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AGENCY AGREEMENT
[o], 2000
Industrialex Manufacturing, Inc.
63 - A.S. Xxxxx Parkway
Xxxxxxxx, XX
X.X.X. 00000
Attention: Xx. Xxxxx Xxxxxx
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Dear Sirs:
We understand that:
1. Industrialex Manufacturing, Inc. (the "Company") is a corporation
formed under the laws of the State of Colorado and Broomfield
Industrial Painting, Inc., Screen Tech Graphics, Inc. and Decorative &
Coating Systems, Inc. are wholly owned subsidiaries of the Company,
both incorporated under the laws of Colorado;
2. as of the date hereof the authorized and issued capital of the Company
is as described in the Preliminary Prospectus (as hereinafter defined)
executed concurrently with the execution and delivery of this
Agreement; and
3. the Company proposes to issue up to 3,000,000 units (the "Units") at a
purchase price of $1.00 USD. Each Unit will consist of one common share
of the Company (a "Common Share") and a warrant to purchase one common
share at the following price:
(a) $1.25USD in the first year (365 days) following the listing of
the Common Shares on the Canadian Venture Exchange ("CDNX")
(the "Listing"); or
(b) $1.50USD in the second year following the Listing;
(collectively, the "Warrant Price"). However, if the Common Shares
trade at a price equal to twice (2x) the Warrant Price for twenty
consecutive days in the first two (2) years following the Listing, the
Company will have a right to redeem any unexercised warrants at a price
determined as follows:
20 day weighted average price of the Common
Shares - Warrant Price = Redemption Price
(the "Redemption Price")
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The Company understands that:
1. the Agent proposes to distribute the Units in certain jurisdictions in
Canada pursuant to a Preliminary Prospectus (as hereinafter defined)
and a Prospectus;
2. the purchase price of the Units has been determined jointly by the
Company and the Agent; and
3. the Units shall have the material attributes described in the
Preliminary Prospectus.
Based upon the foregoing and on the terms and conditions
herein contained, the Agent hereby agrees to act as Agent and offer for sale on
a "best efforts" basis, in the manner described herein, up to 3,000,000 Units of
the Company. It is expressly agreed and understood that the Agent shall have no
obligation to purchase securities pursuant to this offering on its own behalf.
In consideration of the agreement of the Agent to market and
distribute the Offered Securities which will result from the acceptance of this
offer, the Company shall pay to the Agent at the Closing Time a fee of 8% of the
purchase price of each Unit, against delivery by the Agent to the Company of a
receipt therefor.
In addition to the foregoing commission, the Company shall pay
to the Agent:
(i) a work fee (the "Work Fee") of $18,000 USD, which fee
shall be payable at the Closing of the offering and
may, at the election of the Agent, be payable in cash
or Units (the "Work Fee Units") of the Company priced
at the same price as Units issued pursuant to the
Prospectus;
(ii) an investment banking fee (the "Investment Banking
Fee") equal to $125,000 (U.S.), which fee shall be
payable in Units (the "Lead Agent Units") of the
Company priced at the same price as Units issued
pursuant to the Prospectus;
(iii) brokers warrants (the "Agent's Warrants") equal to
10% of the aggregate number of securities offered
pursuant to the Prospectus, which brokers warrants
shall be exercisable by the Agent for a period of two
years from the Closing of the offering at a price
equal to the offering price of Units pursuant to the
Prospectus.
Where the foregoing compensation contemplates the issuance of securities, the
Company shall qualify such securities under the Preliminary Prospectus and the
Prospectus. The Company also agrees that it shall pay any eligible GST on any of
the foregoing fees.
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TERMS AND CONDITIONS
1. DEFINITIONS
In this agreement:
(a) "AGENCY FEE" means the fees payable by the Company to the Agent as
more fully set out in the introductory paragraphs to this Agreement;
(b) "AGENT" means Thomson Kernaghan & Co. Limited;
(c) "AGREEMENT" means the agreement resulting from the acceptance of the
offer made by the Agent in this letter;
(d) "BIP" means Broomfield Industrial Printing, Inc.;
(e) "BUSINESS DAY" means a day on which The Canadian Venture Exchange is
open for trading and banks are open for business in the cities of
Calgary, Vancouver and Toronto;
(f) "CANADIAN SECURITIES LAWS" means, collectively, the applicable
securities laws of each of the provinces of Canada and the respective
regulations and rules made thereunder together with all applicable
published policy statements, blanket orders and rulings of the
Securities Commissions and all discretionary orders or rulings, if
any, of the Securities Commissions made in connection with the
transactions contemplated hereunder;
(g) "CLOSING(s)" means the completion of the purchase and sale of the
Units which may take place more than once;
(h) "CLOSING DATE" means a date that is 90 days from the date of issuance
of a receipt for the Prospectus by the Commission or such earlier date
as the parties may agree upon;
(i) "CLOSING TIME" means 10:00 a.m. (Calgary time) on the Closing Date, or
such other time on the Closing Date as the parties may agree upon;
(j) "COMMON SHARES" means common shares in the capital of the Company;
(k) "COMPANY" means Industrialex Manufacturing, Inc. and includes its
subsidiaries, BIP, DACS and STG, where the context allows;
(l) "DACS" means Decorative & Coating Systems, Inc.
(m) "DISTRIBUTION" means distribution, distribution to the public or
primary distribution to the public, as the case may be, under relevant
securities
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legislation in any province of Canada, and "distribute" has a
corresponding meaning;
(n) "DISTRIBUTION PERIOD" means the period commencing on the date of this
Agreement and ending on the earlier of:
(i) the date on which all of the Offered Securities have been
distributed by the Agent pursuant to the Prospectus; and
(ii) 30 days after the Closing Date;
(o) "ENGAGEMENT LETTER" has the meaning attributed thereto in paragraph 18
hereof;
(p) "ENVIRONMENTAL CLAIM" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law;
(q) "ENVIRONMENTAL LAW" means, with respect to the Company, any federal,
provincial, local or municipal or other governmental statute, law,
rule, regulation and any published judicial or administrative
interpretation thereof including any judicial or administrative order,
consent, decree or judgment binding on or applicable to the Company or
any of its subsidiaries, relating to the environment, health, safety
or any chemical material or substance, exposure to which is
prohibited, limited or regulated by any such governmental authority;
(r) "EXCHANGE" means the Canadian Venture Exchange;
(s) "INDEMNIFIED PARTIES" has the meaning attributed thereto in paragraph
11 hereof;
(t) unless the context otherwise requires, the terms "MATERIAL CHANGE",
"MATERIAL FACT" and "MISREPRESENTATION" shall have the respective
meanings given thereto by the Canadian Securities Laws or any of them;
(u) "OFFERED SECURITIES" means the Units, the Agent's Warrant, the Lead
Agent Units and the Work Fee Units;
(v) "OFFERING DOCUMENTS" means, collectively, the Prospectus and any
Supplementary Material and any amendments thereto;
(w) "PERSONNEL" has the meaning attributed thereto in paragraph 11 hereof;
(x) "PRELIMINARY PROSPECTUS" means the preliminary prospectus of the
Company in the English language dated July 7, 2000 which has been
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approved, signed and certified in accordance with the Canadian
Securities Laws, relating to the distribution of the Offered
Securities in the Qualifying Jurisdictions;
(y) "PROSPECTUS" means the final prospectus of the Company in the English
language to be approved, signed and certified in accordance with the
Canadian Securities Laws relating to the distribution of the Offered
Securities in the Qualifying Jurisdictions;
(z) "QUALIFYING JURISDICTIONS" or "QUALIFYING PROVINCES" means the
provinces of British Columbia, Alberta, and Ontario;
(aa) "SECURITIES COMMISSIONS" means, collectively, the securities
commission or other securities regulatory authority of each of the
Qualifying Jurisdictions;
(bb) "SELLING FIRMS" has the meaning attributed thereto in paragraph 4(a)
hereof;
(cc) "STG" means Screen Tech Graphics, Inc.;
(dd) "SUBSIDIARY" means a subsidiary for purposes of the Business
Corporations Act (Alberta) and includes BIP, DACS and STG;
(ee) "SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the
Prospectus and amended or supplemental Preliminary Prospectus or
Prospectus which may be filed with the Securities Commissions by or on
behalf of the Company under the Canadian Securities Laws in connection
with the distribution of the Offered Securities;
(ff) "USD" means United States Dollars.
