EXHIBIT 1.2
AGENCY AGREEMENT -- UNIT PRIVATE PLACEMENT
THIS AGREEMENT dated for reference March 31, 2004, is made
BETWEEN
CHEMOKINE THERAPEUTICS CORP., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Issuer");
AND
CANACCORD CAPITAL CORPORATION, ▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Agent").
WHEREAS:
A. The Issuer wishes to privately place with purchasers up to 1,860,000 Units at
a price of $0.70 per Unit;
B. The Issuer wishes to appoint the Agent to distribute the Units, and the Agent
is willing to accept such appointment on the terms and conditions of this
Agreement;
THE PARTIES to this Agreement therefore agree:
1. DEFINITIONS
In this Agreement and the Recitals hereto:
(a) "1933 Act" means the Securities Act of 1933 (United States), as
amended;
(b) "Administration Fee" means the fee to be paid to the Agent by the
Issuer in consideration of the Agent's services in connection with
the coordination and review of the Private Placement;
(c) "Agent's Fee" means the fee which is set out in this Agreement and
which is payable by the Issuer to the Agent in consideration of the
services performed by the Agent under this Agreement;
(d) "Agent's Shares" means the previously unissued common shares in the
capital of the Issuer, as presently constituted, which will be
issued as part of the Agent's Units;
(e) "Agent's Units" means the units of the Issuer which may be issued as
part of the Agent's Fee as set out in this Agreement which have the
terms provided in this Agreement;
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(f) "Agent's Warrants" means the share purchase warrants of the Issuer
which will be issued as part of the Agent's Fee and which have the
terms provided in this Agreement and the certificates representing
such share purchase warrants;
(g) "Agent's Warrant Shares" means the previously unissued common shares
in the capital of the Issuer, as presently constituted, which will
be issued upon the exercise of the Agent's Warrants;
(h) "Applicable Legislation" means the securities act in the Selling
Provinces, together with all the regulations and rules made and
promulgated thereunder and all administrative policy statements,
instruments, blanket order and rulings, notices and administrative
directions issued by the Commissions;
(i) "Closing" means a day or days Units are issued to the Purchasers;
(j) "Commissions" means the securities commission or equivalent
regulatory authority in the Selling Provinces;
(k) "Corporate Finance Fee" means the Fee to be paid to the Agent by the
Issuer in consideration of corporate finance and structuring
services provided by the Agent;
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(l) "Corporate Finance Shares" means the previously unissued common
shares of the Issuer which will be issued as part of the Corporate
Finance Units;
(m) "Corporate Finance Units" means the units of the Issuer to be issued
to the Agent by the Issuer in consideration of the corporate finance
and related services provided by the Agent;
(n) "Corporate Finance Warrants" means the share purchase warrants of
the Issuer which will be issued as part of the Corporate Finance
Units and which have the terms provided in this Agreement and the
certificates representing such share purchase warrants;
(o) "Corporate Finance Warrant Shares" means the previously unissued
common shares in the capital of the Issuer, as presently
constituted, which will be issued upon the exercise of the Corporate
Finance Warrants;
(p) "Exemptions" means the exemptions from the prospectus requirements
of the Applicable Legislation;
(q) "Final Closing" means the final closing under the Private Placement;
(r) "First Closing" means the first closing under the Private Placement;
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(s) "Material Change" has the meaning defined in the Applicable
Legislation;
(t) "Material Fact" has the meaning defined in the Applicable
Legislation;
(u) "Multilateral Instrument" means Multilateral Instrument 45-102 or
any successor instrument promulgated by the Commissions;
(v) "Private Placement" means the offering of the Units on the terms and
conditions of this Agreement;
(w) "Prospectus" means, collectively, the preliminary and final
prospectus, including any amendments made thereto prepared and filed
in connection with the Issuer's initial public offering;
(x) "Prospectus Closing Date" means the date on which the Issuer's
proposed initial public offering under the Prospectus closes;
(y) "Purchasers" means the purchasers of Units pursuant to the Private
Placement;
(z) "Regulation S" means Regulation S promulgated under the 1933 Act, as
amended;
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(aa) "Regulatory Authorities" means the Commissions;
(bb) "Securities" means the Units, the Shares, the Warrants, the Warrant
Shares, the Agent's Units, the Agent's Shares, the Agent's Warrants,
the Agent's Warrant Shares, the Corporate Finance Shares, the
Corporate Finance Warrants and the Corporate Finance Warrant Shares;
(cc) "Selling Provinces" means the provinces of Ontario, British Columbia
and Alberta;
(dd) "Shares" means the previously unissued common shares in the capital
of the Issuer, as presently constituted, which will be issued as
part of the Units;
(ee) "Units" means the units of the Issuer to be offered by the Issuer
pursuant to this Agreement having the terms provided in this
Agreement;
(ff) "Warrants" means the non-transferable share purchase warrants of the
Issuer which will be issued as part of the Units and which have the
terms provided in this Agreement and the certificates representing
such share purchase warrants; and
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(gg) "Warrant Shares" means the previously unissued common shares in the
capital of the Issuer, as presently constituted, which will be
issued upon the exercise of the Warrants.
