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EXHIBIT 1
AMENDED AND RESTATED
AGENCY AGREEMENT
February 1, 2001
Industrialex Manufacturing Corp.
63 - A.S. ▇▇▇▇▇ Parkway
▇▇▇▇▇▇▇▇, ▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Dear Sirs:
We understand that:
1. Industrialex Manufacturing Corp. (the "Company") is a corporation
formed under the laws of the State of Colorado and Broomfield
Industrial Painting, Inc., Screen Tech Graphics, Inc. and Decorative &
Coating Systems, Inc. are wholly owned subsidiaries of the Company, all
incorporated under the laws of Colorado;
2. as of the date hereof the authorized and issued capital of the Company
is as described in the Prospectus (as hereinafter defined) executed
concurrently with the execution and delivery of this Agreement; and
3. the Company proposes to issue up to 2,000,000 units (the "Units"), and
up to 300,000 Units pursuant to an over-allotment described in
paragraph 4 below (the "Optioned Units"), all at a purchase price of
$0.75 USD per Unit. Each Unit will consist of one common share of the
Company (a "Common Share") and a warrant to purchase one common share
(a "Purchase Warrant") at the following price:
(a) $1.00USD in the first year (365 days) following the Closing Time
(as hereinafter defined); or
(b) $1.25USD in the second year following the Closing Time;
(collectively, the "Warrant Price"). However, if during the term of the
Purchase Warrants, the closing price of the Common Shares on the
Exchange (as hereinafter defined), or any other exchange on which the
Common Shares are traded, is not less than two times the exercise price
of the Purchase Warrant then in effect for each of 20 consecutive
trading dates, any Purchase Warrant not exercised within 30 days of
deemed receipt by the holders of the Purchase
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Warrants of written notice from the Company will expire on the 30th day
after the deemed receipt of such notice. Such notice will be deemed to
have been received by the holder of the Purchase Warrants eight
calendar days after the date on which it is mailed by ordinary post,
postage prepaid, addressed to the holders of the Purchase Warrants at
their respective addresses appearing on any of the registers of holders
of Purchase Warrants maintained by the Company or its transfer agent.
4. The Company (on the basis of the third paragraph above) hereby grants
to the Agent an option (the "Over-Allotment Option") to use their
reasonable best efforts to offer for sale in the aggregate up to
300,000 Optioned Units (15% of the Units offered by the Company
pursuant to the terms of this Agreement) at a purchase price of $0.75
per Optioned Unit all upon the terms and conditions set forth herein
for the purchase and sale of the Offered Securities. The Company shall
pay the Agent a fee of $0.75 per Optioned Unit in respect of any
Optioned Units sold by the Agent (the "Agent's Optioned Unit Fee").
The Over-Allotment Option shall be exercisable at any time during the
period commencing on the date hereof and ending on the date which is 60
days after the Closing Date (defined below) (the "Over-Allotment Option
Expiry Date").
The Over-Allotment Option shall be exercisable in whole or in part by
the Agent by giving notice to the Company not later than 5:00pm
(Calgary Time) on the Over-Allotment Option Expiry Date, specifying the
number of Optioned Units to be purchased by subscribers on the date and
time of the completion of the sale of the Optioned Units (which shall
not be less than three (3) Business Days (defined below) after the date
of such notice and not more than five (5) Business Days after the
Over-Allotment Option Expiry Date). Upon furnishing such notice, the
Agent shall sell and the Company shall issue, in accordance and subject
to the provisions hereof, the number of Optioned Units indicated in
such notice.
The Over-Allotment Option is solely to cover over-allotment, if any,
and for market stabilization.
The Company understands that:
1. the Agent proposes to distribute the Units and any Optioned Units in
certain jurisdictions in Canada pursuant to a Preliminary Prospectus
(as hereinafter defined) and a Prospectus;
2. the purchase price of the Units and any Optioned Units has been
determined jointly by the Company and the Agent; and
3. the Units and any Optioned Units shall have the material attributes
described in the Preliminary Prospectus.
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Based upon the foregoing and on the terms and conditions herein
contained, the Agent hereby agrees to act as Agent and offer for sale on a "best
efforts" basis, in the manner described herein, up to 2,000,000 Units, and up to
300,000 Optioned Units of the Company. It is expressly agreed and understood
that the Agent shall have no obligation to purchase securities pursuant to this
offering on its own behalf.
In consideration of the agreement of the Agent to market and distribute
the Offered Securities and any Optioned Units which will result from the
acceptance of this offer, the Company shall pay to the Agent at the Closing Time
a fee of 10% of the purchase price of each Unit, including any Optioned Units,
against delivery by the Agent to the Company of a receipt therefor (the "Agency
Fee").
In addition to the foregoing commission, the Company shall pay or issue
to the Agent:
(i) a work fee (the "Work Fee") of $18,000 USD, which fee shall be
payable at Closing in cash;
(ii) an investment banking fee (the "Investment Banking Fee") equal to
$93,750 (U.S.), which fee shall be payable in Units (the "Lead
Agent's Units") of the Company priced at the same price as Units
issued pursuant to the Prospectus;
(iii) that number of brokers warrants (the "Agent's Warrants") equal to
10% of the aggregate number of securities offered, including
Optioned Units, pursuant to the Prospectus, which brokers
warrants shall entitle the Agent to acquire an equivalent number
of Units (the "Agent's Units") at $0.75 USD per Unit at any time
up to two (2) years from the Closing Time. The Agent's Units
shall be exercisable by the Agent for a period of two years from
Closing on the same terms as Units pursuant to the Prospectus;
(iv) the Company shall issue to the Agent that number of Agent's
Warrants equal to 10% of the aggregate number of Optioned Units
sold pursuant to the Over-Allotment Option (the "Agent's
Over-Allotment Warrants"), which Agent's Over-Allotment Warrants
will entitle the Agent to acquire an equivalent number of Units
at $0.75USD per Unit (the "Agent's Over-Allotment Units") at any
time up to two (2) years from the Over-Allotment Expiry Date; and
(v) a fee (the "Special Warrant Fee") of $50,086.00 USD, which fee
shall be payable at Closing in cash.
Where the foregoing compensation contemplates the issuance of securities, the
Company shall qualify such securities under the Preliminary Prospectus and the
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Prospectus. The Company also agrees that it shall pay any eligible GST on any of
the foregoing fees.