2. INTERPRETATION
Unless otherwise expressly provided in this Agreement, words
importing the singular number include the plural and vice versa and words
importing gender include all genders. References to Sections, paragraphs and
subparagraphs are to the appropriate sections, paragraphs and subparagraphs of
this Agreement.
3. COMPLIANCE WITH SECURITIES LAWS: DUE DILIGENCE
The Company shall, as soon as possible, fulfil and comply with, to the
satisfaction of the Agent, the Canadian Securities Laws required to be fulfilled
or complied with by the Company to enable the Offered Securities to be lawfully
distributed in the Qualifying Provinces through the Agent. Prior to the filing
of the Prospectus, the Company shall have allowed the Agent to participate fully
in the preparation of such documents and shall have allowed the Agent to conduct
all due
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diligence investigations which it reasonably requires in order to fulfil
their obligations as Agent and in order to enable them to execute the
certificate required to be executed by them on such documents.
4. DISTRIBUTION AND CERTAIN OBLIGATIONS OF THE AGENT
(a) The Agent shall, and shall require any investment dealer or broker,
other than the Agent, with which the Agent may have a contractual
relationship in respect of the distribution of the Offered Securities
(a "Selling Firm"), to comply with the Canadian Securities Laws in
connection with the distribution thereof and shall offer the Offered
Securities for sale to the public directly and through Selling Firms
upon the terms and conditions set out in the Prospectus and this
Agreement. The Agent shall offer, and shall require any Selling Firm
to offer, for sale to the public and sell the Offered Securities only
in those jurisdictions where they may be lawfully offered for sale or
sold.
(b) The Agent shall, and shall require any Selling Firm to agree to,
distribute the Offered Securities in a manner which complies with and
observes all applicable laws and regulations in each jurisdiction into
and from which they may offer to sell the Offered Securities or
distribute the Prospectus or any Supplementary Material in connection
with the distribution of the Offered Securities and will not, directly
or indirectly, offer, sell or deliver any Offered Securities or
deliver the Prospectus or any Supplementary Material to any person in
any jurisdiction other than in the Qualifying Provinces except in a
manner which will not require the Company to comply with the
registration, prospectus, filing or other similar requirements under
the applicable securities laws of such other jurisdictions. The Agent
shall notify the Corporation, in advance, of any distribution that is
intended to be made outside the Qualifying Provinces in reliance upon
any prospectus, registration or other exemption, provided that the
Agent is aware that the Company intends to concurrently conduct a
United States private placement pursuant to a registration statement
prepared by the Company. The Agent has no responsibility for the
registration statement or the United States private placement and the
Company agrees that it will not distribute the prospectus in the
United States as part of, or separate from, such United States private
placement.
(c) For the purposes of this Section 4, the Agent shall be entitled to
assume that the Offered Securities are qualified for distribution in
any Qualifying Province where a receipt or similar document for the
Prospectus shall have been obtained from the applicable securities
commission following the filing of the Prospectus.
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5. DELIVERIES ON FILING
(a) Concurrently with filing the Prospectus as required pursuant to
Section 5 hereof, the Company shall deliver to the Agent:
(i) a copy of the Preliminary Prospectus and the Prospectus in
the English language signed and certified as required by the
Canadian Securities Laws;
(ii) a copy of any other document required to be filed by the
Company under the laws of each of the Qualifying Provinces in
compliance with the Canadian Securities Laws;
(iii) a comfort letter dated the date of the Prospectus, in form
and substance satisfactory to the Agent, addressed to the
Agent from the auditors of the Company, with respect to
certain financial and accounting information relating to the
Company in the Prospectus, which letter shall be in addition
to the auditors' report contained in the Prospectus and the
auditors' comfort letter addressed to the securities
regulatory authorities in the Qualifying Provinces.
(b) SUPPLEMENTARY MATERIAL
The Company shall also prepare and deliver promptly to the Agent
signed and certified copies of all Supplementary Material. Concurrent
with the delivery of any Supplementary Material, the Company shall
deliver to the Agent, with respect to such Supplementary Material,
documents similar to those referred to in Section 5(a).
(c) REPRESENTATIONS AS TO PROSPECTUS AND PROSPECTUS AMENDMENTS
Delivery of the Preliminary Prospectus, the Prospectus and any
Supplementary Material shall constitute a representation and warranty
by the Company to the Agent that (i) all information and statements
(except information and statements relating solely to the Agent and
provided by the Agent) contained in the Preliminary Prospectus or the
Prospectus or any Supplementary Material, as the case may be, are true
and correct and contain no misrepresentation and constitute full, true
and plain disclosure of all material facts relating to the Company and
the Offered Securities; (ii)no material fact or information has been
omitted from such disclosure (except facts or information relating
solely to the Agent and provided by the Agent) which is required to be
stated in such disclosure or is necessary to make the statements or
information contained in such disclosure not misleading in light of
the circumstances under which they were made; and (iii) such documents
comply fully with the requirements of the Canadian Securities Laws.
Such deliveries shall also constitute the Company's
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consent to the Agent's use of the Preliminary Prospectus, the
Prospectus and any Prospectus Amendments in connection with the
distribution of the Offered Securities in compliance with this
Agreement.
(d) COMMERCIAL COPIES
The Company shall cause commercial copies of the Prospectus and any
Supplementary Material to be delivered to the Agent without charge, in
such numbers and in such cities as the Agent may reasonably request by
oral instructions to the printer of the Prospectus given forthwith
after the Agent has been advised that the Company has complied with
the Canadian Securities Laws in the Qualifying Provinces pursuant to
Section 3.
