EXHIBIT 3.1
EXECUTION COPY
UNDERWRITING AGREEMENT
December 15, 2004
Western Silver Corporation
Xxxxx 0000 - 0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: F. Xxxx Xxxxxx
Chief Executive Officer
Orion Securities Inc. ("ORION"), CIBC World Markets Inc. (together with
Orion, the "LEAD UNDERWRITERS") and Kingsdale Capital Markets Inc.
(collectively, the "UNDERWRITERS" and, individually, an "UNDERWRITER"),
understand that Western Silver Corporation (the "CORPORATION") proposes to issue
and sell to the Underwriters 5,500,000 common shares ("COMMON SHARES") in the
capital of the Corporation (together with any Additional Shares (as defined
below) the "UNDERWRITTEN SHARES"). We further understand that the Corporation
has prepared and filed a preliminary short form prospectus, a registration
statement and all necessary documents relating thereto and will take all
additional necessary steps to qualify or register the Underwritten Shares for
distribution in each of the Qualifying Provinces (as defined below) and in the
United States, as applicable.
Based on the foregoing, and subject to the terms and conditions contained
in this Agreement, the Underwriters severally agree to purchase from the
Corporation in the respective percentages set forth in Paragraph 12 hereof, and
by its acceptance hereof, the Corporation accepts such offer and agrees to sell
to the Underwriters, the Underwritten Shares on the Closing Date and on each
Over-Allotment Closing Date (as defined below) at a price of $10.25 per share
being an aggregate purchase price of $56,375,000 (the "PURCHASE PRICE").
The Underwriters shall have an option (the "OPTION"), which Option may be
exercised in the Underwriters' sole discretion and without obligation, to
purchase, in the respective percentages set forth in Paragraph 12 hereof, up to
an additional 825,000 Common Shares of the Corporation ("ADDITIONAL SHARES")
which, if subscribed for hereunder, shall be deemed to form part of the
Underwritten Shares for the purposes hereof. The Option may be exercised in
whole or in part and from time to time by notice in writing to that effect given
not later than two business days prior to the proposed date of purchase and sale
of Additional Shares by the Lead Underwriters to the Corporation setting out the
number of Additional Shares to be purchased by the Underwriters. Upon the
furnishing of any notice exercising the Option, the Underwriters shall be
committed to purchase and the Corporation shall be committed to issue and sell
in accordance with and subject to the provisions hereof the number of Additional
Shares indicated in such notice. In the event that the Option is exercised, one
or more separate closings (individually, an "OVER-ALLOTMENT CLOSING", and the
date of each such closing, an "OVER-
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ALLOTMENT CLOSING DATE") shall be held, and all of the terms and conditions
relating to closing of the purchase and sale of Underwritten Shares shall apply
to each Over-Allotment Closing.
In consideration of the Underwriters' agreement to purchase the
Underwritten Shares and in consideration of the services to be rendered by the
Underwriters in connection with the distribution of the Underwritten Shares in
each of the Qualifying Provinces and the United States, the Corporation will pay
to the Underwriters a fee of $0.5125 per Underwritten Share for an aggregate of
$2,818,750 (or $3,241,562.50 assuming exercise of the Option in full) (the
"UNDERWRITING FEE"). Such fee shall be due and payable at the Closing Time (as
defined below) against payment by the Underwriters for the Underwritten Shares.
All actions to be undertaken by an Underwriter in connection with the
offering or sale of the Underwritten Shares in the United States, shall be
undertaken through its U.S. Dealer.
DEFINITIONS
In this Agreement:
"1933 ACT" means the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder;
"1934 ACT" means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder;
"AFFILIATE", "DISTRIBUTION", "MATERIAL CHANGE", "MATERIAL FACT",
"MISREPRESENTATION", and "SUBSIDIARY" when used in connection with the Canadian
Preliminary Prospectus, Canadian Final Prospectus or any Prospectus Amendment
thereto shall have the respective meanings given to them under the Canadian
Securities Laws, when used in connection with the Registration Statement, the
U.S. Preliminary Prospectus, the U.S. Final Prospectus or any Prospectus
Amendment thereto shall have the respective meaning (to the extent applicable)
under the U.S. Securities Laws including judicial and administrative
interpretations thereof, and in all other contexts shall have the respective
meanings given to them under Canadian Securities Laws;
"AGREEMENT" means the agreement resulting from the acceptance by the Corporation
of the offer made by the Underwriters by this letter;
"APPLICABLE SECURITIES LAWS" means the Canadian Securities Laws and the U.S.
Securities Laws;
"BUSINESS DAY" means a day which is not a Saturday, a Sunday or a statutory or
civic holiday in Vancouver, Toronto or New York City and a day on which the
office of the SEC in Washington D.C. is open for business;
"CANADIAN PRELIMINARY PROSPECTUS" and "CANADIAN FINAL PROSPECTUS" mean the
Canadian preliminary short form prospectus and Canadian (final) short form
prospectus, respectively, including, in each case, all Documents Incorporated by
Reference, prepared by the Corporation in accordance with National Instrument
44-101 and relating to the distribution of the
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Underwritten Shares and prepared and filed with the Canadian Securities
Regulators in accordance with Canadian Securities Laws;
"CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the
Qualifying Provinces and the respective regulations and rules under such laws
together with applicable published policy statements of the Canadian Securities
Regulators in the Qualifying Provinces and includes the bylaws and requirements
of the TSX;
"CANADIAN SECURITIES REGULATORS" means the applicable securities commission or
regulatory authority in each of the Qualifying Provinces;
"CANADIAN TRANSFER AGENT" means Computershare Trust Company of Canada, at its
office in the City of Vancouver;
"CLAIM" has the meaning given to it in Subparagraph 10(a);
"CLOSING" means the completion of the sale by the Corporation and the purchase
by the Underwriters of the Underwritten Shares pursuant to the terms and
conditions of this Agreement;
"CLOSING DATE" means December 23, 2004, or such other date as the Corporation
and the Underwriters may agree upon in writing or as may be changed in
accordance with Subparagraph 4(c) of this Agreement;
"CLOSING TIME" means 8:30 am (Toronto time) on the Closing Date or an
Over-Allotment Closing Date, as applicable;
"CORPORATION" means Western Silver Corporation;
"COMMON SHARES" means common shares without par value in the capital of the
Corporation;
"DOCUMENTS INCORPORATED BY REFERENCE" means collectively:
(a) initial Annual Information Form dated November 9, 2004 as revised
(the "AIF"), including the management's discussion and analysis of
financial condition and results of operations for the financial
years ended September 30, 2003 and 2002 incorporated therein but
excluding the agreements listed under the heading "Material
Contracts" and the Exhibits 2.1 through 32.1 of the Form 20-F which
forms part of the AIF;
(b) the audited consolidated balance sheets of the Corporation for the
years ended September 30, 2003 and 2002, and the consolidated
statements of loss and deficit and cash flows for the years ended
September 30, 2003, 2002 and 2001 together with the notes thereto
and the auditors' report thereon as contained in pages 23 to 40 of
the Corporation's Annual Report for the year ended September 30,
2003;
(c) comparative consolidated unaudited interim financial statements of
Western Silver for the nine month periods ended June 30, 2004 and
2003, together with the notes thereto;
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(d) Management's Discussion & Analysis of financial condition and
results of operations for the nine month periods ended June 30, 2004
and 2003;
(e) Management Information Circular dated January 26, 2004 prepared in
connection with the Corporation's annual meeting of shareholders
held March 4, 2004 (excluding the Report on Executive Compensation
and the Performance Graph under the heading "Executive Compensation"
and excluding the Statement of Corporate Governance practices
attached to the Information Circular);
(f) Material Change Report dated November 21, 2003 relating to the
entering into of an underwriting agreement with Kingsdale Capital
Markets Inc., Kingsdale Capital Partners Inc. and Orion Securities
Inc. in connection with a private placement of common shares;
(g) Material Change Report dated December 16, 2003 relating to the
closing of the private placement of common shares for gross proceeds
of $12,360,000;
(h) Material Change Report dated April 13, 2004 relating to the
completion by M3 Engineering & Technology Corp. of a pre-feasibility
study on the Chile Colorado zone of the Corporation's Penasquito
Project in Zacatecas State, Mexico;
(i) Material Change Report dated October 4, 2004 relating to the
completion of an independent resource estimate by Xxxxxx Mining
Engineering Services for the Penasco deposit at the Penasquito
Project in Zacatecas State, Mexico; and
(j) Material Change Report dated November 29, 2004, relating to the
announcement of the Offering.
"EFFECTIVE DATE" means any date as of which the
Registration Statement or any amendment thereto is declared effective under the
1933 Act;
"ENVIRONMENTAL LAWS" has the meaning given to it in Subparagraph 7(cc);
"FINAL PROSPECTUSES" means, collectively, the Canadian Final Prospectus and the
U.S. Final Prospectus;
"FINANCIAL INFORMATION" means the Corporation's financial statements included in
the Documents Incorporated by Reference or otherwise included in the Preliminary
Prospectuses and the Final Prospectuses, together with any auditors' report
thereon and the notes thereto;
"FORM F-10" has the meaning given to it in Subparagraph 1(d);
"INDEMNIFIED PARTY" has the meaning given to it in Subparagraph 10(b);
"INDEMNIFIER" has the meaning given to it in Subparagraph 11(a);
"MATERIAL CONTRACTS" means the Contract of Assignment of Rights dated October
29, 1999 and made between Minera Kennecott S.A. de C.V. ("KENNECOTT"") and
Minera, and the Contract of Assignment of Rights dated November 19, 1996 made
between Minera Catasillas, S.A. d C.V. and Kennecott, as assigned by Minera
Catasillas, S.A. d C.V. to Grupo Industrial de Coahuila S.A. de C.V.;
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"MATERIAL SUBSIDIARIES" means Western Copper International Ltd., WCI
(Penasquito) Limited (collectively the "BVI SUBSIDIARIES") and Minera Penasquito
S.A. de C.V. ("MINERA");
"MRRS" means the Mutual Reliance Review System procedures provided for under
National Instrument 43-201;
"NASD" means the National Association of Securities Dealers, Inc.;
"NATIONAL INSTRUMENT 44-101" means National Instrument 44-101 adopted by the
Canadian Securities Regulators;
"NATIONAL INSTRUMENT 43-201" means National Instrument 43-201 adopted by the
Canadian Securities Regulators;
"NOTICE" has the meaning given to it in Paragraph 21 of this Agreement;
"OPTION" has the meaning given to it above;
"PENASQUITO PROJECT" means the 100% beneficial interest held indirectly by the
Corporation in the mineral rights on 14 concessions in the State of Zacatecas,
Mexico subject to a 2% net smelter royalty payable to Kennecott Canada
Explorations Inc. on certain of the concessions and a 3% net smelter royalty
payable to Grupo Industrial de Coahuila S.A. de C.V. on certain of the other
concessions, as more particularly described in the Preliminary Prospectuses;
"PRELIMINARY PROSPECTUSES" means, collectively, the Canadian Preliminary
Prospectus and the U.S. Preliminary Prospectus;
"PROSPECTUS AMENDMENT" means any amendment or supplement to any of the
Preliminary Prospectuses, the Final Prospectuses or the Registration Statement;
"PURCHASE PRICE" has the meaning given to it above;
"QUALIFYING PROVINCES" means all of the provinces of Canada;
"REGISTRATION STATEMENT" means the registration statement on Form F-10 (File No.
