EXHIBIT 10.6
PRIVATE PLACEMENT AGENCY AGREEMENT WITH
CANACCORD INTERNATIONAL LTD. DATED AS OF MARCH 22, 2001
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GASCO ENERGY, INC. PRIVATE PLACEMENT AGENCY AGREEMENT
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THIS AGREEMENT dated for reference March 22, 2001, is made
BETWEEN
GASCO ENERGY, INC., a corporation incorporated under the laws
of Nevada, having an office at 00 Xxxxxxxxx Xxxxx Xxxx,
Xxxxxxxx X, Xxxxx 000, Englewood, Colorado, U.S.A. 80112
(the "Issuer");
AND
CANACCORD INTERNATIONAL LTD., a corporation incorporated under
the laws of Barbados, of Xxxxx Verde, No. 1 Lancaster, St.
Xxxxx, Barbados, West Indies
(the "Agent").
WHEREAS:
A. The Issuer wishes to privately place with purchasers up to
1,400,000 common shares in the capital stock of the Issuer (the "Shares") at a
price of USD 3.00 per share;
B. The Issuer wishes to appoint the Agent to distribute the
Shares, and the Agent is willing to accept such appointment on the terms and
conditions of this Agreement;
THE PARTIES to this Agreement therefore agree:
1. DEFINITIONS
In this Agreement and the Recitals hereto:
(a) "Agent's Fee" has the meaning defined in Section 4;
(b) "Applicable Legislation" means the U.S. Securities Act and all
applicable state blue sky laws, together with the regulations
and rules made and promulgated thereunder and all
administrative policy statements, blanket orders and rulings,
notices, and other administrative directions issued by the
Regulatory Authorities;
(c) "Closing" means a day or days Shares are issued to the
Purchasers;
(d) "Directed Selling Efforts" means "directed selling efforts" as
defined in Regulation S;
(e) "Exchange" means the NASD OTC Bulletin Board in the United
States;
(f) "Exchange Policies" means the rules and policies of the
Exchange;
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(g) "Exemptions" means the distribution of the Shares, effected
without the requirement of compliance with the prospectus
requirements of the Applicable Legislation, with non-residents
of Canada and the United States;
(h) "Final Closing" means the last closing under the Private
Placement;
(i) "First Closing" means the first closing under the Private
Placement;
(j) "Material Change" means a change in the business, operations,
assets or ownership of the Issuer that would reasonably be
expected to have a significant effect on the market price or
value of any of the securities of the Issuer, and includes a
decision to implement that change made by (i) senior
management of the Issuer who believe that confirmation of the
decision by the directors is probable, or (ii) the directors
of the Issuer;
(k) "Material Fact" means a fact that significantly affects, or
could reasonably be expected to significantly affect, the
market price or value of the Shares;
(l) "Misrepresentation" means (i) an untrue statement of a
material fact, or (ii) an omission to state a material fact
that is required to be stated or necessary to prevent a
statement that is made from being false or misleading in the
circumstances in which it was made;
(m) "Private Placement" means the offering of the Shares on the
terms and conditions of this Agreement;
(n) "Public Record" means all documents filed by the Issuer with
the Regulatory Authorities pursuant to the prospectus,
continuous disclosure and proxy solicitation requirements of
the Applicable Legislation, including without limitation all
press releases, material change reports, prospectuses and
financial statements including the Annual Report on Form 10-K
for the fiscal year ending December 31, 2000 filed on March
29, 2001;
(o) "Purchasers" means purchasers of Shares;
(p) "Regulation S" means Regulation S promulgated under the U.S.
Securities Act;
(q) "Regulatory Authorities" means the Securities and Exchange
Commission and the National Association of Securities Dealers;
(r) "Securities" and "Shares" mean the shares in the common stock
of the Issuer offered in accordance with this Agreement;
(s) "Substantial U.S. Market Interest" means "substantial U.S.
market interest" as defined in Regulation S;
(t) "United States" has the meaning defined in Regulation S;
(u) "U.S. Person" has the meaning defined in Regulation S; and
(v) "U.S. Securities Act" means the United States Securities Act
of 1933, as amended.