6. MATERIAL CHANGE DURING DISTRIBUTION
(a) During the Distribution Period, the Company shall promptly notify the
Agent in writing of:
(i) any material change (actual, anticipated, contemplated or
threatened, financial or otherwise) in or affecting the
business, affairs, prospects, operations, management,
ownership, assets, liabilities (contingent or otherwise) or
capital of the Company and its subsidiaries taken as a whole;
(ii) any material fact which has arisen or has been discovered and
would have been required to have been stated in the
Prospectus had the fact arisen or been discovered on, or
prior to, the date of the Prospectus; and
(iii) any change in any material fact contained in the Prospectus
or any Supplementary Material which change is, or may be, of
such a nature as to render any statement in the Prospectus or
any Supplementary Material misleading or untrue or which
would result in a misrepresentation in the Prospectus or any
Supplementary Material or which would result in the
Prospectus or any Supplementary Material not complying (to
the extent that such compliance is required) with the
Canadian Securities Laws.
The Company shall promptly, and in any event within any applicable
time limitation, comply, to the reasonable satisfaction of the Agent,
with all applicable filings and other requirements under the Canadian
Securities Laws as a result of such fact or change; provided that the
Company shall not file any Supplementary Material or other document
without first obtaining from the Agent the approval of the Agent,
after consultation with the Agent with respect to the form and content
thereof,
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which approval will not be unreasonably withheld. The Company shall in
good faith discuss with the Agent any fact or change in circumstances
(actual, anticipated, contemplated or threatened, financial or
otherwise) which is of such a nature that there is reasonable doubt
whether written notice need be given under this paragraph.
(b) CHANGE IN THE CANADIAN SECURITIES LAWS
If during the Distribution Period there shall be any change in the
Canadian Securities Laws which, in the reasonable opinion of the Agent
requires the filing of Supplementary Material, the Company shall, to
the reasonable satisfaction of the Agent, promptly prepare and file
such Supplementary Material with the appropriate securities regulatory
authority in each of the Qualifying Provinces where such filing is
required.
(c) CEASE TRADE NOTIFICATION
The Company shall advise the Agent, promptly after it receives notice
thereof, of the issuance by any federal, provincial or other
governmental authority of any cease trade order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Offered
Securities or any of them for offering or sale in any of the
Qualifying Provinces, of the initiation or threatening of any
proceeding for any such purpose, or of any request by any federal,
provincial or other governmental authority for the amending or
supplementing of the Prospectus or for additional information and, in
the event of issuance of any cease trade order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification, to promptly use its
best efforts to obtain the withdrawal of such order.
7. CHANGE OF CLOSING DATE
Subject to Section 14, if a material change or a change in a material
fact occurs prior to the Closing Date, the Closing Date shall be, unless the
Company and the Agent otherwise agree in writing, the tenth Business Day
following the later of:
(a) the date on which all applicable filing or other requirements of the
Canadian Securities Laws with respect to such material change or
change in a material fact have been complied with in all applicable
Qualifying Provinces and any appropriate receipts obtained for such
filings and notice of such filings from the Company or its counsel has
been received by the Agent; and
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(b) the date upon which the commercial copies of any Supplementary
Material have been delivered in accordance with paragraph 5(d).
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to the Agent and
acknowledges that the Agent is relying upon such representations, warranties and
covenants in offering for sale the Units, that:
(a) the Company and each of its Subsidiaries, whether direct or indirect,
including STG, have been duly incorporated and organized and are
validly existing under the laws of their respective jurisdictions of
incorporation, have all requisite power and authority to carry on
their business as now conducted and as contemplated by the Prospectus
and to own lease and operate their properties and assets, and the
Company and each of its Subsidiaries, whether direct or indirect,
including STG are current with all material filings required to be
made in all jurisdictions in which they carry on any material
business, and the Company has all requisite power and authority to
carry out its obligations under this Agreement;
(b) the Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued and outstanding shares of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable, and no person, firm or corporation has any
agreement or option, or right or privilege capable of becoming an
agreement, for the purchase, subscription or issuance of any of the
unissued Common Shares of the Company except as described in the
Prospectus; all of the issued and outstanding shares of the
subsidiaries of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; all of the shares of the
subsidiaries held by the Company or by the Company's subsidiaries are
held in each case free and clear of any pledge, lien, security
interest, charge, claim or encumbrance except as disclosed in the
Prospectus;
(c) this Agreement has been, and prior to Closing, all material contracts,
will be, duly authorized, executed and delivered by the Company and
each of such agreements constitutes or, at the Closing Time, will
constitute a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency and other laws affecting the rights of
creditors generally and the qualifications that (i) equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction and (ii) rights to indemnity and contribution may be
limited by applicable law;
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(d) the Units, the Work Fee Units, the Lead Agent Units and the Agent's
Warrant to be issued by the Company and sold pursuant to this
Agreement will be duly authorized for such issuance and sale by all
necessary action on the part of the Company and, in the case of the
Units, the Work Fee Units and the Lead Agent Units when issued and
delivered by the Company against payment of the consideration therefor
pursuant to this Agreement, will have been duly and validly issued,
will be fully paid and non-assessable and will not have been issued in
violation of or subject to any pre-emptive rights or other contractual
rights to purchase securities issued by the Company. The certificates
used to evidence the Offered Securities will, where applicable, comply
with the requirements of The Canadian Venture Exchange and all
applicable laws;
(e) the Units, Lead Agent Units, Work Fee Units and Agent's Warrant will
conform to the description thereof in the Prospectus;
(f) no consent, approval, permit, authorization, order or filing of or
with any court or governmental agency or body of Canada or any
Qualifying Province is required by the Company for the issue, offer
and sale of the Offered Securities, or the execution and delivery of
and the performance by the Company of its obligations under this
Agreement except as may be required under Canadian Securities Laws;
(g) the execution and delivery of this Agreement by the Company, the
fulfilment of the terms thereof and the consummation of the
transaction contemplated thereby, and the issuance and sale by the
Company of the Units, the Work Fee Units, the Lead Agent Units and the
Agent's Warrant pursuant to the terms thereof do not and will not
conflict with or result in a breach of or require any consent,
approval permit, order or filing under (i) any statute, rule or
regulation applicable to the Company including, without limitation,
applicable Canadian Securities Laws and the by-laws, rules and
regulations of The Canadian Venture Exchange, except any consent,
approval, permit, authorization, order or filing required under
Canadian Securities Laws and the by-laws, rules and regulations of The
Canadian Venture Exchange which shall have been obtained on or before
the Closing Date; (ii) the constating documents or by-laws of the
Company or resolutions of the directors or shareholders of the Company
which are in effect at the date hereof; (iii) any mortgage, note,
indenture, contract, agreement, instrument, lease or other document to
which the Company or any of its subsidiaries is a party or by which
they or any of their property or assets are bound; or (iv) any
judgement, decree or order binding the Company or the property or
assets of the Company;
(h) at the date hereof, the Company is in compliance with its timely
disclosure obligations under Canadian Securities Laws and, without
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limiting the generality of the foregoing, except as described in the
Prospectus, there has not occurred any material adverse change,
financial or otherwise, in the assets, liabilities (contingent or
otherwise), business, financial condition, ownership, capital or
prospects of the Company and its subsidiaries, taken as a whole, since
September 30, 2000;
(i) since September 30, 2000 there have not been any material changes in
the capital or long-term debt of the Company otherwise than as set
forth or contemplated in the Prospectus;
