UNDERWRITING AGREEMENT
000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxx X. Xxxxxxxxx, President and Chief Executive Officer, and Xxxxx X. Xxxxxxxx, Executive Vice-President and Chief Financial Officer |
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
(a) | The Company hereby covenants to the Underwriters and to the Purchasers and their permitted
assigns, and acknowledges that each of them is relying on such covenants in purchasing the
Offered Securities, that the Company shall: |
(i) | prior to the filing of the Preliminary Prospectus, the Final Prospectus and
any Supplementary Material, the Company will allow the Underwriters to participate
fully in the preparation of the Preliminary Prospectus, the Final Prospectus and any
Supplementary Material and shall allow the Underwriters to conduct all due diligence
which they may reasonably require to conduct in order to fulfill their obligations
and in order to enable them to responsibly execute the certificates required to be
executed by them at the end of each of the Preliminary Prospectus, the Final
Prospectus and any applicable Supplementary Material; |
(ii) | make available its directors, senior management, technical advisors,
auditors and counsel to answer any questions which the Underwriters may have and to
participate in one or more due diligence sessions to be held prior to Closing and,
prior to filing each of the Preliminary Prospectus and Final Prospectus, and any
amendments thereto, and to use its commercially reasonable efforts to arrange for the
auditors of the Company to provide written responses in connection with any such due
diligence session; |
(iii) | duly execute the Subscription Agreements which have been duly completed by
the Purchasers subject to the terms thereof, and duly and punctually perform all the
obligations to be performed by it under this Agreement and the Subscription
Agreements; |
(iv) | use its commercially reasonable efforts to fulfil or cause to be fulfilled,
at or prior to the Closing Date, each of the conditions required to be fulfilled by
it set out in section 6; |
(v) | use its commercially reasonable efforts to obtain the necessary regulatory
consents and approvals of the TSX and the NYSE Amex for the Offering prior to the
Closing Time on such conditions as are acceptable to the Underwriters and the
Company, acting reasonably. |
- 8 -
(vi) | fulfil all legal requirements to permit the creation, issuance, offering
and sale of the Offered Securities and the creation and issuance of the Underlying
Securities, all as contemplated in this Agreement and file or cause to be filed all
documents, applications, forms or undertakings required to be filed by the Company
and take or cause to be taken all action required to be taken by the Company in
connection with the purchase and sale of the Offered Securities and the issuance of
the Underlying Securities; |
(vii) | until the date of the completion of the distribution of the Underlying
Securities, use commercially reasonable efforts to ensure the Preliminary Prospectus
and the Final Prospectus, and any amendments thereto, comply at all times with
applicable Canadian Securities Laws; |
(viii) | during the period from the date hereof until the completion of the distribution of
the Underlying Securities, promptly inform the Underwriters in writing of the full
particulars of: |
(A) | any change (actual, anticipated, contemplated,
proposed or threatened, financial or otherwise) in the business,
financial condition, affairs, operations, assets, liabilities or
obligations (contingent or otherwise), prospects, capital or ownership
of the Company, as the case may be; |
(B) | any change in any material fact disclosed in
the Disclosure Documents; |
(C) | any material fact in respect of the Company
that had not been previously disclosed to the Underwriters, |
which change or material fact is, or may be, of such a nature as: |
(I) | would
result in the Disclosure Documents or Preliminary
Prospectus or Final Prospectus containing a
misrepresentation; or |
||
(II) | would
reasonably be expected to have a material adverse
effect on the Company and the Material Subsidiaries
on a consolidated basis, |
provided that if the Company is uncertain as to whether a change or fact of the
nature referred to in this section has occurred, the Company shall promptly inform
the Underwriters of the full particulars of the occurrence giving rise to the
uncertainty and shall consult with the Underwriters as to whether the occurrence is
of such nature; |
(ix) | during the period commencing on the date hereof and until completion of the
distribution of the Underlying Securities, the Company will use its commercially
reasonable efforts to promptly provide to the Underwriters drafts of any press
releases of the Company for review by the Underwriters and the Underwriters’ counsel
prior to issuance, and will not publish those press releases (unless otherwise
required by applicable Securities Laws) except with the prior approval of the
Underwriters, which approval will not be unreasonably withheld or delayed; |
- 9 -
(x) | apply the net proceeds from the Offering to fund the further development of
the Company’s uranium properties, for working capital and for general corporate
purposes; |
(xi) | will advise the Underwriters, promptly after receiving notice thereof, of
the time when the Preliminary Prospectus, the Final Prospectus and any Supplementary
Material have been filed and receipts therefor have been obtained pursuant to NP
11-202 and will provide evidence reasonably satisfactory to the Underwriters of each
such filing and copies of such receipts; |
(xii) | will advise the Underwriters, promptly after receiving notice or obtaining
knowledge thereof, of: |
(A) | the issuance by any Canadian Securities Re
gulator of any order suspending or preventing the use of the
Preliminary Prospectus, the Final Prospectus or any Supplementary
Material; |
(B) | the institution, threatening or contemplation
of any proceeding for any such purposes; |
(C) | any order, ruling, or determination having the
effect of suspending the sale or ceasing the trading in any securities
of the Company (including the Common Shares) has been issued by any
Canadian Securities Regulator or the institution, threatening or
contemplation of any proceeding for any such purposes; |
(D) | any request of any Securities Regulator for any
information, or the receipt by the Company of any communication from
any Securities Regulator or any other competent authority relating to
the Company or which may be relevant to the distribution of the
Underlying Securities; or |
(E) | any requests made by any Canadian Securities
Regulators for amending or supplementing the Preliminary Prospectus or
the Final Prospectus or for additional information, |
(F) | and will use its commercially reasonable
efforts to prevent the issuance of any order referred to in (A) above
or, if any such order is issued, to obtain the withdrawal thereof as
quickly as possible; |
(b) | The Company further hereby covenants to the Underwriters and to the Purchasers and their
permitted assigns, and acknowledges that each of them is relying on such covenants in
purchasing the Offered Securities, that following the Closing: |
(i) | the Company shall use its reasonable best efforts to obtain a receipt for
the Final Prospectus qualifying the distribution of the Underlying Securities to
purchasers resident in or otherwise subject to the laws of one of the Qualifying
Jurisdictions prior to the Qualification Deadline and use commercially reasonable
efforts to file the Preliminary Prospectus in each of the Qualifying Jurisdictions as
soon as possible following the Closing Date and the Final Prospectus promptly
following
receipt and settlement of comments from the applicable Canadian Securities
Regulators; and |
- 10 -
(ii) | the Company shall allow the Underwriters to participate in the preparation
of the Offering Documents that the Company is required to file under applicable
Canadian Securities Laws relating to the Offering; |
(c) | The Company hereby covenants that: |
(i) | all the information and statements to be contained in the Offering
Documents shall, at the respective dates of delivery thereof, constitute full, true
and plain disclosure of all material facts relating to each of the Offering, the
Company and the Material Subsidiaries on a consolidated basis and the Offered
Securities (provided that this covenant is not intended to extend to information and
statements included in reliance upon and in conformity with information furnished to
the Company by or on behalf of the Underwriters specifically for use therein); |
(ii) | no material fact or information will be omitted from the Offering Documents
(except facts or information relating solely to or provided by the Underwriters)
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) | the Offering Documents shall, in all material respects, contain the
disclosure required by and conform to all requirements of Canadian Securities Laws. |
(d) | Each delivery of the Offering Documents to the Underwriters by the Company in accordance with
this Agreement will constitute the representation and warranty of the Company to the
Underwriters that at the respective date of such documents: |
(i) | all the information and statements to be contained in the Offering
Documents, at the respective dates of delivery thereof, constitutes full, true and
plain disclosure of all material facts relating to each of the Offering, the Company
and the Material Subsidiaries on a consolidated basis and the Offered Securities
(provided that this representation and warranty is not intended to extend to
information and statements included in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Underwriters specifically
for use therein); |
(ii) | no material fact or information has been omitted from the Offering
Documents (except facts or information relating solely to or provided by the
Underwriters) 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) | the Offering Documents, in all material respects, contain the disclosure
required by and conform to all requirements of Canadian Securities Laws. |
(e) | Once the Preliminary Prospectus has been filed, the Company will comply with section 57 of
the Securities Act (Ontario) and with the comparable provisions of the other Canadian