TERMS AND CONDITIONS
1. DEFINITIONS
In this agreement:
(a) "AGENCY FEE" means the fees payable by the Company to the Agent as more
fully set out in the introductory paragraphs to this Agreement;
(b) "AGENT" means Thomson Kernaghan & Co. Limited;
(c) "AGREEMENT" means the agreement resulting from the acceptance of the
offer made by the Agent in this letter;
(d) "BIP" means Broomfield Industrial Printing, Inc.;
(e) "BUSINESS DAY" means a day on which The Canadian Venture Exchange is
open for trading and banks are open for business in the cities of
Calgary, Vancouver and Toronto;
(f) "CANADIAN SECURITIES LAWS" means, collectively, the applicable
securities laws of each of the provinces of Canada and the respective
regulations and rules made thereunder together with all applicable
published policy statements, blanket orders and rulings of the
Securities Commissions and all discretionary orders or rulings, if any,
of the Securities Commissions made in connection with the transactions
contemplated hereunder;
(g) "CLOSING(s)" means the completion of the purchase and sale of the Units
and any Optioned Units which may take place more than once;
(h) "CLOSING DATE" means a date that is 90 days from the date of issuance
of a receipt for the Prospectus by the Commission or such earlier date
as the parties may agree upon;
(i) "CLOSING TIME" means 10:00 a.m. (Calgary time) on the Closing Date, or
such other time on the Closing Date as the parties may agree upon;
(j) "COMMON SHARES" means common shares in the capital of the Company;
(k) "COMPANY" means Industrialex Manufacturing, Corp. and includes its
subsidiaries, BIP, DACS and STG, where the context allows;
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(l) "COMPANY'S KNOWLEDGE" or "KNOWLEDGE OF THE COMPANY" means the knowledge
of the directors and officers of the Company, including those of any of
its subsidiaries and affiliates, after making reasonable inquiry of
employees of the Company and/or any of its subsidiaries or affiliates,
who are, or may be, possessed of knowledge on a particular matter in
question;
(m) "DACS" means Decorative & Coating Systems, Inc.;
(n) "DISTRIBUTION" means distribution, distribution to the public or
primary distribution to the public, as the case may be, under relevant
securities legislation in any province of Canada, and "distribute" has
a corresponding meaning;
(o) "DISTRIBUTION PERIOD" means the period commencing on the date of this
Agreement and ending on the earlier of:
(i) the date on which all of the Offered Securities and any Optioned
Units have been distributed by the Agent pursuant to the
Prospectus; and
(ii) 30 days after the Closing Date;
(p) "ENGAGEMENT LETTER" has the meaning attributed thereto in paragraph 18
hereof;
(q) "ENVIRONMENTAL CLAIM" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law;
(r) "ENVIRONMENTAL LAW" means, with respect to the Company, any federal,
provincial, local or municipal or other governmental statute, law,
rule, regulation and any published judicial or administrative
interpretation thereof including any judicial or administrative order,
consent, decree or judgment binding on or applicable to the Company or
any of its subsidiaries, relating to the environment, health, safety or
any chemical material or substance, exposure to which is prohibited,
limited or regulated by any such governmental authority;
(s) "EXCHANGE" means the Canadian Venture Exchange;
(t) "INDEMNIFIED PARTIES" has the meaning attributed thereto in paragraph
11 hereof;
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(u) unless the context otherwise requires, the terms "MATERIAL CHANGE",
"MATERIAL FACT" and "MISREPRESENTATION" shall have the respective
meanings given thereto by the Canadian Securities Laws or any of them;
(v) "OFFERED SECURITIES" means the Units, the Agent's Warrants and the Lead
Agent's Units, as well as any Optioned Units and Agent's Over-Allotment
Warrants distributed pursuant to the Prospectus;
(w) "OFFERING DOCUMENTS" means, collectively, the Prospectus and any
Supplementary Material and any amendments thereto;
(x) "OPTIONED UNITS" has the meaning ascribed thereto in the first
paragraph of the Agreement;
(y) "PERSONNEL" has the meaning attributed thereto in paragraph 11 hereof;
(z) "PRELIMINARY PROSPECTUS" means the preliminary prospectus of the
Company in the English language dated July 7, 2000 which has been
approved, signed and certified in accordance with the Canadian
Securities Laws, relating to the distribution of the Offered Securities
in the Qualifying Jurisdictions;
(aa) "PROSPECTUS" means the final prospectus of the Company in the English
language to be approved, signed and certified in accordance with the
Canadian Securities Laws relating to the distribution of the Offered
Securities and Optioned Units in the Qualifying Jurisdictions, and any
amendments thereto;
(bb) "QUALIFYING JURISDICTIONS" or "QUALIFYING PROVINCES" means the
provinces of British Columbia, Alberta and Ontario;
(cc) "SECURITIES COMMISSIONS" means, collectively, the securities commission
or other securities regulatory authority of each of the Qualifying
Jurisdictions;
(dd) "SELLING FIRMS" has the meaning attributed thereto in paragraph 4(a)
hereof;
(ee) "STG" means Screen Tech Graphics, Inc.;
(ff) "SUBSIDIARY" means a subsidiary for purposes of the Business
Corporations Act (Alberta) and includes BIP, DACS and STG;
(gg) "SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the
Prospectus and amended or supplemental Preliminary Prospectus or
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Prospectus which may be filed with the Securities Commissions by or on
behalf of the Company under the Canadian Securities Laws in connection
with the distribution of the Offered Securities and Optioned Units;
(hh) "UNITED STATES SECURITIES LAWS" means the United States Securities Act
of 1933, as amended, the United States Securities Exchange Act of 1934,
as amended, the applicable securities laws of each of the states,
territories and/or possessions of the United States of America, and the
rules, regulations, policies, orders and rulings made thereunder,
including discretionary orders or rulings of the United States
Securities and Exchange Commission, or any securities regulator of any
of the states, territories or possessions of the United States of
America, made in connection with the transactions contemplated herein;
(ii) "USD" means United States Dollars; and
(jj) "WARRANT INDENTURE" means the share purchase warrant indenture
providing for the issue of up to 2,300,000 Purchase Warrants among the
Company and Montreal Trust Company of Canada dated February , 2001.
2. INTERPRETATION
Unless otherwise expressly provided in this Agreement, words importing
the singular number include the plural and vice versa and words importing gender
include all genders. References to sections, paragraphs and subparagraphs are to
the appropriate sections, paragraphs and subparagraphs of this Agreement.
3. COMPLIANCE WITH SECURITIES LAWS: DUE DILIGENCE
The Company shall, as soon as possible, fulfil and comply with, to the
satisfaction of the Agent, the Canadian Securities Laws required to be fulfilled
or complied with by the Company to enable the Offered Securities and any
Optioned Units to be lawfully distributed in the Qualifying Provinces through
the Agent. Prior to the filing of the Prospectus, the Company shall have allowed
the Agent to participate fully in the preparation of such documents and shall
have allowed the Agent to conduct all due diligence investigations which it
reasonably requires in order to fulfil their obligations as Agent and in order
to enable them to execute the certificate required to be executed by them on
such documents.
4. DISTRIBUTION AND CERTAIN OBLIGATIONS OF THE AGENT
(a) The Agent shall, and shall require any investment dealer or broker,
other than the Agent, with which the Agent may have a contractual
relationship in respect of the distribution of the Offered Securities
and any Optioned
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Units (a "Selling Firm"), to comply with the Canadian Securities Laws
in connection with the distribution thereof and shall offer the Offered
Securities and any Optioned Units for sale to the public directly and
through Selling Firms upon the terms and conditions set out in the
Prospectus and this Agreement. The Agent shall offer, and shall require
any Selling Firm to offer for sale to the public and sell the Offered
Securities and any Optioned Units only in those jurisdictions where
they may be lawfully offered for sale or sold.
(b) The Agent shall, and shall require any Selling Firm to agree to,
distribute the Offered Securities and any Optioned Units in a manner
which complies with and observes all applicable laws and regulations in
each jurisdiction into and from which they may offer to sell the
Offered Securities and any Optioned Units or distribute the Prospectus
or any Supplementary Material in connection with the distribution of
the Offered Securities and any Optioned Units and will not, directly or
indirectly, offer, sell or deliver any Offered Securities or the
Optioned Units or deliver the Prospectus or any Supplementary Material
to any person in any jurisdiction other than in the Qualifying
Provinces except in a manner which will not require the Company to
comply with the registration, prospectus, filing or other similar
requirements under the applicable securities laws of such other
jurisdictions. The Agent shall notify the Corporation, in advance, of
any distribution that is intended to be made outside the Qualifying
Provinces in reliance upon any prospectus, registration or other
exemption, provided that the Agent is aware that the Company intends to
concurrently conduct a United States public offering pursuant to a
registration statement prepared by the Company. The Agent has no
responsibility for such registration statement or United States public
offering and the Company agrees that it will not distribute the
Prospectus in the United States as part of, or separate from, such
United States public offering.
(c) For the purposes of this Section 4, the Agent shall be entitled to
assume that the Offered Securities and any Optioned Units are qualified
for distribution in any Qualifying Province where a receipt or similar
document for the Prospectus shall have been obtained from the
applicable securities commission following the filing of the
Prospectus.
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5. DELIVERIES ON FILING
(a) Concurrently with filing the Prospectus as required pursuant to Section
5 hereof, the Company shall deliver to the Agent:
(i) a copy of the Preliminary Prospectus and the Prospectus in the
English language signed and certified as required by the Canadian
Securities Laws;
(ii) a copy of any other document required to be filed by the Company
under the laws of each of the Qualifying Provinces in compliance
with the Canadian Securities Laws;
(iii) a comfort letter dated the date of the Prospectus, in form and
substance satisfactory to the Agent, addressed to the Agent from
the auditors of the Company, with respect to certain financial
and accounting information relating to the Company in the
Prospectus, which letter shall be in addition to the auditors'
report contained in the Prospectus and the auditors' comfort
letter addressed to the securities regulatory authorities in the
Qualifying Provinces.
