Exhibit 1.1
AGENCY OFFERING AGREEMENT
THIS AGREEMENT dated for reference September ___, 2004 is made
BETWEEN
GREAT AMERICAN MINERALS, INC., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇-▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(the "Issuer");
AND
CANACCORD CAPITAL CORPORATION, ▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Agent").
WHEREAS:
A. The Issuer wishes to raise money for the purposes set forth in its
Prospectus, which is to be filed by the Issuer with the Commissions and the
Exchange, by offering for sale certain of its securities;
B. The Issuer wishes to appoint the Agent to distribute those securities and the
Agent is willing to accept the appointment on the terms and conditions of this
Agreement; THE PARTIES to this Agreement therefore agree:
1. DEFINITIONS
In this Agreement:
(a) "1933 Act" means the United States Securities Act of 1933, as
amended;
(b) "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;
(c) "Agent's Shares" means the common shares of the Issuer to be
issued to the Agent as part of the Agent's Units;
(d) "Agent's Units" means the units of the Issuer which may be
issued to the Agent as part of the Agent's Fee having the
terms provided in this Agreement;
(e) "Agent's Warrants" means the common share purchase warrants of
the Issuer issued to the Agent as part of the Agent's Fee;
(f) "Agent's Warrant Shares" means any common shares in the
capital of the Issuer that may be issued on exercise of the
Agent's Warrants;
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(g) "Applicable Legislation" means the securities acts in the
Selling Provinces, the regulations and rules made thereunder,
and all administrative policy statements, blanket orders,
notices, directions and rulings issued by the Commissions;
(h) "Certificates" means the certificates representing the Shares,
Warrants, Agent's Shares, Agent's Warrants and Corporate
Finance Shares;
(i) "Closing" means the closing of the purchase and sale, and the
issuance by the Issuer of the Units;
(j) "Closing Day" means the day which falls 10 days after the
Offering Day;
(k) "Commissions" means the securities commission or equivalent
regulatory authority in the Selling Provinces;
(1) "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;
(m) "Corporate Finance Shares" means the previously unissued
common shares of the Issuer which will be issued as part of
the Corporate Finance Fee;
(n) "Distribution" means the distribution or sale of the
Securities pursuant to this Agreement and includes the
distribution of the Agent's Warrants, Agent's Shares and
Corporate Finance Shares;
(o) "Effective Date" means the date on which the final receipt for
the Prospectus is issued by the Commissions;
(p) "Exchange" means the TSX Venture Exchange;
(q) "Exchange Act" means the United States Exchange Act of 1934 as
amended;
(r) "Material Change" has the meaning defined in the Applicable
Legislation;
(s) "Material Fact" has the meaning defined in the Applicable
Legislation;
(t) "Misrepresentation" has the meaning defined in the Applicable
Legislation;
(u) "Offering" means the offering of the Units under the
Prospectus;
(v) "Offering Day" means the day chosen by the Agent to contract
the purchases of Units by the Purchasers;
(w) "Offering Price" means $0. 50 per Unit;
(x) "Proceeds" means the gross proceeds of the Offering, less:
(i) that portion of the Agent's Fee which is payable in
cash;
(ii) the cash portion of the Corporate Finance Fee which
has not yet been paid;
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(iii) the expenses of the Agent in connection with the
Offering which have not been repaid by the Issuer;
and
(iv) any amount already received by the Issuer.
(y) "Prospectus" means the preliminary prospectus and the final
prospectus filed or intended to be filed by the Issuer with
the Regulatory Authorities in connection with the Offering and
any amendments to the preliminary prospectus and final
prospectus which may be filed with the Regulatory Authorities;
(z) "Registration Statement" means a registration statement
prepared on Form SB-2 intended to be filed by the Issuer with
the SEC in connection with the Offering, including any
amendments;
(aa) "Regulatory Authorities" means the Commissions and the
Exchange;
(bb) "SEC" means the Securities and Exchange Commission of the
United States of America;
(cc) "Securities" means the Units, Shares, Warrants, Warrant
Shares, Agent's Shares, Agent's Warrants, Agent's Warrant
Shares, and Corporate Finance Shares;
(dd) "Selling Provinces" means British Columbia, Alberta and
Ontario;
(ee) "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;
(ff) "Units" means the units of the Issuer to be offered by the
Issuer pursuant to this Agreement having the terms provided in
this Agreement;
(gg) "Warrants" means the 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
(hh) "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 will act as the exclusive agent of the Issuer to offer, on a
commercially reasonable efforts basis, up to 5, 000, 000 Units for sale under
the Prospectus at the Offering Price.