Securities Laws, and the Company will prepare and file promptly any
Supplementary Material which may be necessary and will otherwise comply with all legal
requirements necessary to continue to permit the Underlying Securities to be distributed in
each of the Qualifying Jurisdictions as contemplated herein. |
- 11 -
(f) | If during the period of distribution of the Underlying Securities there shall be any change
in Securities Laws which, in the opinion of the Underwriters, acting reasonably, requires the
filing of any Supplementary Material, upon written notice from the Underwriters, the Company
shall, to the satisfaction of the Underwriters, acting reasonably, promptly prepare and file
any such Supplementary Material with the appropriate Securities Regulators where such filing
is required. |
(g) | During the period from the date hereof until the Expiry Time, the Company shall promptly
inform the Underwriters (and if requested by the Underwriters, confirm such notification in
writing) of the full particulars of: |
(i) | any breach or potential breach of any of the representations and warranties
in section 1(d) hereof; and |
(ii) | any material breach or potential material breach of any of the
representations and warranties in section 4 hereof. |
(a) | it shall offer and solicit offers for the purchase of the Offered Securities in compliance
with applicable Securities Laws and only from such persons and in such manner that, pursuant
to applicable Securities Laws and the securities laws of any other jurisdiction applicable to
the offer and sale of the Offered Securities under this Offering, no prospectus, registration
statement or similar document need be delivered or filed, other than any prescribed reports of
the issue and sale of the Offered Securities and the Preliminary Prospectus, Final Prospectus
and any Supplementary Material and, in the case of any jurisdiction other than the Offering
Jurisdictions, no continuous disclosure obligations will be created; |
(b) | it shall not provide to prospective purchasers of Offered Securities any document or other
material that would constitute an offering memorandum within the meaning of the applicable
Securities Laws without the prior written consent of the Company; |
(c) | it will not offer or sell the Offered Securities in any jurisdiction other than the Offering
Jurisdictions and the United States (unless subsequently agreed to by the Company) in
accordance with the terms of this Agreement; |
(d) | it will only make any offers or sales of Special Warrants in the United States in accordance
with applicable United States securities laws and in accordance with Schedule “A” attached
hereto (which schedule is incorporated by reference herein and
forms part of this Agreement) and it will not make any offers or sales of FT Special
Warrants in the United States; |
- 12 -
(e) | it will comply with all applicable Securities Laws in connection with the Offering; |
(f) | it will obtain from each Purchaser a completed and executed Subscription Agreement, together
with all documentation (including documents required by the TSX and the NYSE Amex, if any) as
may be necessary in connection with subscriptions for Offered Securities, as applicable, to
ensure compliance with applicable Securities Laws and any conditional approval requirements of
the TSX and the NYSE Amex; |
(g) | it will refrain from advertising the Offering in (A) printed media of general and regular
paid circulation, (B) radio, (C) television, or (D) telecommunication (including electronic
display and the Internet) and not make use of any green sheet or other internal marketing
document without the consent of the Company, such consent to be promptly considered and not to
be unreasonably withheld; and |
(h) | it will use its commercially reasonable efforts to complete the distribution of the
Underlying Securities pursuant to the Prospectus as early as practicable and the Underwriters
shall advise the Company in writing when, in the opinion of the Underwriters, they have
completed the distribution of the Underlying Securities. |
(a) | The Company shall deliver, or cause to be delivered, to each of the Underwriters: |
(i) | prior to the filing of the Preliminary Prospectus and the Final Prospectus
with the Canadian Securities Regulators, a copy of the Preliminary Prospectus and the
Final Prospectus signed by the Company as required by applicable Canadian Securities
Laws; |
(ii) | prior to the filing of any Supplementary Material with the Canadian
Securities Regulators, a copy of such Supplementary Material required to be filed by
the Company in compliance with applicable Canadian Securities Laws; |
(iii) | concurrently with the filing of the Final Prospectus with the Canadian
Securities Regulators, a “long form” comfort letter dated the date of the Final
Prospectus, in form and substance satisfactory to the Underwriters, acting
reasonably, addressed to the Underwriters and the directors of the Company from the
Company’s Auditors with respect to financial and accounting information relating to
the Company contained in the Final Prospectus, which letter shall be based on a
review by the Company’s Auditors within a cut-off date of not more than two Business
Days prior to the date of the letter, which letter shall be in addition to the
auditors’ consent letter addressed to the Canadian Securities Regulators; |
(iv) | concurrently with the filing of the Final Prospectus with the Canadian
Securities Regulators, an opinion, dated the date of the Final Prospectus and subject
to customary qualifications, of Blake, Xxxxxxx & Xxxxxxx LLP that, subject to the
qualifications contained in the Final Prospectus under the heading “Eligibility for
Investment”, the Underlying Securities are “qualified investments” by for trusts
governed by registered retirement savings plans, registered retirement income
funds, registered education savings plans, registered disability savings plans,
deferred profit sharing plans and tax-free savings accounts within the meaning of
the Income Tax Act (Canada); and |
- 13 -
(v) | prior to the filing of the Final Prospectus with the Canadian Securities
Regulators, copies of correspondence from the TSX and the NYSE Amex indicating that
the application for the listing and posting for trading on the TSX and the NYSE Amex
of the Special Warrant Shares, FT Special Warrant Shares and Penalty Shares (as
applicable) have been approved for listing subject only to satisfaction by the
Company of certain standard post-closing conditions imposed by the TSX and the NYSE
Amex as set out in its conditional approval letters dated November 22, 2010 and
December 8, 2010, respectively (the “Standard Listing Conditions”). |
(b) | The Company shall also prepare and deliver promptly to the Underwriters signed copies of all
Supplementary Material. |
(c) | The Company shall cause commercial copies of the Preliminary Prospectus, the Final Prospectus
and any Supplementary Material to be delivered to the Underwriters without charge, in such
numbers and in such locations as the Underwriters may reasonably request by written
instructions to the Company’s financial printer of the Preliminary Prospectus and the Final
Prospectus. Such delivery shall be effected as soon as possible and, in any event, on or
before the date which is one Business Day for deliveries to be made in Toronto and two
Business Days for deliveries to be made outside of Toronto after the Ontario Securities
Commission, as principal regulator, has issued a receipt in accordance with NP 11-202 in
respect of the Preliminary Prospectus and the Final Prospectus, and on or before a date which
is two Business Days after the Canadian Securities Regulators issue receipts, in respect of or
accept for filing, as the case may be, any Supplementary Material. |
(d) | The Company will deliver to the Underwriters, without charge, contemporaneously with, or
prior to the filing of, the Final Prospectus, unless otherwise indicated: |
(i) | a copy of any document filed with, or delivered to, the Canadian Securities
Regulators by the Company under applicable Canadian Securities Laws with the Final
Prospectus; |
(ii) | a certificate dated the date of the Final Prospectus, addressed to the
Underwriters and signed by the Chief Executive Officer and Chief Financial Officer of
the Company, certifying for and on behalf of the Company, and not in their personal
capacities, after having made due inquiries, with respect to the following matters: |
(A) | the Company having materially complied with all
of the covenants and satisfied all of the terms and conditions of this
Agreement on its part to be complied with and satisfied at or prior to
the date of the Final Prospectus; |
||
(B) | no order, ruling or determination having the
effect of ceasing or suspending trading in any securities of the
Company or prohibiting the issue of the Offered Securities or the
Underlying Securities or any of the Company’s issued securities having
been issued and
no proceeding for such purpose being pending or, to the knowledge of
such officers, threatened; |
- 14 -
(C) | the representations and warranties of the
Company contained in this Agreement and in any certificates of the
Company delivered pursuant to or in connection with this Agreement
being true and correct in all material respects as at the date of the
Final Prospectus (other than those that speak to a specific time, in
which case they shall have been true and correct in all material
respects at such time), with the same force and effect as if made on
and as at the date of the Final Prospectus, after giving effect to the
transactions contemplated by this Agreement; |
||
(D) | since the Closing Time, there having been no
material adverse change, financial or otherwise, in the assets,
liabilities (contingent or otherwise), capital, business or results of
operations of the Company and the Material Subsidiaries on a
consolidated basis; and |
||
(E) | the properties and projects described in the
favourable reports and opinions listed in section 6(b) comprise all of
the properties and projects described in the Final Prospectus and such
reports and opinions, to the knowledge of the Chief Executive Officer
and Chief Financial Officer, continues to be correct and complete in
all material respects; and |