333-120799) referred to in Subparagraph 1(d) of this Agreement, including the
U.S. Preliminary Prospectus and the U.S. Final Prospectus, as the case may be,
and the exhibits thereto and the Documents Incorporated by Reference therein, as
amended at the Effective Date;
"SEC" means the United States Securities and Exchange Commission;
"STOCK EXCHANGES" means the TSX and the American Stock Exchange;
"SUBSIDIARY" OR "SUBSIDIARIES" has the meaning ascribed thereto in the Business
Corporations Act (British Columbia);
"TSX" means the Toronto Stock Exchange;
"UNDERWRITER" and "UNDERWRITERS" have the meaning given to such terms above;
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"UNDERWRITING FEE" has the meaning given to it above;
"UNDERWRITTEN SHARES" has the meaning given to it above;
"U.S. DEALERS" means Orion Securities (U.S.A.) Inc. and CIBC World Markets
Corp., the U.S. broker-dealer affiliates of the Lead Underwriters, registered as
such with the SEC under Paragraph 15 of the 1934 Act, and who are members of the
NASD;
"U.S. PRELIMINARY PROSPECTUS" means the Canadian Preliminary Prospectus
(including the Documents Incorporated by Reference therein), including any
Prospectus Amendment, with such deletions therefrom and additions thereto as
permitted or required by Form F-10, prepared by the Corporation and relating to
the offering of Underwritten Shares in the United States and included in the
Registration Statement before the Effective Date;
"U.S. FINAL PROSPECTUS" means the Canadian Final Prospectus (including the
Documents Incorporated by Reference therein), with such deletions therefrom and
additions thereto as permitted or required by Form F-10, prepared by the
Corporation and relating to the offering of Underwritten Shares in the United
States and included in the Registration Statement at the time it became
effective pursuant to Rule 467(a) of the 1933 Act.;
"U.S. SECURITIES LAWS" means all applicable securities legislation in the United
States, including, without limitation, the 1933 Act and the 1934 Act, including
judicial and administrative interpretations thereof; and
"U.S. TRANSFER AGENT" means Computershare Investor Services Inc. at its offices
in the City of Golden, Colorado.
Unless otherwise expressly provided in this Agreement, words importing
only the singular number include the plural and vice versa and words importing
gender include all genders. References to "Paragraphs", "Subparagraphs" and
"clauses" are to the appropriate paragraph, subparagraph or clause of this
Agreement.
All references to dollars or "$" are Canadian dollars unless otherwise
expressed.
TERMS AND CONDITIONS
1. COMPLIANCE WITH SECURITIES LAWS - FILING OF PROSPECTUSES
The Corporation represents and warrants to, and covenants and agrees with,
the Underwriters that:
(a) the Corporation has filed the Canadian Preliminary Prospectus in
each of the Qualifying Provinces pursuant to National Policy 43-201
and has obtained an MRRS decision document evidencing receipts by
each of the Canadian Securities Regulators for the Canadian
Preliminary Prospectus;
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(b) the Corporation shall fulfil or cause to be fulfilled to the
reasonable satisfaction of the Underwriter's counsel all relevant
provisions of Canadian Securities Laws that are required to be
fulfilled by the Corporation to permit the distribution of the
Underwritten Shares in each of the Qualifying Provinces, by or
through an Underwriter who complies with the relevant provisions of
Canadian Securities Laws;
(c) the Corporation shall, as soon as possible, fulfill all legal
requirements to enable the distribution of the Underwritten Shares
and in any event shall file the Canadian Final Prospectus in each of
the Qualifying Provinces and use its best efforts to obtain an MRRS
decision document evidencing receipt of the Canadian Final
Prospectus by each of the Canadian Securities Regulators on or prior
to 4:30 pm (Toronto time) on December 15, 2004; and
(d) the Corporation: (i) has prepared and filed, pursuant to the
multi-jurisdictional disclosure system with the SEC, the
Registration Statement including the U.S. Preliminary Prospectus and
a written irrevocable consent and power of attorney of the
Corporation on Form F-X (the "FORM F-X"); and (ii) as soon as
practicable after the filing of the Canadian Final Prospectus with
the Canadian Securities Regulators and, in any event, on the date on
which the Canadian Final Prospectus is filed with the Canadian
Securities Regulators, will file an amendment to such Registration
Statement including the U.S. Final Prospectus and shall have
fulfilled and complied with, to the reasonable satisfaction of the
Underwriters, the U.S. Securities Laws required to be fulfilled or
complied with by the Corporation to enable the Underwritten Shares
to be lawfully distributed to the public in the United States.
2. DUE DILIGENCE
Prior to the filing of the Final Prospectuses, the Corporation shall
permit the Underwriters and their counsel to review and provide comments on
drafts of each of the Final Prospectuses and shall allow the Underwriters to
conduct any due diligence investigations which they reasonably require in order
to fulfill their obligations as an underwriter under the Applicable Securities
Laws and in order to enable the Underwriters to responsibly execute the
certificate in the Canadian Final Prospectus required to be executed by
them.
3. (a) DELIVERIES ON FILING OF FINAL PROSPECTUSES
No later than the time of filing of the Final Prospectuses with the
Canadian Securities Regulators and with the SEC, unless otherwise
indicated below, the Corporation shall deliver to the Underwriters:
(i) a copy of the Final Prospectuses, in the English language,
signed, filed and certified as required by the Applicable
Securities Laws;
(ii) a copy of the Canadian Final Prospectus in the French
language, signed, filed and certified as required by
Applicable Securities Laws;
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(iii) a copy of each other document filed by the Corporation at or
prior to the time of filing the Canadian Final Prospectus in
compliance with Applicable Securities Laws in connection with
the distribution of the Underwritten Shares;
(iv) a "long-form" comfort letter of PricewaterhouseCoopers LLP,
dated as of the date of the Final Prospectuses (with the
requisite procedures to be completed by PricewaterhouseCoopers
LLP within two Business Days of the date of the Canadian Final
Prospectus), addressed to the Underwriters and the board of
directors of the Corporation, in form and substance
satisfactory to the Underwriters, acting reasonably, with
respect to certain financial and accounting information
relating to the Corporation in the Final Prospectuses,
including all Documents Incorporated by Reference, which
letter shall be in addition to the auditors' report
incorporated by reference into the Final Prospectuses;
(v) legal opinions dated the date of the Canadian Final
Prospectus, in form and substance satisfactory to the
Underwriters, acting reasonably, addressed to the
Underwriters, the Corporation and counsel to the Underwriters
from Quebec counsel to the Corporation to the effect that the
French language version of the Canadian Preliminary Prospectus
and the Canadian Final Prospectus, except for the Financial
Information as to which no opinion need be expressed by such
counsel, is, in all material respects, a complete and accurate
translation of the English language version thereof, and that
the English and French language versions are not susceptible
to any materially different interpretation with respect to any
material matter contained therein; and
(vi) an opinion of PricewaterhouseCoopers LLP, dated as of the date
of the Canadian Final Prospectus, in form and substance
satisfactory to the Underwriters, addressed to the
Underwriters, the Corporation and counsel to the Underwriters
to the effect that the French language version of the
Financial Information included in the Canadian Preliminary
Prospectus and the Canadian Final Prospectus is, in all
material respects, a complete and accurate translation of the
English language version thereof, and that the English and
French language versions are not susceptible to any materially
different interpretation with respect to any material matter
contained therein.
(b) REGISTRATION STATEMENT
The Corporation shall furnish promptly to the Underwriters and to
counsel for the Underwriters, without charge, a signed copy of the
Registration Statement as originally filed and a copy of each
amendment thereto (in each case together with all exhibits filed
therewith) related to or covering the Underwritten Shares, and a
copy of each U.S. Preliminary Prospectus and U.S. Final Prospectus
filed with the SEC.
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(c) PROSPECTUS AMENDMENTS
In the event that the Corporation is required by Applicable
Securities Laws to prepare and file a Prospectus Amendment, the
Corporation shall prepare and deliver promptly to the Underwriters
signed and certified copies of such Prospectus Amendment along with
all Documents Incorporated by Reference that have not been
previously delivered. Any Prospectus Amendments shall be in form and
substance satisfactory to the Underwriters acting reasonably.
Concurrently with the delivery of any Prospectus Amendment, the
Corporation shall deliver to the Underwriters with respect to such
Prospectus Amendment, documents similar to those referred to in
Subparagraphs 3(a)(ii), (iii), (iv), (v) and (vi).
(d) COMMERCIAL COPIES
The Corporation has caused commercial copies of the Preliminary
Prospectuses and shall cause commercial copies of the Final
Prospectuses to be delivered, without charge, to the Underwriters in
such cities in North America and in such quantities as the
Underwriters may reasonably request by oral instructions to the
Corporation or the printer of such documents. Such delivery of the
Final Prospectuses shall be effected as soon as possible after
receipts are issued by the Canadian Securities Regulators for the
Canadian Final Prospectus but, in any event, on or before 10:00 a.m.
(Toronto time) on December 16, 2004. Such deliveries shall
constitute the consent of the Corporation to the Underwriters' use
of the Preliminary Prospectuses and Final Prospectuses in connection
with the distribution of the Underwritten Shares in the Qualifying
Provinces and in the United States in compliance with the provisions
of this Agreement and Applicable Securities Laws.
(e) QUALIFICATION OF SECURITIES
The Corporation will promptly from time to time take such action as
the Underwriters may reasonably request to qualify the Underwritten
Shares for offering and sale under the Applicable Securities Laws or
"Blue Sky laws" of such United States or Canadian jurisdictions as
the Underwriters may reasonably request and to comply with such laws
so as to permit the continuance of sales and dealings therein in
such jurisdictions for so long as may be necessary to complete the
distribution of the Underwritten Shares until 30 days after the date
hereof; provided that in connection therewith, the Corporation shall
not be required to amend its memorandum or articles or to qualify as
a foreign corporation or to file a general consent to service of
process in any jurisdiction or subject itself to taxation in respect
of doing business in any jurisdiction in which it is not otherwise
so subject.