(b) SUPPLEMENTARY MATERIAL
The Company shall also prepare and deliver promptly to the Agent signed
and certified copies of all Supplementary Material. Concurrent with the
delivery of any Supplementary Material, the Company shall deliver to
the Agent, with respect to such Supplementary Material, documents
similar to those referred to in Section 5(a).
(c) REPRESENTATIONS AS TO PROSPECTUS AND PROSPECTUS AMENDMENTS
Delivery of the Preliminary Prospectus, the Prospectus and any
Supplementary Material shall constitute a representation and warranty
by the Company to the Agent that (i) all information and statements
(except information and statements relating solely to the Agent and
provided by the Agent) contained in the Preliminary Prospectus or the
Prospectus or any Supplementary Material, as the case may be, are true
and correct and contain no misrepresentation and constitute full, true
and plain disclosure of all material facts relating to the Company, the
Offered Securities and any Optioned Units; (ii) no material fact or
information has been omitted from such disclosure (except facts or
information relating solely to the Agent and provided by the Agent)
which is required to be stated in such disclosure or is necessary to
make the statements or information contained in such disclosure not
misleading in light of the circumstances under which they were made;
and (iii) such documents comply fully with the
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requirements of the Canadian Securities Laws. Such deliveries shall
also constitute the Company's consent to the Agent's use of the
Preliminary Prospectus, the Prospectus and any Prospectus Amendments in
connection with the distribution of the Offered Securities and any
Optioned Units in compliance with this Agreement.
(d) COMMERCIAL COPIES
The Company shall cause commercial copies of the Prospectus and any
Supplementary Material to be delivered to the Agent without charge, in
such numbers and in such cities as the Agent may reasonably request by
oral instructions to the printer of the Prospectus given forthwith
after the Agent has been advised that the Company has complied with the
Canadian Securities Laws in the Qualifying Provinces pursuant to
Section 3.
6. MATERIAL CHANGE DURING DISTRIBUTION
(a) During the Distribution Period, the Company shall promptly notify the
Agent in writing of:
(i) any material change (actual, anticipated, contemplated or
threatened, financial or otherwise) in or affecting the business,
affairs, prospects, operations, management, ownership, assets,
liabilities (contingent or otherwise) or capital of the Company
and its subsidiaries taken as a whole;
(ii) any material fact which has arisen or has been discovered and
would have been required to have been stated in the Prospectus
had the fact arisen or been discovered on, or prior to, the date
of the Prospectus; and
(iii) any change in any material fact contained in the Prospectus or
any Supplementary Material which change is, or may be, of such a
nature as to render any statement in the Prospectus or any
Supplementary Material misleading or untrue or which would result
in a misrepresentation in the Prospectus or any Supplementary
Material or which would result in the Prospectus or any
Supplementary Material not complying (to the extent that such
compliance is required) with the Canadian Securities Laws.
The Company shall promptly, and in any event within any applicable time
limitation, comply, to the reasonable satisfaction of the Agent, with
all applicable filings and other requirements under the Canadian
Securities Laws as a result of such fact or change; provided that
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the Company shall not file any Supplementary Material or other document
without first obtaining from the Agent the approval of the Agent, after
consultation with the Agent with respect to the form and content
thereof, which approval will not be unreasonably withheld. The Company
shall in good faith discuss with the Agent any fact or change in
circumstances (actual, anticipated, contemplated or threatened,
financial or otherwise) which is of such a nature that there is
reasonable doubt whether written notice need be given under this
paragraph.
(b) CHANGE IN THE CANADIAN SECURITIES LAWS
If during the Distribution Period there shall be any change in the
Canadian Securities Laws which, in the reasonable opinion of the Agent
requires the filing of Supplementary Material, the Company shall, to
the reasonable satisfaction of the Agent, promptly prepare and file
such Supplementary Material with the appropriate securities regulatory
authority in each of the Qualifying Provinces where such filing is
required.
(c) CEASE TRADE NOTIFICATION
The Company shall advise the Agent, promptly after it receives notice
thereof, of the issuance by any federal, provincial or other
governmental authority of any cease trade order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Offered
Securities and any Optioned Units or any of them for offering or sale
in any of the Qualifying Provinces, of the initiation or threatening of
any proceeding for any such purpose, or of any request by any federal,
provincial or other governmental authority for the amending or
supplementing of the Prospectus or for additional information and, in
the event of issuance of any cease trade order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification, to promptly use its
best efforts to obtain the withdrawal of such order.
7. CHANGE OF CLOSING DATE
Subject to Section 14, if a material change or a change in a material
fact occurs prior to the Closing Date, the Closing Date shall be, unless the
Company and the Agent otherwise agree in writing, the tenth Business Day
following the later of:
(a) the date on which all applicable filing or other requirements of the
Canadian Securities Laws with respect to such material change or change
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in a material fact have been complied with in all applicable Qualifying
Provinces and any appropriate receipts obtained for such filings and
notice of such filings from the Company or its counsel has been
received by the Agent; and
(b) the date upon which the commercial copies of any Supplementary
Material have been delivered in accordance with paragraph 5(d).
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to the Agent and
acknowledges that the Agent is relying upon such representations, warranties and
covenants in offering for sale the Units and any Optioned Units, that:
(a) the Company and each of its subsidiaries, whether direct or indirect,
have been duly incorporated and organized and are validly existing
under the laws of their respective jurisdictions of incorporation, have
all requisite power and authority to carry on their business as now
conducted and as contemplated by the Prospectus and to own, lease and
operate their properties and assets, and the Company and each of its
subsidiaries, whether direct or indirect, are current with all material
filings required to be made in all jurisdictions in which they carry on
any material business, and the Company has all requisite power and
authority to carry out its obligations under this Agreement;
(b) the Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued and outstanding shares of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable, and no person, firm or corporation has any agreement or
option, or right or privilege capable of becoming an agreement, for the
purchase, subscription or issuance of any of the unissued Common Shares
of the Company except as described in the Prospectus; all of the issued
and outstanding shares of the subsidiaries of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable; all of the shares of the subsidiaries held by the
Company or by the Company's subsidiaries are held in each case free and
clear of any pledge, lien, security interest, charge, claim or
encumbrance except as disclosed in the Prospectus;
(c) this Agreement has been, and prior to Closing, all material contracts,
(as that term is defined in the Prospectus), will be, duly authorized,
executed and delivered by the Company and each of such agreements
constitutes or, at the Closing Time, will constitute a legal, valid and
binding obligation of the Company enforceable against the Company in
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accordance with its terms, subject to bankruptcy, insolvency and other
laws affecting the rights of creditors generally and the qualifications
that (i) equitable remedies may be granted only in the discretion of a
court of competent jurisdiction and (ii) rights to indemnity and
contribution may be limited by applicable law;
(d) the Units, the Lead Agent's Units, the Agent's Warrants and any
Optioned Units and Agent's Over-Allotment Warrants to be issued by the
Company and sold pursuant to this Agreement will be duly authorized for
such issuance and sale by all necessary action on the part of the
Company and, in the case of the Units, the Lead Agent's Units, the
Offered Securities and any Optioned Units, when issued and delivered by
the Company against payment of the consideration therefor pursuant to
this Agreement, will have been duly and validly issued, will be fully
paid and non-assessable and will not have been issued in violation of
or subject to any pre-emptive rights or other contractual rights to
purchase securities issued by the Company. The certificates used to
evidence the Offered Securities and any Optioned Units will, where
applicable, comply with the requirements of The Canadian Venture
Exchange and all applicable laws;
(e) the Units, Lead Agent's Units, Agent's Warrants, Optioned Units and the
Agent's Over-Allotment Warrants will conform to the description thereof
in the Prospectus;
(f) no consent, approval, permit, authorization, order or filing of or with
any court or governmental agency or body of Canada or any Qualifying
Province is required by the Company for the issue, offer and sale of
the Offered Securities and any Optioned Units in Canada, or the
execution and delivery of and the performance by the Company of its
obligations under this Agreement except as may be required under