(e) | On the closing date of the distribution of the Underlying Securities, the Underwriters shall
have received an opinion, subject to customary qualifications, of Blake, Xxxxxxx & Xxxxxxx LLP
or from local counsel in the Qualifying Jurisdictions other than British Columbia, Alberta or
Ontario (it being understood that such counsel may rely to the extent appropriate in the
circumstances, (i) as to matters of fact, on certificates of the Company executed on its
behalf by a senior officer of the Company and on certificates of Computershare Investor
Services Inc., the transfer agent and registrar for the Company, as to the issued capital of
the Company; and (ii) as to matters of fact not independently established, on certificates of
the Company’s Auditors or a public official) with respect to the following matters: |
(i) | the attributes of the Special Warrants and the FT Special Warrants and the
Underlying Securities, including for the purposes of the Income Tax Act (Canada),
conform in all material respects with the description thereof contained in the Final
Prospectus and confirming its opinions concerning tax matters contained under the
heading “Eligibility For Investment” and under the heading “Certain Canadian Federal
Income Tax Consequences” in the Final Prospectus; |
(ii) | all necessary documents have been filed, all necessary proceedings have
been taken and all legal requirements have been fulfilled as required under Canadian
Securities Laws in order to qualify the Underlying Securities for distribution and
sale to the public in each of the Qualifying Jurisdictions by or through investment
dealers and brokers duly registered under the applicable laws of such provinces who
have complied with the relevant provisions of Canadian Securities Laws; and
|
- 15 -
(iii) | the Company has the necessary corporate power and authority to execute and
deliver the Preliminary Prospectus and the Final Prospectus and all necessary
corporate action has been taken by the Company to authorize the execution and
delivery by it of the Preliminary Prospectus and the Final Prospectus and the filing
thereof, as the case may be, in each of the Qualifying Jurisdictions in accordance
with applicable Canadian Securities Laws. |
(f) | The Company shall deliver opinions, comfort letters and other documents substantially similar
to those referred to in this section of this Agreement to the Underwriters and Underwriters’
legal counsel, as applicable, with respect to any Supplementary Material, contemporaneously
with, or prior to the filing of, any Supplementary Material. |
4.1 |
(a) | The Company has been duly incorporated and is validly existing under the laws of its
jurisdiction of incorporation, has all requisite corporate power and authority and is duly
qualified and holds all certificates, authority, permits and licences issued by the
appropriate provincial, municipal, federal regulatory agencies or bodies necessary (and has
not received or is not aware of any modification or revocation to such licences, authority,
certificates or permits) to carry on its businesses as now conducted and to own its properties
and assets (except to the extent that the failure to hold such certificates, authority,
permits or licences would not have a material adverse effect on the Company and the Material
Subsidiaries on a consolidated basis) and the Company has all requisite corporate power and
authority to carry out its obligations under this Agreement. |
- 16 -
(b) | Each of the direct or indirect subsidiaries of the Company, which is material to the
operations of the Company as a whole, is listed below (the “Material Subsidiaries”) and the
Company beneficially owns, directly or indirectly, the percentage indicated below of the
issued and outstanding shares or ownership interests in the capital of the Material
Subsidiaries free and clear of all mortgages, liens, charges, pledges, security interests,
encumbrances, claims or demands of any kind whatsoever, except as contemplated in the Credit
Facility, all of such shares or ownership interests have been duly authorized and validly
issued and are outstanding as fully paid and non-assessable shares or ownership interests and
no person has any right, agreement or option, present or future, contingent or absolute, or
any right capable of becoming a right, agreement or option, for the purchase from the Company
of any interest in any of such shares or ownership interest or for the issue or allotment of
any unissued shares or ownership interest in the capital of the Material Subsidiaries or any
other security convertible into or exchangeable for any such shares: |
Beneficial | ||||||||
Jurisdiction of Incorporation or | Equity/Voting | |||||||
Name | Continuance | Ownership | ||||||
Xxxxxxx Mines Inc. |
Ontario | 100 | % | |||||
Xxxxxxx Mines Holdings Corp. |
Delaware | 100 | % | |||||
Xxxxxxx Mines (USA) Corp. |
Delaware | 100 | % | |||||
Xxxxxxx Colorado Plateau LLC |
Colorado | 100 | % | |||||
Xxxxxxx Xxxxx Mountains LLC |
Colorado | 100 | % | |||||
Xxxxxxx Arizona Strip LLC |
Colorado | 100 | % | |||||
Xxxxxxx Mines (Bermuda) I Ltd. |
Bermuda | 100 | % | |||||
Xxxxxxx Mines Mongolia XXK |
Mongolia | 100 | % | |||||
Xxxxxxx Mines (Mongolia) Ltd. |
Bermuda | 100 | % | |||||
Gurvan Saihan XXK |
Mongolia | 70 | % | |||||
OmegaCorp Limited |
Australia | 100 | % | |||||
OmegaCorp Resources Pty Ltd |
Australia | 100 | % | |||||
Xxxxxxx Mines Zambia Limited |
Zambia | 100 | % | |||||
Xxxxxxx White Mesa LLC |
Colorado | 100 | % |
(c) | All consents, approvals, permits, authorizations or filings as may be required under
applicable legislation and other relevant laws in the Qualifying Jurisdictions necessary for
the execution and delivery of this Agreement and the completion of the transactions
contemplated hereby have been made or obtained, as applicable, other than in respect of those
filings which are required to be made upon completion of the transactions contemplated hereby. |
|
(d) | No proceedings have been taken, instituted or, to the knowledge of the Company, are pending
for the dissolution or liquidation of the Company or the Material Subsidiaries. |
|
(e) | Each of the execution and delivery of this Agreement, the performance by the Company of its
obligations hereunder, the issue and sale of the Offered Securities and the consummation of
the transactions contemplated hereby do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default under, (whether
after notice or lapse of time or both), (A) any statute, rule or regulation applicable to the
Company including applicable laws and other relevant corporate and securities laws in the
Qualifying Jurisdictions; (B) the constating documents, by-laws or resolutions of the Company
and its shareholders that are in effect at the date hereof; (C) any Debt Instruments, Material
Agreement, mortgage, note, indenture, contract, arrangement, instrument, lease, the Credit
Facility or other document to which the Company is a party or by which it is bound, except for
such conflicts or defaults that would not have a material adverse effect on the Company and
the Material Subsidiaries on a consolidated basis, either individually or in the aggregate; or
(D) any judgment, decree or order binding the Company or the property or assets of the
Company. |
- 17 -
(f) | The comparative audited consolidated financial statements of the Company as at and for the
year ended December 31, 2009 and the comparative unaudited consolidated financial statements
of the Company as at and for the three and nine months ended September 30, 2010 (the
“Financial Statements”) have been prepared in accordance with generally accepted accounting
principles in Canada consistently applied throughout the period referred to therein and
present fairly, in all material respects, the financial position (including the assets and
liabilities, whether absolute, contingent or otherwise) of the Company as at such dates and
results of operations of the Company for the periods then ended and there has been no change
in accounting policies or practices of the Company since December 31, 2009, except as
disclosed in the notes to the Financial Statements. |
|
(g) | There are no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations) or other relationships of the Company or any of its subsidiaries with
unconsolidated entities or other persons that could reasonably be expected to have a material
adverse effect on the Company and the Material Subsidiaries on a consolidated basis. |
|
(h) | There has been no adverse material change (actual, proposed or prospective, whether financial
or otherwise) in the business, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Company or the Material Subsidiaries since December 31, 2009,
which has not been generally disclosed to the public and the business of the Company and the
Material Subsidiaries have been carried on in the usual and ordinary course consistent with
past practice since December 31, 2009. |
|
(i) | All taxes (including income tax, capital tax, payroll taxes, employer health tax, workers’
compensation payments, property taxes, customs duties and land transfer taxes), duties,
royalties, levies, imposts, assessments, deductions, charges or withholdings and all
liabilities with respect thereto including any penalty and interest payable with respect
thereto (collectively, “Taxes”) due and payable or required to be collected or withheld and
remitted, by the Company have been paid, collected or withheld and remitted as applicable,
except for where the failure to pay such Taxes would not have a material adverse effect on the
Company and the Material Subsidiaries on a consolidated basis. All tax returns, declarations,
remittances and filings required to be filed by the Company and the Material Subsidiaries have
been filed with all appropriate governmental authorities and all such returns, declarations,
remittances and filings are complete and accurate and no material fact or facts have been
omitted therefrom that would make any of them misleading except where the failure to file such
documents would not have a material adverse effect on the Company and the Material
Subsidiaries on a consolidated basis. To the knowledge of the Company, no examination of any
tax return of the Company or the Material Subsidiaries is currently in progress and there are