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(f) DISTRIBUTION OF SHARES
Each Underwriter represents and warrants to, and covenants and
agrees with the Corporation, that it shall (and each Underwriter
severally agrees to require any selling firm to agree with such
Underwriter, for the benefit of the Corporation, to):
(i) offer the Underwritten Shares for sale to the public only as
permitted by applicable law, including Applicable Securities
Laws, and at a price not exceeding $10.25 per Underwritten
Share and cause the U.S. Dealers to conduct all offers and
sales of the Underwritten Shares in the United States in
compliance with all applicable U.S. Securities Laws,
including, without limitation, applicable "Blue Sky laws";
(ii) not solicit offers to purchase Underwritten Shares from, or
sell Underwritten Shares to, any person resident in any
jurisdiction other than the Qualifying Provinces or the United
States, except in a manner which is exempt from registration
and prospectus requirements under applicable securities laws
and which does not require the Corporation to register any of
its securities or comply with ongoing filing or disclosure
requirements or other similar requirements and further
provided that in connection therewith, the Corporation shall
not be required to amend its memorandum or articles or to
qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction or subject itself to
taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject;
(iii) not make use of any "green sheet" or information memorandum in
respect of the Corporation or the distribution of the
Underwritten Shares in the United States and not make use of
any such "green sheet" or information memorandum in Canada
that has not first been approved by the Corporation;
(iv) offer and sell the Underwritten Shares in the United States
only through the U.S. Dealers.
(g) REGISTRATION IN U.S.
The Lead Underwriters severally represent and warrant in respect of
their respective affiliates that are identified as the U.S. Dealers
herein, that such affiliates are duly registered as broker dealer
affiliates of the Lead Underwriters with the SEC under Paragraph 15
of the 1934 Act and are members of NASD.
(h) NOTICE OF COMPLETION OF DISTRIBUTION
After the Closing Time, the Underwriters shall:
(i) use their best efforts to complete the distribution of the
Underwritten Shares as promptly as possible; and
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(ii) give prompt written notice to the Corporation when, in the
opinion of the Lead Underwriters, the Underwriters have
completed distribution of the Underwritten Shares, including a
breakdown of the gross proceeds realized therefrom in each of
the Qualifying Provinces, in the United States and in any
other applicable jurisdiction.
4. MATERIAL CHANGES DURING DISTRIBUTION
(a) CORPORATION MATERIAL CHANGE
During the period from the date of this Agreement to the completion
of distribution of the Underwritten Shares, the Corporation shall
promptly notify the Lead Underwriters in writing of:
(i) any change (actual, anticipated, or threatened, financial or
otherwise) in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of the
Corporation and its Subsidiaries that would be material to the
Corporation and its Subsidiaries that is not otherwise
referred to in the Final Prospectuses;
(ii) any material fact which has arisen or been discovered that
would have been required to have been stated in the Final
Prospectuses or the Registration Statement had such fact
arisen or been discovered on, or prior to, the date of such
document; and
(iii) any change in any material fact (which for the purposes of
this Agreement shall be deemed to include the disclosure of
any previously undisclosed material fact) contained in the
Final Prospectuses or the Registration Statement, including
all Documents Incorporated by Reference, which fact or change
is, or may be, of such a nature as: (A) to render any
statement in the Final Prospectuses or the Registration
Statement misleading or untrue or which would result in a
misrepresentation in the Final Prospectuses or the
Registration Statement; (B) which would result in the Final
Prospectuses or the Registration Statement not complying (to
the extent that such compliance is required) with Applicable
Securities Laws; (C) would reasonably be expected to have a
significant effect on the market price or value of the
Underwritten Shares; or (D) would be material to a prospective
purchaser of the Underwritten Shares.
The Corporation will in good faith discuss with the Lead
Underwriters any event described in clauses (i), (ii) or (iii) above
that occurs or is discovered during the period from the date of this
Agreement to the completion of distribution of the Underwritten
Shares which is of such a nature that there may be reasonable doubt
as to whether notice need be given to the Lead Underwriters pursuant
to this Subparagraph 4(a). If at any time during the period from the
date of this Agreement to the completion of distribution of the
Underwritten Shares, any event described in clauses (i), (ii) or
(iii) above occurs or any condition exists as a
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result of which it is necessary, in the reasonable opinion of
counsel for the Corporation or the Underwriters, to amend the
Registration Statement or amend or supplement the Final
Prospectuses, as the case may be, in order that the Final
Prospectuses will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall
be necessary, in the opinion of any such counsel, at any such time
to amend the Registration Statement or amend or supplement the Final
Prospectuses, as the case may be, in order to comply with the
requirements under Applicable Securities Laws or other applicable
laws, the Corporation will promptly prepare and file such Prospectus
Amendment as may be necessary to correct such statement or omission
or to make the Registration Statement or the Final Prospectuses, as
the case may be, comply with such laws, and the Corporation will
furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriter may reasonably request.
The Corporation shall not file any Prospectus Amendment or other
document, however, without first obtaining approval from the
Underwriters, after consultation with the Underwriters with respect
to the form and content thereof, which approval shall not be
unreasonably withheld or delayed.
(b) CHANGE IN APPLICABLE SECURITIES LAWS
If during the period of distribution of the Underwritten Shares,
there shall be any change in the Applicable Securities Laws which,
in the opinion of any Underwriter, acting reasonably, requires the
filing of a Prospectus Amendment, the Corporation shall, to the
satisfaction of the Underwriters, acting reasonably, promptly
prepare and file such Prospectus Amendment with the appropriate
securities regulatory authority in each jurisdiction where such
filing is required.
(c) CHANGE IN CLOSING DATE
If a material change occurs or an undisclosed material fact has
arisen or been discovered prior to the Closing Date, then, subject
to Paragraph 9, the Closing Date or Over-Allotment Closing Date, as
the case may be, shall be, unless the Corporation and the
Underwriters otherwise agree in writing or unless otherwise required
under the Applicable Securities Laws, the later of:
(i) the third Business Day following the date on which all
applicable filings or other requirements of the Applicable
Securities Laws with respect to such material change or change
in a material fact have been made or complied with in all
relevant jurisdictions and any appropriate receipts obtained
for such filings and notice of such filings from the
Corporation or its counsel have been received by the
Underwriters; and
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(ii) the fifth Business Day following the date upon which the
commercial copies of any Prospectus Amendment have been
delivered in accordance with Subparagraph 3(c).
In no event, however, shall the Closing Date be later than December
31, 2004.
(d) NOTIFICATION
During the period commencing on the date hereof until the
Underwriters notify the Corporation of the completion of the
distribution of the Underwritten Shares, the Corporation will
promptly inform the Underwriters of the full particulars of:
(i) any request of any Canadian Securities Regulator or the SEC
for any amendment to the Preliminary Prospectus, the Final
Prospectus, the Registration Statement or any Prospectus
Amendment or for any additional information in respect of the
offering of the Underwritten Shares;
(ii) the receipt by the Corporation of any material communication,
whether written or oral, from any Canadian Securities
Regulator, the SEC, either Stock Exchange or any other
competent authority, relating to the Final Prospectuses, the
Registration Statement or the distribution of the Underwritten
Shares;
(iii) any notice or other correspondence received by the Corporation
from any governmental body requesting any information, meeting
or hearing relating to the Corporation, the offering, the
issue and sale of the Underwritten Shares or any other event
or state of affairs, that the Corporation reasonably believes
would have a material adverse effect on the business, assets,
financial condition, liabilities or operations of the
Corporation; or
(iv) the issuance by any Canadian Securities Regulator, the SEC,
either Stock Exchange or any other competent authority,
including any other governmental or regulatory body, of any
order to cease or suspend trading or distribution of any
securities of the Corporation or of the institution, threat of
institution of any proceedings for that purpose or any notice
of investigation that could potentially result in an order to
cease or suspend trading or distribution of any securities of
the Corporation.
5. SERVICES PROVIDED BY UNDERWRITERS AND UNDERWRITING FEE
In consideration for the Underwriters' services in assisting in the
preparation of the Preliminary Prospectuses, the Final Prospectuses, the
Registration Statement and any Prospectus Amendments, in distributing the
Underwritten Shares, both directly and to other registered dealers as brokers,
and in performing administrative work in connection with the distribution of the
Underwritten Shares, the Corporation agrees to pay to the Underwriters the
Underwriting Fee. The Underwriting Fee shall be payable as provided for in
Subparagraph 6(a). The Underwriting
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Fee shall be payable by way of set-off of the amount of the Underwriting Fee
against, and deduction of the Underwriting Fee from, the Purchase Price.
6. DELIVERY OF PURCHASE PRICE, UNDERWRITING FEE AND CERTIFICATE
(a) DELIVERIES
The purchase and sale of the Underwritten Shares shall be completed
at the Closing Time on the Closing Date and each Over-Allotment
Closing Date at the offices of DuMoulin Black, 10th Floor, 000 Xxxx
Xxxxxx, Xxxxxxxxx XX X0X 0X0, or at such other place as the
Underwriter and the Corporation may agree upon.
At the Closing Time on the Closing Date and on each Over-Allotment
Closing Date, the Corporation shall deliver to Orion, for the
benefit of the Underwriters, one or more definitive share
certificate(s) representing the Underwritten Shares or Additional
Shares, as the case may be, registered in the name of Orion or its
nominee, against payment by the Underwriters to the Corporation of
the Purchase Price, less the Underwriting Fee, by wire transfer, or
if permitted under applicable laws, certified cheque or bank draft
(in any case, as may be directed by the Corporation), together with
a receipt signed by Orion on behalf of the Underwriters for such
definitive certificate(s) and a receipt for the Underwriting Fee.
(b) DELIVERY OF CERTIFICATE(S) TO TRANSFER AGENT
The Corporation shall, prior to the Closing Date, make all necessary
arrangements for the exchange of the definitive certificate(s)
representing the Underwritten Shares, on the Closing Date, at the
principal offices of the Canadian Transfer Agent in the City of
Vancouver and the U.S. Transfer Agent in the City of Golden,
Colorado for certificates representing such number of Underwritten
Shares registered in such names as shall be designated by the
Underwriters not less than 48 hours (or 72 hours if the Closing Date
is a Monday) prior to the Closing Time.