(j) other than as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of the
Company's subsidiaries is a party or of which any property of the
Company or any of the Company's subsidiaries is the subject which, if
determined adversely to the Company or any of such subsidiaries, would
individually or in the aggregate have a material adverse effect on the
assets, liabilities (contingent or otherwise), business, financial
condition, capital or prospects of the Company and its subsidiaries
taken as a whole, or the ability of the Company or its subsidiaries to
perform their obligations under this Agreement or the Trust Indenture,
as applicable, and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or others;
(k) no order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus has been issued by any securities
regulatory authority in a Qualifying Province;
(l) prior to the Closing, all Offered Securities, as well as Common Shares
issuable pursuant to the Agent's Warrant will have been conditionally
approved for listing on The Canadian Venture Exchange and, as at the
Closing Time, the Company will have complied with all of the
conditions within its control required by The Canadian Venture
Exchange to be complied with prior to the Closing Date to have the
Offered Securities listed and posted for trading on The Canadian
Venture Exchange as of the opening of trading on the Closing Date;
(m) except with respect to information and statements relating solely to
the Agent and provided by the Agent, at the date hereof, each of the
Offering Documents fully complies with the requirements of applicable
Canadian Securities Laws and all information and statements therein
are true and accurate in all material respects, contain no
misrepresentation, and constitute full, true and plain disclosure of
all material facts relating to the Company and its subsidiaries, taken
as a whole, and to the securities being offered thereby;
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(n) the financial statements included in the Offering Documents present
fairly the consolidated financial position of the Company as at the
dates indicated and the results of its operations for the periods
specified and, except as otherwise stated in such documents, the said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") pursuant to the requirements
of Canada or the United States applied on a consistent basis and,
where such statements have been prepared based on U.S. GAAP,
appropriate reconciliation to Canadian GAAP is provided;
(o) no default exists, and no event has occurred which with notice or
lapse of time, or both would constitute a default, in the due
performance and observance of any term, covenant or condition of any
material contract, indenture, mortgage, deed of trust, bank loan,
credit agreement, evidence of indebtedness or other agreement,
understanding or instrument to which any of the Company and its
subsidiaries is a party or by which any of them or any of their
respective properties is bound or affected, which default would have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(p) other than pursuant to a registration statement being filed by the
Company and an exempt offering of up to $500,000 (U.S.) being made by
the Company concurrently in the United States, the Company has not
distributed or delivered, nor caused to be distributed or delivered,
any offering documents to any persons, other than insiders of the
Company, in the United States, its territories or possessions;
(q) the Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned
by it, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do
not materially interfere with the use made and proposed to be made of
such property by the Company; and any real properties and buildings
held under lease by the Company are held by it under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
properties and buildings by the Company;
(r) the Company and its subsidiaries have filed all federal, provincial,
state, local and foreign tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the
failure so to file would not have a material adverse effect on the
assets and properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole,) and have paid all taxes required to
be paid by them and any assessment, fine
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or penalty levied against them, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith;
(s) none of the Canada Customs and Revenue Agency, any of its
predecessors, the United States Internal Revenue Service or any
foreign taxation authority has asserted or, to the best of the
Company's knowledge, threatened to assert any reassessment, claim or
liability for taxes due or to become due in connection with any review
or examination of the tax returns of the Company or its subsidiaries
filed for any year which would have a material adverse effect on the
assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company or its subsidiaries;
(t) neither the Company nor any of its subsidiaries is subject to any
material liabilities or obligations, direct or indirect, absolute or
contingent, other than the liabilities or obligations set forth in the
Prospectus and those arising thereafter in the ordinary course of
business, none of which is materially adverse to the Company and its
subsidiaries, taken as a whole. Without limiting the generality of the
foregoing, neither the Company nor any of its subsidiaries has any
material obligation or liability for the debts or obligations of
others or any material exposure or liability as a result of hedging
transactions, the purchase of derivative securities and the like
except as set forth in the Prospectus or those arising in the ordinary
course of business, none of which is materially adverse to the Company
or its subsidiaries;
(u) (1) the Company and its subsidiaries are in compliance in all material
respects with all applicable Environmental Laws, (2) the Company and
its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance
with their requirements except to the extent that non-compliance or
failure to hold such permits, authorizations and approvals would not
have a material adverse impact on the Company or its subsidiaries (3)
there are no pending or, to the best of the knowledge of the Company
or its subsidiaries, threatened Environmental Claims against the
Company or its subsidiaries, and (4) neither the Company nor its
subsidiaries have any knowledge of any circumstances that could
reasonably be anticipated to form the basis of an Environmental Claim
against the Company or its subsidiaries or any of their respective
properties or operations and the business operations relating thereto
which Environmental Claim, individually or in the aggregate, would
have a material adverse affect on the business or operations of the
Company considered as a whole;
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(v) neither the Company nor its subsidiaries are in violation of their
respective Articles or By-Laws or in default in the performance or
observance of any material obligation, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which they are a party or by which
they or any of their properties may be bound except as disclosed in
the Prospectus; and
(w) the Company shall use the net proceeds received by it from the sale of
the Offered Securities pursuant to this Agreement in the manner
specified in the Prospectus under the caption "Use of Proceeds".
9. CLOSING
Closing of the Offering shall take place at the Closing Time at such
place as may be agreed to by the Agent and the Company.
10. CLOSING CONDITIONS
The obligations of the Agent under this Agreement are conditional upon
and subject to the Agent receiving, at the Closing Time:
(a) evidence satisfactory to the Agent that the Company has obtained all
necessary approvals for the Units and the Offered Securities to be
listed on The Canadian Venture Exchange subject to satisfaction only
of the usual conditions;
(b) one definitive share certificate representing the Units registered in
the name of the Agent (or in such other name or names as the Agent may
notify the Company of in writing not less than 24 hours prior to the
Closing Time) against payment to the Company (or as the Company may
direct to the Agent in writing not less than 24 hours prior to the
Closing Time) of the aggregate purchase price for the Units by
certified cheque or bank draft payable immediately at par in Calgary;
(c) the Agency Fee, together with all expenses of the Agent, and expenses
of the Agent's counsel, to the extent the Agent has been provided
proper invoices therefor at least 24 hours prior to the Closing Time
payable by the Company by bank draft or certified cheque payable
immediately at par in Calgary and made payable to the Agent (or as the
Agent may direct by notice given to the Company in writing not less
than 24 hours prior to the Closing Time);
(d) agreements between the Company and all registered holders of the
4,250,000 Common Shares (the "Registered Holders") issued and
outstanding prior to the sale of the Offered Securities (the "Issued
Shares")
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which, in the sole discretion of the Agent, adequately prevent the
sale by the Registered Holders of any of the Issued Shares legally or
beneficially owned by them for a period of twelve (12) months
following the Closing Date, after which time the Registered Holders
may sell fifty percent (50%) of the Issued Shares legally or
beneficially owned by them, with the remaining balance of fifty
percent (50%) free from all resale restrictions, subject to applicable
Canadian Securities Laws and the policies of the Exchange, on that
date which is fifteen (15) months from the Closing Date.