no issues or disputes outstanding with any governmental authority respecting any taxes that
have been paid, or may be payable, by the Company and the Material Subsidiaries, and there are
no agreements, waivers or other arrangements with any taxation authority providing for an
extension of time for any assessment or reassessment of taxes with respect to the Company and
the Material Subsidiaries, except where such examinations, issues, disputes, assessments or
reassessments would not have a material adverse effect on the Company and the Material
Subsidiaries on a consolidated basis. |
- 18 -
(j) | The Company’s Auditors who audited the audited financial statements of the Company as at and
for the year ended December 31, 2009 and who provided their audit report
thereon are independent public accountants as required under Canadian Securities Laws. |
|
(k) | There has never been a “reportable event” (within the meaning of National Instrument 51-102
— Continuous Disclosure Obligations) between the Company and the present or former auditors
of the Company. |
(l) | No holder of outstanding securities of the Company is entitled to any pre-emptive or any
similar rights to subscribe for any securities of the Company and no rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, any security in the
capital of the Company are outstanding other than as set out in Schedule “B” hereto. |
|
(m) | The information and statements set forth in the Disclosure Documents (except any information
or statements relating solely to or provided by the Underwriters) are true, correct and
complete in all material respects and do not contain any misrepresentation as of the date of
such information or statement, and the Company has not filed any confidential material change
reports or similar confidential report with any Canadian Securities Regulators that are still
maintained on a confidential basis. |
|
(n) | Other than pursuant to the Credit Facility, there is not, in the constating documents,
by-laws or in any Debt Instrument, Material Agreement, arrangement, mortgage, note, debenture,
indenture or other instrument or document to which the Company or the Material Subsidiaries is
a party, any restriction upon or impediment to, the declaration or payment of dividends by the
directors of the Company or the payment of dividends by the Company to the holders of Common
Shares. |
|
(o) | Other than (i) the Credit Facility; (ii) the Strategic Relationship Agreement; and (iii)
provisions of the joint venture agreements to which the Company is a party customary to the
mining business, the Company is not party to or bound or affected by any commitment, agreement
or document containing any covenant that expressly limits the freedom of the Company or the
Material Subsidiaries to compete in any line of business, transfer or move any of its assets
or operations or that materially or adversely affects the business practices, operations or
condition of the Company and the Material Subsidiaries taken as a whole. |
|
(p) | Other than as disclosed in the Disclosure Documents, no legal or governmental proceedings are
pending to which the Company is a party or to which its property is subject that would result
individually or in the aggregate in a material adverse effect on the Company and the Material
Subsidiaries on a consolidated basis and to the knowledge of the Company no such proceedings
have been threatened against or are contemplated with respect to the Company or its
properties. |
|
(q) | The Company has conducted and is conducting its business in material compliance with all
applicable laws and regulations of each jurisdiction in which it carries on business
(including all applicable federal, provincial, state, municipal and local environmental,
anti-pollution and licensing laws, regulations and other lawful requirements of any
governmental or regulatory body, including relevant exploration and exploitation permits and
concessions) and, other than as disclosed in the Disclosure Documents, has not received a
notice of non-compliance, nor know of, nor has reasonable grounds to know of, any facts that
could give rise to a notice of non-compliance with any such laws,
regulations or permits that would have a material adverse effect on the Company and the
Material Subsidiaries on a consolidated basis. |
- 19 -
(r) | Other than as disclosed in the Disclosure Documents, the Company is not aware of any pending
or contemplated change to any applicable law or regulation or governmental position that would
have a material adverse effect on the Company and the Material Subsidiaries on a consolidated
basis or would materially adversely affect the business of the Company or legal environment
under which the Company or the Material Subsidiaries operate. |
|
(s) | This Agreement has been duly authorized, executed and delivered by the Company and this
Agreement constitutes a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the
rights of creditors generally and except as limited by the application of equitable principles
when equitable remedies are sought, and by the fact that rights to indemnity, contribution and
waiver, and the ability to sever unenforceable terms, may be limited by applicable law. |
|
(t) | At the Closing Time, all necessary corporate action will have been taken by the Company to
validly authorize and issue the Offered Securities and, upon due exercise or deemed exercise
of the Offered Securities, to validly authorize and issue the Special Warrant Shares, FT
Special Warrant Shares and Penalty Shares (as applicable) as fully paid and non-assessable
Common Shares. |
|
(u) | As of the date hereof (and prior to giving effect to the Offering), the authorized capital of
the Company consists of an unlimited number of Common Shares and an unlimited number of
preferred shares, of which 339,754,165 Common Shares are issued and outstanding as fully paid
and non-assessable and no preferred shares are issued and outstanding as fully paid and
non-assessable. |
|
(v) | The Company is a reporting issuer, or the equivalent thereof, in each of the provinces of
Canada. The Company is not currently in default of any requirement of the Canadian Securities
Laws and the Company is not included on a list of defaulting reporting issuers maintained by
any of the securities regulators of the provinces of Canada. |
|
(w) | The Company has not taken any action which would reasonably be expected to result in the
delisting or suspension of trading of the Common Shares on the TSX or the NYSE Amex and the
Company is currently in material compliance with the rules and regulations of the TSX and the
NYSE Amex. |
|
(x) | No order ceasing or suspending trading in any securities of the Company or the trading of any
of the Company’s issued securities is currently outstanding and no proceedings for such
purpose are, to the knowledge of the Company, pending or threatened. |
|
(y) | All information (including the Disclosure Documents) which has been prepared by the Company
relating to the Company and the Material Subsidiaries and their respective business, property
and liabilities and either publicly disclosed or provided to the Underwriters, including all
financial and operational information provided to the Underwriters, are as of the date of such
information, true and correct in all material
respects and does not contain a misrepresentation and no material fact or facts have been
omitted therefrom that would make such information materially misleading. |
- 20 -
(z) | The Company has not, directly or indirectly, declared or paid any dividend or declared or
made any other distribution on any of its securities or, directly or indirectly, redeemed,
purchased or otherwise acquired any of its securities or agreed to do any of the foregoing
other than as has been publicly disclosed. |
|
(aa) | All filings and fees required to be made and paid by the Company pursuant to applicable laws
and general corporate and securities laws in the Qualifying Jurisdictions have been made and
paid except where failure to make such filing or pay such fees would not have a material
adverse effect on the Company and the Material Subsidiaries on a consolidated basis, and such
disclosure and filings were true and accurate in all material respects as at the respective
dates thereof and the Company has not filed any confidential material change reports. |
|
(bb) | Except as set out in the Disclosure Documents, or as otherwise disclosed to the Underwriters,
to the knowledge of the Company none of the directors, officers or employees of the Company or
the Material Subsidiaries, any known holder of more than ten per cent of any class of shares
of the Company, or any known associate or affiliate of any of the foregoing persons or
companies (as such terms are defined in the Securities Act (Ontario)), has had any material
interest, direct or indirect, in any material transaction within the previous two years or has
any material interest in any proposed material transaction involving the Company which, as the
case may be, materially affected, is material to or will materially affect the Company and the
Material Subsidiaries (taken as a whole). |
|
(cc) | The Company does not have in place a shareholder rights protection or similar plan. |
|
(dd) | To the Company’s knowledge, other than the Strategic Relationship Agreement, neither the
Company nor any of its shareholders is a party to any shareholders agreement, pooling
agreement, voting trust or other similar type of arrangements in respect of outstanding
securities of the Company. |
|
(ee) | No officer, director, employee or any other person not dealing at arm’s length with the
Company or its Material Subsidiaries, or to the knowledge of the Company, any associate or
affiliate of such person, owns, has or is entitled to any royalty, net profits interest,
carried interest, licensing fee, or any other encumbrances or claims of any nature whatsoever
which are based on the revenues of the Company or its Material Subsidiaries. |
|
(ff) | The Company and the Material Subsidiaries are in material compliance with all laws respecting
employment and employment practices, terms and conditions of employment, occupational health
and safety, pay equity and wages, except where such non-compliance would not constitute a
material adverse effect on the Company and the Material Subsidiaries on a consolidated basis.