The Corporation shall pay all fees and expenses payable to the
Canadian Transfer Agent and the U.S. Transfer Agent in connection
with the preparation, delivery, certification and exchange of the
Underwritten Shares, contemplated by this Subparagraph 6(b) and the
fees and expenses payable to the Canadian Transfer Agent and the
U.S. Transfer Agent in connection with the initial or additional
transfers as may be required in the course of the distribution of
the Underwritten Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to each of the Underwriters that,
and acknowledges that the Underwriters are relying upon, such representations
and warranties in purchasing the Underwritten Shares:
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(a) the Corporation and each of the Material Subsidiaries has been duly
organized and is validly existing under the laws of its jurisdiction
of incorporation and is properly registered under the laws of all
jurisdictions in which its business is carried on except where the
failure to be so registered would not have a material adverse effect
on the business or operations of the Corporation;
(b) the Corporation is: (i) a reporting issuer not in default in any
material respect of any requirement under Canadian Securities Laws;
and (ii) has timely filed all documents required to be filed by it
under U.S. Securities Laws and is not in default in any material
respect of any requirement under U.S. Securities Laws;
(c) the Corporation has the requisite corporate power, authority and
capacity to enter into this Agreement and to perform the
transactions contemplated herein and the Corporation and each of its
Subsidiaries has the requisite corporate power, authority and
capacity to own, lease and to operate its property and assets
including licences or other similar rights and to carry on the
business customarily carried on by it and has all the requisite
corporate power and authority to carry on its business as currently
carried on or as currently proposed to be carried on. The
Corporation and each of its Subsidiaries is conducting its business
in compliance with all applicable laws, rules and regulations of
each jurisdiction in which its business is carried on and is duly
licensed, registered or qualified in all jurisdictions in which it
owns, leases or operates its property or carries on business to
enable its business to be carried on as now conducted and its
property and assets to be owned, leased and operated except where
such non-compliance or failure to obtain such licence, registration
or qualification would not have a material adverse effect on the
business or operations of the Corporation or any of its Subsidiaries
and all such licences, registrations and qualifications are valid
and subsisting and in good standing;
(d) Corporation has authorized share capital consisting of 100,000,000
Common Shares of which 41,643,081 Common Shares and no more are
validly issued and outstanding as fully paid and non-assessable on
the date hereof. No person, firm or corporation has any agreement
or option, or right or privilege (whether pre-emptive or
contractual) capable of becoming an agreement or option, for the
purchase from the Corporation or any of its Subsidiaries of any
unissued shares of the Corporation or any of its Subsidiaries,
except as otherwise described in the Final Prospectuses;
(e) the Corporation is the direct or indirect legal and beneficial owner
of all of the issued and outstanding shares of each of the Material
Subsidiaries, save that legal title to 0.01% of the issued and
outstanding shares of Minera are held by a Mexican individual, and
no person, firm or corporation has any agreement, right or option
for the purchase from the Corporation or any other person for the
purchase of any shares of any of the Material Subsidiaries;
(f) except as disclosed in the Final Prospectuses, to the best of the
Corporation's knowledge, there is no action, proceeding or
investigation pending or threatened
-16-
against the Corporation or any of its Subsidiaries before or by any
federal, provincial, municipal or other governmental department,
commission, board or agency, domestic or foreign, which is
reasonably expected to result in any material change in the business
or in the condition (financial or otherwise) of the Corporation or
any of its Subsidiaries or their respective properties or assets
(taken as a whole), or which questions the validity of any action
taken or to be taken by the Corporation or any of its Subsidiaries
pursuant to or in connection with this Agreement or as contemplated
by the Final Prospectuses;
(g) since June 30, 2004, there have been no changes in the assets or
liabilities of the Corporation from the position thereof as set
forth in the financial statements of the Corporation dated as of
such date, except changes arising from transactions in the ordinary
course of business which, in the aggregate, have not been material
to the Corporation and except for changes that are disclosed in the
Final Prospectuses;
(h) the financial statements of the Corporation, including the notes
thereto included in the U.S. Final Prospectus and the Registration
Statement have been prepared in conformity with Canadian generally
accepted accounting principles and have been reconciled to United
States generally accepted accounting principles in accordance with
the 1933 Act, including the requirements of Form F-10, in each case
applied on a consistent basis throughout the periods involved;
(i) the financial statements of the Corporation as included or
incorporated by reference in the Final Prospectuses present fairly
in all material respects the financial position of the Corporation
as at the dates of such statements;
(j) the Corporation is not in material violation of, and the execution
and delivery of this Agreement and the performance by the
Corporation of its obligations under this Agreement will not result
in any material breach or violation of, or be in material conflict
with, or constitute a material default under, or create a state of
facts which after notice or lapse of time, or both, would constitute
a material default under any term or provision of the memorandum or
articles of the Corporation or any resolution of the directors or
shareholders of the Corporation or any material contract, mortgage,
note, indenture, joint venture or partnership arrangement, agreement
(written or oral), instrument, lease, judgment, decree, order,
statute, rule, licence or regulation applicable to the Corporation;
(k) no approval, authorization, consent or other order of, and no
filing, registration or recording with, any governmental authority
is required of the Corporation in connection with the execution and
delivery or with the performance by the Corporation of this
Agreement except as disclosed in the Final Prospectuses and
compliance with the Applicable Securities Laws with regard to the
distribution of the Underwritten Shares in the Qualifying Provinces
and the United States;
(l) this Agreement has been duly authorized, executed and delivered by
the Corporation and constitutes a valid and binding obligation of
the Corporation, enforceable in accordance with its terms, except as
enforcement hereof may be
-17-
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and except
as limited by the application of equitable principles when equitable
remedies are sought and subject to the fact that rights of indemnity
and contribution may be limited by applicable law;
(m) to the knowledge of the Corporation, no securities commission, stock
exchange or comparable authority has issued any order preventing or
suspending the use or effectiveness of the Preliminary Prospectuses,
the Final Prospectuses, the Registration Statement or any Prospectus
Amendment or preventing the distribution of the Underwritten Shares
in any Qualifying Province or the United States nor instituted
proceedings for that purpose and, to the knowledge of the
Corporation, no such proceedings are pending or contemplated and any
request on the part of the SEC for additional information has been
complied with;
(n) the Corporation is eligible, in accordance with the provisions of
National Instrument 44-101, to file a short form prospectus with the
Canadian Securities Regulators;
(o) the Corporation is not, and upon consummation of the transactions
contemplated hereby will not be, an "investment company" or an
entity "controlled by an investment company" as such terms are
defined in the United States Investment Company Act of 1940, as
amended;
(p) the Canadian Transfer Agent has been duly appointed as registrar and
transfer agent for the Common Shares in Canada, and the U.S.
Transfer Agent has been duly appointed as registrar and transfer
agent for the Common Shares in the United States;
(q) to the knowledge of the Corporation, the Corporation is not a
"related issuer" or "connected issuer" (as such terms are defined
under the Canadian Securities Laws) of any of the Underwriters;
(r) the Corporation has prepared and filed with the SEC an appointment
of agent for service of process upon the Corporation on Form F-X;
(s) the Corporation meets the general eligibility requirements for the
use of Form F-10;
(t) as at their respective dates, the Canadian Preliminary Prospectus
does, and the Canadian Final Prospectus will, comply in all material
respects with the Canadian Securities Laws and, at the time of
delivery of the Underwritten Shares to the Underwriters, the
Canadian Final Prospectus will comply in all material respects with
the Canadian Securities Laws;
(u) (i) the U.S. Preliminary Prospectus conforms and the U.S. Final
Prospectus will conform to the Canadian Preliminary Prospectus and
Canadian Final Prospectus, respectively, except for such deletions
therefrom and additions thereto as are permitted or required by Form
F-10; (ii) the Registration Statement as amended or
-18-
supplemented, does not and, on the Effective Date, will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; (iii) the U.S. Preliminary
Prospectus and the Corporation's Form F-X comply, and the U.S. Final
Prospectus and the Registration Statement, as amended or
supplemented, will, on the Closing Date, comply, and if any
Additional Shares are purchased on an Over-Allotment Closing Date
(if such date is different than the Closing Date), will comply, in
all material respects with the 1933 Act; (iv) the U.S. Preliminary
Prospectus does not, and the U.S. Final Prospectus, as of their
respective dates and with respect to the U.S. Final Prospectus as of
the Closing Date, will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and (v) each of the Canadian
Preliminary Prospectus contains, and the Canadian Final Prospectus,
on its date or on the Closing Date or on an Over-Allotment Closing
Date (if such date is different than the Closing Date), contained or
will contain full, true and plain disclosure of all material facts
required to be stated therein relating to the Corporation, the
operations of the Corporation, and the Underwritten Shares, and as
of the date of its filing will contain no untrue statement of a
material fact and will not omit to state a material fact regarding
the Corporation and its business and affairs that is necessary to
make any statement therein not misleading in light of the
circumstances in which it was made; provided, however, that this
representation and warranty shall not apply to statements or
omissions made in reliance upon and in conformity with information
relating to an Underwriter furnished in writing to the Corporation
by that Underwriter expressly for use in the Preliminary
Prospectuses, the Final Prospectuses or the Registration Statement;
(v) there are no reports or information that, in accordance with the
requirements of the Canadian Securities Regulators or the SEC, must
be made publicly available or filed in connection with the offering
of the Underwritten Shares that have not been made publicly
available or filed as required;
(w) the delivery by the Corporation of any signed Prospectus Amendment
or material change report required to be filed under the Applicable
Securities Laws will constitute a representation and warranty by the
Corporation to each Underwriter that all the information and
statements contained therein (except information and statements
relating to the Underwriters) are true and correct and that no
material information has been omitted therefrom which is necessary
to make the statements contained therein not misleading;
(x) the Corporation has procured and maintains adequate insurance, in
accordance with industry standards for mineral exploration companies
which are at a similar stage of development, against all insurable
risks reasonably known to the Corporation which are material to the
Corporation and its Material Subsidiaries, taken together as a
whole;
-19-
(y) except as disclosed in the Final Prospectuses, the Corporation
and/or its Material Subsidiaries are the absolute legal (save in
respect of subsidiaries incorporated in Mexico where legal title as
to 99.99% of the issued and outstanding shares of such Subsidiaries
is held by the Corporation and legal title as to 0.01% of the issued
and outstanding shares of such Subsidiaries is held by a Mexican
individual) and beneficial owners of, and has or have good and
marketable title to, all of the material property or assets thereof
as described in the Prospectuses (including, without limitation, the
Penasquito Project) free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances, claims or demands
whatsoever, and the Corporation knows of no claim or basis for any
claim that might or could adversely affect the right to use,
transfer or otherwise exploit such property and assets (including,
without limitation, the Penasquito Project) and neither the
Corporation nor any of its Material Subsidiaries has any
responsibility or obligation to pay any commission, royalty, licence
fee or similar payment to any person with respect to such property
and assets, except as disclosed in the Final Prospectuses;
(z) the Corporation and/or a Material Subsidiary of the Corporation
holds the mining leases, mining claims and exploration agreements
relating to the Penasquito Project under valid, subsisting and
enforceable title documents or other recognized and enforceable
agreements or instruments, which are currently sufficient to permit
the Corporation and the relevant Material Subsidiary to conduct all
exploration and development activities planned for the Penasquito
Project and all such leases, claims and exploration agreements have
been validly located and recorded in accordance with all applicable
laws, except as disclosed in the Final Prospectuses, and each of the
documents, agreements and instruments and obligations relating
thereto are currently in good standing in the name of the
Corporation or the relevant Material Subsidiary;
(aa) any and all of the agreements and other documents and instruments
pursuant to which the Corporation or the relevant Material
Subsidiary holds its property and assets (including any interest in,
or right to earn an interest in, any property) are valid and
subsisting agreements, documents or instruments in full force and
effect, enforceable in accordance with the terms thereof, neither
the Corporation nor any Material Subsidiary is in default of any of