3. FILING OF PROSPECTUS
3.1 The Issuer will provide the Agent with a draft preliminary Prospectus as
soon as practicable.
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3.2 As soon as practicable after the Agent has indicated that it is satisfied
with the form and substance of the draft preliminary Prospectus, the Issuer will
cause the Prospectus to be filed with the Regulatory Authorities, will deliver
all necessary copies of the Prospectus to the Regulatory Authorities and will
use its best efforts to have the Prospectus accepted by the Regulatory
Authorities.
3.3 The Issuer will provide the Agent with as many copies of the Prospectus as
the Agent reasonably requests.
3.4 Delivery of the Prospectus and any amendment thereto shall constitute a
representation and warranty by the Issuer to the Agent that all information and
statements (except information and statements relating solely to the Agent)
contained in the Prospectus and any amendment thereto are true and correct in
all material respects at the time of delivery thereof and contain no
Misrepresentations and constitute full, true and plain disclosure of all
Material Facts relating to the Issuer and the Securities and that no Material
Fact or material information has been omitted therefrom (except facts of
information relating solely to the Agent) which is required to be stated therein
or is necessary to make statements of information contained therein not
misleading in light of the circumstances under which they were made. Such
delivery shall also constitute the Issuer's consent to the Agent's use of the
Prospectus, any amendment thereto and any other documents supplied to the Agent
by the Issuer for the purpose of the sale of Units in the Selling Provinces in
compliance herewith and with the Applicable Legislation.
4. FILING OF REGISTRATION STATEMENT
4.1 The Issuer will provide the Agent with a draft Registration Statement as
soon as practicable.
4.2 As soon as practicable after the Agent has indicated that it is satisfied
with the form and substance of the Registration Statement, the Issuer will file
the Registration Statement with the SEC. The Issuer will promptly advise the
Agent when the Registration Statement has become effective.
4.3 From and after the Effective Date until the Closing Day, and for such longer
period as any of the Warrants or Agent's Warrants remain outstanding (the
"Specified Period"), the Issuer will ensure that the Registration Statement:
(a) complies in all material respects with the 1933 Act and the
rules promulgated thereunder;
(b) constitutes full, true and plain disclosure of all material
facts relating to the Issuer and to the Securities; and
(c) does not contain any untrue statement of a material fact, or
omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
4.4 The Issuer will use its best efforts to cause the Registration Statement,
and any amendment thereto, to remain effective continuously through the
Specified Period. If the Issuer uses Rule 430A, or the filing of the prospectus
included in the Registration Statement is
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otherwise required under Rule 424(b) of the 1933 Act, the Issuer will file such
prospectus (properly completed if Rule 430A has been used) pursuant to Rule
420(b) within the prescribed time period and will provide satisfactory evidence
to the Agent of such timely filing. During the Specified Period, the Issuer:
(a) will not file any amendment of the Registration Statement or
amendment or supplement to the prospectus included therein
unless the Issuer has furnished such amendment or supplement
to the Agent prior to filing, and will not file any such
amendment or supplement to which the Agent reasonably objects;
(b) will advise the Agent of any request by the SEC for any
amendment to the Registration Statement, or any supplement to
the prospectus included therein or for any additional
information;
(c) will advise the Agent when any amendment to the Registration
Statement or supplement to the prospectus included therein
shall have been filed and when it has become effective;
(d) will advise the Agent of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding
for that purpose, and will use its best efforts to prevent the
issuance of any such stop order;
(e) will advise the Agent of its receipt of any notification with
respect to the suspension of the qualification of the
Securities for trading in any jurisdiction, or the institution
or threatening of any proceeding for such purpose, and will
use its best efforts to prevent such suspension;
(f) will comply, at its own expense, with all requirements imposed
upon it by the SEC, the 1933 Act, the Exchange Act, and the
rules and regulations promulgated by the SEC thereunder, so
far as necessary to permit the continuance of sales or dealing
in the Securities in accordance with the certificates
representing the Warrants, the Agent's Warrants and this
Agreement.