There is not currently any, or any reasonably foreseeable, material labour disruption or
conflict involving the Company or the Material Subsidiaries. |
|
(gg) | The Company and the Material Subsidiaries do not have any loans or other indebtedness
outstanding that has been made to any of its shareholders, officers,
directors or employees, past or present, or any person not dealing at “arm’s length” (as
such term is defined in the Income Tax Act (Canada)) with the Company. |
- 21 -
(hh) | The assets of the Company and the Material Subsidiaries and their respective business and
operations are insured against loss or damage with responsible insurers to the extent and in
the amounts set out in the Disclosure Documents, and such coverage is in full force and
effect, and the Company and the Material Subsidiaries have not breached the terms of any
policies in respect thereof nor failed to promptly give any notice or present any material
claim thereunder. |
|
(ii) | Other than the Underwriters and the US Affiliates, there are no persons acting or purporting
to act at the request or on behalf of the Company, that are entitled to any brokerage or
finder’s fee in connection with the Offering. |
|
(jj) | Other than the Company, there is no person that is or will be entitled to the proceeds of
this Offering under the terms of any Debt Instrument, Material Agreement, mortgage, note,
indenture, contract, instrument, lease agreement (written or unwritten) or otherwise. |
|
(kk) | Other than as disclosed in the Disclosure Documents, the Company and the Material
Subsidiaries (i) are 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 material permits, licences or other
approvals required of it under applicable Environmental Laws to conduct its business, and
(iii) is in material compliance with all terms and conditions of any such permit, licence or
approval. |
|
(ll) | Other than as disclosed in the Disclosure Documents or as otherwise disclosed to the
Underwriters, there have been no past, and, to the knowledge of the Company, there are no
pending or, threatened claims, complaints, notices or requests for information received by the
Company or the Material Subsidiaries with respect to any alleged material violation of any
Environmental Law and no conditions exist at, on or under any property now or previously
owned, operated, leased or contracted to perform work by the Company or the Material
Subsidiaries that, with the passage of time, or the giving of notice or both, would give rise
to liability under any Environmental Law that, individually or in the aggregate, has or may
reasonably be expected to have, in any such case, a material adverse effect with respect to
the Company and the Material Subsidiaries, taken as a whole. |
|
(mm) | The Company is not party to any agreement, nor is the Company aware of any agreement, which
in any manner affects the voting control of any of the securities of the Company, other than
in respect of the Strategic Relationship Agreement. |
|
(nn) | Except for the Credit Facility and equipment leases and similar obligations entered into by
the Company in the ordinary course of business, the Company is not party to any Debt
Instrument or any agreement, contract or commitment to create, assume or issue any Debt
Instrument. |
|
(oo) | Except as disclosed in Schedule “C” hereto, the Company and the Material Subsidiaries are
not, nor to the knowledge of the Company, any other person, is not in material
default in the observance or performance of any term or obligation to be performed by it
under any Material Agreement and no event has occurred that with notice or lapse of time or
both would constitute such a default. |
- 22 -
(pp) | The minute books and records of the Company and the Material Subsidiaries that the Company
has made available to the Underwriters and their counsel, Xxxxxxx Xxxxx & Xxxxxxxxx LLP, in
connection with their due diligence investigation of the Company for the period from June 2009
of the Company to the date of examination thereof, are all of the minute books and
substantially all the material records of the Company for such period and contain copies of
all material proceedings (or certified copies thereof) of the shareholders, the board of
directors and all committees of the board of directors of the Company and the Material
Subsidiaries to the date of review of such corporate records and minute books. There have
been no other material meetings, resolutions or proceedings of the shareholders, board of
directors or, to the knowledge of the Company, any committees of the board of directors of the
Company to the date of review of such corporate records and minute books not reflected in such
minute books and other records. |
|
(qq) | With respect to each of the premises that are material to the Company and that the Company
occupies as tenant (the “Leased Premises”), the Company occupies the Leased Premises and has
the exclusive right to occupy and use the Leased Premises and each of the leases pursuant to
which the Company occupies the Leased Premises is in good standing in all material respects
and in full force and effect. The performance of obligations pursuant to and in compliance
with the terms of this Agreement and the completion of the transactions described herein by
the Company, will not afford any of the parties to such leases or any other person the right
to terminate such lease or result in any additional or more onerous obligations under such
leases. |
|
(rr) | Except as disclosed in the Disclosure Documents or as otherwise disclosed to the
Underwriters, there are no actions, suits, proceedings or inquiries pending or, to the
knowledge of the Company, threatened against or affecting the Company or its property or
assets at law or in equity or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality other than those
that would not have a material adverse effect on the business, operations or financial
condition of the Company. |
|
(ss) | There are no judgments against the Company that are unsatisfied, nor are there any consent
decrees or injunctions to which the Company is subject. |
|
(tt) | The Company is the beneficial owner of, or has the right to acquire certain interests in, the
properties, business and assets referred to in the Disclosure Documents free of all mortgages,
liens, charges, pledges, security interest, encumbrances, claims or demands whatsoever other
than security interests under the Credit Facility or otherwise as disclosed in the Disclosure
Documents, in Schedule “C” hereto or set out below and any and all agreements pursuant to
which the Company holds or will hold any such interest in property, business or assets are in
good standing in all material respects according to their terms, and the properties are in
good standing under the applicable statutes and regulations of the jurisdictions in which they
are situated except, in either case, where it would not result in a material adverse effect on
the Company and the Material Subsidiaries on a consolidated basis, and to the Company’s
knowledge there are no unrecorded encumbrances on the properties, business and assets in which
the
Company has or will have an interest except for the rights of joint venture partners under
the joint venture and operating agreements applicable to such properties, business or assets
and except security interests contemplated under the Credit Facility or as disclosed in the
Disclosure Documents. No other property rights are necessary for the conduct of the business
of the Company or the Material Subsidiaries (and of the joint ventures to which the Company
is party) as currently conducted or contemplated to be conducted, the Company knows of no
claim or basis for any claim that might or could adversely affect the right of the Company
to use, transfer or otherwise exploit such property rights and, except as disclosed in the
Disclosure Documents or in Schedule “C” hereto, the Company has no responsibility or
obligation to pay any commission, royalty, license fee or similar payment to any person with
respect to the property rights thereof. |
- 23 -
(uu) | To the knowledge of the Company, the operators or owners of the respective joint ventures, or
trustees on their respective behalves, hold either freehold title, mining leases, mining
claims or other conventional property, proprietary or contractual interests or rights,
recognized in the jurisdiction in which a particular property is located in respect of the ore
bodies and minerals located in properties in which the Company and the Material Subsidiaries
have an interest as described in the Disclosure Documents under valid, subsisting and
enforceable title documents or other recognized and enforceable agreements or instruments,
sufficient to permit the Company and/or its joint venture partners to explore or mine the
minerals relating thereto, all such property, leases or claims and all property, leases or
claims in which the Company has any interest or right have been validly located and recorded
in accordance with all applicable laws and are valid and subsisting, the operators or owners
of the respective joint ventures, or trustees on their respective behalves, have all necessary
surface rights, access rights and other necessary rights and interest relating to the
properties in which the Company has an interest as described in the Disclosure Documents
granting the joint ventures the right and ability to mine or explore for minerals, ore and
metals for development purposes as are appropriate in view of rights and interests therein,
with only such exceptions as do not materially interfere with the use made by the joint
ventures of the rights or interests so held and each of the proprietary interests or rights
and each of the documents, agreements and instruments and obligations relating thereto
referred to above are currently in good standing. |
|
(vv) | Any and all of the agreements and other documents and instruments pursuant to which the
Company 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, the Company is not in default of
any of the material provisions of any such agreements, documents or instruments nor has any
such default been alleged. None of the properties (or any interest in, or right to earn an
interest in, any property) of the Company are subject to any right of first refusal or
purchase or acquisition rights that are not disclosed in the Disclosure Documents other than
rights of first refusal in certain of the Company’s joint venture agreements that are
customary in the mining business. |
|
(ww) | The Company has duly filed with the applicable regulatory authorities in compliance with
applicable Securities Laws all reports required by NI 43-101, and all such reports comply with
the requirements of NI 43-101. |
|
(xx) | Computershare Trust Company of Canada at its office in Toronto, Ontario has been duly
appointed as the special warrant agent in respect of the Offered Securities. |
- 24 -
(yy) | The proceeds from the sale of the Offered Securities shall be as described in the Company’s
Disclosure Documents. |
|
(zz) | The Company represents, warrants, covenants and agrees as set out in Schedule “A” and further
represents and warrants that: |
(i) | it is not, and upon the issuance and sale of the Offered Securities or the
Underlying Securities and application of the net proceeds of the Offering 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; and |
||
(ii) | it is, and will be at the time it issues the Underlying Securities, a
“foreign private issuer” as such term is defined in Rule 405 under the U.S.