Canadian Securities Laws or the United States Securities Laws;
(g) the execution and delivery of this Agreement by the Company, the
fulfilment of the terms thereof and the consummation of the transaction
contemplated thereby, and the issuance and sale by the Company of the
Units, the Lead Agent's Units, the Agent's Warrants and any Optioned
Units and Agent's Over-Allotment Warrants pursuant to the terms thereof
do not and will not conflict with or result in a breach of or require
any consent, approval, permit, order or filing under (i) any statute,
rule or regulation applicable to the Company including, without
limitation, applicable Canadian Securities Laws or United States
Securities Laws and the by-laws, rules and regulations of The Canadian
Venture Exchange, except any consent, approval, permit, authorization,
order or filing required under Canadian Securities Laws or United
States Securities Laws
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and the by-laws, rules and regulations of The Canadian Venture Exchange
which shall have been obtained on or before the Closing Date; (ii) the
constating documents or by-laws of the Company or resolutions of the
directors or shareholders of the Company which are in effect at the
date hereof; (iii) any mortgage, note, indenture, contract, agreement,
instrument, lease or other document to which the Company or any of its
subsidiaries is a party or by which they or any of their property or
assets are bound; or (iv) any judgement, decree or order binding the
Company or the property or assets of the Company;
(h) at the date hereof, the Company is in compliance with its timely
disclosure obligations under Canadian Securities Laws and, without
limiting the generality of the foregoing, except as described in the
Prospectus, there has not occurred any material adverse change,
financial or otherwise, in the assets, liabilities (contingent or
otherwise), business, financial condition, ownership, capital or
prospects of the Company and its subsidiaries, taken as a whole, since
December 31, 2000;
(i) since December 31, 2000 there have not been any material changes in the
capital or long-term debt of the Company otherwise than as set forth or
contemplated in the Prospectus;
(j) other than as disclosed in the Prospectus, the Company is not aware of
any legal or governmental proceedings pending to which the Company or
any of the Company's subsidiaries is a party or of which any property
of the Company or any of the Company's subsidiaries is the subject
which, if determined adversely to the Company or any of such
subsidiaries, would individually or in the aggregate have a material
adverse effect on the assets, liabilities (contingent or otherwise),
business, financial condition, capital or prospects of the Company and
its subsidiaries taken as a whole, or the ability of the Company or its
subsidiaries to perform their obligations under this Agreement or the
Warrant Indenture, as applicable, and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others;
(k) no order preventing or suspending the use of the Preliminary Prospectus
or the Prospectus has been issued by any securities regulatory
authority in a Qualifying Province;
(l) prior to the Closing, all of the Common Shares and Purchase Warrants
issuable pursuant to the Offered Securities and any Optioned Units, as
well as Common Shares issuable pursuant to the Lead Agent's Units,
Agent's Warrants and Agent's Over-Allotment Warrants, will have been
conditionally approved for listing on the Exchange and, as at the
Closing
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Time, the Company will have complied with all of the conditions within
its control required by the Exchange to be complied with prior to the
Closing Date to have the Common Shares and Purchase Warrants issuable
pursuant to the Offered Securities and any Optioned Units, as well as
Common Shares and Purchase Warrants issuable pursuant to the Lead
Agent's Units, Agent's Warrants and Agent's Over-Allotment Warrants,
listed and posted for trading on the Exchange as of the opening of
trading on the Closing Date;
(m) except with respect to information and statements relating solely to
the Agent and provided by the Agent, at the date hereof, each of the
Offering Documents fully complies with the requirements of applicable
Canadian Securities Laws and all information and statements therein are
true and accurate in all material respects, contain no
misrepresentation, and constitute full, true and plain disclosure of
all material facts relating to the Company and its subsidiaries, taken
as a whole, and to the securities being offered thereby;
(n) the financial statements included in the Offering Documents present
fairly the consolidated financial position of the Company as at the
dates indicated and the results of its operations for the periods
specified and, except as otherwise stated in such documents, the said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") pursuant to the requirements of
Canada or the United States applied on a consistent basis and, where
such statements have been prepared based on U.S. GAAP, appropriate
reconciliation to Canadian GAAP is provided;
(o) no default exists, and no event has occurred which with notice or lapse
of time, or both would constitute a default, in the due performance and
observance of any term, covenant or condition of any material contract,
indenture, mortgage, deed of trust, bank loan, credit agreement,
evidence of indebtedness or other agreement, understanding or
instrument to which any of the Company and its subsidiaries is a party
or by which any of them or any of their respective properties is bound
or affected, which default would have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(p) the Company is aware and understands that the Agent is not registered
to sell any securities in any jurisdiction of the United States, its
states, territories or other possessions, and that the Agent is not
involved in the distribution of any of the Company's securities to
purchasers in the United States or any of its states, territories or
other possessions, including, but not limited to, the public offering
of up to 500,000 Units in the United
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States, which the Agent understands will be distributed concurrently
with the offering of Units and any Optioned Units in Canada
contemplated herein;
(q) the Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned
by it, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do
not materially interfere with the use made and proposed to be made of
such property by the Company; and any real properties and buildings
held under lease by the Company are held by it under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
properties and buildings by the Company;
(r) the Company and its subsidiaries have filed all federal, provincial,
state, local and foreign tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the
failure so to file would not have a material adverse effect on the
assets and properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole,) and have paid all taxes required to be paid by them
and any assessment, fine or penalty levied against them, to the extent
that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith and, except for taxes, the failure to so pay would not have a
material adverse affect on the business of the Company;
(s) none of the Canada Customs and Revenue Agency, any of its predecessors,
the United States Internal Revenue Service or any foreign taxation
authority has asserted or, to the best of the Company's knowledge,
threatened to assert any reassessment, claim or liability for taxes due
or to become due in connection with any review or examination of the
tax returns of the Company or its subsidiaries filed for any year which
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company or its subsidiaries;
(t) neither the Company nor any of its subsidiaries is subject to any
material liabilities or obligations, direct or indirect, absolute or
contingent, other than the liabilities or obligations set forth in the
Prospectus and those arising thereafter in the ordinary course of
business. Without limiting the generality of the foregoing, neither the
Company nor any of its subsidiaries has any material obligation or
liability for the debts or
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obligations of others or any material exposure or liability as a result
of hedging transactions, the purchase of derivative securities and the
like except as set forth in the Prospectus or those arising in the
ordinary course of business;
(u) (1) the Company and its subsidiaries are in compliance in all material
respects with all applicable Environmental Laws; (2) the Company and
its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance
with their requirements except to the extent that non-compliance or
failure to hold such permits, authorizations and approvals would not
have a material adverse impact on the Company and its subsidiaries,
taken as a whole; (3) there are no pending or, to the knowledge of the
Company or its subsidiaries, threatened Environmental Claims against
the Company or its subsidiaries; and (4) neither the Company nor its
subsidiaries have any knowledge of any circumstances that could
reasonably be anticipated to form the basis of an Environmental Claim
against the Company or its subsidiaries or any of their respective
properties or operations and the business operations relating thereto
which Environmental Claims, individually or in the aggregate, would
have a material adverse affect on the business or operations of the
Company and its subsidiaries considered as a whole;
(v) neither the Company nor its subsidiaries are in violation of their
respective Articles, By-Laws or other constating documents, or in
default in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
they are a party or by which they or any of their properties may be
bound except as disclosed in the Prospectus; and
(w) the Company shall use the net proceeds received by it from the sale of
the Offered Securities and any Optioned Units pursuant to this
Agreement in the manner specified in the Prospectus under the caption
"Use of Proceeds".