the material provisions of any such agreements, documents or
instruments nor has any such default been alleged, and such
properties and assets are in good standing under the applicable
statutes and regulations of the jurisdictions in which they are
situated, and there has been no material default under any lease,
claim or exploration agreement pursuant to which the Corporation or
any Material Subsidiary derives an interest in such property or
assets and all assessments and taxes required to be paid with
respect to such properties and assets to the date hereof have been
paid. The interests of the Corporation and its Material Subsidiaries
in, or rights of the Corporation or its Material Subsidiaries to
earn an interest in, any property, are not subject to any right of
first refusal or purchase or acquisition rights except as disclosed
in the Final Prospectuses;
-20-
(bb) the Corporation and each of its Subsidiaries is in compliance in all
material respects with each material license and permit held by it
and is not in violation of, or in default under, the applicable
statutes, ordinances, rules, regulations, orders or decrees
(including, without limitation, Environmental Laws (as defined
below)) of any governmental entities, regulatory agencies or bodies
having, asserting or claiming jurisdiction over it or over any part
of its operations or assets;
(cc) the Corporation and each of its Subsidiaries: (i) is in material
compliance with any and all applicable foreign, federal, provincial,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"); (ii) has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business as currently conducted; (iii) is in material compliance
with all terms and conditions of each such permit, license or
approval; (iv) confirms that there have been no past, and to the
best knowledge of the Corporation, there are no pending or
threatened claims, complaints, notices or requests for information
received by the Corporation or any Subsidiary of the Corporation
with respect to any alleged material violation of any Environmental
Law; and (v) confirms that no conditions exist at, on or under any
property now or previously owned or leased by the Corporation or a
Subsidiary of the Corporation which, with the passage of time, or
the giving of notice or both, would give rise to liability under any
Environmental Law;
(dd) neither the Corporation, any Subsidiary of the Corporation, nor to
the Corporation's knowledge, any other person, has ever caused or
permitted hazardous or toxic waste to be placed, held, located or
disposed of on, under or at any lands or premises owned or occupied
by the Corporation or any Subsidiary of the Corporation otherwise
than in compliance with Environmental Laws and no notice has been
received by the Corporation or any Subsidiary of the Corporation of
any action or potential liability in respect thereof and, to the
knowledge of the Corporation, no civil, criminal or enforcement
actions or complaints in respect thereof are threatened, pending or
have been commenced against the Corporation or any Subsidiary of the
Corporation;
(ee) there are no environmental audits, evaluations, assessments, studies
or tests that were commissioned by the Corporation or any of its
Subsidiaries respecting the business, operations, properties or
facilities of the Corporation or any of its Subsidiaries except as
disclosed to the Underwriters in the letter dated December 10, 2004
from M3 Engineering & Technology Corp. and in Appendix A to the AIF
under the heading "The Carmacks Property, Yukon Territory";
(ff) the Corporation has filed with the British Columbia Securities
Commission, the Ontario Securities Commission and the SEC all of the
technical reports required to be filed under National Instrument
43-101 or U.S. Securities Laws in respect of each property material
to the Corporation and all public disclosure made by the Corporation
regarding its properties complies with the requirements of National
Instrument 43-101;
-21-
(gg) there has not been any "disagreement" (within the meaning of
National Instrument 51-102) with the auditors of the Corporation;
(hh) the Corporation shall use its best efforts to arrange for the
listing and posting for trading of the Underwritten Shares on the
Stock Exchanges on or before the Time of Closing;
(ii) the Corporation shall use the net proceeds of the offering of the
Underwritten Shares solely for the purposes described in the Final
Prospectuses and the Corporation covenants and agrees that no
portion of the net proceeds of the offering of Underwritten Shares
may be expended on, or used in connection with the maintenance or
development of any of the Corporation's projects other than the
Penasquito Project;
(jj) the books and records of the Corporation and its Subsidiaries made
available to the Underwriters, or their respective representatives,
in connection with their due diligence investigations are the
original or true copies of the books and records of such entities
and contain copies of all proceedings required to be contained
therein of the directors, shareholders and other securityholders of
such entities (or certified copies thereof); and
(kk) all information relating to the business, assets, liabilities,
properties, capitalization or financial condition of the Corporation
and its Subsidiaries provided to the Underwriters, or their
respective representatives, is true, accurate and complete in all
material respects.
8. CONDITIONS
The Underwriters' obligations to purchase the Underwritten Shares at the
Closing Time is subject to the accuracy of the representations and warranties of
the Corporation contained in this Agreement, both as of the date of this
Agreement and as of each Closing Time, the performance by the Corporation of its
obligations under this Agreement and the following additional conditions:
(a) the Registration Statement shall have become effective under the
1933 Act prior to the Closing Date (or Over-Allotment Closing Date,
as the case may be) or at such later time or on such later date as
the Underwriters shall have agreed to in writing and no stop order
suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened by the SEC and any request for additional
information shall have been complied with;
(b) the Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date (or Over-Allotment Closing Date, as
the case may be) in form and substance satisfactory to counsel to
the Underwriters, addressed to the Underwriters and counsel to the
Underwriters from counsel to the Corporation, DuMoulin Black (or, in
the case of the opinions respecting matters in jurisdictions other
than British Columbia, local counsel in such jurisdictions)
regarding the
-22-
following matters and such other matters as the Underwriters and
their counsel may reasonably request:
(i) that the Corporation and each of the Material Subsidiaries has
been incorporated under the laws of its jurisdiction of
incorporation and has not been dissolved and has all requisite
corporate power to conduct their respective businesses as
described in the Prospectuses and, in the case of the
Corporation, to enter into and carry out its obligations under
this Agreement and to issue the Underwritten Shares;
(ii) that the Corporation is the legal and beneficial owner,
directly or indirectly, of all of the issued and outstanding
shares of each of the Material Subsidiaries;
(iii) that, subject to reasonable assumptions and qualifications,
the execution and delivery of this Agreement, the fulfilment
of the terms hereof, the grant of the Over-Allotment Option by
the Corporation, the issue, sale and delivery on the Closing
Date of the Underwritten Shares by the Corporation or the
issue of the Additional Shares on the Over-Allotment Closing
Date, as the case may be, do not and will not contravene any
laws of the Province of British Columbia or of Canada
applicable therein and do not and will not conflict with or
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 of the terms, conditions or
provisions of the memorandum, articles or resolutions of the
directors or shareholders of the Corporation;
(iv) that all requisite corporate action has been taken by and on
behalf of the Corporation to authorize the creation, issuance
and sale of the Underwritten Shares;
(v) that the authorized capital of the Corporation consists of
100,000,000 Common Shares of which 41,643,081 Common Shares
are, and will be as of the Closing Date, issued and
outstanding as fully paid and non-assessable shares in the
capital of the Corporation;
(vi) that the Corporation and each of its Material Subsidiaries has
all requisite corporate power and authority under the laws of
the Province of British Columbia, the laws of the British
Virgin Islands and the laws of Mexico, and is qualified to,
carry on its business as presently carried on in such
jurisdictions and in respect of the Corporation to carry out
the transactions contemplated by the Final Prospectuses and
any Prospectus Amendment;
(vii) that all necessary corporate action has been taken by the
Corporation to authorize the execution and delivery of each of
the Preliminary Prospectuses and the Final Prospectuses and,
if applicable, any Prospectus
-23-
Amendment and the filing of such documents under the Canadian
Securities Laws in each of the Qualifying Provinces;
(viii) that the Corporation is a "reporting issuer" not in default
within the meaning of the Securities Act (Ontario) and the
Securities Act (British Columbia);
(ix) that the Underwritten Shares have been duly authorized and
validly issued by the Corporation and are outstanding as fully
paid and non-assessable shares in the capital of the
Corporation;
(x) that the attributes of the Underwritten Shares, are consistent
in all material respects with the descriptions thereof in the
Prospectuses;
(xi) that this Agreement has been duly authorized and executed by
the Corporation and constitutes a legal, valid and binding
obligation of the Corporation and is enforceable in accordance
with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and except as
limited by the application of equitable principles when
equitable remedies are sought; provided that such counsel may
express no opinion as to the enforceability of the indemnity
provisions and the contribution provisions hereof;
(xii) that the Underwritten Shares are qualified investments under
the Income Tax Act (Canada) and the Regulations thereunder for
trusts governed by registered retirement savings plans,
registered retirement income funds, deferred profit sharing
plans and registered education savings plans;
(xiii) that the form and terms of the certificates representing the
Underwritten Shares meet all legal requirements under the
Business Corporations Act (British Columbia) and the rules of
the TSX and the form and terms of the certificates
representing the Underwritten Shares used for the purposes of
listing on the TSX and the American Stock Exchange have been
duly approved by the Corporation;
(xiv) that each of the Canadian Transfer Agent and the U.S. Transfer
Agent has been duly appointed as the transfer agent and
registrar for the Common Shares in, respectively, Canada and
the United States;
(xv) that no consent, approval, authorization or order, or filing
with any court or public, governmental or regulatory agency or
body is required for the execution, delivery and performance
by the Corporation of this Agreement, or for the consummation
by the Corporation of the offering contemplated hereby except
as have been made or obtained under the Canadian Securities
Laws;
-24-
(xvi) that all documents have been filed and all requisite
proceedings have been taken and all approvals, permits,
consents and authorizations of the appropriate regulatory
authorities under Canadian Securities Laws have been obtained
by the Corporation to qualify the Underwritten Shares for
distribution in each of the Qualifying Provinces through
investment dealers or brokers registered under the applicable
laws of the Qualifying Provinces who have complied with such
applicable laws;
(xvii) that the execution and delivery by the Corporation of this
Agreement and the consummation by the Corporation of the
transactions contemplated thereby, including the issuance and
sale of the Underwritten Shares, will not constitute a
violation of, or a breach or default under, the terms of any
Material Contract;
(xviii) the statements in the Final Prospectus under the heading
"Canadian Federal Income Tax Considerations" constitute an
accurate summary of the principal Canadian federal income tax
considerations relating to the acquisition of Underwritten
Shares pursuant to the offering;
(xix) that the Underwritten Shares have been conditionally approved
for listing by the TSX; and
(xx) that nothing (excluding for the purpose of this subsection the
financial statements and related schedules and notes thereto
and other financial information; or data with respect to
mineral resources and reserves contained or incorporated by
reference therein upon the authority of an expert in the
calculation of mineral resources and reserves, referred to or
included therein or omitted therefrom, as to which such
counsel need make no statement, has come to the attention of
such counsel that would lead them to believe that the Final
Prospectuses (including the material incorporated therein by
reference) contained or contain an untrue statement of a
material fact, within the meaning of the Securities Act
(British Columbia), respecting the Corporation or omitted or
omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
In giving the opinions contemplated above and the statement referred
to in (xx) above, counsel may rely upon opinions of local counsel
acceptable to it as to matters related to the Income Tax Act
(Canada) and may rely, to the extent appropriate in the
circumstances, as to matters of fact on certificates of the
Corporation's officers and certificates issued by securities
commissions, public and stock exchange officials, other governmental
agencies and the Corporation's registrar and transfer agent, and
such opinions may be subject to usual qualifications and
assumptions. In respect of opinions as to matters governed by the
laws of provinces other than British Columbia or by the laws of
countries
-25-
other than Canada, such opinions shall be provided as stand-alone
opinions of counsel from such other jurisdictions;
(c) the Underwriters shall have received at the Closing Time an opinion
of the Corporation's U.S. counsel, Xxxxxxx Xxxxx & Xxxxx LLP, dated
the Closing Date (or Over-Allotment Closing Date, as the case may
be) in respect of the following matters and such other matters as
the Underwriters and their counsel may reasonably request:
(i) the Corporation meets the general eligibility requirements for
use of Form F-10; the Registration Statement has been declared
effective; the Form F-X was filed with the Commission prior to
the effectiveness of the Registration Statement; and to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
threatened;
(ii) assuming that the Canadian Preliminary Prospectus complies as
to form in all material respects and has been prepared in
accordance with the requirements of all applicable Canadian
Securities Laws as interpreted and applied by the Canadian
