reports and other information with the SEC under Section 13 or
Section 15(d) of the U.S. Exchange Act; or (iii) in the event it is not
exempt from reporting pursuant to Rule 12g3-2(b) nor subject to Section 13
or Section 15(d) of the U.S. Exchange Act, furnish to any holder of the
Treasury Units and any prospective purchaser of the Treasury Units
designated by such holder, upon request of such holder, the information
required to be delivered pursuant to Rule 144A(d)(4) under the U.S.
Exchange Act (so long as such requirement is necessary in order to permit
holders of the Treasury Units to effect resales under Rule 144A).
8. Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has paid or will pay any commission or other
remuneration, directly or indirectly for soliciting the exercise of the
Warrants.
9. The Corporation will use its commercially reasonable efforts to qualify as
a "foreign issuer" for a period of 24 months after the Closing Date.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING SHAREHOLDERS
The Selling Shareholders represent, warrant, covenant and agree that:
1. Except with respect to offers and sales to Qualified Institutional Buyers
within the United States in reliance upon any exemption from registration
under Rule 144A, neither the Selling Shareholders nor any of their
affiliates, nor any person acting on its behalf, has made or will make: (A)
any offer to sell, or any solicitation of an offer to buy, any Secondary
Shares to a U.S. Person or a person in the United States; or (B) any sale
of Secondary Shares unless, at the time the buy order was or will have been
originated, the purchaser is (i) outside the United States or (ii) the
Selling Shareholders their affiliates, and any person acting on their
behalf reasonably believes that the purchaser is outside the United States.
2. During the period in which the Secondary Shares are offered for sale,
neither it nor any of its affiliates, nor any person acting on its or their
behalf (i) has engaged in or will engage in any form of general
solicitation or general advertising (as those terms are used in Regulation
D) with respect to offers or sales of the Secondary Shares in the United
States, 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; or (ii) or in any
manner involving a public offering within the meaning of Section 4(2) of
the U.S. Securities Act.
39
3. The Secondary Shares satisfy the requirements set out in Rule 144A(d)(3) of
the U.S. Securities Act.
40
ANNEX I TO SCHEDULE A
UNDERWRITERS' CERTIFICATE
In connection with the private placement in the United States of the units (the
"Treasury Units") and secondary shares (the "Secondary Shares") of Pine Valley
Mining Corporation (the "Company") with one or more U.S. qualified institutional
buyers (the "U.S. Purchasers") pursuant to one or more Subscription Agreements
dated as of March 22, 2005, the undersigned Sprott Securities Inc., on behalf of
the Underwriters referred to in the Underwriting Agreement dated March 22, 2005
among the Company, Xxxx X. Xxxxx, the X. Xxxxxxxxx Xxxxx Foundation, Sprott
Securities Inc., Salman Partners Inc. and Canaccord Capital Corporation (the
"Underwriting Agreement"), and Sprott Securities (U.S.A.) Limited who has signed
below in its capacity as placement agent in the United States for the
Underwriters (the "U.S. Placement Agent"), do hereby certify as follows:
(i) the U.S. Placement Agent is a duly registered broker or dealer with
the United States Securities and Exchange Commission (the "SEC") and
the National Association of Securities Dealers, Inc, ("NASD") and is
in good standing with the NASD and the SEC on the date hereof;
(ii) all offers and sales of Treasury Units and/or Secondary Shares in the
United States were made to a maximum of 50 U.S. Purchasers by the U.S.
registered broker-dealer affiliate;
(iii) no written material other than the Subscription Agreement, was used
in connection with the offer and sale of the Treasury Units and
Secondary Shares in the United States;
(iv) immediately prior to offering Treasury Units and Secondary Shares to
such offerees in the United States, we had reasonable grounds to
believe and did believe that each offeree was an qualified
institutional buyer (a "Qualified Institutional Buyer") (as defined in
Rule 144A adopted by the US Securities and Exchange Commission under
the United States Securities Act of 1933 (the "U.S. Securities Act"))
and, on the date hereof, we continue to believe that each U.S. person
purchasing Treasury Units and/or Secondary Shares through or from us
is a Qualified Institutional Buyer;
(v) no form of general solicitation or general advertising (as those terms
are used in Regulation D under the U.S. Securities Act) was used, nor
will be used, by us or our representatives, 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 had been invited by general
solicitation or general advertising, in connection with the offer or
sale of the Treasury Units and Secondary Shares in the United States
or to U.S. persons;
(vi) the offering of the Treasury Units and Secondary Shares in the United
States has been conducted by the Underwriters through the U.S.
Placement Agent in
41
accordance with the Underwriting Agreement and all applicable U.S.
broker-dealer requirements; and
(vii) (vii) prior to the sale of Treasury Units and the Secondary Shares in
the United States pursuant to Rule 144A, we caused each U.S. purchaser
to execute a Subscription Agreement which includes a term sheet and
containing such representations, warranties and acknowledgements as
may be necessary to ensure compliance with U.S. securities laws.
Terms used in this certificate have the meanings given to them in the
Underwriting Agreement unless defined herein.