2. APPOINTMENT OF AGENT
The Issuer appoints the Agent as its exclusive agent and the Agent accepts the
appointment and agrees to act as the exclusive agent of the Issuer to use its
commercially reasonable efforts to find and introduce to the Issuer potential
purchasers to purchase up to 1,860,000 Units, at a price of $0.70 per Unit, by
way of private placement under the Exemptions.
3. THE UNITS
Each Unit will consist of one Share and one Warrant and the Shares and Warrants
will be issued and registered in the names of the Purchasers or their nominees.
4. WARRANTS
4.1 The right to purchase a Warrant Share under a Warrant may be exercised at
any time until the close of business on the day which is 24 months from the date
of issue of the Unit under which such Warrant was issued to the holder.
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4.2 One Warrant will entitle the holder, on exercise, to purchase one Warrant
Share at a price of $1.00 per Warrant Share.
4.3 The certificates representing the Warrants will, among other things, include
provisions for the appropriate adjustment in the class, number and price of the
Warrant Shares issued upon exercise of the Warrants upon the occurrence of
certain events, including any subdivision, consolidation or reclassification of
the Issuer's common shares, the payment of stock dividends and the amalgamation
of the Issuer.
4.4 The issue of the Warrants will not restrict or prevent the Issuer from
obtaining any other financing, or from issuing additional securities or rights,
during the period within which the Warrants may be exercised.
5. AGENT'S FEE
5.1 In consideration of the services performed by the Agent under this
Agreement, the Issuer agrees to pay to the Agent on each Closing an Agent's Fee
consisting of:
(a) 8.0% of the gross proceeds received by the Issuer from the sale of
the Units on such Closing which will be paid in cash or Agent's
Units or a combination of cash and Agent's Units at the election of
the Agent; and
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(b) that number of Agent's Warrants which is equal to 8.0% of the number
of Units sold on such Closing.
5.2 Each Agent's Unit will consist of one Agent's Share and one Agent's Warrant
and the Agent's Shares and Agent's Warrants will be registered in the name of
the Agent or such other party or parties as the Agent may reasonably request.
5.3 One Agent's Warrant will entitle the holder, on exercise, to purchase one
Agent's Warrant Share at a price of $1.00 per Agent's Warrant Share. The right
to purchase an Agent's Warrant Share under an Agent's Warrant may be exercised
at any time until the close of business on the day which is 24 months from the
date such Agent's Warrant was issued to the holder.
5.4 The Issuer will also pay the Agent, on First Closing of the Private
Placement or termination of this Agreement, the Administration Fee in the amount
of $5,000.
5.5 The Issuer also agrees to pay a Corporate Finance Fee to the Agent by the
issuance of 400,000 Corporate Finance Units on the First Closing.
5.6 Each Corporate Finance Unit will be comprised of one Corporate Finance Share
and one Corporate Finance Warrant.
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5.7 One Corporate Finance Warrant will entitle the holder to purchase one
Corporate Finance Warrant Share. The right to purchase Corporate Finance Warrant
Shares may be exercised at any time up to the close of business 24 months from
the Closing Day, at a price of $1.00 per Corporate Finance Warrant Share.
5.8 The Agent's Warrants and the Corporate Finance Warrants will be represented
by certificates, and will be non-transferable except as permitted by Applicable
Legislation and any order granted by the Commissions.
5.9 The terms governing the Agent's Warrants and the Corporate Finance Warrants
will include, among other things, provisions for the appropriate adjustment in
the class, number and price of the Agent's Warrant Shares and Corporate Finance
Shares upon the occurrence of certain events, including any subdivision,
consolidation or reclassification of the shares, the payment of stock dividends
or the amalgamation of the Issuer.