2. APPOINTMENT OF AGENT
The Issuer appoints the Agent as its exclusive agent and the Agent accepts the
appointment and agrees to act as the agent of the Issuer to use its commercially
reasonable efforts to find and introduce to the Issuer potential purchasers to
purchase up to 1,400,000 common shares in the capital stock of the Issuer at a
price of USD 3.00 per share by way of private placement under the Exemptions.
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3. THE SHARES
The Shares will be in form and substance satisfactory to the Agent and will be
registered in the names of the Purchasers or their nominees.
4. AGENT'S FEE
4.1 In consideration of the services performed by the Agent under
this Agreement, the Issuer agrees to pay to the Agent on each Closing a fee (the
"Agent's Fee") consisting of a cash payment equal to 5% of the gross proceeds
received by the Issuer from the sale of the Shares on such Closing.
4.2 In addition to the fee set out in Subsection 4.1, the Issuer
will also pay to the Agent a corporate finance fee (the "Corporate Fee") of USD
5,000 per month for 12 months commencing upon First Closing. The Corporate Fee
compensates the Agent for its fiscal agency costs, and the Agent will continue
to provide fiscal advice, assistance with contacts, road shows, and related
financial services during that period.
5. OFFERING RESTRICTIONS
5.1 The Agent will sell the Shares only to persons who represent
themselves as being persons:
(a) resident in jurisdictions outside of Canada and the United
States where the Shares may lawfully be offered for sale;
(b) who are purchasing as principal, or are deemed by law or
discretionary order to be purchasing as principal;
(c) who are qualified to purchase the Shares under the Exemptions
applicable to the Shares; and
(d) who are not U.S Persons or in the United States.
5.2 Neither the Issuer, the Agent, nor any of their respective
affiliates, nor any person acting on behalf of any of the foregoing, has offered
or sold or will offer or sell any of the Securities in the United States or to
U.S. Persons, or has engaged in or will engage in Directed Selling Efforts,
which include but are not limited to any activity for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market for
the Securities in the United States.
5.3 The Private Placement has not been and will not be advertised
in any way.
5.4 No selling or promotional expenses will be paid or incurred in
connection with the Private Placement, except for professional services or for
services performed by a registered dealer.
5.5 Promptly following the Final Closing, the Issuer will prepare
and file or cause to be prepared and filed a registration statement covering the
resale of the Shares, which registration statement will have the legal effect of
allowing the Purchasers to resell all or part of the Shares in the United
States. The failure of the Issuer to effect the registration of the Shares for
resale by the 120th day following the First Closing will result in the Issuer
issuing to the Purchasers an additional 0.1 share of its common stock for each
of the Shares purchased by the Purchasers in the Private Placement. Assuming the
First Closing takes place on May 4, 2001, then the Issuer will be required to
effect the registration of the Shares by September 1, 2001. The Agent
acknowledges that the Issuer is under a similar obligation to register
approximately 9,000,000 other of its outstanding shares of common stock at or
about the same time as this obligation to register the Shares. The effect of the
registration obligations of the Issuer, when satisfied, will be that, of the
expected approximately 25,000,000 shares to be issued and outstanding on or
about May 2, 2001 approximately 11.8 million shares will be able to be freely
resold in the United States public markets. The Issuer makes no representations
concerning the effect or lack of effect of this large number of publicly
tradeable shares on the market for the Issuer's shares. For the purposes of this
section, "Shares" includes
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any securities of the Issuer or any successor which may be issued in exchange
for the Shares pursuant to any merger, consolidation, stock split, stock
dividend, recapitalization of the Issuer or otherwise.
5.6 The Issuer agrees that it will not, without the written
consent of the Agent, effect the registration of any of its common shares
including the common shares that were issued to Pannonian Energy, Inc.
shareholders pursuant to the Agreement and Plan of Reorganization between the
Issuer, Nampa Oil & Gas Ltd. and Pannonian Energy, Inc. dated January 31, 2001
(the "Pannonian Merger Agreement") except as set out in Table 3 of the Amended
and Restated Financing Agreement between Wet Coast Management Corp. and the
Issuer dated for reference April 1, 2001.