Securities Act. |
4.2 | ||
(a) | The Company hereby represents and warrants to the Underwriters and acknowledges that the
Underwriters are relying thereon that: |
(i) | the Company has the full corporate right, power and authority to enter into
the FT Subscription Agreements for the FT Special Warrants, to issue the FT Special
Warrants and the FT Special Warrant Shares in connection therewith and to incur and
renounce to each of the FT Purchasers, Qualifying Expenditures in an amount equal to
their respective Commitment Amounts; |
||
(ii) | the incurring and renouncing of Qualifying Expenditures to the FT
Purchasers pursuant to the FT Subscription Agreement, does not and will not
constitute a breach of or default under the constating documents of the Company or
any law, regulation, order or ruling applicable to the Company or any agreement,
contract or indenture to which the Company is a party or by which it is bound; |
||
(iii) | the Company is a Principal Business Corporation; |
||
(iv) | upon issuance, subject to any agreement to which the Company is not a party
and of which it has no knowledge, the FT Special Warrants issued to FT Purchasers
that are not Underwriters will be “flow-through shares” as defined in subsection
66(15) of the Act and will not constitute “prescribed shares” for the purpose of
Regulation 6202.1 of the Act or “prescribed rights” pursuant to proposed Regulation
6202.1(1.1) of the Act; and |
||
(v) | the Company has no reason to believe that it will be unable to incur (or be
deemed to incur) Qualifying Expenditures during the Expenditure Period in an amount
not less than the Commitment Amount or that it will be unable to renounce to the FT
Purchasers effective on or before December 31, 2010 Qualifying Expenditures in an
amount equal to the Commitment Amount. |
- 25 -
(b) | The Company covenants and agrees with the Underwriters: |
(i) | to keep proper books, records and accounts of all Qualifying Expenditures
and all transactions affecting the Commitment Amount and the Qualifying Expenditures
and, in the event the Canada Revenue Agency denies or proposes to deny the deduction
of Qualifying Expenditures renounced to the FT Purchasers under the FT Subscription
Agreements and upon reasonable notice and on a reasonable basis, to make such books,
records and accounts available for inspection and review by or on behalf of the FT
Purchasers at the FT Purchasers’ expense for the sole purpose of responding to the
demand or proposal of the Canada Revenue Agency; |
||
(ii) | to incur (or be deemed to incur), during the Expenditure Period, Qualifying
Expenditures in such amount as enables the Company to renounce to the FT Purchasers,
Qualifying Expenditures in an amount equal to the Commitment Amount; |
||
(iii) | to renounce to the FT Purchasers, effective on or before December 31,
2010, Qualifying Expenditures incurred during the Expenditure Period as required
under the Act in an amount equal to the Commitment Amount; |
||
(iv) | to deliver to the FT Purchasers within the time period required by the Act
and, in any event, not later than March 1, 2011, all applicable forms prescribed
under the Act setting forth the aggregate amounts of Qualifying Expenditures
renounced to the FT Purchasers under the FT Subscription Agreements; |
||
(v) | that all Qualifying Expenditures renounced to the FT Purchasers pursuant to
the FT Subscription Agreements will be Qualifying Expenditures incurred by (or
deemed to be incurred by) the Company that, but for the renunciation to the FT
Purchasers, the Company would be entitled to deduct in computing its income for the
purposes of Part I of the Act if it had sufficient income; |
||
(vi) | that the Company will not reduce the amount to be renounced to the FT
Purchasers under the FT Subscription Agreements and, in the event the Minister of
National Revenue (“MNR”) reduces the amount renounced to the FT Purchasers under the
FT Subscription Agreements pursuant to subsection 66(12.73) of the Act, the Company
shall indemnify the FT Purchasers as to, and pay to the FT Purchasers, an amount
equal to the amount of any tax payable under the Act (within the meaning of
Regulation 6202.1(5)(b) under the definition of “excluded obligation” and proposed
Regulation 6202.1(5)(c) and under any corresponding provincial legislation) by the FT
Purchasers as a consequence of such reduction, such payment to be made on a timely
basis once the amount is definitively determined. This indemnity is in addition to
and not in derogation of any other recourse or rights of action the FT Purchasers may
have against the Company. For certainty, the foregoing indemnity shall have no force
or effect and the FT Purchasers shall not have any recourse or rights of action to
the extent that such indemnity, recourse or rights of action would otherwise cause
the FT Special Warrants to be “prescribed rights” or “prescribed shares” within the
meaning of either of proposed Regulation 6202.1(1.1) or Regulation 6202.1(1) of the
Act, respectively; |
- 26 -
(vii) | that if the Company does not renounce to the FT Purchasers Qualifying
Expenditures equal to the Commitment Amount effective on or before December 31, 2010,
the Company shall indemnify the FT Purchasers as to, and pay to each FT Purchaser, an
amount equal to the amount of any tax payable under the Act
(within the meaning of Regulation 6202.1(5)(b) under the definition of “excluded
obligation” and proposed Regulation 6202.1(5)(c) and under any corresponding
provincial legislation) by the FT Purchasers as a consequence of such failure, such
payment to be made on a timely basis once the amount is definitively determined.
This indemnity is in addition to and not in derogation of any other recourse or
rights of action the FT Purchasers may have against the Company. For certainty, the
foregoing indemnity shall have no force or effect and the FT Purchasers shall not
have any recourse or rights of action to the extent that such indemnity, recourse or
rights of action would otherwise cause the FT Special Warrants to be “prescribed
rights” or “prescribed shares” within the meaning of either of proposed Regulation
6202.1(1.1) or Regulation 6202.1(1) of the Act, respectively; |
||
(viii) | that the Company shall renounce Qualifying Expenditures to FT Purchasers under the
Offering pro rata based on the number of FT Special Warrants issued or to be issued
pursuant thereto before or concurrent with renouncing Qualifying Expenditures
pursuant to any other agreement (a “Subsequent Agreement”) which the Company shall
subsequently, after the Closing Date, enter into. If the Company is required under
the Act or by the MNR to reduce Qualifying Expenditures previously renounced to FT
Purchasers under the Offering, such reduction shall, to the extent possible, be made
pro rata based on the number of FT Special Warrants issued under the Offering only
after it has first reduced, to the extent possible, all Qualifying Expenditures
renounced to persons under Subsequent Agreements; |
||
(ix) | that the Company will maintain its status as a Principal Business
Corporation until the earlier of January 1, 2012 and the date the Company has
fulfilled its obligation to incur and renounce to the FT Purchasers Qualifying
Expenditures in an amount equal to the Commitment Amount; |
||
(x) | to file, within the time(s) prescribed by the Act (or any corresponding
provincial tax legislation), all prescribed forms required under the Act to renounce
Qualifying Expenditures equal to the Commitment Amount to the FT Purchasers effective
on or before December 31, 2010 and to provide the FT Purchasers with a copy of all
such forms as are required to be provided thereto, all on a timely basis and in no
case later than March 1, 2011; |
||
(xi) | that the Company will not be subject to the provisions of subsection
66(12.67) of the Act in a manner which impairs its ability to renounce Qualifying
Expenditures to the FT Purchasers in an amount equal to the Commitment Amount; and |
||
(xii) | that the Company will refrain from entering into transactions or taking
deductions which would otherwise reduce its cumulative CEE to an extent it would
preclude renunciation of Qualifying Expenditures under the FT Subscription Agreements
in an amount equal to the Commitment Amount as contemplated herein. |
- 27 -
(a) | the Underwriters shall have received an opinion, dated as of the Closing Date and subject to
customary qualifications, of Blake, Xxxxxxx & Xxxxxxx LLP or from local counsel in the
Qualifying Jurisdictions other than British Columbia, Alberta or Ontario (it being understood
that such counsel may rely to the extent appropriate in the circumstances, (i) as to matters
of fact, on certificates of the Company executed on its behalf by a senior officer of the
Company and on certificates of Computershare Investor Services Inc., the transfer agent and
registrar for the Company, as to the issued capital of the Company; and (ii) as to matters of
fact not independently established, on certificates of the Company’s Auditors or a public
official) with respect to the following matters: |
(i) | the Company is a corporation existing under the Business Corporations Act
(Ontario) |
(ii) | the authorized capital of the Company; |
(iii) | the Company has all requisite corporate power and capacity to carry on its
business as now conducted; to own, lease and operate its property and assets; to
execute, deliver and perform its obligations under this Agreement and the Indentures;
to create, issue and sell the Special Warrants and the FT Special Warrants; and to
issue the Underlying Securities; |
(iv) | the issuance and sale by the Company of the Special Warrants and the FT
Special Warrants to the Purchasers are exempt from the prospectus requirements of
Canadian Securities Laws and no documents are required to be filed (other than
specified forms accompanied by requisite filing fees), proceedings taken or
approvals, permits, consents or authorizations obtained under the Canadian Securities
Laws to permit such issuance and sale; |
(v) | the first trade of the Offered Securities and the Underlying Securities; |
- 28 -
(vi) | the Special Warrants and FT Special Warrants have been duly authorized and
validly allotted for issuance by the Company, and upon payment, will be validly
issued as full paid securities; |
(vii) | the Special Warrant Shares, the FT Special Warrant Shares and the Penalty
Shares, as applicable, have been duly authorized and validly allotted for issuance by
the Company and, when issued in accordance with the terms of the Special Warrants and
FT Special Warrants, respectively, will be outstanding as fully paid and
non-assessable Common Shares; |
(viii) | all necessary corporate action has been taken by the Company to authorize the