Securities Regulators, including, without limitation,: (A)
that there are no documents, reports or other information that
in accordance with the requirements of the Canadian Securities
Regulators must be filed or made publicly available in
connection with the offering of the Underwritten Shares that
have not or will not prior to the effective date of the
Canadian Final Prospectus have been so filed or made
available; and (B) that, other than a form of this
Underwriting Agreement, there were no publicly available
documents filed with the Canadian Securities Regulators or any
other Canadian regulatory authority in connection with the
Canadian Final Prospectus: (x) the Registration Statement and
the U.S. Final Prospectus, as of its respective effective or
issue date (other than the financial statements and related
schedules and notes thereto and other financial information,
or data with respect to mineral resources and reserves
contained or incorporated by reference therein upon the
authority of an expert in the calculation of mineral resources
and reserves, as to which such counsel need express no
opinion) and the Form F-X, complied or comply as to form in
all material respects with the applicable requirements of the
1933 Act; and (y) there is no material required to be filed as
an exhibit to the Registration Statement by the 1933 Act which
has not been so filed;
(iii) the Underwritten Shares are duly listed, subject to official
notice of issuance, on the American Stock Exchange;
(iv) the information in the U.S. Final Prospectus under the heading
"Certain United States Federal Income Tax Considerations", to
the extent that it
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constitutes summaries of legal tax matters or legal
conclusions, has been reviewed by such counsel and is correct
in all material respects;
(v) no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any United
States court or governmental authority or agency (other than
under the 1933 Act, which have been obtained, or as may be
required under the securities or blue sky laws of the various
states, as to which such counsel need express no opinion) is
necessary or required in connection with the due
authorization, execution and delivery of the Underwriting
Agreement or for the offering, issuance, sale or delivery of
the Underwritten Shares;
(vi) the execution, delivery and performance of the Underwriting
Agreement and the consummation of the transactions
contemplated in the Underwriting Agreement and in the
Registration Statement (including the issuance and sale of the
Underwritten Shares and the use of the proceeds from the sale
of the Underwritten Shares as described in the U.S. Final
Prospectus under the caption "USE OF PROCEEDS") do not and the
compliance by the Corporation with its obligations under the
Underwriting Agreement will not, whether with or without the
giving of notice or lapse of time or both, result in any
violation of the provisions of any United States federal law,
statute, rule, regulation, judgment, order, writ or decree,
known to such counsel, applicable to the Corporation or its
subsidiaries of any United States federal government, United
States federal government instrumentality or United States
federal court having jurisdiction over the Corporation or any
subsidiary or any of their respective properties, assets or
operations in the United States;
(vii) the Corporation is not required and, upon the issuance and
sale of the Underwritten Shares as herein contemplated and the
application of the net proceeds therefrom, as described in the
U.S. Final Prospectus, will not be required to register as an
"investment company" under the United States Investment
Company Act of 1940, as amended;
(viii) nothing has come to the attention of such counsel that would
lead them to believe that the Registration Statement or any
amendment thereto (except for financial statements and
schedules and other financial data; or data with respect to
mineral resources and reserves contained or incorporated by
reference therein upon the authority of an expert in the
calculation of mineral resources and reserves, referred to or
included therein or omitted therefrom, as to which such
counsel need make no statement), at the time such Registration
Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the U.S.
Final Prospectus or any amendment or supplement thereto
(except for financial statements and
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schedules and other financial data or data with respect to
mineral resources and reserves contained or incorporated by
reference therein upon the authority of an expert in the
calculation of mineral resources and reserves included therein
or omitted therefrom, as to which such counsel need make no
statement), at the time the U.S. Final Prospectus was issued,
or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(d) the Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date (or Over-Allotment Closing Date, as
the case may be) from the Underwriter's counsel, Xxxxxxx Xxxxx &
Xxxxxxxxx LLP, with respect to matters related to the transactions
contemplated hereby reasonably requested by the Underwriters. In
providing such opinion Xxxxxxx Xxxxx & Xxxxxxxxx LLP shall be
entitled to rely on the opinions of local counsel as to matters
governed by the laws of jurisdictions other than the laws of Canada
and Ontario respectively, and as to matters of fact, on certificates
of the Corporation's registrar and transfer agents, public and stock
exchange officials and officers of the Corporation. Xxxxxxx Xxxxx &
Xxxxxxxxx LLP shall also be entitled to rely upon the opinion of
DuMoulin Black with respect to the matters relating to the
Corporation;
(e) the Underwriters shall have received at the Closing Time opinions
dated the Closing Date (or Over-Allotment Closing Date, as the case
may be) as to the title of Minera to the Penasquito Project
and as to the ownership of the shares of Minera and as to the
ownership of the shares of the BVI Subsidiaries, in each case in
form and content satisfactory to the Underwriters;
(f) the Underwriters shall have received at the Closing Time a letter
dated the Closing Date (or Over-Allotment Closing Date, as the case
may be) from PricewaterhouseCoopers LLP addressed to the
Underwriters and to the board of directors of the Corporation in
form and substance satisfactory to the Underwriters, acting
reasonably, confirming the continued accuracy of the comfort letter
to be delivered to the Underwriters pursuant to Subparagraph
3(a)(iv) with such changes as may be necessary to bring the
information in such letter forward to within two Business Days of
the Closing Date (or Over-Allotment Closing Date, as the case may
be), which changes shall be acceptable to the Underwriters;
(g) the Underwriters shall have received at the Closing Time a
certificate dated the Closing Date (or Over-Allotment Closing Date,
as the case may be) signed by an appropriate officer of the
Corporation addressed to the Underwriters and their counsel, with
respect to the memorandum and articles of the Corporation, all
resolutions of the board of directors of the Corporation relating to
this Agreement, the Final Prospectuses and the Registration
Statement, the incumbency and specimen signatures of signing
officers and with respect to such other matters as the Underwriters
may reasonably request;
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(h) the Underwriters shall have received at the Closing Time a
certificate dated the Closing Date (or Over-Allotment Closing Date,
as the case may be) signed on behalf of the Corporation by the
President and Chief Executive Officer of the Corporation or such
other officers of the Corporation acceptable to the Underwriters,
acting reasonably, addressed to the Underwriters certifying for and
on behalf of the Corporation after having made due enquiry and after
having carefully examined the Final Prospectuses and the
Registration Statement, including all Documents Incorporated by
Reference, that:
(i) since the respective dates as of which information is given in
the Final Prospectuses and the Registration Statement as
amended by any Prospectus Amendments: (A) there has been no
material change (actual, anticipated, contemplated or
threatened, whether financial or otherwise) in the business,
affairs, operations, assets or liabilities (contingent or
otherwise) or capital of the Corporation; and (B) no
transaction has been entered into by the Corporation which is
material to the Corporation, other than as disclosed in the
Final Prospectuses and the Registration Statement, or any
Prospectus Amendments, as the case may be;
(ii) no order, ruling or determination having the effect of
suspending the sale or ceasing the trading of the Common
Shares or any other securities of the Corporation has been
issued by any regulatory authority and is continuing in effect
and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of such officers,
contemplated or threatened under any of the Applicable
Securities Laws or by any other regulatory authority;
(iii) the Corporation has duly complied with all the terms and
conditions of this Agreement on its part to be complied with
up to the Closing Time;
(iv) the representations and warranties of the Corporation
contained in this Agreement are true and correct as of the
Closing Time with the same force and effect as if made at and
as of the Closing Time;
(v) there are no undisclosed contingent liabilities affecting the
Corporation or any of its Subsidiaries; and
(vi) there are no reports or information that, in accordance with
the requirements of the Canadian Securities Regulators, must
be made publicly available in connection with the sale of the
Underwritten Shares that have not been made publicly available
as required; there are no documents required to be filed with
the SEC as an exhibit to the Registration Statement or with
the Canadian Securities Regulators in connection with the
Canadian Final Prospectus that have not been filed as required
and delivered to the Underwriters; there are no contracts,
documents or other materials required to be described or
referred to in the
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Final Prospectuses or the Registration Statement that are not
described, or referred to as required and delivered to the
Underwriters;
(i) the principal shareholders (as determined by the Underwriters,
acting reasonably), and such of the directors and officers of the
Corporation as may be determined by the Underwriters, shall have
executed and delivered written undertakings in favour of the
Underwriters agreeing not to sell, transfer, assign or otherwise
dispose of any securities of the Corporation owned, directly or
indirectly, by such persons for a period of 90 days following the
Closing Date, without the prior written consent of the Lead
Underwriters;
(j) the Underwriters shall have received at the Closing Time a
certificate from the Canadian Transfer Agent dated the Closing Date
or Over-Allotment Closing Date, as the case may be, and signed by an
authorized officer of such transfer agent, confirming the issued
capital of the Corporation;
(k) the NASD shall have confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting
terms and arrangements;
(l) the Underwriters shall have received copies of all required
approvals from the Stock Exchanges to permit the completion of the
transactions contemplated herein and the conditional listing and
posting for trading of the Underwritten Shares on the Stock
Exchanges;
(m) the several obligations of the Underwriters to purchase Additional
Shares hereunder which arise after the due exercise of the Option
are subject to delivery to the Lead Underwriters, on behalf of the
Underwriters, on each Over-Allotment Closing Date and dated as of
such Over-Allotment Closing Date, of such documents and opinions as
they may reasonably request with respect to the good standing of the
Corporation, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional
Shares; and
(n) the Underwriters and counsel for the Underwriters shall have
received from the Corporation such further certificates, documents
and other information as they may have reasonably requested.
9. TERMINATION RIGHTS
(a) (i) LITIGATION
If any enquiry, action, suit, investigation or other
proceeding, whether formal or informal, is instituted,
threatened or publicly announced or any order is made under or
pursuant to any statute or by any federal, provincial or other
governmental authority, commission, board, bureau, agency or
instrumentality (including, without limitation, any Stock
Exchange, Canadian Securities Regulator, the SEC or any other
securities regulatory authority) in relation to the
Corporation or the Corporation's directors or officers which,
in the sole opinion of an Underwriter, operates to prevent
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or restrict materially the distribution or trading of the
Underwritten Shares or which, in the sole opinion of an
Underwriter, adversely impacts the marketability of the
Underwritten Shares in a material manner; or
(ii) REGULATORY OUT
If any law or regulation is enacted or proposed or changed
that, in the sole opinion of an Underwriter, operates to
prevent or restrict materially the distribution or trading of
the Corporation's Common Shares or which, in the sole opinion
of an Underwriter, adversely impacts or may materially
adversely affect the marketability of the Corporation's Common
Shares in a material manner; or
(iii) DISASTER OUT
If there should develop, occur or come into effect or
existence any occurrence of national or international
consequence or any action, governmental law or regulation,
enquiry or other occurrence, whether in any financial market
or otherwise, of any nature whatsoever, including, without
limiting the generality of the foregoing, any military
conflict, civil insurrection, or any terrorist action (whether
or not in connection with such conflict or insurrection)
which, in the sole opinion of an Underwriter, materially
adversely affects or may materially adversely affect the
financial markets in Canada or the United States, the
marketability of the Underwritten Shares, or the business of
the Corporation;
(iv) MATERIAL CHANGE
There should occur or be announced by the Corporation any
material change (actual, contemplated or threatened) in the
business, affairs, operations, assets, liabilities (contingent
or otherwise) or financial condition of the Corporation or a
change in any material fact or if there should be discovered
any previously undisclosed material change or material fact
(other than a material fact related solely to any of the
Underwriters) required to be disclosed in the Preliminary
Prospectuses or Final Prospectuses or if there should occur a
change (other than a change related solely to any of the
Underwriters) in a material fact contained in the Preliminary
Prospectuses or the Final Prospectuses, in each case which, in
the sole opinion of an Underwriter, prevents or restricts
trading in the distribution of the Corporation's common shares
or has or may have a materially adverse effect on the market
price or value of the Underwritten Shares or the marketability
of the Underwritten Shares or the Corporation's common shares
generally.