9. CLOSING
(a) The purchase of the Offered Securities shall be completed at the
Closing Time on the Closing Date at such place as the Agent and the
Company may agree. If the Agent exercises the Over-Allotment Option, in
whole or in part, in accordance with the provisions hereof, the
purchase and sale of the Optioned Units shall be completed in the same
manner as the Closing (the "Additional Closing") but at the time and on
the date (the "Additional
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Closing Time" and "Additional Closing Date") set for such purchase in
the notice provided to the Company by the Agent. All provisions of this
Agreement with respect to the sale of the Offered Securities shall
apply, mutatis mutandis, to the sale of the Optioned Units at the
Additional Closing, with the Additional Closing Time being substituted
for the Closing Time, the Additional Closing Date being substituted for
the Closing Date, the Optioned Units being substituted for the Offered
Securities, and any other required substitutions being made. If the
Over-Allotment Option is exercised at least 48 hours prior to the
Closing Time, the sale of the Optioned Units shall be made
contemporaneously with the sale of the Offered Securities.
(b) The Agent's sale of the Offered Securities shall be completed by the
Company issuing and delivering to the Agent one certificate
representing the Offered Securities to be issued and sold by it, duly
registered in the name of the Agent, or in such other name or names as
the Agent shall notify the Company in writing not less than two
business days prior to the Closing Time. Contemporaneously therewith:
(i) the Agent shall pay to the Company, or as it may direct, the
purchase price for the Offered Securities by certified cheque or bank
draft; and (ii) the Company shall pay to the Agent the Agency Fee,
including any Agent's Optioned Unit Fee.
(c) The Company shall make all necessary arrangements for the exchange of
the certificates representing the Offered Securities delivered at the
Closing Time at the principal offices of Montreal Trust Company of
Canada in the city of Vancouver for certificates representing the
aggregate number of Offered Securities in such denominations and
registered in such names as shall be designated by or behalf of the
Agent not less than two (2) Business Days prior to the Closing Time.
All such exchanges are to be made without cost to the Agent.
10. CLOSING CONDITIONS
The obligations of the Agent under this Agreement are conditional upon
and subject to the Agent receiving, at the Closing Time:
(a) evidence satisfactory to the Agent that the Company has obtained all
necessary approvals for the Common Shares and Purchase Warrants
issuable on Exercise of the Units, the Offered Securities and any
Optioned Units to be listed on The Canadian Venture Exchange subject to
satisfaction only of the usual conditions;
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(b) one definitive certificate representing the Units and any Optioned
Units registered in the name of the Agent (or in such other name or
names as the Agent may notify the Company of in writing not less than
24 hours prior to the Closing Time) against payment to the Company (or
as the Company may direct to the Agent in writing not less than 24
hours prior to the Closing Time) of the aggregate purchase price for
the Units and any Optioned Units by certified cheque or bank draft
payable immediately at par in Calgary;
(c) the Agency Fee, Work Fee, Special Warrants Fee and any Agent's Optioned
Units Fee, together with all expenses of the Agent, and expenses of the
Agent's counsel, to the extent the Agent has been provided proper
invoices therefor at least 24 hours prior to the Closing Time, shall be
payable by the Company by bank draft or certified cheque payable
immediately at par in Calgary and made payable to the Agent (or as the
Agent may direct by notice given to the Company in writing not less
than 24 hours prior to the Closing Time);
(d) agreements between the Company, the Agent and certain registered
holders namely, ▇▇▇▇▇ ▇▇▇▇▇▇ and Bolder Venture Partners LLC (the
"Registered Holders"), of the Common Shares and rights to purchase
Common Shares (the "Issued Shares") issued and outstanding prior to the
sale of the Offered Securities and any Optioned Units which prevent the
sale by the Registered Holders of any of the Issued Shares legally or
beneficially owned by them in accordance with the guidelines and time
periods imposed by applicable Canadian Securities Laws and the
policies, orders and rules of the Securities Commissions and the
Exchange, specifically, but not limited to, Canadian Securities
Administrators Notice 46-301-"Proposal for Uniform Terms of Escrow
Applicable to Initial Public Distributions";
(e) agreements between the Company, the Agent and ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Bolder Venture Partners
LLC (the "Seed Investors") which prevent the sale by the Seed Investors
of their Common Shares and any warrants to purchase Common Shares (the
"Seed Investors' Issued Shares") except in accordance with the
following terms:
(i) none of the Seed Investors' Issued Shares shall be sold or
transferred for a period of 12 months following the Closing Date;
(ii) 50% of the Seed Investors' Issued Shares shall become available
to the Seed Investors, on a pro rata basis, free from any
restrictions on resale imposed by the terms of the Lock-Up
Agreements only, on that date which is 12 months following the
Closing Date; and
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(iii) the balance of the Seed Investors' Issued Shares shall become
available to the Seed Investors free from any resale restrictions
imposed by the terms of the Lock-Up Agreements only on that date
which is 15 months after the Closing Date;
provided that at the end of the 15 months following the Closing Date,
60% of the Seed Investors' Issued Shares registered in the name of
▇▇▇▇▇ ▇▇▇▇▇▇ and Bolder Venture Partners LLC will be subject to the
resale restrictions described in subparagraph (d) above.
(f) a certificate dated as of the Closing Date signed by the Chief
Executive Officer of the Company or such other persons as may be agreed
upon by the Agent, acting reasonably, certifying, for and on behalf of
the Company and without personal liability, to the best of the
knowledge, information and belief of the persons signing such
certificate, after having made due inquiry, that:
(i) no order ceasing or suspending trading in the Offered Securities
and any Optioned Units or prohibiting the sale of the Offered
Securities and any Optioned Units has been issued and, to the
best of the knowledge of such person, no proceedings for such
purposes are pending or threatened;
(ii) since the later of the date of the Prospectus or the date of any
Supplementary Material, (A) there has been no material adverse
change, (actual, contemplated or threatened) in the business,
affairs, operations, management, assets, liabilities (contingent
or otherwise) or capital of the Company and its subsidiaries,
taken as a whole, and (B) there have been no dividends (other
than as disclosed in the Prospectus as being payable) or other
distribution of any kind declared, paid or made by the Company
on or in respect of its equity capital;
(iv) since the later of the date of the Prospectus or the date of any
Supplementary Material, no transaction material to the Company
and its subsidiaries, taken as a whole, has been entered into by
the Company or any of its subsidiaries, except in the normal
course of its business;
(v) except as disclosed in the Prospectus, none of the Company and
its subsidiaries has any contingent liability arising out of the
ordinary course of business which is material to the Company and
its subsidiaries, taken as a whole;
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(vi) except as disclosed in the Prospectus, there are no actions,
suits, proceedings or inquiries in existence or, to the
knowledge of such officers, pending or threatened against or
affecting the Company or any of its subsidiaries at law or in
equity or before or by any federal, provincial, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality which may materially adversely affect the
Company and its subsidiaries, taken as a whole;
(vii) the representations and warranties of the Company set out in
Section 8 hereof are true and correct in all material respects
at the Closing Time as if made at such time; and
(viii) the Company has complied with all covenants and satisfied all
terms and conditions hereof to be complied with and satisfied by
it, except to the extent that the same have been waived by the
Agent in writing.