4.5 The Issuer will, as soon as practicable and in any event not later than 45
days after the end of its fiscal quarter in which the first anniversary date of
the effective date of the Registration Statement occurs, make generally
available (within the meaning of Section 11 (a) of the ▇▇▇▇ ▇▇▇) to its
securityholders and to the Agent an earnings statement or statements of the
Issuer which will satisfy the provisions of Section ll(a) of the 1933 Act and
Rule 158 promulgated thereunder, covering a period of at least 12 consecutive
months beginning after the effective date of the Registration Statement.
4.6 The Issuer will timely file with the SEC an appropriate form to register the
Securities pursuant to Section 12(g) of the Exchange Act, and comply with all
registration, filing and reporting requirements of the Exchange Act which may be
applicable to the Issuer.
4.7 Neither the Issuer nor the Agent will take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, whether under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
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Issuer to facilitate the sale or resale of the Shares, the Warrant Shares, the
Agent's Shares, the Agent's Warrant Shares or the Corporate Finance Shares.
5. LISTING APPLICATION AND CONDUCT OF THE OFFERING
5.1 Prior to the Closing Day, the Issuer will make application to list the
Shares, Warrant Shares, Agent's Shares, Agent's Warrant Shares, and Corporate
Finance Shares on the Exchange and conditional approval of such application must
be obtained from the Exchange prior to Closing.
5.2 Following the Effective Date and after consulting with the Exchange, the
Issuer and the Agent will set the Offering Day.
5.3 The Offering Day will be on or before the earlier of the day which is: (a)
90 days after the Effective Date; and (b) 12 months after the date of the issue
by the Commissions of the preliminary receipt for the Prospectus.
5.4 Immediately after the Offering Day, the Issuer shall take all necessary
steps to complete and file with the Exchange its application for listing with
all other documentation required by the Exchange, to allow for the listing and
posting for trading of the common shares of the Issuer on the Exchange, which is
to occur no earlier than 10 business days after the Offering Day unless
otherwise agreed to by the Agent.
5.5 The Agent will advise the Issuer and its counsel in writing when the
Distribution under the Prospectus is complete.
6. OPINIONS AND CERTIFICATES
6.1 On the Effective Date, the Issuer will deliver the following documents to
the Agent and its counsel in a form acceptable to them:
(a) a comfort letter from the auditor of the Issuer, dated as of
the date of the Prospectus and addressed to the Agent and its
counsel, relating to the accuracy of the financial statements
forming part of the Prospectus and the accuracy of the
financial, numerical and certain other information disclosed
in the Prospectus;
(b) an opinion of counsel for the Issuer, dated as of the
Effective Date and addressed to the Agent and its counsel,
relating to any legal matter in connection with the creation,
issuance and sale of the Securities for which the Agent may
reasonably request an opinion (the "Legal Opinion");
(c) a certificate of the Issuer, dated as of the Effective Date
and signed by the president of the Issuer and the chief
financial officer of the Issuer or such other officers of the
Issuer approved by the Agent, certifying certain facts
relating to the Issuer and its affairs (the "Officers'
Certificate"); and
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(d) any other certificates, comfort letters or opinions in
connection with any matter related to the Prospectus which are
reasonably requested by the Agent or its counsel.
6.2 On Closing, the Issuer will provide the Agent and its counsel with evidence
of the necessary approval of the Regulatory Authorities for the Offering, the
Legal Opinion and the Officers' Certificate updated to the Closing Day.