5.7 Before each Closing, the Issuer and the Agent will take all
reasonable steps necessary to ensure compliance with the Exemptions.
5.8 The Agent will comply with all applicable laws of the
jurisdictions in which it assists in soliciting or procuring subscriptions for
the Shares and will not assist in soliciting or procuring subscriptions for
Shares so as to require the registration thereof or the filing of a prospectus
with respect thereto under the laws of any jurisdiction.
6. USE OF PROCEEDS
6.1 The Issuer will use the net proceeds from this Private
Placement primarily to assist the Issuer in the development and consolidation of
the Issuer's leasehold position in the Riverbend Project area located in the
Uintah Basin in Utah.
7. EMPLOYMENT AGREEMENTS
7.1 During the period from the date of reference of this Agreement
to the date which is 12 months following the Final Closing, the Issuer will not
enter into any employment, consulting or compensation agreements or
arrangements, whether written or oral, with Xxxx Xxxxxx or Xxxx Xxxxxxxx unless
such agreements or arrangements are approved in advance by the Agent.
8. SUBSCRIPTIONS
8.1 The Agent will use its best efforts to obtain from each
Purchaser introduced by the Agent, and deliver to the Issuer, on or before the
Closing duly completed and signed subscriptions in the form attached as Schedule
"A" or in such other form consented to by the Issuer and the Agent and executed
by the Purchaser.
8.2 The Issuer will accept each properly completed subscription
agreement tendered by the Agent, unless:
(a) the subscriber thereunder would, by virtue of the issue of the
shares subscribed for, become a "control person" of the
Issuer, with the meaning of the Applicable Legislation; or
(b) the Issuer's directors determine, acting reasonably, that it
would not be in the best interests of the Issuer to accept
such subscription.
9. FILINGS WITH THE REGULATORY AUTHORITIES
9.1 The Issuer will comply with all requirements of the Exchange
for notice of the terms of this Agreement and the proposed Private Placement and
all other information required by the Exchange Policies (the "Notice"). The
Issuer will forthwith provide the Agent and its solicitor with a copy of the
Notice.
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9.2 After the Closing, the Issuer will file all required
documents, pay all required filing fees and take all other actions required by
the Exchange Policies to fulfill all conditions upon listing imposed by the
Exchange, with all possible dispatch.
10. CLOSING
10.1 In this Section:
(a) "Certificates" means certificates representing the Shares sold
on the Closing in the names and denominations reasonably
requested by the Purchasers; and
(b) "Proceeds" means the gross proceeds of the sale of Shares on
the Closing, less:
(i) the Agent's Fee;
(ii) the expenses of the Agent in connection with the
Private Placement which have not been paid by the
Issuer;
(iii) any amount which has been attached by garnishing
order or other form of attachment; and
(iv) any amount paid directly to the Issuer by purchasers
in connection with the Private Placement.
10.2 The Closing will take place in one or more closings on such
day as may be selected by the Agent and the Issuer, each acting reasonably.
10.3 The Issuer will, on each Closing, issue and deliver the
Certificates to the Agent, or at the Agent's request, to the Purchasers, against
payment of the Proceeds.