5.10 The issue of the Agent's Warrants and Corporate Finance Warrants will not
restrict or prevent the Issuer from obtaining any other financing, or from
issuing additional securities or rights, during the period within which the
Agent's Warrants and Corporate Finance Warrants may be exercised.
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5.11 In the event that the Issuer's shares are not listed on a recognized
exchange in North America within a nine month period from the Final Closing, the
Agent will return to the Issuer 300,000 Corporate Finance Units for
cancellation.
5.12 All securities of the Issuer issued to the Agent under this Agreement shall
be subject to the same restrictions and limitations, including the placement of
legends on certificates and covenants, that are set forth in this Agreement as
to the Securities to be issued to other purchasers, and to the restrictions and
limitations, including legends and covenants, set forth in the subscription
agreements of other purchasers that are imposed on the securities sold to such
purchasers. The purpose of such restrictions and limitations is to assure
compliance with laws applicable to the offer and sale of securities by the
Issuer pursuant to this Agreement. In particular, the Agent agrees that
additional restrictions required by Regulation S shall apply to warrants issued
to the Agent.
6. OFFERING RESTRICTIONS
6.1 The Agent agrees:
(a) that all offers and sales of the Securities prior to the expiration
of the distribution compliance period specified in Category 3
(paragraph (b)(3)(iii)) in Section 230.903 of Regulation S shall be
made only in accordance with the provisions of Section 230.903 or
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Section 230.904 of Regulation S; pursuant to registration of the
securities under the 1933 Act, or pursuant to an available exemption
from the registration requirements of the 1933 Act; and
(b) not to engage in hedging transactions with regard to such Securities
prior to the expiration of the distribution compliance period
specified in Category 3 (paragraph (3)(iii)) in Section 230.903,
unless in compliance with the 1933 Act; and
(c) all offering materials and documents (other than press releases)
used in connection with offers and sales of the securities prior to
the expiration of the distribution compliance period specified in
Category 3 (paragraph (b)(3)(iii) in Section 230.903), shall include
statements to the effect that the securities have not been
registered under the 1933 Act and may not be offered or sold in the
United States or to U.S. persons (other than distributors) unless
the Securities are registered under the 1933 Act, or an exemption
from the registration requirements of the 1933 Act is available.
Such offering materials and documents also must state that hedging
transactions involving the Securities may not be conducted unless in
compliance with the 1933 Act. Such statements shall appear:
(i) on the cover or inside cover page of any prospectus or
offering circular used in connection with the offer or sale of
the securities;
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(ii) in the underwriting section of any prospectus or offering
circular used in connection with the offer or sale of the
securities; and
(iii) in any advertisement made or issued by the issuer, any
distributor, any of their respective affiliates, or any person
acting on behalf of any of the foregoing. Such statements may
appear in summary form on prospectus cover pages and in
advertisements.
6.2 The Agent will only sell the Units to persons who represent themselves as
being, and who the Agent reasonably believes are:
(a) persons purchasing as principal;
(b) qualified to purchase the Units, the Shares and the Warrants under
the Exemptions;
(c) persons who are not U.S. Persons, or in the United States (which
terms herein shall have the meanings defined in Regulation S); and
(d) notwithstanding subparagraphs (a) to (c), offers and sales of
securities specifically targeted at identifiable groups of U.S.
citizens abroad, such as members of the U.S. armed forces serving
overseas, shall be deemed to be made to U.S. Persons.
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6.3 The Agent agrees that at the time any buy order for the Units is placed by
clients of the Agent, the buyer will be outside the United States, or the Agent
and all persons acting on their behalf will reasonably believe that the buyer is
outside the United States, and neither the Agent nor any person acting on their
behalf will have knowledge that such transaction has been pre-arranged with a
buyer in the United States.
6.4 Neither the Issuer, the Agent, nor any of their respective affiliates, nor
any person acting on behalf of any of the foregoing, will offer or sell any of
the Securities to U.S. Persons or in the United States, or undertake any
activity for the purpose of, or that could reasonably be expected to have the
effect of, conditioning the market for the Securities in the United States.
6.5 The Private Placement has not been and will not be advertised in any way.
6.6 No selling or promotional expenses will be paid or incurred in connection
with the Private Placement, except for professional services or for services
performed by a registered dealer.