DATED this 22nd day of March, 2005
SPROTT SECURITIES INC. SPROTT SECURITIES (U.S.A.) LIMITED
By: By:
------------------------------------ ---------------------------------
Authorized Signing Officer Authorized Signing Officer
42
SCHEDULE "B"
OUTSTANDING CONVERTIBLE SECURITIES
A. Director Stock Options -- December 13, 2001
Effective December 13, 2001, the Company granted director stock options to
purchase up to an aggregate of 1,050,000 Common shares exercisable for a period
of five years ending on December 12, 2006 at a price of $0.90, of which the
following remain outstanding:
Name No. of Shares
---- -------------
Xxxx Xxxxxx 300,000
B. Director Stock Options -- April 29, 2002
Effective April 29, 2002, the Company granted director stock options to
purchase up to an aggregate of 400,000 Common shares exercisable for a period of
five years ending on April 28, 2007 at a price of $0.90, of which the following
remain outstanding:
Name No. of Shares
---- -------------
Xxxx Xxxxx 150,000
Xxxx Xxxxxxxxx 100,000
These options were approved by the TSX Venture Exchange on May 21, 2002.
C. Private Placement Warrants -- April 16, 2003
On April 16, 2003, the Company issued private placement warrants to purchase
5,500,000 Common shares in the capital of the Company exercisable for a term of
two years ending on April 16, 2005 at a price of $0.25 per share, of which the
following remain outstanding:
Name No. of Shares
---- -------------
Bazamakijo Pty.
Limited 1,100,000
D. Director Stock Option -- August 12, 2003
Effective August 12, 2003, the Company granted to Xxxx Xxxxxxxx, pursuant
to the terms of the Company's Share Option Plan, a director stock option to
purchase up to 100,000 Common shares exercisable for a period of five years
ending on August 12, 2008 at a price of $0.29 per share, of which 10,000 remain
unexercised.
43
E. Employee and Consultant Stock Options -- April 23, 2004
Effective April 23, 2004, pursuant to the Company's Share Option Plan, the
Company granted employee and consultant stock options to purchase up to an
aggregate of 85,000 Common shares exercisable for a period of five years ending
on April 23, 2009 at a price of $1.01, of which the following remain
outstanding:
Name No. of Shares
---- -------------
Xxx Xxxx, (employee) 35,000
F. Employee Stock Option -- July 8, 2004
Effective July 8, 2004, the Company granted to Xxxx XxxXxxxx an employee
stock option to purchase 100,000 Common shares exercisable for a period of five
years ending on July 8, 2009 at a price of $1.56 per share. This option will
vest and may be exercised as follows: (a) 25,000 shares on the date of grant
(July 8, 2004), (b) 25,000 shares on July 8, 2005; and (c) 50,000 shares on July
8, 2006, and, should a change of control occur of the Company, then all
remaining shares shall vest upon the change of control. This option has been
exercised as to 25,000 shares on December 2, 2004.
G. Director Stock Option -- September 24, 2004
Effective September 24, 2004, the Company granted to Xxxx Xxxx a director
stock option to purchase 950,000 Common shares exercisable for a period of five
years ending on September 24, 2009 at a price of $2.30 per share. This option
will vest and may be exercised as follows: (a) 310,000 shares on the date of
grant (September 24, 2004), and (b) 80,000 shares on each of November 30, 2004,
February 28, 2005, May 31, 2005, August 31, 2005, November 30, 2005, February
28, 2006, May 31, 2006 and August 31, 2006.
H. Senior Officer and Employee Stock Options -- February 14, 2005
Effective February 14, 2005, pursuant to the Company's Share Option Plan,
the Company granted senior officer and employee stock options to purchase up to
an aggregate of 400,000 Common shares exercisable for a period of five years
ending on February 14, 2010 at a price of $5.60 per share as follows:
Name Type of Option No. of Shares
---- -------------- -------------
Xxxxxx Rip(1) Senior Officer 300,000
Xxx Xxxxxxx(2) Employee 100,000
NOTES:
(1) This option vests as to 37,500 shares on May 14, 2005 and 37,500 shares
every three months thereafter.
(2) This option vests as to 12,500 shares on May 14, 2005 and 12,500 shares
every three months thereafter.
44
I. Director Stock Options -- March 9, 2005
Effective March 9, 2005, pursuant to the Company's Share Option Plan, the
Company granted director stock options to purchase up to an aggregate of 750,000
Common shares exercisable for a period of five years ending on March 9, 2010 at
a price of $5.30 per share as follows:
Name No. of Shares Date of Exercise No. of Shares Exercised
---- ------------- ---------------- -----------------------
Xxxxxx Xxxxxxxxx(1) 500,000
Xxxxxxx Xxxx(2) 250,000
NOTES:
(1) This option vests as to 62,500 shares on June 1, 2005 and 62,500 shares
every three months thereafter.
(2) This option vests as to 31,250 shares on June 1, 2005 and 31,250 shares
every three months thereafter.
Director Stock Options -- March 17, 2005
Effective March 17, 2005, pursuant to the Company's Share Option Plan, the
Company granted director stock options to purchase up to an aggregate of 300,000
Common shares exercisable for a period of five years ending on March 17, 2010 at
a price of $5.31 per share to Xxx Xxx( I).
NOTES:
(1) This option vests as to 37,500 shares on June 16, 2005 and 62,500 shares
every three months thereafter.
45