11. CONDITIONS OF CLOSING
11.1 The obligations of the Agent on each Closing will be
conditional upon the following:
(a) the Issuer will take all necessary corporate action in order
to validly create, issue and sell the Shares;
(b) the Issuer will make all necessary filings, if any, and obtain
all necessary approvals, if any, in the United States in order
to issue and sell the Shares to the Purchasers and to ensure
that such issuance and sale will not be subject to or be
exempt from the prospectus requirements of the Applicable
Legislation;
(c) the Issuer's outstanding common shares will be listed and
posted for trading on the Exchange, subject in each case only
to conditions which by their nature may only be fulfilled
after the Closing;
(d) the Agent will be satisfied, in its sole discretion, with the
results of its investigation of the business and affairs of
the Issuer;
(e) on each Closing, the Issuer will deliver to the Agent and its
solicitors favourable opinions of the Issuer's solicitors
dated as of the date of the Closing, as to all legal matters
reasonably requested by the Agent relating to the
incorporation of the Issuer and its Subsidiaries, their
respective businesses and the creation, issuance and sale of
the Securities, satisfactory in form and substance to the
Agent;
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(f) on each Closing, the Issuer will deliver to the Agent and its
solicitors such certificates of its officers, comfort letters
or opinions of its auditors, and other documents relating to
the Private Placement or the affairs of the Issuer as the
Agent or its solicitors may reasonably request, satisfactory
in form and substance to the Agent;
(g) each representation and warranty of the Issuer herein will
continue to be true, and the Issuer will perform or comply
with all of its covenants, agreements and obligations
hereunder;
(h) receipt of all required regulatory approval for or acceptance
of the Private Placement;
(i) the Issuer will have appointed a Chief Financial Officer and
the Agent will have been satisfied, in its sole discretion,
with the selection of such Chief Financial Officer; and
(j) the removal or partial revocation of any cease trading order
or trading suspension made by any competent authority to the
extent necessary to complete the Private Placement.
11.2 The conditions set out in Subsection 11.1 are for the sole
benefit of the Agent and may be waived by the Agent in whole or in part.
12. MATERIAL CHANGES
12.1 If, between the date of this Agreement and the Final Closing,
a Material Change, or a change in a Material Fact occurs, the Issuer will:
(a) as soon as practicable notify the Agent in writing, setting
forth the particulars of such change;
(b) as soon as practicable, issue and file with the Regulatory
Authorities a press release that is authorized by a senior
officer disclosing the nature and substance of the change;
(c) as soon as practicable file with the Regulatory Authorities
the report required by Applicable Legislation and in any event
no later than 10 days after the date on which the change
occurs; and
(d) provide copies of that press release, when issued, and that
report, when filed, to the Agent and its solicitors.
12.2 If the Issuer is uncertain as to whether there has been a
Material Change, or a change in a Material Fact, it will promptly provide the
Agent with full particulars of the event giving rise to the uncertainty, and
will consult with the Agent as to whether such event constitutes a Material
Change, or a change in a Material Fact.
13. TERMINATION
13.1 The Agent may terminate its obligations under this Agreement
by notice in writing to the Issuer at any time before the Final Closing if:
(a) an adverse Material Change, or an adverse change in a Material
Fact relating to any of the Securities, occurs or is announced
by the Issuer;
(b) there is an event or accident, or enactment of a governmental
law or regulation, or other occurrence of any nature which, in
the opinion of the Agent, seriously affects or will seriously
affect the financial markets, or the business of the Issuer or
its Subsidiaries or the ability of the Agent to perform its
obligations under this Agreement, or a Purchaser's decision to
purchase the Shares;
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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 of the state of the financial markets in
general, or the state of the market for the Issuer's
securities in particular, the Agent determines, in its sole
discretion, that it is not in the interest of the Purchasers
to complete the purchase and sale of the Shares;
(d) the Securities cannot, in the opinion of the Agent, be
marketed due to the state of the financial markets, or the
market for the Shares in particular;
(e) an enquiry or investigation (whether formal or informal) in
relation to the Issuer, or the Issuer's directors, officers or
promoters, is commenced or threatened by an officer or
official of any competent authority;
(f) any order to cease, halt or suspend trading (including an
order prohibiting communications with persons in order to
obtain expressions of interest) in the securities of the
Issuer prohibiting or restricting the Private Placement is
made by a competent regulatory authority and that order is
still in effect;
(g) the Issuer is in breach of any material term of this
Agreement; or
(h) the Agent determines that any of the representations or
warranties made by the Issuer in this Agreement is false or
has become false.
13.2 The Agent's obligations hereunder will terminate if the First
Closing does not take place within 90 days of the reference date of this
Agreement, unless otherwise agreed in writing by the Agent.