6.7 The following conditions apply to the offer and sale of the Securities:
(a) the offer or sale of the Securities, if made prior to the expiration
of a one year "distribution compliance period" set forth in
Regulation S of the United States
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Securities and Exchange Commission, is not made to a U.S. person or
for the account or benefit of a U.S. person; and
(b) the offer or sale of the Securities, if made prior to the expiration
of a one year distribution compliance period, is made pursuant to
the following conditions:
(i) the purchaser of the Securities certifies that it is not a
U.S. person and is not acquiring the Securities for the
account or benefit of any U.S. person or is a U.S. person who
purchased Securities in a transaction that did not require
registration under the 1933 Act;
(ii) the purchaser of the Securities agrees to resell such
securities only in accordance with the provisions of
Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration; and
agrees not to engage in hedging transactions with regard to
such Securities unless in compliance with the 1933 Act; and
(iii) the certificate(s) representing the Securities contain(s) a
legend to the effect that transfer is prohibited except in
accordance with the provisions of Regulation S, pursuant to
registration under the 1933 Act, or pursuant to an available
exemption from registration; and that hedging transactions
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involving the Securities may not be conducted unless in
compliance with the 1933 Act.
7. SUBSCRIPTIONS
The Agent will use its best efforts to obtain from each Purchaser introduced by
the Agent, and deliver to the Issuer, on or before each Closing duly completed
and signed subscriptions in the form consented to by the Issuer and the Agent
and executed by the Purchaser.
8. FILINGS WITH THE REGULATORY AUTHORITIES
8.1 Within 10 days of each Closing of the Private Placement, the Issuer will:
(a) file with the Commissions any report required to be filed by the
Applicable Legislation in connection with the Private Placement, in
the required form; and
(b) provide the Agent's solicitor with copies of the report or reports.
9. CLOSINGS
9.1 In this Section:
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(a) "Certificates" means the certificates representing the Shares and
the Warrants sold and the Agent's Shares, the Agent's Warrants, the
Corporate Finance Shares and the Corporate Finance Warrants to be
issued, on a Closing in the names and denominations reasonably
requested by the Agent or the Purchasers, as the case may be; and
(b) "Proceeds" means the gross proceeds of the sale of Units on a
Closing, less:
(i) any portion of the Agent's Fee which is payable in cash;
(ii) at the First Closing, the Administration Fee;
(iii) the reasonable expenses of the Agent in connection with the
Private Placement which have not been paid by the Issuer; and
(iv) any amount paid directly to the Issuer by purchasers in
connection with the Private Placement.
9.2 The Issuer and the Agent will cause the Closing to take place in one or more
closings.
9.3 The Issuer will, on each Closing, issue and deliver the Certificates to the
Agent, or at the Agent's request, to the Purchasers, against payment of the
Proceeds.
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9.4 If the Issuer has satisfied all of its material obligations under this
Agreement, the Agent will, on each Closing, pay the Proceeds to the Issuer
against delivery of the Certificates.
9.5 The Issuer will endorse the Certificates, and the certificates representing
the Warrant Shares, the Agent's Warrant Shares and the Corporate Finance Warrant
Shares with such legends as required by the Applicable Legislation and any
legends required pursuant to U.S. securities laws.
10. CONDITIONS OF CLOSINGS
10.1 The obligations of the Agent on each Closing will be conditional upon the
following:
(a) on each Closing, the Issuer will have delivered to the Agent and its
solicitor a favourable opinion of the Issuer's solicitor dated as of
the date of such Closing, in a form acceptable to the Agent and its
solicitor as to all legal matters reasonably requested by the Agent
relating to the business of the Issuer and the creation, issuance
and sale of the Securities;
(b) on each Closing, the Issuer will have delivered to the Agent and its
solicitor such certificates of its officers and experts, if any,
comfort letters or opinions of its
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auditors, and other documents relating to the Private Placement or
the affairs of the Issuer as the Agent or its solicitor may
reasonably request; and
(c) each representation and warranty of the Issuer which is contained in
this Agreement continues to be true, and the Issuer has performed or
complied with all of its covenants, agreements and obligations under
this Agreement.
10.2 Each Closing and the obligations of the Issuer and the Agent to complete
the issue and sale of the Securities are subject to:
(a) receipt of all required regulatory approval for or acceptance of the
Private Placement; and
(b) the removal or partial revocation of any cease trading order or
trading suspension made by any competent authority to the extent
necessary to complete the Private Placement.
11. MATERIAL CHANGES
The Issuer agrees that if, between the date of this Agreement and the Final
Closing a Material Change, or a change in a Material Fact occurs, the Issuer
will as soon as practicable notify the Agent in writing, setting forth the
particulars of such change.