execution and delivery of this Agreement and the Indentures, and the performance of
its obligations hereunder and thereunder and this Agreement and the Indentures have
been executed and delivered by the Company and constitute legal, valid and binding
obligations of the Company enforceable against it in accordance with their terms,
subject to customary qualifications; |
(ix) | the Special Warrant Shares, the FT Special Warrant Shares and the Penalty
Shares, as applicable, have been conditionally approved for listing on the TSX
subject only to the Standard Listing Conditions; |
(x) | the execution and delivery of this Agreement, the fulfilment of the terms
hereof by the Company and the issuance, sale and delivery of the Offered Securities
to be issued, delivered and sold by the Company at the Closing Time do not and will
not result in a breach of or default under, 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 or
default under, and do not and will not conflict with any of the terms, conditions or
provisions of the articles or by-laws of the Company or the Business Corporations Act
(Ontario); |
(xi) | the FT Special Warrants issued to FT Purchasers that are not Underwriters
are “flow-through shares” as defined in subsection 66(15) of the Act and the FT
Special Warrants do not constitute, as at the Closing Date, “prescribed shares” for
the purposes of the definition of “flow-through share” in subsection 66(15) of the
Act or “prescribed rights” pursuant to proposed regulation 6202.1(1.1) of the Act;
and |
(xii) | Computershare Investor Services Inc. has been duly appointed the transfer
agent and registrar for the Shares; |
(b) | if any Special Warrants are sold in the United States, the Company’s U.S. legal counsel,
Xxxxxx & Whitney LLP, shall have delivered a favourable legal opinion addressed to the
Underwriters in form and substance satisfactory to the Underwriters, acting reasonably, to the
effect that no registration under the U.S. Securities Act is required for the sale of the
Special Warrants by the Company in the United States; |
- 29 -
(c) | the Underwriters shall have received the following reports or opinions dated as of the
Closing Date, in form and substance satisfactory to the Underwriters and Underwriters’
counsel, acting reasonably: |
(i) | a favourable legal opinion addressed to the Underwriters dated the Closing
Date, from XxxXxxxxxx Xxxxxx & Xxxxxxx LLP, the Company’s counsel in Saskatchewan,
regarding title to the XxXxxxx Lake and Midwest mineral properties and Xxxxxxx River
project of the Company; and |
(ii) | a favourable report of the Company’s, or as applicable, a subsidiary’s,
external counsel regarding the status and ownership interests in the properties and
mines that comprise: |
(A) | the Arizona Strip properties; |
(B) | Xxxxx Mountains Complex properties, including
the Bullfrog and Xxxx M deposits; |
(C) | the Colorado Plateau properties; and |
(D) | the Mutanga project; |
(d) | the Company will have caused a favourable legal opinion to be delivered by local counsel in
the jurisdiction of incorporation of each of the Opinion Subsidiaries addressed to the
Underwriters, in form and substance satisfactory to the Underwriters, acting reasonably, and
with respect to the following matters: |
(i) | the incorporation and existence of each Opinion Subsidiary under the laws of
its jurisdiction of incorporation; |
(ii) | as to the registered ownership of the issued and outstanding shares of each
Opinion Subsidiary; and |
(iii) | that each Opinion Subsidiary has all requisite corporate power under the
laws of its jurisdiction of incorporation to carry on its business as presently
carried on and own its properties; |
and at the Closing Time, shall deliver certificates of status (or the equivalent) with
respect to each of the Material Subsidiaries dated the Business Day immediately prior to the
Closing Date or such other date as the Company and the Underwriters may agree; |
(e) | the Underwriters shall have received certificates evidencing the Special Warrants and FT
Special Warrants in form and substance satisfactory to the Underwriters, acting reasonably; |
(f) | the Underwriters shall have received a certificate, in form and substance acceptable to the
Underwriters and their legal counsel, dated as of the Closing Date signed by the Chief
Executive Officer or Chief Financial Officer of the Company (or such other officer or officers
of the Company acceptable to the Underwriters, acting reasonably) with respect to: |
(i) | the constating documents of the Company; |
(ii) | the resolutions of the Board of Directors of the Company related to the
Offering, the allotment and sale of the Offered Securities, the authorization of this
Agreement, the Subscription Agreements and the other agreements and transactions
contemplated by this Agreement; and |
- 30 -
(iii) | the incumbency and signatures of signing officers of the Company; |
(g) | the Underwriters shall have received a certificate, dated as of the Closing Date, of the
Chief Executive Officer and the Chief Financial Officer of the Company (or such other officer
or officers of the Company acceptable to the Underwriters, acting reasonably), addressed to
the Underwriters and their counsel to the effect that, to the best of their knowledge,
information and belief, after due enquiry and without personal liability: |
(i) | the representations and warranties of the Company in this Agreement are
true and correct in all material respects as if made at and as of the Closing Time
(other than those that speak to a specific time, in which case they shall have been
true and correct in all material respects at such time) and the Company has performed
all covenants and agreements and satisfied all conditions on its part to be performed
or satisfied in all material respects at or prior to the Closing Time; |
(ii) | no order, ruling or determination having the effect of suspending the sale
or ceasing, suspending or restricting the trading of Common Shares in the Qualifying
Jurisdictions has been issued or made by any stock exchange, securities commission or
regulatory authority and is continuing in effect and no proceedings, investigations
or enquiries for that purpose have been instituted or are pending; |
(iii) | the articles and by-laws of the Company delivered at Closing are full,
true and correct copies, unamended, and in effect on the date thereof; and |
(iv) | the minutes or other records of various proceedings and actions of the
Company’s Board of Directors relating to the Offering and delivered at Closing are
full, true and correct copies thereof, and have not been modified or rescinded as of
the date thereof, |
(h) | the Special Warrant Shares, the FT Special Warrant Shares and the Penalty Shares, as
applicable, shall have been conditionally approved for listing on the TSX and the NYSE Amex,
subject to the conditions set out in the Standard Listing Conditions; |
(i) | the Underwriters shall have conducted all due diligence inquiries and investigations and not
identified any material adverse changes or misrepresentations or any items materially
adversely affecting the Company’s affairs which exist as of the date hereof but which have not
been widely disseminated to the public; |
(j) | the Underwriters shall have received a certificate of status in respect of the Company; |
(k) | the Underwriters shall have received certificates or the equivalent thereof from the Canadian
Securities Regulators issued under Securities Laws of the Qualifying Jurisdictions stating
that the Company is not in default under such Securities Laws; |
(l) | the Underwriters shall have received a certificate from Computershare Investor Services Inc.
as to the number of Common Shares issued and outstanding as at a date no more than two
Business Days prior to the Closing Date; and |
- 31 -
(m) | the Underwriters shall have received such further certificates, opinions and other
documentation from the Company as may be contemplated herein or as the Underwriters may
reasonably require, provided, however, that the Underwriters shall request any such
certificate, opinions or document within a reasonable period prior to the Closing Time that is
sufficient for the Company to obtain and deliver such certificate, opinion or document. |
(a) | there shall be any material change in the affairs of the Company or its Material
Subsidiaries, or there should be discovered any previously undisclosed material fact (other
than facts relating solely to the Underwriters) which, in the reasonable opinion of the
Underwriters (or any of them), has or would be expected to have a significant adverse effect
on the market price or value of the Offered Securities or other securities of the Company; |
- 32 -
(b) | (i) any order, inquiry, action, suit, investigation or other proceeding (whether formal or
informal) is commenced, announced or threatened or made by any federal, provincial, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality including, without limitation, the TSX, the NYSE Amex or any securities
regulatory authority against the Company, its Material Subsidiaries or any of its officers,
directors or principal shareholders of the Company or any law or regulation is
enacted or changed which in the opinion of the Underwriters (or any of them), acting
reasonably, operates or threatens to prevent, cease or restrict the issuance or trading of
the securities of the Company by the Company, its officers, directors or principal
shareholders or materially and adversely affects or will materially and adversely affect the
market price or value of the securities of the Company; or (ii) there should develop, occur
or come into effect or existence any event, action, state, accident, condition, terrorist
event or major financial occurrence of national or international consequence or any law or
regulation which in the reasonable opinion of the Underwriters seriously adversely affects,
or will, or could reasonably be expected to, seriously adversely affect, the financial
markets or the business, operation or affairs of the Company and its material subsidiaries,
on a consolidated basis; or |
(c) | the Underwriters (or any one of them) determines that the Company is in breach of a material
term, condition or covenant of the Agreement. |
- 33 -
(a) | The Company shall indemnify and save the Underwriters and/or any of their respective
affiliates (in this section 12 referred to collectively as the “Underwriters”) and the
directors, officers, employees and agents of the Underwriters (in this section 12 referred to
as the “Personnel”) harmless from and against any and all expenses, losses (other than loss of
profits), 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 its counsel that may be incurred in advising with