14. WARRANTIES, REPRESENTATIONS AND COVENANTS
14.1 The Issuer warrants and represents to and covenants with the
Agent that:
(a) the Issuer is a validly existing corporation duly incorporated
and in good standing under the laws of Nevada, and all the
subsidiaries of the Issuer ("Subsidiaries") are valid and
subsisting corporations duly incorporated under the laws of
their respective jurisdictions of incorporation;
(b) pursuant to the Pannonian Merger Agreement, the Issuer has
acquired and is the registered and beneficial owner of all of
the issued and outstanding shares of Pannonian Energy, Inc.
and Pannonian Energy, Inc. is a wholly-owned Subsidiary of the
Issuer;
(c) the Issuer and its Subsidiaries each hold all material
licences and permits that are required for carrying on their
respective businesses in the manner and in the jurisdictions
in which such businesses are presently being carried on;
(d) the Issuer and its Subsidiaries each have the corporate power
and capacity to own their assets and to carry on the business
presently carried on by them;
(e) the authorized and issued capital of the Issuer consists of
the number of common shares disclosed in the Public Record,
and all of the shares shown in the Public Record as issued are
issued and outstanding as fully paid and non-assessable as at
the date hereof;
(f) the Issuer will reserve or set aside sufficient authorized but
unissued shares to issue the Shares and the Shares will be
duly and validly issued as fully paid and non-assessable;
(g) the minute books of the Issuer contain all records of the
proceedings of the meetings of the Issuer's directors,
shareholders and committees of directors since incorporation;
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(h) the minute books of the Subsidiaries contains all records of
the proceedings of the meetings of the Subsidiaries'
directors, shareholders and committees of directors since
their respective dates of incorporation;
(i) the Issuer is the beneficial owner of the material businesses
and assets or the interests in the businesses and assets
referred to in the Public Record as being owned by the Issuer
or its Subsidiaries, and all agreements by which the Issuer or
a Subsidiary holds or may earn an interest in a business or
asset are in good standing according to their terms;
(j) the Public Record, taken as a whole, is true and complete in
all material respects and each document included in the Public
Record was prepared in accordance with the securities
legislation and rules applicable thereto and was true and
correct and contained no misrepresentation as at the date
thereof;
(k) the Issuer is a "reporting company" under the federal
securities legislation of the United States and is not in
default of any of the requirements thereof or the regulation
and rules made thereunder;
(l) the Issuer's outstanding common shares are approved for
quotation on the NASD OTC Bulletin Board;
(m) the audited financial statements of the Issuer for its fiscal
years ended December 31, 1999 and 2000 (the "Audited Financial
Statements) have been prepared in accordance with United
States generally accepted accounting principles, and
accurately reflect the financial position and all material
liabilities (accrued, absolute, contingent or otherwise) of
the Issuer on a consolidated basis as at the date thereof;
(n) the unaudited financial statements of the Issuer for the nine
month period ended September 30, 2000 (the "Interim Financial
Statements") have been prepared in accordance with United
States generally accepted accounting principles and accurately
reflect the financial position and all material liabilities
(accrued, absolute, contingent or otherwise) of the Issuer as
at the date thereof;
(o) the unaudited financial statements of Pannonian Energy, Inc.