(g) an opinion addressed to each of the Agent and to its counsel from
counsel for the Company with respect to:
(i) the Company, and all of its subsidiaries, are validly subsisting
under the laws of Colorado and have all requisite corporate
power and authority to carry on their business and the Company
has the authority to issue and sell the Units and other Offered
Securities and any Optioned Units in the manner provided for in
this Agreement and to carry out its obligations hereunder;
(ii) the authorized capital of the Company;
(iii) this Agreement to which the Company is a party has been duly
authorized, executed and delivered by the Company, is legally
binding upon the Company, and enforceable in accordance with its
terms, except as enforcement of rights and indemnity and
contribution under this Agreement may be limited by applicable
law and except as enforcement may be limited by bankruptcy,
insolvency and other laws of general application affecting the
enforcement of creditors' rights and except that equitable
remedies, such as specific performance and injunction, may only
be granted in the discretion of a court of competent
jurisdiction;
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(iv) the fulfilment of the terms of this Agreement by the Company and
the issue and sale of the Units and the issuance of the other
Offered Securities and any Optioned Units by the Company do not
and will not result in a breach of, and do not and will not
create a state of facts which, after notice or lapse of time or
both, will result in a breach of, any applicable laws, and do
not and will not conflict with any of the terms, conditions or
provisions of the articles or by-laws of the Company;
(v) the Offered Securities and Optioned Units have been duly
qualified for distribution (or distribution to the public, as
the case may be) in the manner contemplated by the Prospectus in
all of the Qualifying Provinces through registered dealers;
(vi) the attributes of the Units, including the Optioned Units,
Agent's Units, Lead Agent's Units and Agent's Over-Allotment
Units, are as described in the Prospectus;
(vii) the Common Shares underlying the Units, Optioned Units, Lead
Agent's Units, Agent's Warrants and the Agent's Over-Allotment
Warrants have been validly issued by the Company and are
outstanding as fully paid and non-assessable shares;
(viii) the Common Shares underlying the Purchase Warrants, including
the Purchase Warrants that comprise part of the Optioned Units,
Lead Agent's Units, Agent's Over-Allotment Warrants and the
Agent's Warrants, have been validly reserved for issuance as
fully paid and non-assessable Common Shares;
(ix) the form and terms of the certificates representing the Units,
Optioned Units, Lead Agent's Units, Agent's Warrants and Agent's
Over-Allotment Warrants meet all legal requirements and have
been duly approved by the Company;
(x) Montreal Trust Company of Canada, at its offices in Vancouver,
has been duly appointed as the transfer agent and registrar for
the Common Shares; and
(xi) the Common Shares and Purchase Warrants issuable on the exercise
of the Units, Optioned Units, Lead Agent's Units, Agent's
Warrants and Agent's Over-Allotment Warrants have been
conditionally approved for listing on The Canadian Venture
Exchange subject to compliance with the requirements of such
exchange.
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(h) a comfort letter from the Company's auditors dated the Closing Date to
the same effect as the comfort letter referred to in paragraph
5(a)(iii) hereof bringing the information contained in the comfort
letter referred to in paragraph 5(a)(iii) forward to the Closing Date,
provided that such comfort letter shall be based on a review by the
auditors having a cut-off date not more than two Business Days prior to
the Closing Date;
all of which opinions shall be in form and substance reasonably satisfactory to
the Agent and their counsel.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and Stikeman Elliott may rely on the opinions of local counsel
acceptable to them as to matters governed by the laws of jurisdictions other
than the Province of British Columbia, in the case of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, and
Alberta, in the case of Stikeman Elliott. Stikeman Elliott may rely on the
opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ as to matters which relate specifically to the
Company. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ and Stikeman Elliott may rely, to the extent
appropriate in the circumstances, as to matters of fact, on certificates of the
Company executed on its behalf under corporate seal by any officer of the
Company;
(i) a certificate dated as of the Closing Date of Montreal Trust Company of
Canada, the registrar and transfer agent for the Common Shares, as to
the issued capital of the Company; and
(j) such other certificates, statutory declarations, opinions, agreements
or materials in form and substance satisfactory to the Agent as the
Agent may reasonably request, including such as may be required as the
basis for the opinions referred to in this Section 10.
11. INDEMNITIES OF THE COMPANY
(a) The Company hereby agrees to indemnify and hold the Agent and/or any of
their subsidiary companies and/or divisions and professional advisors
(hereinafter collectively referred to as the "INDEMNIFIED PARTIES") and
each and every one of the directors, officers, employees and
shareholders of the Indemnified Parties (hereinafter referred to as the
"PERSONNEL") harmless from and against any and all expenses, losses,
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 brought against any one or
more of the Indemnified Parties and/or their Personnel or to which they
may become subject or otherwise involved in any capacity under any
statute or common law insofar as such expenses,
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losses, claims, damages, liabilities or actions arise out of or are
based, directly or indirectly, upon:
(i) any information or statement contained in the Preliminary
Prospectus or in any of the Offering Documents being or being
alleged to be a misrepresentation or untrue or any omission or
alleged omission to state therein any material fact required to
be stated therein or necessary to make any of the statements
therein not misleading in light of the circumstances in which
they were made, except for information contained in the
Prospectus supplied solely by the Agent;
(ii) any order made or any inquiry, investigation or proceeding
instituted, threatened or announced by any court, securities
regulatory authority, stock exchange or by any other competent
authority, based upon any untrue statement, omission or
misrepresentation or alleged untrue statement, omission or
misrepresentation in the Preliminary Prospectus or in any of the
Offering Documents preventing or restricting the trading in or
the sale or distribution of the Offered Securities and any
Optioned Units in any Qualifying Jurisdiction;
(iii) the Company not complying with any requirement of any applicable
Canadian Securities Laws to make any document available for
inspection, or any breach or violation or alleged breach or
violation of any applicable Canadian Securities Laws or other
applicable securities legislation of any jurisdiction resulting
from any action taken or omitted to be taken by the Company in
connection with the transactions contemplated herein;
(iv) the breach of any representation, warranty or covenant of the
Company contained herein; or
(v) any claim, demand or action arising from the exempt distribution
concurrently conducted by the Company in the United States.
provided, however, that this indemnity shall not apply to the extent
that a court of competent jurisdiction in a final judgement that has
become non-appealable shall determine that any one or more of the
Indemnified Parties or their Personnel have been negligent or dishonest
or have committed any fraudulent act in the course of their duties and
the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly caused by the negligence,
dishonesty or fraud therein.
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(b) If for any reason (other than the negligence or fraud of any one or
more of the Indemnified Parties or their Personnel as referred to
above) the foregoing indemnification is unavailable to an Indemnified
Party or insufficient to hold it harmless, then the Company shall
contribute to the amount paid or payable by the Indemnified Party 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 on the one hand and the Indemnified Party on
the other hand but also the relative fault of the Company and the
Indemnified Party, as well as any relevant equitable considerations
provided that the Company shall in any event contribute to the amount
paid or payable by the Indemnified Party as a result of such expense,
loss, claim, damage or liability any excess of such amount over the
amount of the fees received by such Indemnified Party hereunder.
(c) The Company agrees that in case any legal proceeding shall be brought
against the Company and/or any or all of the Indemnified Parties by any
governmental commission or regulatory authority, or in case any stock
exchange or other entity having regulatory authority, either domestic
or foreign, shall investigate the Company and/or any or all of the
Indemnified Parties, in either case in connection with matters pursuant
to which an indemnity is being provided herein as described in
paragraph 11(a), and in case the Personnel of such Indemnified Party(s)
shall be required to testify in connection therewith or shall be
required to respond to procedures designed to discover information in
connection with the performance of professional services rendered to
the Company by the Indemnified Party(s), the Indemnified Party(s) shall
have the right to employ its/their own counsel in connection therewith,
and the reasonable fees and expenses of such counsel as well as the
reasonable costs and out-of-pocket expenses incurred by the Indemnified
Party(s) and their Personnel in connection therewith shall be paid by
the Company as they occur.
(d) Promptly after receipt of notice of the commencement of any legal
proceeding against the Indemnified Party(s) or any of its/their
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, the
Indemnified Party(s) will notify the Company in writing of the
commencement thereof and, throughout the course thereof, will provide
copies of all relevant documentation to the Company, will keep the
Company advised of the progress thereof and will discuss with the
Company all significant actions proposed.
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(e) Contribution obligations of the Company shall be in addition to any
liability which the Company may otherwise have, shall extend upon the
same terms and conditions to the Personnel of the Indemnified Party(s)
and shall be binding upon and enure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the
Indemnified Party(s) and any of the Personnel of the Indemnified
Party(s).
12. INDEMNITY QUALIFICATIONS
Notwithstanding the provisions of Section 11 hereof the foregoing
rights of indemnity shall not enure to any Indemnified Party if the Company has
complied with the provisions of Section 5 hereof and the claim for
indemnification relates to a person asserting a claim in respect of an alleged
untrue statement in or alleged omission from any document, including the
Preliminary Prospectus or the Prospectus, and such person was not provided with
a copy of the Prospectus or Supplementary Material which corrects such alleged
untrue statement or alleged omission and which is required, under applicable
law, to be delivered to such person by such Indemnified Party.