7. AGENT'S FEE
7.1 In consideration of the services performed by the Agent under this
Agreement, the Issuer agrees to pay to the Agent on Closing an Agent's Fee
consisting of:
(a) a commission equal to 10% of the gross proceeds received by
the Issuer from the sale of the Units, one-half of which will
be paid in cash and one-half of which will be paid in cash or
Agent's Units, at the election of the Agent; and
(b) that number of Agent's Warrants which is equal to 20% of the
number of Units sold on such Closing.
7.2 Each Agent's Unit will consist of one Agent's Share and one Agents' Warrant.
7.3 Each Agent's Warrant will entitle the holder, on exercise, to purchase one
Agent's Warrant Share at a price of $0. 65 per Agent's Warrant Share.
7.4 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 one
year from the date such Agent's Warrant was issued to the holder.
7.5 The Issuer agrees to pay a Corporate Finance Fee to the Agent by the
issuance of 250, 000 Corporate Finance Shares on the Closing and by the cash
payment of $30, 000 as follows:
(a) as to $15, 000 on August 26, 2003 (paid);
(b) as to $7, 500 upon filing of the preliminary Prospectus; and
(c) as to $7, 500 on the Closing.
7.6 The Agent's Warrants will be represented by certificates, and will be
non-transferable except as permitted by Applicable Legislation and any order
granted by the Commissions.
7.7 The terms governing the Agent's Warrants will include, among other things,
provisions for the appropriate adjustment in the class, number and price of the
Agent's Warrant 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.
7.8 In the event the Agent is willing to proceed with the Distribution but the
Issuer precludes the Agent from completing the Distribution, notwithstanding
anything else in this Agreement, the Corporate Finance Fee shall be payable to
the Agent.
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8. THE UNITS
Each Unit will consist of one Share and one Warrant and the Shares and Warrants
will be issued and registered in accordance with the instructions of the Agent.
9. WARRANTS
9.1 The Warrants will be non-transferable and will be registered in accordance
with the instructions of the Agent.
9.2 The Warrants may be exercised at any time up to the close of business one
year from the Closing Day. Two Warrants will entitle the holder to purchase one
Warrant Share of the Issuer at a price of $0. 65 per Warrant Share.
9.3 The terms governing the Warrants will include, among other things,
provisions for the appropriate adjustment in the class, number and price of the
Warrant Shares of the Issuer issuable under the Warrants upon the occurrence of
certain events, including any subdivision, consolidation or reclassification of
the common shares of the Issuer, the payment of stock dividends or the
amalgamation of the Issuer.
9.4 The issue of the Warrants will not restrict or prevent the Issuer from
obtaining any other financing, nor from issuing additional securities or rights
during the period within which the Warrants are exercisable.
10. MINIMUM SUBSCRIPTION
10.1 The Offering is subject to a minimum subscription of 3, 000, 000 Units.
10.2 All funds received by the Agent for subscription will be held in trust by
the Agent or placed in trust with the Issuer's registrar and transfer agent
until the minimum subscription has been obtained.
10.3 Notwithstanding any other term of this Agreement, all subscription funds
received by the Agent will be returned to the subscribers if the minimum
subscription is not obtained by 5: 00 p. m. (Vancouver time) on the Offering
Day.
11. CLOSING
11.1 The Closing will take place on the Closing Day.
11.2 On Closing, the Issuer will deliver the Certificates, through its registrar
and transfer agent, to the Agent against payment of the Proceeds.
11.3 If the Issuer has satisfied all of its obligations under this Agreement, on
Closing, the Agent will pay the Proceeds to the Issuer through its registrar and
transfer agent, against delivery of the Certificates.
11.4 The obligation of the Agent to pay the Proceeds to the Issuer shall be
subject to the following conditions precedent:
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(a) the Issuer shall have performed or complied with each covenant
and obligation herein provided on its part to be performed or
complied with;
(b) each of the representations and warranties of the Issuer
herein shall continue to be true, and the Officers'
Certificate shall contain certification to that effect;
(c) the Registration Statement shall have been declared effective;
and (d) the Issuer shall have, to the satisfaction of the
Agent's counsel, taken or caused to be taken all steps and
proceedings which may be requisite under the Applicable
Legislation to qualify the Distribution of the Units to the
public in the Selling Provinces through registrants who have
complied with the provision of the Applicable Legislation,
including the filing and the obtaining of receipts for the
Prospectus.