dated March 31, 2001 and provided to the Agent on April 27,
2001 have been prepared in accordance with United States
generally accepted accounting principles and accurately
reflect the financial position and all material liabilities
(accrued, absolute, contingent or otherwise) of Pannonian
Energy, Inc. as at the date thereof;
(p) there have been no adverse material changes in the financial
position of the Issuer since the date of the Audited Financial
Statements, except as recorded in the books of the Issuer and
fully and plainly disclosed in the Public Record;
(q) since the date of the Audited Financial Statements, there has
been no damage, loss or other change of any kind whatsoever in
circumstances materially affecting the business or assets of
the Issuer or any of its Subsidiaries, or the right or
capacity of the Issuer or any of its Subsidiaries to carry on
its business;
(r) all of the material transactions of the Issuer and its
Subsidiaries have been promptly and properly recorded or filed
in or with the books or records of the Issuer or its
Subsidiaries;
(s) with the exception of the Memorandum of Understanding between
the Issuer and New Energy West Corporation dated March 26,
2001, all of the material contracts of the Issuer and its
Subsidiaries are described in the Public Record and are in
good standing in all material respects, and neither the Issuer
nor any of its Subsidiaries is in default in any material
respect thereof, and the Issuer is not aware of any default in
any material respect by any other party to such contracts;
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(t) the Issuer has complied and will comply fully with the
requirements of all applicable corporate and securities laws,
and all applicable Nevada corporate legislation in relation to
the issue of the Shares, and in all matters relating to the
Private Placement;
(u) 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;
(v) neither the Issuer nor any of its Subsidiaries is party to any
actions, suits, proceedings or arbitrations which could
materially affect the business or financial condition of the
Issuer, taken as a whole, and, to the best of the knowledge of
the Issuer, no such actions, suits, proceedings or
arbitrations are contemplated or have been threatened;
(w) there are no judgments against the Issuer or any of its
Subsidiaries which are unsatisfied, nor are there any consent
decrees or injunctions to which the Issuer or any of its
Subsidiaries is subject;
(x) to the best of the Issuer's knowledge, neither the Issuer nor
any of its Subsidiaries is in breach of any law, ordinance,
statute, regulation, bylaw, order or decree of any kind
whatsoever which breach would have a material adverse effect
on the financial position, business or prospects of the Issuer
on a consolidated basis;
(y) 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 Private
Placement;
(z) there is not presently, and will not be until the Final
Closing, any material change relating to the Issuer which has
not been or will not be fully disclosed in the Public Record;
(aa) 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, to
the best of the knowledge of the Issuer, its directors,
officers or promoters and, to the best of the knowledge of the
Issuer, no investigations or proceedings for such purposes are
pending or threatened;
(bb) except as disclosed in the Public Record, 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 shares
in the capital of the Issuer or any other security convertible
into or exchangeable for any such shares, or to require the
Issuer to purchase, redeem or otherwise acquire any of the
issued and outstanding shares in its capital;
(cc) the Issuer and each of its Subsidiaries has filed all federal,
state, local and foreign tax returns which are required to be
filed, or has requested extensions thereof, and has paid all
taxes required to be paid and any other assessment, fine or
penalty levied against it, 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;
(dd) there are no liens for taxes on the assets of the Issuer or
any of its Subsidiaries except for taxes not yet due, and
there are no audits of any of the tax returns of the Issuer or
any of its Subsidiaries 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 on a consolidated basis;
(ee) this Agreement will be upon execution and delivery by the
Issuer, a legal, valid and binding agreement of the Issuer,
enforceable against the Issuer in accordance with its terms,
subject only to customary qualifications regarding the
availability of equitable remedies;
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(ff) the Issuer or its Subsidiaries own or are entitled to use all
material patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and
processes necessary for the business of the Issuer and each of
its Subsidiaries as now conducted and as proposed to be
conducted, without any conflict with or infringement of the
rights of others;
(gg) neither the Issuer nor any of its Subsidiaries has received
any communication alleging that the Issuer or any Subsidiary
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, and, to the best of the
Issuer's knowledge, neither the execution or delivery of this
Agreement, the carrying on of the businesses of the Issuer and
its Subsidiaries, nor the conduct of the businesses of the
Issuer or its Subsidiaries by their respective employees will
conflict with or result in a breach or default of any of the
material terms of any contract, covenant or instrument under
which any of such employees are bound; and
(hh) apart from 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.
14.2 The representations and warranties of the Issuer contained
herein will be true and correct at the Closing, will survive the Closing for a
period of one year, and no investigation by or on behalf of the Agent or the
Purchasers will diminish in any respect their rights to rely on such
representations and warranties.
14.3 The Agent warrants and represents to the Issuer that:
(a) it is a valid and subsisting corporation under the law of the
jurisdiction in which it was incorporated; and
(b) it will sell the Shares in compliance with Applicable
Legislation.
15. EXPENSES OF AGENT
15.1 The Issuer will pay all of the expenses of the Private
Placement and all the expenses reasonably incurred by the Agent in connection
with the Private Placement including, without limitation, the 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 transactions contemplated by this Agreement are not
completed or this Agreement is terminated, unless the failure of acceptance or
completion or the termination is the result of a breach of this Agreement by the
Agent.