(e) a certificate dated as of the Closing Date signed by the Chief
Executive Officer of the Company or such other persons as may be
agreed upon by the Agent, acting reasonably, certifying, for and on
behalf of the Company and without personal liability, to the best of
the knowledge, information and belief of the persons signing such
certificate, after having made due inquiry, that:
(i) no order ceasing or suspending trading in the Offered
Securities or prohibiting the sale of the Offered Securities
has been issued and, to the best of the knowledge of such
person, no proceedings for such purposes are pending or
threatened;
(ii) since the later of the date of the Prospectus or the date of
any Supplementary Material, (A) there has been no material
adverse change, (actual, contemplated or threatened) in the
business, affairs, operations, management, assets,
liabilities (contingent or otherwise) or capital of the
Company and its subsidiaries, taken as a whole, and (B) there
have been no dividends (other than as disclosed in the
Prospectus as being payable) or other distribution of any
kind declared, paid or made by the Company on or in respect
of its equity capital;
(iv) since the later of the date of the Prospectus or the date of
any Supplementary Material, no transaction material to the
Company and its subsidiaries, taken as a whole, has been
entered into by the Company or any of its subsidiaries,
except in the normal course of its business;
(v) except as disclosed in the Prospectus, none of the Company
and its subsidiaries has any contingent liability arising out
of the ordinary course of business which is material to the
Company and its subsidiaries, taken as a whole;
(vi) except as disclosed in the Prospectus, there are no actions,
suits, proceedings or inquiries in existence or, to the
knowledge of such officers, pending or threatened against or
affecting the Company or
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any of its subsidiaries at law or in equity or before or by
any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality which may in any way materially adversely
affect the Company and its subsidiaries, taken as a whole;
(vii) the representations and warranties of the Company set out in
Section 8 hereof are true and correct in all material
respects at the Closing Time as if made at such time; and
(viii) the Company has complied with all covenants and satisfied all
terms and conditions hereof to be complied with and satisfied
by it, except to the extent that the same have been waived by
the Agent in writing.
(f) an opinion addressed to each of the Agent and to its counsel from
counsel for the Company with respect to:
(i) the Company is validly subsisting under the laws of Colorado
and has all requisite corporate power and authority to carry
on its business and the Company has the authority to issue
and sell the Units and other Offered Securities in the manner
provided for in this Agreement and to carry out its
obligations hereunder;
(ii) the authorized capital of the Company;
(iii) this Agreement to which the Company is a party has been duly
authorized, executed and delivered by the Company, is legally
binding upon the Company, and enforceable in accordance with
its terms, except as enforcement of rights and indemnity and
contribution under this Agreement may be limited by
applicable law and except as enforcement may be limited by
bankruptcy, insolvency and other laws of general application
affecting the enforcement of creditors' rights and except
that equitable remedies, such as specific performance and
injunction, may only be granted in the discretion of a court
of competent jurisdiction;
(iv) the fulfilment of the terms of this Agreement by the Company
and the issue and sale of the Units and the issuance of the
other Offered Securities by the Company do not and will not
result in a breach of, and do not and will not create a state
of facts which, after notice or lapse of time or both, will
result in a breach of, any applicable laws, and do not and
will not conflict with any of the terms, conditions or
provisions of the articles or by-laws of the Company;
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(v) the Offered Securities have been duly qualified for
distribution (or distribution to the public, as the case may
be) in the manner contemplated by the Prospectus in all of
the Qualifying Provinces through registered dealers;
(vi) the attributes of the Units are as described in the
Prospectus;
(vii) the Units have been validly issued by the Company and are
outstanding as fully paid and non-assessable shares;
(viii) the form and terms of the certificates representing the Units
meet all legal requirements and have been duly approved by
the Company;
(ix) Montreal Trust Company of Canada, at its offices in Vancouver
has been duly appointed as the transfer agent and registrar
for the Common Shares; and
(x) the Units have been conditionally approved for listing on The
Canadian Venture Exchange subject to compliance with the
requirements of such exchange.
(g) a comfort letter from the Company's auditors dated the Closing Date to
the same effect as the comfort letter referred to in paragraph
5(a)(iii) hereof bringing the information contained in the comfort
letter referred to in paragraph 5(a)(iii) forward to the Closing Date,
provided that such comfort letter shall be based on a review by the
auditors having a cut-off date not more than two Business Days prior
to the Closing Date;
all of which opinions shall be in form and substance reasonably satisfactory to
the Agent and their counsel.
Xxxxxxx & Xxxxxx and Stikeman Elliott may rely on the opinions of local counsel
acceptable to them as to matters governed by the laws of jurisdictions other
than the Province of British Columbia, in the case of Xxxxxxx & Xxxxxx, and
Alberta, in the case of Stikeman Elliott. Stikeman Elliott may rely on the
opinion of Xxxxxxx & Xxxxxx as to matters which relate specifically to the
Company. Xxxxxxx & Xxxxxx and Stikeman Elliott may rely, to the extent
appropriate in the circumstances, as to matters of fact, on certificates of the
Company executed on its behalf under corporate seal by any officer of the
Company and of the Trustee executed on its behalf by authorized officers;
(h) a certificate dated as of the Closing Date of Montreal Trust Company
of Canada, the registrar and transfer agent for the Common Shares, as
to the issued capital of the Company;
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(i) such other certificates, statutory declarations, opinions, agreements
or materials in form and substance satisfactory to the Agent as the
Agent may reasonably request, including such as may be required as the
basis for the opinions referred to in this Section 10; and
(j) the Agent's obligations pursuant to this Agreement are also
conditional upon the receipt of satisfactory, in the Agent's sole
discretion, independent valuations of the Company prior to the Closing
and the entering into of satisfactory "lock-up" agreements by various
security holders of the Company prior to the filing of the Prospectus.