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12. PROSPECTUS AND REGISTRATION STATEMENT
12.1 The Issuer will use its best efforts to file and obtain a receipt for a
final prospectus in respect of an initial public offering in the Selling
Provinces and to effect the Prospectus Closing Date within nine months of the
Final Closing.
12.2 The Issuer will also use its best efforts to ensure that the resale of the
Securities will be the subject of a registration statement in the United States
filed with and cleared by the United States Securities and Exchange Commission
within nine months of the Final Closing.
13. TERMINATION
13.1 The Agent may terminate its obligations under this Agreement by notice in
writing to the Issuer at any time before the Final Closing if:
(a) an adverse Material Change, or an adverse change in a Material Fact
relating to any of the Securities, occurs or is announced by the
Issuer;
(b) there is an event, accident, governmental law or regulation or other
occurrence of any nature which, in the opinion of the Agent,
seriously affects or will seriously affect the financial markets, or
the business of the Issuer or its subsidiaries, if any,
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or the ability of the Agent to perform its obligations under this
Agreement, or a Purchaser's decision to purchase the Units;
(c) following a consideration of the history, business, products,
property or affairs of the Issuer or its principals and promoters,
or of the state of the financial markets in general, or the state of
the market for the Issuer's securities in particular, the Agent
determines, in its sole discretion, that it is not in the interest
of the Purchasers to complete the purchase and sale of the Units;
(d) the Securities cannot, in the opinion of the Agent, be marketed due
to the state of the financial markets, or the market for the Units
in particular;
(e) an enquiry or investigation (whether formal or informal) in relation
to the Issuer, or the Issuer's directors, officers or promoters, is
commenced or threatened by an officer or official of any competent
authority;
(f) any order to cease, halt or suspend trading (including an order
prohibiting communications with persons in order to obtain
expressions of interest) in the securities of the Issuer prohibiting
or restricting the Private Placement is made by a competent
regulatory authority and that order is still in effect;
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(g) the Issuer is in breach of any material term of this Agreement; or
(h) the Agent determines that any of the representations or warranties
made by the Issuer in this Agreement is false or has become false.
14. WARRANTIES, REPRESENTATIONS AND COVENANTS
14.1 The Issuer warrants and represents to and covenants with the Agent that:
(a) the Issuer and its subsidiaries, if any, are or will be at the First
Closing valid and subsisting corporations duly incorporated and in
good standing under the laws of the jurisdiction in which they are
incorporated, continued or amalgamated;
(b) the Issuer and its subsidiaries, if any, are duly registered and
licenced to carry on business in the jurisdictions in which they
carry on business or own property where so required by the laws of
that jurisdiction;
(c) the authorized and issued capital of the Issuer are as disclosed to
the Agent and the outstanding shares of the Issuer are fully paid
and non-assessable;
(d) the Issuer will reserve or set aside sufficient shares in its
treasury to issue the Shares, the Warrant Shares, the Agent's
Shares, the Agent's Warrant Shares, the
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Corporate Finance Shares and the Corporate Finance Warrant Shares
and all such shares will be duly and validly issued as fully paid
and non-assessable;
(e) except as otherwise disclosed to the Agent, the Issuer is the
beneficial owner of the properties, business and assets or the
interests in the properties, business or assets referred to in any
materials provided to the Agent, all agreements by which the Issuer
holds an interest in a property, business or assets are in good
standing according to their terms and the properties are in good
standing under the applicable laws of the jurisdictions in which
they are situated;
(f) the subscription form and all other written or oral representations
made by the Issuer to a Purchaser or potential Purchaser in
connection with the Private Placement will be accurate in all
material respects and will omit no fact, the omission of which will
make such representations misleading or incorrect;
(g) the financial statements supplied by the Issuer to the Agent in
connection with the Private Placement have been prepared in
accordance with U.S. generally accepted accounting principles,
accurately reflect the financial position and all material
liabilities (accrued, absolute, contingent or otherwise) of the
Issuer, and its subsidiaries, if any, as of the date thereof, and no
adverse material changes in the
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financial position of the Issuer have taken place since the date
thereof, save in the ordinary course of the Issuer's business;
(h) the Issuer has complied and will comply fully with the requirements
of all applicable corporate and securities laws and administrative
policies and directions, including, without limitation, the
Applicable Legislation in relation to the issue and trading of its
securities and in all matters relating to the Private Placement;
(i) there is not presently, and will not be until the Final Closing, any
Material Change or change in any Material Fact relating to the
Issuer which has not been or will not be fully disclosed to the
Agent;
(j) the issue and sale of the Securities by the Issuer and the Agent
does not and will not conflict with, and does not and will not
result in a breach of, any of the terms of its incorporating