13. EXPENSES
(a) Whether or not the transactions herein contemplated shall be completed,
all expenses of or incidental to the delivery and sale of the Offered
Securities and any Optioned Units, and of or incidental to all other
matters in connection with the transactions herein set out (other than
expenses of the Agent as hereinafter provided, except to the extent
hereinafter provided in this Section 13) shall be borne by the Company
including, without limitation, (i) expenses payable in connection with
the qualification of the Offered Securities and any Optioned Units for
distribution (including filing fees payable to Securities Commissions);
(ii) the fees and expenses of the Company's counsel and the Company's
auditors; (iii) expenses of the information meetings relating to the
transactions herein set out; (iv) all costs incurred in connection with
the preparation, printing and delivery of the Preliminary Prospectus,
the Prospectus and any Supplementary Material, including commercial
copies thereof; (v) all costs of the certificates representing the
Units, Optioned Units, Agent's Warrants, Lead Agent's Units and Agent's
Over-Allotment Warrants; (vi) all costs incurred in connection with the
listing of the Common Shares and Purchase Warrants issuable in the
exercise of the Units, Optioned Units, Agent's Warrants, Lead Agent's
Units and Agent's Over-Allotment Warrants on The Canadian Venture
Exchange; and (vii) the fees and disbursements of the Agent's counsel
and the Agent's "out-of-pocket" expenses, including, without
limitation, advertising, travel, courier, background searches and
communication expenses.
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(b) The Company hereby acknowledges that legal fees and disbursements of
the Agent's counsel shall be payable by the Company on the Closing
Date.
14. EARLY TERMINATION
(a) In addition to any other remedies which may be available to the Agent,
the Agent shall be entitled to terminate and cancel, without any
liability on the Agent's part, the Agent's obligations under this
Agreement if at any time prior to the Closing Time, or if there is more
than one Closing, any time prior to the Closing Time associated with
the first Closing:
(i) there should develop, occur or come into effect or existence any
event, action, state, condition or major financial occurrence of
national or international consequence or any law or regulation
which, in the Agent's reasonable opinion, materially and
adversely affects, or will materially and adversely affect, the
financial markets, the business, operations or affairs of the
Company and its subsidiaries, taken as a whole, or the profitable
marketing or distribution of the Offered Securities and Optioned
Units;
(ii) there shall occur any material change, or change in a material
fact, as described or contemplated in Section 6 hereof which, in
the Agent's reasonable opinion, has or will have a material
adverse effect on the market price or value of the Units or which
results or, in the Agent's opinion, would reasonably be expected
to result in, the purchasers of a material number of the Offered
Securities or Optioned Units exercising their right under
Canadian Securities Laws to withdraw from their purchase of the
Offered Securities and any Optioned Units;
(iii) if any inquiry, action, suit, proceeding or investigation
(whether formal or informal) is instituted or any order made by
any federal, provincial, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality,
including without limitation, any of The Canadian Venture
Exchange or any of the Securities Commissions (other than an
inquiry, action, suit, proceeding, investigation or order based
solely on the activities or alleged activities of the Agent) or
any law or regulation is promulgated or changed which, in the
Agent's reasonable opinion, operates to prevent or restrict the
trading or distribution of the Offered Securities, Optioned Units
or any of them; or
(iv) there should occur or come into effect any change in the
financial markets which, in the Agent's reasonable opinion, is
material and adverse and such that the Offered Securities or
Optioned Units cannot be profitably marketed;
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by giving written notice to the Company to that effect as soon as
practicable in the circumstances and in any event prior to the
Closing Time.
(b) If the obligations of the Agent are terminated under this Section 14
there shall be no further liability on the part of the Agent to the
Company and the liability of the Company hereunder to the Agent shall
be limited to their respective obligations under Sections 11, 12 and 13
hereof.
15. RESTRICTIONS ON SALES
Unless the Closing does not occur, the Company agrees that it will not,
without the prior consent of the Agent, which consent shall not be unreasonably
withheld, offer, sell or otherwise dispose of any Common Shares or any
securities convertible into or exchangeable or exercisable for Common Shares or
agree to do so or publicly announce any intention to do so (except Common Shares
required to be issued pursuant to stock options or other awards now outstanding
or hereafter issued in the ordinary course under the Company's equity incentive
plan, or pursuant to convertible instruments currently outstanding) for a period
of 180 days from the Closing Date.
16. TERMS AND CONDITIONS
All material terms and conditions of this Agreement shall be construed
as conditions. Any breach or failure to comply with any of such terms or
conditions (i) by the Company shall entitle the Agent, without limitation of its
other remedies, to terminate its obligations pursuant to this Agreement or (ii)
by the Agent shall entitle the Company, without limitation of any of its other
remedies, to terminate its obligations pursuant to this Agreement, in any such
case by giving written notice to that effect to the Company or to the Agent
prior to the Closing Time. It is understood that the Agent, on the one hand, or
the Company, on the other hand, may waive, in whole or in part, or extend the
time for compliance with, any of such terms and conditions without prejudice to
its or their rights in respect of any other of such terms and conditions or any
other or subsequent breach or non-compliance, provided that to be binding on the
Agent or the Company, as the case may be, any such waiver or extension must be
in writing.
17. SURVIVAL
The representations, warranties, covenants and agreements of the
Company and the Agent contained in this Agreement or delivered pursuant hereto
shall survive the period of distribution and shall continue in full force and
effect for a period of three years from the Closing Date or the Over-Allotment
Expiry Date,
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whichever is later, or if more than one Closing is held, three years from the
last Closing Date, and the Agent shall be entitled to rely on the
representations and warranties of the Company contained herein or delivered
pursuant hereto notwithstanding any investigation which the Agent may undertake
or which may be undertaken on their behalf.
18. INCORPORATION BY REFERENCE
This Agreement supersedes and replaces the letter of engagement between
the Company and the Agent (the "Engagement Letter"), dated for reference May 15,
2000, and the Agency Agreement between the Company and the Agent, dated for
reference December 7, 2000 (the "Original Agency Agreement"), neither of which
continue to be of any force or effect between the parties. For further
clarification, to the extent that there is a conflict between the terms of the
Engagement Letter and Original Agency Agreement with this Agreement, the terms
of this Agreement shall prevail in all cases.
19. NOTICES
Any notice or other communication to be given hereunder shall be
addressed as follows:
To the Company: Industrialex Manufacturing Corp.
63 - A.S. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇.▇.▇. ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
#2100, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Agent: Thomson Kernaghan & Co. Limited
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
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Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Stikeman Elliott
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or other communication shall be in writing and, unless delivered
personally to a responsible officer of the addressee, shall be given by courier
service or facsimile transmission and shall be deemed to have been received, if
given by facsimile transmission, on the date of sending (or if such day is not a
Business Day, the next Business Day) and, if given by courier service, when
received. The Company or the Agent may change their respective addresses for
notice by notice given in the manner aforesaid.
20. RIGHT OF FIRST REFUSAL
Provided the offering contemplated by this Agreement is completed, the
Agent shall have the right of first refusal to lead all subsequent public
financings contemplated by the Company, whether debt or equity, for a period of
eighteen (18) months from May 15, 2000. In the event that the Company receives
any proposal from any party to assist, broker or conduct such offering on behalf
of the Company, the Company shall immediately deliver a copy of such proposal
(the "Term Sheet") to the Agent who shall have ten (10) business days to
determine if they are prepared to conduct such offering on behalf of the Company
on such terms. In the event that the Agent elects not to conduct such offering,
the Company may proceed to complete such offering with another party on terms no
less favourable than those set out in the Term Sheet and such offering must be
completed within 140 days of the delivery of the Term Sheet to the Agent.
This right of first refusal shall be recurring and the failure of the
Agent to exercise such right of first refusal with respect to any one financing
shall not affect the Company's obligation to provide such right to the Agent on
subsequent financings.
In the circumstances where such offering is to be conducted in the
United States, the Company acknowledges that the Agent shall still be entitled
to such right of first refusal but may involve one or more associated or
affiliated entities to comply with United States Securities Laws and other legal
requirements.