11. INDEMNITIES OF THE COMPANY
(a) The Company hereby agrees to indemnify and hold the Agent and/or any
of their subsidiary companies and/or divisions and professional
advisors (hereinafter collectively referred to as the "INDEMNIFIED
PARTIES") and each and every one of the directors, officers, employees
and shareholders of the Indemnified Parties (hereinafter referred to
as the "PERSONNEL") harmless from and against any and all expenses,
losses, claims, actions, damages, or liabilities, whether joint or
several (including the aggregate amount paid in reasonable settlement
of any actions, suits, proceedings or claims), and the reasonable fees
and expenses of their counsel that may be incurred in advising with
respect to and/or defending any claim that may be brought against the
Indemnified Party and/or its Personnel or to which they may become
subject or otherwise involved in any capacity under any statute or
common law insofar as such expenses, losses, claims, damages,
liabilities or actions arise out of or are based, directly or
indirectly, upon:
(i) any information or statement contained in the Preliminary
Prospectus or in any of the Offering Documents being or being
alleged to be a misrepresentation or untrue or any omission
or alleged omission to state therein any material fact
required to be stated therein or necessary to make any of the
statements therein not misleading in light of the
circumstances in which they were made;
(ii) any order made or any inquiry, investigation or proceeding
instituted, threatened or announced by any court, securities
regulatory authority, stock exchange or by any other
competent authority, based upon any untrue statement,
omission or misrepresentation or alleged untrue statement,
omission or misrepresentation in the Preliminary Prospectus
or in any of the Offering Documents preventing or restricting
the trading in or the sale or distribution of the Offered
Securities in any Qualifying Jurisdiction;
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(iii) the Company not complying with any requirement of any
applicable Canadian Securities Laws to make any document
available for inspection, or any breach or violation or
alleged breach or violation of any applicable Canadian
Securities Laws or other applicable securities legislation of
any jurisdiction resulting from any action taken or omitted
to be taken by the Company in connection with the
transactions contemplated herein;
(iv) the breach of any representation, warranty or covenant of the
Company contained herein; or
(v) any claim, demand or action arising from the exempt
distribution concurrently conducted by the Company in the
United States.
provided, however, that this indemnity shall not apply to the extent
that a court of competent jurisdiction in a final judgement that has
become non-appealable shall determine that the Indemnified Party or
its Personnel have been negligent or dishonest or have committed any
fraudulent act in the course of their duties and the expenses, losses,
claims, damages or liabilities, as to which indemnification is
claimed, were directly caused by the negligence, dishonesty or fraud
therein.
(b) If for any reason (other than the negligence or fraud of an
Indemnified Party or its Personnel as referred to above) the foregoing
indemnification is unavailable to an Indemnified Party or insufficient
to hold it harmless, then the Company shall contribute to the amount
paid or payable by the Indemnified Party as a result of such expense,
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Company on
the one hand and the Indemnified Party on the other hand but also the
relative fault of the Company and the Indemnified Party, as well as
any relevant equitable considerations provided that the Company shall
in any event contribute to the amount paid or payable by the
Indemnified Party as a result of such expense, loss, claim, damage or
liability any excess of such amount over the amount of the fees
received by the Indemnified Party hereunder.
(c) The Company agrees that in case any legal proceeding shall be brought
against the Company and/or the Indemnified Party by any governmental
commission or regulatory authority, or in case any stock exchange or
other entity having regulatory authority, either domestic or foreign,
shall investigate the Company and/or the Indemnified Party, in either
case in connection with matters pursuant to which an indemnity is
being provided herein as described in paragraph 11(a), and in case the
Personnel of the Indemnified Party shall be required to testify in
connection therewith or shall be required to respond to procedures
designed to
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discover information in connection with the performance of
professional services rendered to the Company by the Indemnified
Party, the Indemnified Party shall have the right to employ its own
counsel in connection therewith, and the reasonable fees and expenses
of such counsel as well as the reasonable costs and out-of-pocket
expenses incurred by the Indemnified Party and its Personnel in
connection therewith shall be paid by the Company as they occur.
(d) Promptly after receipt of notice of the commencement of any legal
proceeding against the Indemnified Party or any of its Personnel or
after receipt of notice of the commencement of any investigation,
which is based, directly or indirectly, upon any matter in respect of
which indemnification may be sought from the Company, the Indemnified
Party will notify the Company in writing of the commencement thereof
and, throughout the course thereof, will provide copies of all
relevant documentation to the Company, will keep the Company advised
of the progress thereof and will discuss with the Company all
significant actions proposed.
(e) Contribution obligations of the Company shall be in addition to any
liability which the Company may otherwise have, shall extend upon the
same terms and conditions to the Personnel of the Indemnified Party
and shall be binding upon and enure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the
Indemnified Party and any of the Personnel of the Indemnified Party.
12. INDEMNITY QUALIFICATIONS
Notwithstanding the provisions of Section 11 hereof the foregoing
rights of indemnity shall not enure to any Indemnified Party if the Company has
complied with the provisions of Section 5 hereof and the claim for
indemnification relates to a person asserting a claim in respect of an alleged
untrue statement in or alleged omission from any document, including the
Preliminary Prospectus or the Prospectus, and such person was not provided with
a copy of the Prospectus or Supplementary Material which corrects such alleged
untrue statement or alleged omission and which is required, under applicable
law, to be delivered to such person by such Indemnified Party.
13. EXPENSES
(a) Whether or not the transactions herein contemplated shall be
completed, all expenses of or incidental to the delivery and sale of
the Offered Securities and of or incidental to all other matters in
connection with the transactions herein set out (other than expenses
of the Agent as hereinafter provided, except to the extent hereinafter
provided in this Section 13) shall be borne by the Company including,
without limitation,
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(i) expenses payable in connection with the qualification of the
Offered Securities for distribution (including filing fees payable to
Securities Commissions); (ii) the fees and expenses of the Company's
counsel and the Company's auditors; (iii) expenses of the information
meetings relating to the transactions herein set out; (iv) all costs
incurred in connection with the preparation, printing and delivery of
the Preliminary Prospectus, the Prospectus and any Supplementary
Material, including commercial copies thereof; (v) all costs of the
certificates representing the Units, (vi) all fees and disbursements
of the Trustee; (vii)all costs incurred in connection with the listing
of the Units on The Canadian Venture Exchange; and (viii) the fees and
disbursements of the Agent's counsel and the Agent's "out-of-pocket"
expenses, including, without limitation, advertising, travel, courier,
background searches and communication expenses.
(b) The Company hereby acknowledges that legal fees and disbursements of
the Agent's counsel shall be payable by the Company on the Closing
Date.