documents or any agreement or instrument to which the Issuer is a
party;
(k) neither the Issuer nor any of its subsidiaries is a party to any
actions, suits or proceedings which could materially affect its
business or financial condition, and to the best of the Issuer's
knowledge no such actions, suits or proceedings are
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contemplated or have been threatened which are not disclosed in the
Disclosure Record;
(l) there are no judgments against the Issuer or any of its
subsidiaries, if any, which are unsatisfied, nor are there any
consent decrees or injunctions to which the Issuer or any of its
subsidiaries, if any, is subject;
(m) this Agreement has been or will be by the First Closing, duly
authorized by all necessary corporate action on the part of the
Issuer, and the Issuer has full corporate power and authority to
undertake the Private Placement;
(n) no order ceasing, halting or suspending trading in securities of the
Issuer nor prohibiting the sale of such securities has been issued
to and is outstanding against the Issuer or its directors, officers
or promoters or against any other companies that have common
directors, officers or promoters and no investigations or
proceedings for such purposes are pending or threatened;
(o) except as disclosed to the Agent or otherwise to the Regulatory
Authorities, no person has any right, agreement or option, present
or future, contingent or absolute, or any right capable of becoming
such a right, agreement or option, for the issue or allotment of any
unissued shares in the capital of the Issuer or its
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subsidiaries, if any, or any other security convertible into or
exchangeable for any such shares, or to require the Issuer or its
subsidiaries, if any, to purchase, redeem or otherwise acquire any
of the issued and outstanding shares in its capital;
(p) the Issuer and its subsidiaries, if any, have filed all federal,
provincial, local and foreign tax returns which are required to be
filed, or have requested extensions thereof, and have paid all taxes
required to be paid by them and any other assessment, fine or
penalty levied against them, to the extent that any of the foregoing
is due and payable, except for such assessments, fines and penalties
which are currently being contested in good faith;
(q) the Issuer and its subsidiaries, if any, have established on their
books and records reserves which are adequate for the payment of all
taxes not yet due and payable and there are no liens for taxes on
the assets of the Issuer or its subsidiaries, if any, except for
taxes not yet due, and there are no audits of any of the tax returns
of the Issuer or its subsidiaries, if any, which are known by the
Issuer's management to be pending, and there are no claims which
have been or may be asserted relating to any such tax returns which,
if determined adversely, would result in the assertion by any
governmental agency of any deficiency which would have a material
adverse effect on the properties, business or assets of the Issuer
or its subsidiaries, if any;
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(r) the Issuer owns or possesses adequate rights to use all material
patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and other intellectual
property necessary for the business of the Issuer now conducted and
proposed to be conducted, without any conflict with or infringement
of the rights of others. The Issuer has received no communication
alleging that the Issuer has violated or, by conducting its business
as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity. Neither the execution or
delivery of this Agreement nor the carrying on of the business of
the Issuer by the employees of the Issuer, nor the conduct of the
business of the Issuer will conflict with or result in a breach of
the terms, conditions, or provisions of or constitute a default
under, any contract, covenant or instrument under which any of such
employees is now obligated;
(s) other than the Agent, no person, firm or corporation acting or
purporting to act at the request of the Issuer is entitled to any
brokerage, agency or finder's fee in connection with the
transactions described herein;
(t) the Issuer has and will have filed all documents that are required
to be filed under the continuous disclosure provisions of the
Applicable Legislation, including
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annual and interim financial information and annual reports, press
releases disclosing material changes and material change reports;
and
(u) the warranties and representations in this Section are true and
correct and will remain so as of the Final Closing.
14.2 The Issuer covenants with the Agent that the Issuer will not issue or
announce the issuance of any common shares of the Issuer or any securities
convertible into or exchangeable for or exercisable to acquire common shares of
the Issuer during the period commencing on the Final Closing and continuing
until the Prospectus Closing Date or for a period of 180 days, whichever is
sooner, thereafter without the consent of both the Issuer and the Agent, such
consent to not be unreasonably withheld, other than pursuant to:
(a) presently outstanding rights, including options, warrants and other
convertible securities and including any such rights which have been
granted or issued and as previously disclosed in writing to the
Agent;
(b) options or shares granted to officers, directors or employees of the
Issuer or any subsidiary thereof pursuant to existing stock option
and stock ownership plans or any stock option, stock ownership or
bonus plans approved by shareholders at the upcoming annual general
meeting of the Issuer; or
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(c) any merger, acquisition or strategic partnership transactions
effected by the Issuer.