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21. SPONSORSHIP
(a) Subject to paragraph (b) below, the Agent agrees that it shall act as
the Company's sponsor for listing of the Common Shares and Purchase
Warrants on the Exchange and, in connection therewith, shall prepare
and file with the Exchange in accordance with the rules, regulations
and policies of the Exchange:
(i) a Sponsorship Acknowledgement Form concurrently with the
Company's application to list the Common Shares and Purchase
Warrants on the Exchange;
(ii) a Preliminary Sponsor Report concurrently with the Company's
application to list the Common Shares and Purchase Warrants on
the Exchange; and
(iii) a Final Sponsor Report concurrently with the filing of the final
Prospectus with the Exchange
(collectively, the "Sponsorship Documents") or at such other times as
determined by the Exchange, but only after the Agent conducts the
necessary Review Procedures and Due Diligence.
"Sponsorship Acknowledgement Form", Sponsor Report", "Due Diligence"
and "Review Procedures" all have the meaning prescribed in the policies
of the Exchange.
The Company agrees that it shall provide the Agent with the opportunity
to conduct all necessary Due Diligence and Review Procedures to prepare
such Sponsorship Documents.
(b) The parties acknowledge that the Agent has agreed to act as the
Company's sponsor for listing of the Common Shares and Purchase
Warrants on the Exchange relying on its own Due Diligence and Review
Procedures and on the good faith of the representations made, and
materials provided, by the Company and its directors, officers,
promoters, agents and employees. The parties hereby agree that the
Agent may unilaterally cease to act as the Company's sponsor for
listing the Common Shares and Purchase Warrants on the Exchange,
without penalty or deduction of the Work Fee, Investment Banking Fee,
Special Warrant Fee, Agent's Optioned Unit Fee or the amounts
prescribed by Sections 13, if, at any time following preparation and
filing of any of the Sponsorship Documents with the Exchange:
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(i) there shall have occurred any material adverse change or any
adverse change of a material fact or a development that could
reasonably result in a material adverse change or adverse
change in a material fact in respect of the business,
operations, capital, condition (financial or otherwise),
properties, assets, liabilities, obligations or affairs of the
Company;
(ii) the Company shall be in breach of or default under or
non-compliance with any material representation, warranty,
term, condition or covenant of this Agreement, its application
to the Exchange to list the Common Shares and Purchase
Warrants, the Prospectus or any other material contract listed
in the Prospectus.;
(iii) any inquiry, investigation (whether formal or informal) or
other proceeding is announced or commenced by any court,
securities commission or other regulatory authority, or any
order is issued in relation to the Company, any of its
affiliates, or any of its directors or officers or any of the
Company's securities;
which, in the sole discretion of the Agent, prevents or restricts
trading in or the distribution of the Common Shares or Purchase
Warrants, or has or would have a material adverse affect on the
business of the Company or on the value of, or market price, or the
investment quality or marketability of the Common Shares or Purchase
Warrants;
(iv) if there should develop, occur or come into effect or existence
any event, action, state, condition or major financial
occurrence of national or international consequence or any law
or regulation which, in the opinion of the Agent, materially
adversely affects or involves, or will materially adversely
affect or involve, the financial markets or the business,
operations or affairs of the Company or the marketability of
the Common Shares or Purchase Warrants; or
(v) an order to cease or suspend trading is made by any securities
commission, stock exchange or other competent authority by
reason of the fault of the Company or its directors, officers
and agents and such order is not rescinded within two Business
Days; or
(vi) the Agent receives or becomes aware of any information which,
in the sole opinion of the Agent, acting reasonably, may result
in the purchasers of a material number of the Units or Optioned
Units exercising their rights under applicable legislation to
withdraw or rescind their purchase thereof at any time
following the filing or preparation of any of the Sponsorship
Documents;
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(vii) the Agent shall become aware, as a result of its Due Diligence,
Review Procedures or otherwise, of any adverse material change
or adverse material fact (financial or otherwise) with respect
to the Company, its subsidiaries, affiliates or their
directors, officers or promoters, which had not been publicly
disclosed or disclosed to the Agent in writing by the Company,
prior to the preparation or filing of the Sponsorship Documents
with the Exchange; or
(viii) the Company has not obtained all necessary regulatory approvals
and filed all necessary documentation under applicable Canadian
Securities Laws or the rules, regulations and policies of the
Exchange in connection with the listing of the Common Shares
and Purchase Warrants on the Exchange or the distribution of
the Offered Securities or Optioned Units; or
(ix) if there is an event or occurrence of any nature in the
business or other affairs of the Company, its subsidiaries and
affiliates, or their directors, officers or promoters, which,
in the sole discretion of the Agent, would seriously effect the
ability of the Agent to perform its obligations as sponsor for
listing of the Common Shares and Purchase Warrants on the
Exchange; or
(x) if any of the representations made by the Company, its
affiliates or subsidiaries, or their directors, officers or
promoters in the course of the Agent's Due Diligence, Review
Procedures or otherwise are, in the sole opinion of the Agent,
false or have become false in any material respect since the
preparation and/or filing of the Sponsorship Documents with the
Exchange; or
(xi) if the Agent becomes aware of any past conduct of the
directors, officers, promoters or Insiders (as that term is
defined in the policies of the Exchange) of the Company or any
of its subsidiaries or affiliates which, in the sole discretion
of the Agent, shows that one or more of them do not possess the
industry and securities experience, as well as integrity,
required by the Exchange for publicly listed companies, or that
one or more of them has displayed a history of regulatory
non-compliance or lack of corporate or financial success; or
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(xii) if the Agent becomes aware that the Insiders and Control
Persons (as that term is defined in the policies of the
Exchange) of the Company or any of its subsidiaries or
affiliates do not, to the sole satisfaction of the Agent,
understand their statutory trading and reporting obligations as
prescribed by applicable Canadian Securities Laws; or
(xiii) if the Agent becomes aware that, in its sole opinion, the
directors and officers of the Company or any of its affiliates
or subsidiaries do not possess the business acumen, history of
responsible business conduct and success, or educational and
professional qualities required by the policies of the
Exchange; or
(xiv) if the Agent becomes aware that internal controls do not exist
in the Company requiring the signatures of two authorized
persons on all cheques or other instruments binding the
Company; or
(xv) if the Agent becomes aware that the proceeds from the sale of
the Offered Securities and any Optioned Units are not being
used as disclosed in the Prospectus; or
(xvi) if the Agent becomes aware that the directors and officers are
not, in its sole opinion, devoting sufficient time to properly
manage the business and corporate affairs of the Company; or
(xvii) if the Agent becomes aware that the officers and/or directors
of the Company have failed to prepare or disclose all
information required by applicable Canadian Securities Laws and
the rules, regulations and policies of the Exchange; or
(xviii) if the Agent becomes aware that the directors and officers of
the Company, in the Agent's sole opinion, do not appreciate the
nature of their responsibilities as management of the Company;
or
(xix) if the Agent becomes aware, in it sole opinion, that the
Company does not meet minimum listing or other requirements, as
defined in the rules, regulations and policies of the Exchange.
22. STABILIZATION
In connection with the distribution of the Offered Securities and any
Optioned Units, the Agent may, for its own account, over-allot or effect
transactions which stabilize or maintain the market price of the Offered
Securities and Optioned Units at levels other than those which might otherwise
prevail in the open markets but in each case only as permitted by applicable
law. Such stabilizing transactions, if any, may be discontinued at any time.
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23. SEVERABILITY
If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall be deemed not to affect or impair
the validity of any other provision of this Agreement and such void or
unenforceable provision shall be severable from this Agreement.
24. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
25. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta.
26. COUNTERPARTS
This offer and the agreement resulting from the acceptance of this
offer may be executed by manual or facsimile signature in several counterparts,
each of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
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27. ATTORNMENT
The Company and the Agent hereby attorn to the non-exclusive
jurisdiction of the courts of the Province of Alberta.
If the foregoing is in accordance with your understanding and is agreed
to by you, will you please confirm your acceptance by signing the enclosed
copies of this Agreement and returning the same to the Agent.
Yours truly,
THOMSON KERNAGHAN & CO. LIMITED
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Accepted and agreed to this
1st day of February, 2001.
INDUSTRIALEX MANUFACTURING CORP.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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