15.3 The Agent may, from time to time, render accounts for their
respective expenses in connection with the Private Placement to the Issuer for
payment on or before the dates set out in the accounts.
15.4 The Issuer authorizes the Agent to deduct its expenses in
connection with the Private Placement from the gross proceeds of the Private
Placement and any advance payments made by the Issuer, including expenses for
which an account has not yet been rendered but for which a reasonable estimate
has been provided by the Agent to the Issuer.
16. GARNISHING ORDERS
16.1 If at any time, up to and including the Final Closing, the
Agent receives a garnishing order or other form of attachment purporting to
attach or garnish a part or all of the sale price of the Shares, the Agent will
be free to pay the amount purportedly attached or garnished into court.
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16.2 Any payment by the Agent into court pursuant to a garnishing
order will be deemed to have been received by the Issuer as payment by the Agent
against the sale price of the Securities to the extent of the amount paid, and
the Issuer will be bound to issue and deliver the Securities proportionately to
the amount paid by the Agent.
16.3 The Agent will not be bound to ascertain the validity of any
garnishing order or attachment, or whether in fact it attaches any moneys held
by the Agent, and the Agent will be free to act with impunity in replying to any
garnishing order or attachment.
16.4 The Issuer will release, indemnify and save harmless the Agent
in respect of all damages, costs, expenses or liability arising from any acts of
the Agent under this Section.
17. INDEMNITY
17.1 The Issuer will indemnify the Agent and its agents, directors,
officers and employees (individually, an "Indemnified Party" and collectively,
the "Indemnified Parties") and save them harmless against all losses, claims,
damages or liabilities:
(a) existing by reason of an untrue statement contained in the
Public Record, subscription agreement or other written or oral
representation made by the Issuer to a Purchaser or potential
Purchaser in connection with the Private Placement, or by
reason of the omission to state any fact necessary to make
such statements or representations not misleading (except for
information and statements supplied by and relating solely to
the Agent);
(b) arising directly or indirectly out of any order made by any
regulatory authority based upon an allegation that any such
untrue statement or representation, or omission exists (except
information and statements supplied by and relating solely to
the Agent), that trading in or distribution of any of the
Securities is to cease;
(c) resulting from the failure by the Issuer to obtain the
requisite regulatory approval for the Private Placement unless
the failure to obtain such approval is the result of a breach
of this Agreement by the Agent;
(d) resulting from the breach by the Issuer of any of the terms of
this Agreement;
(e) resulting from any representation or warranty made by the
Issuer herein being untrue or ceasing to be true;
(f) if the Issuer fails to issue and deliver the certificates
representing the Shares 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
Shares does not take place; or
(g) if, following the completion of a sale of any of the Shares, a
determination is made by any competent authority setting aside
the sale or issuance, unless that determination arises out of
an act or omission by the Agent.
17.2 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 of
the nature of such action or claim.
17.3 The Issuer will assume the defence of the action or claim,
including the employment of counsel and the payment of all expenses.
17.4 The Indemnified Party will have the right to employ separate
counsel, and the Issuer will pay the reasonable fees and expenses of such
counsel.
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17.5 The indemnity provided for in this Section will not be limited
or otherwise affected by any other indemnity obtained by the Indemnified Party
from any other person in respect of any matters specified in this Agreement and
will continue in full force and effect until all possible liability of the
Indemnified Parties arising out of the transactions contemplated by this
Agreement has been extinguished by the operation of law.
17.6 If indemnification under this Agreement is found in a final
judgment (not subject to further appeal) by a court of competent jurisdiction
not to be available for reason of public policy, the Issuer and the Indemnified
Parties will contribute to the losses, claims, damages, liabilities or expenses
(or actions in respect thereof) for which such indemnification is held
unavailable in such proportion as is appropriate to reflect the relative
benefits to and fault of the Issuer, on the one hand, and the Indemnified
Parties on the other hand, in connection with the matter giving rise to such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof). No person found liable for a fraudulent Misrepresentation will be
entitled to contribution from any person who is not found liable for such
fraudulent Misrepresentation.