14. EARLY TERMINATION
(a) In addition to any other remedies which may be available to the Agent,
the Agent shall be entitled to terminate and cancel, without any
liability on the Agent's part, the Agent's obligations under this
Agreement if at any time prior to the Closing Time, or if there is
more than one Closing, any time prior to the Closing Time associated
with the first Closing:
(i) there should develop, occur or come into effect or existence
any event, action, state, condition or major financial
occurrence of national or international consequence or any
law or regulation which, in the Agent's reasonable opinion,
materially and adversely affects, or will materially and
adversely affect, the financial markets, the business,
operations or affairs of the Company and its subsidiaries,
taken as a whole, or the profitable marketing or distribution
of the Offered Securities;
(ii) there shall occur any material change, or change in a
material fact, as described or contemplated in Section 6
hereof which, in the Agent's reasonable opinion, has or will
have a material adverse effect on the market price or value
of the Units or which results or, in the Agent's opinion,
would reasonably be expected to result in, the purchasers of
a material number of the Offered Securities exercising their
right under Canadian Securities Laws to withdraw from their
purchase of the Offered Securities;
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(iii) if any inquiry, action, suit, proceeding or investigation
(whether formal or informal) is instituted or any order made
by any federal, provincial, state, municipal, or other
governmental department, commission, board, bureau, agency or
instrumentality, including without limitation, any of The
Canadian Venture Exchange or any of the Securities
Commissions (other than an inquiry, action, suit, proceeding,
investigation or order based solely on the activities or
alleged activities of the Agent) or any law or regulation is
promulgated or changed which, in the Agent's reasonable
opinion, operates to prevent or restrict the trading or
distribution of the Offered Securities or any of them; or
(iv) there should occur or come into effect any change in the
financial markets which, in the Agent's reasonable opinion,
is material and adverse and such that the Offered Securities
cannot be profitably marketed;
by giving written notice to the Company to that effect as soon as
practicable in the circumstances and in any event prior to the Closing
Time.
(b) If the obligations of the Agent are terminated under this Section 14
there shall be no further liability on the part of the Agent to the
Company and the liability of the Company hereunder to the Agent shall
be limited to their respective obligations under Sections 11, 12 and
13 hereof.
15. RESTRICTIONS ON SALES
Unless the Closing does not occur, the Company agrees that it will
not, without the prior consent of the Agent, which consent shall not be
unreasonably withheld, offer, sell or otherwise dispose of any Common Shares or
any securities convertible into or exchangeable or exercisable for Common Shares
or agree to do so or publicly announce any intention to do so (except Common
Shares required to be issued pursuant to stock options or other awards now
outstanding or hereafter issued in the ordinary course under the Company's stock
option plan, or pursuant to convertible instruments currently outstanding) for a
period of 180 days from the Closing Date.
16. TERMS AND CONDITIONS
All material terms and conditions of this Agreement shall be construed
as conditions. Any breach or failure to comply with any of such terms or
conditions (i) by the Company shall entitle the Agent, without limitation of its
other remedies, to terminate its obligations pursuant to this Agreement or (ii)
by the Agent shall entitle the Company, without limitation of any of its other
remedies, to terminate its obligations pursuant to this Agreement, in any such
case by giving written notice to that effect to the Company or to the Agent
prior to the Closing Time. It is understood that, the
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Agent, on the one hand, or the Company, on the other hand, may waive, in whole
or in part, or extend the time for compliance with, any of such terms and
conditions without prejudice to its or their rights in respect of any other of
such terms and conditions or any other or subsequent breach or non-compliance,
provided that to be binding on the Agent or the Company, as the case may be, any
such waiver or extension must be in writing.
17. SURVIVAL
The representations, warranties, covenants and agreements of the
Company and the Agent contained in this Agreement or delivered pursuant hereto
shall survive the period of distribution and shall continue in full force and
effect for a period of three years from the Closing Date, or if more than one
Closing is held, three years from the last Closing Date and the Agent shall be
entitled to rely on the representations and warranties of the Company contained
herein or delivered pursuant hereto notwithstanding any investigation which the
Agent may undertake or which may be undertaken on their behalf.
18. INCORPORATION BY REFERENCE
This Agreement supercedes and replaces the letter of engagement
between the Company and Thomson Kernaghan & Co. Limited (the "Engagement
Letter"), which no longer continues to be of any force or effect between the
parties. For further clarification, to the extent that there is a conflict
between the terms of the Engagement Letter and this Agreement, the terms of this
Agreement shall prevail.
19. NOTICES
Any notice or other communication to be given hereunder shall be
addressed as follows:
To the Company: Industrialex Manufacturing, Inc.
63 - A.S. Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx
X.X.X. 00000
Attention: Xx. Xxxxx Xxxxxx
President
Fax: (000) 000-0000
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with a copy to:
Xxxxxxx & Xxxxxx
#2100, 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xx. Xxxxx Xxxxx
Fax: (000) 000-0000
To the Agent: Thomson Kernaghan & Co. Limited
Xxxxx 000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxxx Xx Xxxx
Fax: (000) 000-0000
with a copy to: Stikeman Elliott
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
Any such notice or other communication shall be in writing and, unless delivered
personally to a responsible officer of the addressee, shall be given by courier
service or facsimile transmission and shall be deemed to have been received, if
given by facsimile transmission, on the date of sending (or if such day is not a
Business Day, the next Business Day) and, if given by courier service, when
received. The Company or the Agent may change their respective addresses for
notice by notice given in the manner aforesaid.
20. RIGHT OF FIRST REFUSAL
Provided the offering contemplated by this Agreement is completed, the
Agent shall have the right of first refusal to lead all subsequent public
financings contemplated by the Company, whether debt or equity, for a period of
eighteen (18) months from the Closing of this offering. In the event that the
Company receives any proposal from any party to assist, broker or conduct such
offering on behalf of the Company, the Company shall immediately deliver a copy
of such proposal (the "Term Sheet") to the Agent who shall have ten (10)
business days to determine if they are prepared to conduct such offering on
behalf of the Company on such terms. In the event that the Agent elects not to
conduct such offering, the Company may proceed to complete such offering with
another party on terms no less favourable than those set
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out in the Term Sheet and such offering must be completed within 140 days of the
delivery of the Term Sheet to the Agent.
This right of first refusal shall be recurring and the failure of the
Agent to exercise such right of first refusal with respect to any one financing
shall not affect the Company's obligation to provide such right to the Agent on
subsequent financings.
In the circumstances where such offering is to be conducted in the
United States, the Company acknowledges that the Agent shall still be entitled
to such right of first refusal but may involve one or more associated or
affiliated entities to comply with United States legal requirements.
21. SPONSORSHIP
(a) Subject to paragraph (b) below, the Agent agrees that it shall act as
the Company's sponsor for listing on the Exchange and, in connection
therewith, shall prepare and file with the Exchange in accordance with
the rules, regulations and policies of the Exchange:
(i) a Sponsorship Acknowledgement Form concurrently with the
Company's application to list the Common Shares on the
Exchange;
(ii) a Preliminary Sponsor Report concurrently with the Company's
application to list the Common Shares on the Exchange; and
(iii) a Final Sponsor Report concurrently with the filing of the
final Prospectus with the Exchange
(collectively, the "Sponsorship Documents") or at such other times as
determined by the Exchange, but only after the Agent conducts the
necessary Review Procedures and Due Diligence.
"Sponsorship Acknowledgement Form", Sponsor Report", "Due Diligence"
and "Review Procedures" all have the meaning prescribed in the
policies of the Exchange.