Each Underwriter shall be entitled, at its sole option, in
accordance with Subparagraph 9(c), to terminate its obligations
under this Agreement, by notice to the Corporation, at any time at
or prior to the Closing Time or Over-Allotment
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Closing Date, as applicable.
(b) CONDITIONS
The Corporation agrees that that all terms and conditions of
Paragraph 8 shall be construed as conditions and complied with so
far as they relate to acts to be performed or caused to be performed
by it, that it will use all reasonable commercial efforts to cause
such conditions to be complied with, and that any breach or failure
by the Corporation to comply with any such conditions shall entitle
an Underwriter to terminate its obligations under this Agreement by
notice to that effect given to the Corporation at or prior to the
Closing Time on the Closing Date or any Over-Allotment Closing Date,
unless otherwise expressly provided in this Agreement. The
Underwriters may waive, in whole or in part, or extend the time for
compliance with, any terms and conditions without prejudice to its
rights in respect of any other of such terms and conditions or any
other or subsequent breach or non-compliance, provided that any such
waiver or extension shall be binding upon an Underwriter only if
such waiver or extension is in writing and signed by such
Underwriter.
(c) EXERCISE OF TERMINATION RIGHTS
The rights of termination contained in Subparagraphs 9(a)(i),(ii),
(iii) and (iv) are in addition to any other rights or remedies the
Underwriters may have in respect of any default, act or failure to
act or non-compliance by the Corporation in respect of any of the
matters contemplated by this Agreement or otherwise. In the event
that an Underwriter exercises such rights of termination, there
shall be no further liability on the part of such Underwriter to the
Corporation or on the part of the Corporation to such Underwriter
except in respect of any liability that may have arisen or may later
arise under Paragraphs 10, 11 and 15.
10. INDEMNITY
(a) INDEMNITY
The Corporation will indemnify and save harmless each of the
Underwriters and their respective affiliates (which shall include,
without limitation, the U.S. Dealers) and each of their respective
directors, officers, employees and agents from and against all
liabilities, claims, losses (other than loss of profits), reasonable
costs, damages and reasonable expenses (including, without
limitation any legal fees or other expenses reasonably incurred by
an Underwriter in connection with defending or investigating any
such action or claim) (a "CLAIM") in any way caused by, or arising
directly or indirectly from, or in consequence of:
(i) any information or statement (except any statement relating
solely to the Underwriters and provided by an Underwriter for
use therein) contained in this Agreement, the Preliminary
Prospectuses, the Final Prospectuses or the Registration
Statement, including the Documents Incorporated by Reference,
or any Prospectus Amendment or supplements which, at the
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time and in the light of the circumstances under which it was
made, contains or is alleged to contain a misrepresentation;
(ii) any omission or alleged omission to state in the Preliminary
Prospectuses, the Final Prospectuses or the Registration
Statement, including the Documents Incorporated by Reference,
or any Prospectus Amendment or supplements thereto, any fact
(except facts relating solely to an Underwriter and provided
by the Underwriter expressly for use therein), whether
material or not, regarding the Corporation and its business
and affairs that is necessary to make any statement therein
not misleading (in the case of the Preliminary Prospectuses
and Final Prospectuses) in light of the circumstances in which
it was made;
(iii) any order made or enquiry, investigation or proceedings
commenced or threatened by any securities commission or other
competent authority based upon any untrue statement or
omission or alleged untrue statement or alleged omission or
any misrepresentation or alleged misrepresentation (except a
statement or omission or alleged statement or omission
regarding facts relating solely to an Underwriter and provided
by the Underwriter expressly for use therein) in the
Preliminary Prospectuses, the Final Prospectuses or the
Registration Statement, including the Documents Incorporated
by Reference, or any Prospectus Amendment or supplements
thereto or based upon any failure to comply with the
Applicable Securities Laws (other than any failure or alleged
failure to comply by the Underwriters), preventing or
restricting the trading in or the sale or distribution of the
Underwritten Shares in any of the Qualifying Provinces or the
United States;
(iv) the non-compliance or alleged noncompliance by the Corporation
with any of the Applicable Securities Laws, including, in the
case of the Corporation, the Corporation's non-compliance with
any statutory requirement to make any document available for
inspection; or
(v) any breach by the Corporation of its representations,
warranties, covenants or obligations to be complied with under
this Agreement.
In no event shall this indemnity enure to the benefit of an
Underwriter, if (i) a court of competent jurisdiction in a final
judgment determines that the Claim in respect of which
indemnification is sought is a result of or arises out of the
recklessness or willful misconduct of such Underwriter; or (ii) a
copy of the Final Prospectuses (as then amended or supplemented, if
the Corporation shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of an Underwriter to
a person asserting any such losses, claims, damages or liabilities,
if required by law so to have been delivered by the Underwriters to
such person, at or prior to the written confirmation of the sale of
the Underwritten Shares to such person, and if the Final
Prospectuses (as so amended or supplemented) delivered to the
Underwriters a reasonable amount of time in
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advance of such confirmation would have cured the defect giving rise
to such losses, claims, damages or liabilities.
(b) NOTIFICATION OF CLAIMS
If any Claim is asserted against any person or company in respect of
which indemnification is or might reasonably be considered to be
provided, such person or company (the "INDEMNIFIED PARTY") will
notify the Corporation as soon as possible of the nature of such
Claim (but the omission so to notify the Corporation of any
potential Claim shall not relieve the Corporation from any liability
which it may have to any Indemnified Party and any omission so to
notify the Corporation of any actual Claim shall affect the
Corporation's liability only to the extent that it is materially
prejudiced by that failure). Subject to Subparagraph 10(d), the
Corporation shall be entitled to participate in and, to the extent
that it wishes, to assume the defense of any suit brought to enforce
such Claim; provided, however, that the defense shall be conducted
through legal counsel acceptable to the Indemnified Party, acting
reasonably, that no settlement of any such Claim or admission of
liability may be made by the Corporation or the Indemnified Party
without the prior written consent of the other parties, acting
reasonably, and the Corporation shall not be liable for any
settlement of any such Claim unless it has consented in writing to
such settlement. The Corporation shall not settle any Claim, or
compromise a consent to any judgment unless such settlement,
compromise or judgment: (i) includes an unconditional release of the
Indemnified Party from all liability arising out of such action or
claim; and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any
Indemnified Party.
(c) RIGHT OF INDEMNITY IN FAVOUR OF OTHERS
With respect to any Indemnified Party who is not a party to this
Agreement, the Indemnified Parties who are party to this Agreement
shall obtain and hold the rights and benefits of this paragraph in
trust for and on behalf of such Indemnified Party.
(d) RETAINING COUNSEL
In any Claim, the Indemnified Party shall have the right to retain
other counsel to act on its behalf, provided that the reasonable
fees and disbursements of such counsel shall be paid by the
Indemnified Party unless (i) the Corporation fails to assume the
defense of such suit on behalf of the Indemnified Party within 10
days of receiving written notice of such suit; (ii) the Corporation
and the Indemnified Party shall have mutually agreed to the
retention of the other counsel; or (iii) the named parties to any
such Claim (including any added third or impleaded party) include
the Indemnified Party and the Corporation and the Indemnified Party
shall have been advised by counsel that the representation of all
parties by the same counsel would be inappropriate due to the actual
or potential differing interests between them. In no event shall the
Corporation be liable to pay the fees and
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disbursements of more than one firm of separate counsel for all
Indemnified Parties and, in addition, one firm of local counsel in
each applicable jurisdiction.
11. CONTRIBUTION
(a) CONTRIBUTION BY THE CORPORATION
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Paragraph
10 is unavailable, in whole or in part, for any reason to an
Indemnified Party in respect of any Claim, the Corporation (the
"INDEMNIFIER") and each Underwriter shall contribute to the amount
paid or payable (or, if such indemnity is unavailable only in
respect of a portion of the amount so paid or payable, such portion
of the amount so paid or payable) by the Corporation as a result of
such Claim in such proportion as is appropriate to reflect the
relative benefits received by the Corporation on the one hand and
the Underwriters on the other hand from the offering of the
Underwritten Shares; or if this allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative
fault of the Corporation on the one hand and the Underwriters on the
other hand in connection with the information, statement, omission,
misrepresentation, order, inquiry, investigation or other matter or
thing referred to in Paragraph 10 which resulted in such Claim, as
well as any other relevant equitable considerations.
The relative benefits received by the Corporation on the one hand
and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total proceeds (net of the fee payable to
each Underwriter but before deducting expenses (to the extent that
such expenses are payable by the Corporation pursuant to Paragraph
15)) received by the Corporation from the issue and sale of the
Underwritten Shares bears to the fee received by each Underwriter,
in each case, as set out in the table on the face page of the Final
Prospectuses and in Paragraph 12 hereof. The relative fault of the
Corporation on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the
information, statement, omission, misrepresentation, order, inquiry,
investigation or other matter or thing referred to in Paragraph 10
which resulted in such Claim relates to information supplied by or
steps or actions taken or done by or on behalf of the Corporation or
to information supplied by or steps or actions taken or done by or
on behalf of the Underwriters and the relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement, omission, misrepresentation, order, inquiry,
investigation or other matter or thing referred to in Paragraph 10.
The amount paid or payable by an Indemnified Party as a result of
the Claim referred to above shall include any legal or other
expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such Claim, whether or not
resulting in any such action, suit, proceeding or claim. The
Corporation and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Paragraph 11 were
determined by any method of
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allocation which does not take into account the equitable
considerations referred to immediately above.
A person who is engaged in any fraud, fraudulent misrepresentation,
recklessness or gross negligence shall not, to the extent that a
court of competent jurisdiction in a final judgment determines that
the Claim was caused by that activity, be entitled to claim
contributions therefor from any person who is not engaged in that
fraud, fraudulent misrepresentation, recklessness or gross
negligence.