17.7 To the extent that any Indemnified Party is not a party to
this Agreement, the Agent will obtain and hold the right and benefit of this
section in trust for and on behalf of such Indemnified Party.
17.8 The indemnity provided herein replaces and supersedes the
indemnity provided by the Issuer pursuant to the letter from the Agent to the
Issuer dated March 15, 2001, and captioned "Proposed Financing".
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 any
required 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 dealers, brokers and
investment dealers, who may or who may not be offered part of the Agent's Fee.
19. RIGHT OF FIRST REFUSAL
19.1 The Issuer will notify the Agent of the terms of any further
brokered equity financing of up to USD 25 million that it requires or proposes
to obtain during the 12 months following the Final Closing and the Agent will
have the right of first refusal to participate in any such financing.
19.2 The right of first refusal must be exercised by the Agent
within 15 days following the receipt of the notice by notifying the Issuer that
it will provide such financing on the terms set out in the notice.
19.3 If the Agent fails to give notice within the 15 days that it
will provide such financing upon the terms set out in the notice, the Issuer
will then be free to make other arrangements to obtain financing from another
source on the same terms or on terms no less favourable to the Issuer, subject
to obtaining the acceptance of the Regulatory Authorities.
19.4 The right of first refusal will not terminate if, on receipt
of any notice from the Issuer under this Section, the Agent fails to exercise
the right.
19.5 In any further brokered equity financing of USD 25 million or
more, the Agent will be entitled to participate and will be paid a commission
equal to the greater of (a) 2.5% of the gross proceeds of the financing and (b)
commissions on the securities actually placed by the Agent at the same rate as
the commissions paid to other brokers participating in the financing.
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20. NOTICE
20.1 Any notice under this Agreement will be given in writing and
must be delivered, sent by facsimile transmission addressed to the party to
which notice is to be given at the address indicated above, or at another
address designated by the party in writing.
20.2 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, or
if not a business day, the next business day.
21. ENGAGEMENT LETTER
The parties to this Agreement acknowledge that the letter from the Agent to the
Issuer dated March 15, 2001, and captioned "Proposed Financing" is superseded in
its entirety by this Agreement but that the letter from the Agent to the Issuer
dated March 15, 2001, and captioned "Engagement as Financial Advisor" shall
continue in full force except as amended by this Agreement, the letter from the
Agent to the Issuer dated April 30, 2001, and any future amendments.
22. TIME
Time is of the essence of this Agreement and will be calculated in accordance
with the provisions of the INTERPRETATION ACT (British Columbia).
23. LANGUAGE
This Agreement is to be read with all changes in gender or number as required by
the context.
24. ENUREMENT
This Agreement enures to the benefit of and is binding on the parties to this
Agreement and their successors and permitted assigns.
25. HEADINGS
The headings in this Agreement are for convenience of reference only and do not
affect the interpretation of this Agreement.
26. COUNTERPARTS
This Agreement may be executed in two or more counterparts and may be delivered
by facsimile transmission. Each counterpart will be deemed to be an original and
all counterparts will constitute one agreement, effective as of the reference
date given above.
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27. LAW
This Agreement is governed by the law of British Columbia, and the parties
hereto irrevocably attorn and submit to the exclusive 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:
Executed by an authorized )
signatory of GASCO ENERGY, INC. )
)
in the presence of: )
)
)
------------------------------------- )
Name ) GASCO ENERGY, INC.
)
------------------------------------- )
Address ) By:
) -----------------------------------
)
------------------------------------- )
)
)
------------------------------------- )
Occupation )
Executed by an authorized )
signatory of CANACCORD )
INTERNATIONAL LTD. )
)
in the presence of: )
)
)
------------------------------------- )
Name ) CANACCORD INTERNATIONAL LTD.
)
------------------------------------- )
Address ) By:
) -----------------------------------
)
------------------------------------- )
)
)
------------------------------------- )
Occupation )
lxs\lxs01411\2\March 22, 2001