14.3 The Agent warrants and represents to the Issuer that:
(a) it is a valid and subsisting corporation under the law of the
jurisdiction in which it was incorporated;
(b) it is a broker registered under the Applicable Legislation; and
(c) it will sell the Units in compliance with the Applicable Legislation
and Regulation S.
14.4 The Issuer covenants that it shall refuse to register any transfer of the
Securities not made in accordance with the provisions of Regulation S, pursuant
to registration under the 1933 Act, or pursuant to an available exemption from
registration; provided, however, that if the Securities are in bearer form or
foreign law prevents the Issuer from refusing to register securities transfers,
other reasonable procedures (such as a legend described in paragraph
(b)(3)(iii)(B)(3) of section 903 of Regulation S) are implemented to prevent any
transfer of the Securities not made in accordance with the provisions of the
Regulation S.
14.5 Should the Agent (or any other distributor) sell any of the Securities to
another distributor, dealer (as such term is defined in section 2(a)(12) of the
1933 Act), or any person
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receiving a selling concession, fee or other remuneration, it shall send a
confirmation or other notice to the purchaser stating that the purchaser is
subject to the same restrictions on offers and sales that apply to a
distributor.
15. EXPENSES OF AGENT
15.1 The Issuer will pay all of the expenses of the Private Placement and all
the expenses reasonably incurred by the Agent in connection with the Private
Placement including, without limitation, the reasonable fees and expenses of the
solicitor for the Agent. The parties agree that any invoices, individually or
cumulatively, over $5,000 (excluding disbursements, taxes and background search
fees) will require the Issuer's prior approval.
15.2 The Issuer will pay the expenses referred to in the previous Subsection
even if the transactions contemplated by this Agreement are not completed or
this Agreement is terminated, unless the failure of acceptance or completion or
the termination is the result of a breach of this Agreement by the Agent.
15.3 The Agent may, from time to time, render accounts for its expenses in
connection with the Private Placement to the Issuer for payment on or before the
dates set out in the accounts.
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15.4 The Issuer authorizes the Agent to deduct its reasonable expenses in
connection with Private Placement from the proceeds of the Private Placement and
any advance payments made by the Issuer, including expenses for which an account
has not yet been rendered.
16. INDEMNITY
16.1 The Issuer will indemnify the Agent and each of the Agent's agents,
directors, officers and employees (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties") and save them harmless against all
losses, claims, damages or liabilities:
(a) existing by reason of an untrue statement contained in the
subscription agreement or other written or oral representation made
by the Issuer to a Purchaser or potential Purchaser in connection
with the Private Placement, or by reason of the omission to state
any fact necessary to make such statements or representations not
misleading (except for information and statements supplied by and
relating solely to the Agent);
(b) arising directly or indirectly out of any order made by any
regulatory authority based upon an allegation that any such untrue
statement or representation, or omission exists (except information
and statements supplied by and relating solely to the Agent), that
trading in or distribution of any of the Securities is to cease;
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(c) resulting from the failure by the Issuer to obtain the requisite
regulatory approval to the Private Placement unless the failure to
obtain such approval is the result of a breach of this Agreement by
the Agent;
(d) resulting from the breach by the Issuer of any of the terms of this
Agreement;
(e) resulting from any representation or warranty made by the Issuer
herein not being true or ceasing to be true;
(f) if the Issuer fails to issue and deliver the certificates
representing the Securities in the form and denominations
satisfactory to the Agent at the time and place required by the
Agent with the result that any completion of a sale of the
Securities does not take place; or
(g) if, following the completion of a sale of any of the Securities, a
determination is made by any competent authority setting aside the
sale, unless that determination arises out of an act or omission by
the Agent.
16.2 If any action or claim is brought against an Indemnified Party in respect
of which indemnity may be sought from the Issuer pursuant to this Agreement, the
Indemnified Party will promptly notify the Issuer in writing.
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16.3 The Issuer will assume the defence of the action or claim, including the
employment of counsel and the payment of all expenses.
16.4 The Indemnified Party will have the right to employ separate counsel, and
the Issuer will pay the reasonable fees and expenses of such counsel.