12. MATERIAL CHANGES
12.1 If, after the Prospectus is filed with the Regulatory Authorities but
before the Closing, a Material Change or change in a Material Fact occurs in the
affairs of the Issuer, the Issuer will:
(a) notify the Agent immediately, in writing, with full
particulars of the change;
(b) file with the Regulatory Authorities as soon as practicable,
and in any event no later than 10 days after the change
occurs, an amendment to the Prospectus in a form acceptable to
the Agent disclosing the material change;
(c) file with the SEC as soon as practicable, an amendment to the
Registration Statement disclosing the material change; and
(d) provide as many copies of the applicable amendments to the
Agent as the Agent may reasonably request.
12.2 The Issuer shall in good faith discuss with the Agent any fact or change in
circumstances (actual and anticipated, contemplated or threatened, whether
financial or otherwise) which is of such a nature that there is reasonable doubt
as to whether notice in writing need be given to the Agent pursuant to the
previous Subsection.
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 Closing if:
(a) 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 any
subsidiary of the Issuer or the ability of the Agent to
perform its obligations under this Agreement or an investor's
decision to purchase Units;
(b) an adverse Material Change or change in a Material Fact
relating to any of the Securities occurs or is announced by
the Issuer;
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(c) following a consideration of the history, business, products,
property or affairs of the Issuer or its principals and
promoters, or the state of the financial markets in general,
or the state of the market for the Issuer's securities in
particular, or the possibility of investors exercising their
statutory rights to withdraw from the purchase of the Units,
the Agent determines, in its discretion, that it is not in the
interest of investors to complete the Offering;
(d) the Units 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; or
(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.
13.2 The Agent may terminate its obligations under this Agreement at any time
if:
(a) any order to cease trading (including communicating with
persons in order to obtain expressions of interest) in the
securities of the Issuer is made by a competent regulatory
authority and that order is still in effect;
(b) the Issuer is in breach of any term of this Agreement;
(c) the Agent determines that any of the representations or
warranties made by the Issuer in this Agreement is false or
has become false.
13.3 If the Agent exercises its right to terminate this Agreement, then the
Issuer will immediately issue a press release setting out particulars of the
termination.
13.4 This Agreement will terminate if a final receipt for the Prospectus is not
issued by the Commissions within 120 days of the reference date of this
Agreement.
14. WARRANTIES AND REPRESENTATIONS
14.1 The Issuer warrants and represents to the Agent that:
(a) the Issuer and its subsidiaries, if any, are valid and
subsisting corporations duly incorporated and in good standing
under the laws of the jurisdictions 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 or own property 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 is as
disclosed in the Prospectus and the issued and outstanding
common shares of the Issuer are fully paid and non-assessable;
(d) the Issuer will reserve or set aside sufficient common shares
in its treasury to issue the Shares, Warrant Shares, Agent's
Shares, Agent's Warrant Shares, and Corporate Finance Shares;
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(e) except as qualified by the Prospectus and Registration
Statement, the Issuer is the beneficial owner of the
properties, business and assets or the interests in the
properties, business or assets referred to in the Prospectus
and Registration Statement; all agreements by which the Issuer
holds an interest in a property, business or asset 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 Prospectus and the Registration Statement will contain
full, true and plain disclosure of all Material Facts in
relation to the Issuer, its subsidiaries (if any), its
business and its securities, will contain no
Misrepresentations, 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 of the Issuer which form part of the
Prospectus have been prepared in accordance with Canadian
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 at the date of the financial
statements and there have been no adverse material changes in
the financial position of the Issuer since that date, except
as fully and plainly disclosed in the Prospectus;
(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, the 1933 Act, the
Exchange Act and the corporate law of the jurisdiction in
which it was incorporated in relation to the issue and trading
of its securities and in all matters relating to the Offering;
(i) the issue and sale of the Securities by the Issuer 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;
(j) except as disclosed in the Prospectus and the Registration
Statement, neither the Issuer or its subsidiaries, if any, is
a party to any actions, suits or proceedings which could
materially affect its business or financial condition, and no
such actions, suits or proceedings are contemplated or have
been threatened;
(k) 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;
(1) this Agreement has been 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 Offering;
(m) there is not presently, and will not be until the conclusion
of the Distribution, any Material Change or change in any
Material Fact relating to the Issuer which has
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not been or will not be fully disclosed in the Prospectus and
the Registration Statement;
(n) no order ceasing, halting or suspending trading in securities
of the Issuer or 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 in the Prospectus and the Registration
Statement, 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 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;
(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 or 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;
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(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; and
(t) the warranties and representations in this Subsection are true
and correct and will remain so as of the Closing.