(b) RIGHT OF CONTRIBUTION IN ADDITION TO OTHER RIGHTS
The rights to contribution provided in this Paragraph 11 shall be in
addition to and not in derogation of any other right to contribution
which the Underwriters may have by statute or otherwise at law.
(c) CALCULATION OF CONTRIBUTION
In the event that a court of competent jurisdiction in a final
judgment determines that an Indemnifier is entitled to contribution
from one or more of the Underwriters under the provisions of any
statute or at law, the Indemnifier shall be limited to contribution
in an amount not exceeding the lesser of:
(i) the portion of the full amount of the loss or liability giving
rise to such contribution for which an Underwriter is
responsible, as determined in Subparagraph 11(a), and
(ii) the amount of the fee actually received by the Underwriter
from the Corporation under this Agreement.
(d) NOTICE OF CLAIM FOR CONTRIBUTION
Notification to the Corporation of a Claim pursuant to Subparagraph
10(b) shall be deemed to also constitute notice to the Corporation
that a claim for contribution by the Underwriters may arise and
omission to so notify shall have similar effect.
(e) RIGHT OF CONTRIBUTION IN FAVOUR OF OTHERS
The Corporation hereby acknowledges and agrees that, with respect to
Paragraphs 10 and 11 hereof, each Underwriter is contracting on its
behalf and as agent for its affiliates and for its and its
affiliates' directors, officers, employees and agents (collectively,
the "BENEFICIARIES"). In this regard the Underwriter shall act as
trustee for the Beneficiaries of the Corporation's covenants under
Paragraphs 10 and 11 hereof with respect to the Beneficiaries and
accept these trusts and shall hold and enforce the covenants on
behalf of the Beneficiaries.
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12. SEVERAL OBLIGATIONS
(a) The obligations of the Underwriters to purchase the Underwritten
Shares at the Closing Time shall be several and not joint, and the
percentage of the Shares which each of the Underwriters shall be
severally obligated to purchase is as follows:
Orion Securities Inc. 45%
CIBC World Markets Inc. 45%
Kingsdale Capital Markets Inc. 10%
---
100%
---
(b) If Kingsdale Capital Markets Inc. shall fail or refuse to purchase
its applicable percentage of the Underwritten Shares at the Closing
Time, the other Underwriters shall be obligated to purchase
severally the Underwritten Shares not taken up, on a pro rata basis
or as they may otherwise agree as between themselves. In the event
that either or both of the Lead Underwriters shall fail or refuse to
purchase its applicable percentage of the Underwritten shares at the
Closing Time, the other Underwriters shall have the right, but not
the obligation, to purchase severally the Underwritten shares not
taken up, on a pro rata basis or as they may otherwise agree amongst
themselves. In the event that such right is not exercised, the
Underwriter or Underwriters that is or are willing and able to
purchase its or their respective percentage of the Underwritten
Shares shall be relieved, without liability, of its or their
obligations to purchase its or their respective percentage of the
Underwritten Shares.
(c) Notwithstanding anything contained in Subparagraph 12(b), nothing in
this Paragraph 12 shall oblige the Corporation to sell to the
Underwriters less than all of the Underwritten Shares issuable on a
Closing Date or Over-Allotment Closing Date, as the case may be. In
addition, nothing contained in Paragraph 12 shall relieve from
responsibility to the Corporation any one of the Underwriters who
shall default in its obligation to purchase its respective
percentage of the Underwritten Shares issuable on a Closing Date or
Over-Allotment Closing Date, as the case may be.
13. AUTHORITY TO ORION
All steps which must or may be taken by the Underwriters in connection
with this Agreement, including any agreement to amend this Agreement, but with
the exception of steps contemplated by Paragraph 9, may be taken by Orion on the
Underwriters' behalf, after consultation with the other Underwriters, and this
is the authority to the Corporation for accepting notification of any such steps
from Orion on their behalf without any further investigation or inquiry.
14. SEVERABILITY
If any provision of Paragraph 10 or Paragraph 11 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
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from this Agreement.
15. EXPENSES
Whether or not the transactions contemplated by this Agreement shall be
completed, all expenses incurred by the Corporation and the Underwriters of, or
incidental to, the issue, sale and delivery of the Underwritten Shares and all
expenses of or incidental to all other matters in connection with the
transaction set out in this Agreement shall be borne by the Corporation
including, without limitation, fees and expenses payable in connection with the
qualification of the Underwritten Shares, the reasonable fees of Canadian,
United States and Mexican counsel to the Underwriters plus disbursements and
goods and services tax, the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the NASD of the terms of the sale of the Underwritten Shares, all fees and
disbursements of counsel to the Corporation, local counsel and U.S. counsel, all
fees and expenses of the Corporation's auditors, reasonable fees and expenses
relating to the marketing of the Underwritten Shares (including, without
limitation, "road shows"; marketing meetings, marketing documentation and
institutional investor meetings) and all reasonable out-of-pocket expenses of
the Underwriters (including the Underwriter's travel expenses in connection with
due diligence, marketing meetings and "road shows") and all costs incurred in
connection with the preparation and printing of the Preliminary Prospectuses,
Final Prospectuses, Registration Statement, Prospectus Amendments and
certificates representing the Underwritten Shares. All amounts to be paid under
this Paragraph 15 shall be paid forthwith upon receiving an invoice therefor.
16. RESTRICTIONS ON SALES
Unless this Agreement is terminated in accordance with its terms or the
Closing does not occur on the Closing Date, the Corporation shall not for a
period of 90 days after the Closing Date: (i) offer, pledge, sell, contract to
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, Common Shares of the Corporation or any
securities convertible into or exercisable or exchangeable for Common Shares; or
(ii) enter into any swap or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Shares or such
other securities, whether any such transaction described in clause (i) or (ii)
of this paragraph is to be settled by delivery of Common Shares or such other
securities, in cash or otherwise, other than the Underwritten Shares offered
pursuant to the transactions contemplated by this Agreement, without the prior
consent of the Underwriters, acting reasonably. The foregoing restrictions shall
not apply with respect to issuances of securities by the Corporation in
connection with (i) the exercise of currently outstanding employee and director
compensation securities or similar liabilities; (ii) the satisfaction of
outstanding instruments or contractual commitments that have been publicly
disclosed including options, warrants and other convertible securities and any
rights which have been granted or issued prior to the Closing Date, subject to
any necessary regulatory approval; (iii) the grant of options pursuant to and in
accordance with the Corporation's stock option plan; or (iv) pursuant to any
bona fide arm's length acquisition of a business, whether by way of purchase of
shares or assets, merger, plan of arrangement, amalgamation or otherwise,
provided that the shares issued does not exceed 10% of the common shares of the
Corporation outstanding
-38-
immediately following the completion of the issuance of the Underwritten Shares.
For greater certainty, nothing contained in this Paragraph 16 shall be construed
to in any way limit the ability of the Corporation from issuing, transferring or
otherwise dealing with any securities of the Corporation if this Agreement is
terminated in accordance with its terms or the Closing does not occur on the
Closing Date. In addition, the Corporation agrees that, until December 31, 2004,
the Underwriters shall have the exclusive right to act as the Corporation's
underwriters in respect of any public offering or private placement of common
shares.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The respective representations, warranties, obligations and agreements of the
Corporation and the Underwriters contained in this Agreement and in any
certificate delivered pursuant to this Agreement or in connection with the
purchase and sale of the Underwritten Shares shall survive the purchase of the
Underwritten Shares and shall continue in full force and effect unaffected by
any subsequent disposition of the Underwritten Shares by the Underwriters or the
termination of the Underwriter's obligations and shall not be limited or
prejudiced by any investigation made by or on behalf of an Underwriter or the
Corporation, or any officer, director or controlling person of the Corporation
in connection with the preparation of the Preliminary Prospectuses, Final
Prospectuses or Registration Statement or the distribution of the Underwritten
Shares for a period of three years from the date hereof.
18. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
19. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in Ontario.
20. SUCCESSORS
This Agreement shall enure to the benefit of, and be binding on, the
parties to this Agreement and any of their respective successors.
21. NOTICE
Unless otherwise expressly provided in this Agreement, any notice,
statement, request or other communication to be given under this Agreement (a
"NOTICE") shall be in writing addressed to:
(i) the Corporation at:
Western Silver Corporation
0000 - 0000 Xxxx Xxxxxxx Xx.
Xxxxxxxxx XX X0X 0X0
Attention: Xx. Xxxx Xxxxxx
Fax: (000) 000-0000
-39-
with a copy to:
DuMoulin Black
10th Floor - 000 Xxxx Xxxxxx
Xxxxxxxxx XX X0X 0X0
Attention: Xx. Xxxxx X. Xxxx
Fax: (000) 000-0000
and to:
Xxxxxxx Xxxxx & Xxxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxxx X. Guest
Fax: (000) 000-0000
(ii) the Underwriters at:
Orion Securities Inc.
000 Xxx Xxxxxx
XXX Xxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx XX X0X 0X0
Attention: Mr. Xxxxxxx Xxxx
Fax: (000) 000-0000
- and -
CIBC World Markets Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xx. Xxx Xxxxx
Fax: (000) 000-0000
- and -
Kingsdale Capital Markets Inc.
Scotia Plaza
00 Xxxx Xxxxxx Xxxx, Xxxxx 00000
Xxxxxxx, XX
X0X 0X0
Attention: Xx. Xxxxxx X. Xxxxxxxxx
-40-
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
Scotia Plaza, Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxxx X. Xxx
Fax: (000) 000-0000
or to such other address as any of the parties may designate by notice given to
the others.
Each notice shall be personally delivered to the addressee or sent by
facsimile transmission to the addressee and: (i) a notice which is personally
delivered shall, if delivered on a Business Day, be deemed to be given and
received on that day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is delivered; and (ii) a
notice which is sent by facsimile transmission shall be deemed to be given and
received on the first Business Day following the day on which it is sent.
22. COUNTERPARTS AND BY FACSIMILE
This Agreement may be executed by any one or more of the parties to this
Agreement in any number of counterparts, and may be delivered by facsimile, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
23. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement and supersedes any and all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties and, except as incorporated by reference above, there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement unless signed by each party
and purporting to be an amendment to this Agreement.
If the foregoing is in accordance with your understanding and is agreed to
by you, please signify your acceptance by executing the enclosed copies of this
letter where indicated below and returning them to Orion Securities Inc.,
facsimile number: 000-000-0000, upon which this letter as so accepted shall
constitute an Agreement among us.
Yours very truly,
ORION SECURITIES INC.
By: "Xxxxxxx Xxxx"
__________________________________
Xxxxxxx Xxxx
-41-
CIBC WORLD MARKETS INC.
By: "Xxx Xxxxx"
__________________________________
Xxx Xxxxx
KINGSDALE CAPITAL MARKETS INC.
By: "Xxxxxxx Xxxxxx"
__________________________________
Xxxxxxx Xxxxxx
The foregoing is accepted and agreed to as of the date first above written.
WESTERN SILVER CORPORATION
By: "Xxxxxxx Xxxxxxxxxx"
__________________________________
Xxxxxxx Xxxxxxxxxx