16.5 The indemnity provided for in this Section will not be limited or otherwise
affected by any other indemnity obtained by the Indemnified Party from any other
person in respect of any matters specified in this Agreement and will continue
in full force and effect until all possible liability of the Indemnified Parties
arising out of the transactions contemplated by this Agreement has been
extinguished by the operation of law.
16.6 If indemnification under this Agreement is found in a final judgment (not
subject to further appeal) by a court of competent jurisdiction not to be
available for reason of public policy, the Issuer and the Indemnified Parties
will contribute to the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) for which such indemnification is held unavailable
in such proportion as is appropriate to reflect the relative benefits to and
fault of the Issuer, on the one hand, and the Indemnified Parties on the other
hand, in connection with the matter giving rise to such losses, claims, damages,
liabilities or expenses (or actions in respect thereof). No person found liable
for a fraudulent misrepresentation (within the meaning of
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applicable securities laws) will be entitled to contribution from any person who
is not found liable for such fraudulent misrepresentation.
16.7 To the extent that any Indemnified Party is not a party to this Agreement,
the Agent will obtain and hold the right and benefit of this section in trust
for and on behalf of such Indemnified Party.
17. ASSIGNMENT AND SELLING GROUP PARTICIPATION
17.1 The Agent will not assign this Agreement or any of its rights under this
Agreement or, with respect to the Securities, enter into any agreement in the
nature of an option or a sub-option unless and until, for each intended
transaction, the Agent has obtained the consent of the Issuer, and any required
notice has been given to and accepted by the Regulatory Authorities.
17.2 The Agent may offer selling group participation in the normal course of the
brokerage business to selling groups of other licensed dealers, brokers and
investments dealers, who may or who may not be offered part of the Agent's Fee.
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18. NOTICE
18.1 Any notice under this Agreement will be given in writing and must be
delivered, sent by facsimile transmission or mailed by prepaid post and
addressed to the party to which notice is to be given at the address indicated
above, or at another address designated by the party in writing.
18.2 If notice is sent by facsimile transmission or is delivered, it will be
deemed to have been given at the time of transmission or delivery.
18.3 If notice is mailed, it will be deemed to have been received 48 hours
following the date of mailing of the notice.
18.4 If there is an interruption in normal mail service due to strike, labour
unrest or other cause at or prior to the time a notice is mailed the notice will
be sent by facsimile transmission or will be delivered.
19. RIGHT OF FIRST REFUSAL
19.1 The Issuer will notify the Agent of the terms of any further equity
financing that it requires or proposes to obtain during the 180 days following
the Final Closing and the Agent will have the right of first refusal to provide
any such financing.
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19.2 The right of first refusal must be exercised by the Agent within 15 days
following the receipt of the notice by notifying the Issuer that they will
provide such financing on the terms set out in the notice.
19.3 If the Agent fails to give notice within the 15 days that it will provide
such financing upon the terms set out in the notice, the Issuer will then be
free to make other arrangements to obtain financing from another source on the
same terms or on terms no less favourable to the Issuer, subject to obtaining
the acceptance of the Regulatory Authorities.
19.4 The right of first refusal will not terminate if, on receipt of any notice
from the Issuer under this Section, the Agent fails to exercise the right.
20. TIME
Time is of the essence of this Agreement and will be calculated in accordance
with the provisions of the Interpretation Act (British Columbia).
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations, warranties, covenants and indemnities of the Issuer and the
Agent contained in this Agreement will survive the Final Closing.
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22. LANGUAGE
This Agreement is to be read with all changes in gender or number as required by
the context.
23. INUREMENT
Except for restrictions on assignment elsewhere in this Agreement, this
Agreement inures to the benefit of and is binding on the parties to this
Agreement and their successors and permitted assigns.
24. HEADINGS
The headings in this Agreement are for convenience of reference only and do not
affect the interpretation of this Agreement.
25. COUNTERPARTS
This Agreement may be executed in two or more counterparts and may be delivered
by facsimile transmission, each of which will be deemed to be an original and
all of which will constitute one agreement, effective as of the reference date
given above.
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26. LAW
This Agreement is governed by the law of British Columbia, and the parties
hereto irrevocably attorn and submit to the jurisdiction of the courts of
British Columbia with respect to any dispute related to this Agreement.
This document was executed and delivered as of the date given above:
CHEMOKINE THERAPEUTICS CORP.
Per: _________________________________
Authorized Signatory
Per: _________________________________
Authorized Signatory
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CANACCORD CAPITAL CORPORATION
Per: _________________________________
Authorized Signatory
Per: _________________________________
Authorized Signatory