14.2 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, continued or
amalgamated;
(b) it is a member in good standing of the Exchange; and
(c) it has complied with and will fully comply with the
requirements of all applicable securities laws, including,
without limitation, the Applicable Legislation and the by-laws
and rules of the Exchange, in relation to trading in the
Securities and all matters relating to the Offering.
15. EXPENSES OF AGENT
15.1 The Issuer will pay all of the expenses of the Offering and all the
expenses reasonably incurred by the Agent in connection with the Offering
including, without limitation, the fees and expenses of the solicitors for the
Agent.
15.2 The Issuer will pay the expenses referred to in the previous Subsection
even if the Prospectus and this Agreement are not accepted by the Regulatory
Authorities or 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 to the Issuer for its
expenses for payment on the dates set out in the accounts.
15.4 The Issuer authorizes the Agent to deduct its reasonable expenses in
connection with the Offering from the proceeds of the Offering, including
expenses for which an account has not yet been rendered to the Issuer.
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 (or alleged to exist) by reason of untrue statements
contained in the Prospectus, Registration Statement or other
written or oral representation made by the Issuer to an
investor in connection with the Offering or by reason of the
omission to state in the Prospectus and the Registration
Statement any fact
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necessary to make such statements or representations not
misleading (except for information and statements referring
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
for information and statements referring solely to the Agent)
including, without limitation, an order that trading in or
distribution of the Securities is to cease;
(c) resulting from the failure by the Issuer to file an amendment
to the Prospectus or the Registration Statement as required by
this Agreement;
(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 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.
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 Party
arising out of the transactions contemplated by this Agreement has been
extinguished by the operation of law.
16.6 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.
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17. RIGHT OF FIRST REFUSAL
17.1 The Issuer will notify the Agent of the terms of any further financing that
it requires or proposes to obtain during the period commencing July 29, 2004 and
ending 12 months from the Closing Day and the Agent will have the right of first
refusal to provide any such financing.
17.2 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.
17.3 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.
17.4 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.
18. ASSIGNMENT AND SELLING GROUP PARTICIPATION
18.1 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 notice has
been given to and accepted by the Regulatory Authorities.
18.2 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 commissions
or warrants to be received by the Agent pursuant to this Agreement.
19. NOTICE
19.1 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 such party in writing.
19.2 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.
19.3 If notice is mailed, it will be deemed to have been received 48 hours
following the date of mailing of the notice.
19.4 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.
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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 parties
contained in this Agreement will survive the closing of the purchase and sale of
the Securities.
22. LANGUAGE
Wherever a singular or masculine expression is used in this Agreement, that
expression is deemed to include the plural, feminine or the body corporate where
required by the context.
23. ENUREMENT
This Agreement enures 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, 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 shall be treated
in all respects as a British Columbia contract, 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.
GREAT AMERICAN MINERALS, INC.
Per:______________________________
Authorized Signatory
Per:______________________________
Authorized Signatory
CANACCORD CAPITAL CORPORATION
Per:______________________________
Authorized Signatory
Per:______________________________
Authorized Signatory