The Company agrees that it shall provide the Agent with the
opportunity to conduct all necessary Due Diligence and Review
Procedures to prepare such Sponsorship Documents.
(b) The parties acknowledges that the Agent has agreed to act as the
Company's sponsor for listing on the Exchange relying on its own Due
Diligence and Review Procedures and on the good faith of the
representations made, and materials provided, by the Company and its
directors, officers, promoters, agents and employees. The parties
hereby agree that the Agent may unilaterally cease to act as the
Company's
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sponsor for listing on the Exchange, without penalty or deduction of
the Work Fee, Investment Banking Fee or the amounts prescribed by
Sections 13, if, at any time following preparation and filing of any
of the Sponsorship Documents with the Exchange:
(i) there shall have occurred any material adverse change or any
adverse change of a material fact or a development that could
reasonably result in a material adverse change or adverse
change in a material fact in respect of the business,
operations, capital, condition (financial or otherwise),
properties, assets, liabilities, obligations or affairs of
the Company;
(ii) the Company shall be in breach of or default under or
non-compliance with any material representation, warranty,
term, condition or covenant of this Agreement, its
application to the Exchange to list the Common Shares, the
Prospectus or any other material contract listed in the
Prospectus.;
(iii) any inquiry, investigation (whether formal or informal) or
other proceeding is announced or commenced by any court,
securities commission or other regulatory authority, or any
order is issued in relation to the Company, any of its
affiliates, or any of its directors or officers or any of the
Company's securities;
which, in the sole discretion of the Agent, prevents or restricts
trading in or the distribution of the Common Shares, or has or would
have a material adverse affect on the business of the Company or on
the value of, or market price, or the investment quality or
marketability of the Common Shares;
(iv) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence of national or international consequence
or any law or regulation which, in the opinion of the Agent,
materially adversely affects or involves, or will materially
adversely affect or involve, the financial markets or the
business, operations or affairs of the Company or the
marketability of the Common Shares; or
(v) an order to cease or suspend trading is made by any
securities commission, stock exchange or other competent
authority by reason of the fault of the Company or its
directors, officers and agents and such order is not
rescinded within two business days; or
(vi) the Agent receives or becomes aware of any information which,
in the sole opinion of the Agent, acting reasonably, may
result in the purchasers of a material number of the Units
exercising their rights
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under applicable legislation to withdraw or rescind their
purchase thereof at any time following the filing or
preparation of any of the Sponsorship Documents;
(vii) the Agent shall become aware, as a result of its Due
Diligence, Review Procedures or otherwise, of any adverse
material change or adverse material fact (financial or
otherwise) with respect to the Company, its subsidiaries,
affiliates or their directors, officers or promoters, which
had not been publicly disclosed or disclosed to the Agent in
writing by the Company, prior to the preparation or filing of
the Sponsorship Documents with the Exchange; or
(viii) the Company has not obtained all necessary regulatory
approvals and filed all necessary documentation under
applicable Canadian Securities Laws or the rules, regulations
and policies of the Exchange in connection with the listing
of the Common Shares on the Exchange or the Offered
Securities; or
(ix) if there is an event or occurrence of any nature in the
business or other affairs of the Company, its subsidiaries
and affiliates, or their directors, officers or promoters,
which, in the sole discretion of the Agent, would seriously
effect the ability of the Agent to perform its obligations as
sponsor for listing of the Common Shares on the Exchange; or
(x) if any of the representations made by the Company, its
affiliates or subsidiaries, or their directors, officers or
promoters in the course of the Agent's Due Diligence, Review
Procedures or otherwise are, in the sole opinion of the
Agent, false or have become false in any material respect
since the preparation and/or filing of the Sponsorship
Documents with The Exchange; or
(xi) if the Agent becomes aware of any past conduct of the
directors, officers, promoters or Insiders (as that term is
defined in the policies of the Exchange) of the Company or
any of its subsidiaries or affiliates which, in the sole
discretion of the Agent, shows that one or more of them do
not possess the industry and securities experience, as well
as integrity, required by the Exchange for publicly listed
companies, or that one or more of them has displayed a
history of regulatory non-compliance or lack of corporate or
financial success; or
(xii) if the Agent becomes aware that the Insiders and Control
Persons (as that term is defined in the policies of the
Exchange) of the Company or any of its subsidiaries or
affiliates do not, to the sole
29
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satisfaction of the Agent, understand their statutory trading
and reporting obligations as prescribed by applicable
Canadian Securities Laws; or
(xiii) if the Agent becomes aware that, in its sole opinion, the
directors and officers of the Company or any of its
affiliates or subsidiaries do not possess the business
acumen, history of responsible business conduct and success,
or educational and professional qualities required by the
policies of the Exchange; or
(xiv) if the Agent becomes aware that internal controls do not
exist in the Company requiring the signatures of two
authorized persons on all cheques or other instruments
binding the Company; or
(xv) if the Agent becomes aware that the proceeds from the sale of
the Offered Securities are not being used as disclosed in the
Prospectus; or
(xvi) if the Agent becomes aware that the directors and officers
are not, in its sole opinion, devoting sufficient time to
properly manage the business and corporate affairs of the
Company; or
(xvii) if the Agent becomes aware that the officers and/or directors
of the Company have failed to prepare or disclose all
information required by applicable Canadian Securities Laws
and the rules, regulations and policies of the Exchange; or
(xviii) if the Agent becomes aware that the directors and officers of
the Company, in the Agent's sole opinion, do not appreciate
the nature of their responsibilities as management of the
Company; or
(xix) if the Agent becomes aware, in it sole opinion, that the
Company does not meet minimum listing or other requirements,
as defined in the rules, regulations and policies of the
Exchange.
22. STABILIZATION
In connection with the distribution of the Offered Securities, the
Agent may, for its own account, over-allot or effect transactions which
stabilize or maintain the market price of the Offered Securities at levels other
than those which might otherwise prevail in the open markets but in each case
only as permitted by applicable law. Such stabilizing transactions, if any, may
be discontinued at any time.
23. SEVERABILITY
If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall be deemed not to affect or impair
the validity
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of any other provision of this Agreement and such void or unenforceable
provision shall be severable from this Agreement.
24. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
25. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta.
26. COUNTERPARTS
This offer and the agreement resulting from the acceptance of this
offer may be executed by manual or facsimile signature in several counterparts,
each of which when so executed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument.
27. ATTORNMENT
The Company and the Agent hereby attorn to the non-exclusive
jurisdiction of the courts of the Province of Alberta.
If the foregoing is in accordance with your understanding and is
agreed to by you, will you please confirm your acceptance by signing the
enclosed copies of this letter and returning the same to the Agent.
Yours truly,
THOMSON KERNAGHAN & CO. LIMITED
Per:
-----------------------------
Xx. Xxxxxxx Xx Xxxx
Accepted and agreed to this ______ day of ______________, 2000.
INDUSTRIALEX MANUFACTURING, INC.
Per:
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Per:
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