respect to and/or defending any claim that may be made against the Underwriters and/or the
Personnel, to which the Underwriters and/or their Personnel may become subject or otherwise
involved in any capacity under any statute or common law or otherwise insofar as such
expenses, losses, claims, damages, liabilities or actions arise out of or are based, directly
or indirectly, upon the performance of professional services rendered to the Company by the
Underwriters and/or their Personnel or otherwise in connection with the matters referred to in
this Agreement, including, without limitation, in any way caused by, or arising directly or
indirectly from, or in consequence of: |
(i) | any misrepresentation (as such term is defined in the Securities Act
(Ontario)) or alleged misrepresentation contained in this Agreement, the Preliminary
Prospectus, the Final Prospectus or any Supplementary Material filed in connection
with the Offering or in any documents incorporated therein by reference; |
(ii) | any information or statement (except any information or statement relating
solely to the Underwriters) contained in any certificate of the Company delivered
under or pursuant to this Agreement which at the time and in light of the
circumstances under which it was made contains or is alleged to contain a
misrepresentation; |
(iii) | any omission or alleged omission to state, in any certificate of the
Company delivered under or pursuant to this Agreement, any fact (except facts
relating solely to the Underwriters) required to be stated in such document or
necessary to make any statement in such document not misleading in light of the
circumstances under which it was made; or |
(iv) | the non-compliance or alleged non-compliance by the Company with any
requirements of the Securities Act (Ontario) or other Securities Laws. |
(b) | Notwithstanding anything to the contrary contained herein, this indemnity shall not apply to
the extent that a court of competent jurisdiction in a final judgment that has become
non-appealable shall determine that: |
(i) | the Underwriters or their Personnel have been negligent or have committed
any fraudulent or illegal act or an act of willful misconduct in the course of the
performance of professional services rendered to the Company by the Underwriters
and/or their Personnel or otherwise in connection with the matters referred to in
this Agreement; and |
(ii) | the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly caused by the negligence, illegality,
willful misconduct or fraud referred to in section 12(b)(i). |
- 34 -
(c) | If for any reason (other than the occurrence of any of the events itemized in sections
12(b)(b)(i) and 12(b)(b)(ii)), the foregoing indemnification is unavailable to the
Underwriters or insufficient to hold them harmless, then the Company shall contribute to the
amount paid or payable by the Underwriters 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 Underwriters on the other hand but also the
relative fault of the Company and the Underwriters, as well as any relevant equitable
considerations; provided that the Company shall, in any event, contribute to the amount paid
or payable by the Underwriters 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 Underwriters hereunder
pursuant to this Agreement. |
(d) | The Company agrees that in case any legal proceeding shall be brought against the Company
and/or the Underwriters by any governmental commission or regulatory authority or any stock
exchange or other entity having regulatory authority, either domestic or foreign, shall
investigate the Company and/or the Underwriters and any Personnel of the Underwriters shall be
required to testify in connection therewith or shall be required to respond to procedures
designed to discover information regarding, in connection with, or by reason of the
performance of professional services rendered to the Company by the Underwriters, the
Underwriters shall have the right to employ their own counsel in connection therewith, and the
reasonable fees and expenses of such counsel as well as the reasonable costs (including an
amount to reimburse the Underwriters for time spent by their Personnel in connection
therewith) and out-of-pocket expenses incurred by their Personnel in connection therewith
shall, subject to the right of indemnity, be paid by the Company as they occur. |
(e) | Promptly after receipt of notice of the commencement of any legal proceeding against the
Underwriters or any of their Personnel or after receipt of notice of the commencement of any
investigation, which is based, directly or indirectly, upon any matter in respect of which
indemnification may be sought from the Company, the Underwriters 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. The omission so to
notify the Company shall not relieve the Company of any liability which the Company may have
to the Underwriters except only to the extent that any such delay in giving or failure to give
notice as herein required materially prejudices the defence of such action, suit, proceeding,
claim or Investigation or results in any material increase in the liability which the Company
would otherwise have under this indemnity had the Underwriters not so delayed in giving or
failed to give the notice required hereunder. |
(f) | The Company shall be entitled, at its own expense, to participate in and, to the extent it
may wish to do so, assume the defence thereof, provided such defence is conducted by
experienced and competent counsel. Upon the Company notifying the Underwriters in writing of
its election to assume the defence and retaining counsel, the Company shall not be liable to
the Underwriters for any legal expenses subsequently incurred by them in connection with such
defence. If such defence is assumed by the Company, the Company throughout the course thereof
will provide copies of all relevant documentation to the Underwriters, will keep the
Underwriters advised of the progress thereof and will discuss with the Underwriters all
significant actions proposed. |
- 35 -
(g) | Notwithstanding the foregoing section, any Underwriter shall have the right, at the Company’s
expense, to employ counsel of such Underwriter’s choice, in respect of the defence of any
action, suit, proceeding, claim or investigation if: (i) the employment of such counsel has
been authorized by the Company; or (ii) the Company has not assumed the defence and employed
counsel therefor within a reasonable time after receiving notice of such action, suit,
proceeding, claim or investigation; or (iii) counsel retained by the Company or the
Underwriter(s) has advised the Underwriters) that representation of both parties by the same
counsel would be inappropriate for any reason, including without limitation because there may
be legal defences available to the Underwriters which are different from or in addition to
those available to the Company (in which event and to that extent, the Company shall not have
the right to assume or direct the defence on the Underwriter’s behalf) or that there is a
conflict of interest between the Company and the Underwriters or the subject matter of the
action, suit, proceeding, claim or investigation may not fall within the indemnity set forth
herein (in either of which events the Company shall not have the right to assume or direct the
defence on the Underwriters’ behalf). |
(h) | No admission of liability and no settlement of any action, suit, proceeding, claim or
investigation shall be made without the consent of the Underwriters affected. No admission of
liability shall be made and the Company shall not be liable for any settlement of any action,
suit, proceeding, claim or investigation made without its consent. |
(i) | The indemnity and 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 Underwriters and shall be binding upon and enure to the
benefit of any successors, assigns, heirs and personal representatives of the Company, the
Underwriters and any of the Personnel of the Underwriters. The foregoing provisions shall
survive the completion of the transactions contemplated under this Agreement or any
termination of this Agreement. |
(j) | Notwithstanding anything contained in this Agreement, except as provided in any Subscription
Agreement entered into by the Underwriters or their respective affiliates to acquire FT
Special Warrants as principal, the Underwriters and their respective affiliates shall not be
indemnified by the Company for any losses, claims, damages, liabilities, costs or expenses
that the Underwriters or their respective affiliates may sustain by reason of the holding,
ownership or disposition of FT Special Warrants by the Underwriters or their respective
affiliates. |
13. |
- 36 -
14. |
GMP Securities L.P. |
50 | % | ||
Scotia Capital Inc. |
50 | % |
(a) | the Continuing Underwriter shall not be obliged to purchase any of the Offered Securities
that any Refusing Underwriter is obligated to purchase; and |
(b) | the Company shall not be obliged to sell less than all of the Offered Securities, |
(c) | and the Company shall be entitled to terminate its obligations under this Agreement arising
from its acceptance of this offer, in which event there shall be no further liability on the
part of the Company or the Continuing Underwriter, except pursuant to the provisions of
sections 12 and 13 hereof. Nothing in this Agreement shall oblige any U.S. Affiliate to
purchase any Offered Securities. Notwithstanding the foregoing, the Refusing Underwriter
shall not be entitled to the benefit of the provisions of sections 12 and 13 hereof following
such termination. |
- 37 -
17. |
(a) | If to the Company, to: |
Xxxxxxx Mines Corp. 000 Xxx Xxxxxx, Xxxxx 000 Xxxxxxx, XX X0X 0X0 |
||
Attention: Xxx X. Xxxxxxxxx Fax: 000-000-0000 |
||
with a copy (for information purposes only and not constituting notice) to: |
||
Blake, Xxxxxxx & Xxxxxxx LLP 855 — 0xx Xxxxxx X.X. Suite 3500, Bankers Hall East Tower Calgary AB T2P 4J8 |
||
Attention: Xxxxxx XxXxxx Fax: 403-260-9700 |
||
(b) | If to the Underwriters, to: |
|
GMP Securities L.P. 000 Xxxx Xxxxxx Xxxx, Xxxxx 000 Xxxxxxx, XX X0X 0X0 |
||
Attention: Xxxx Xxxxxxxx Fax: 000-000-0000 |
||
And to: |
||
Scotia Capital Inc. 00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx Xxxxxxx, XX X0X 0X0 |
||
Attention: Xxxxxxx Xxxxxxxx Fax: 000-000-0000 |
- 38 -
With a copy (for information purposes only and not constituting notice) to: |
||
Xxxxxxx Xxxxx & Xxxxxxxxx LLP 2100 Scotia Plaza 00 Xxxx Xxxxxx Xxxx Xxxxxxx, XX X0X 0X0 |
||
Attention: Xxxx Xxxxxxx Fax: 000-000-0000 |
19. |
20. |
23. |
24. |
- 39 -
27. |
29. |
- 40 -
30. |
- 41 -
Yours very truly, | ||||
GMP SECURITIES L.P. | ||||
Per:
|
(signed) “Xxxx Xxxxxxxx”
|
|||
SCOTIA CAPITAL INC. | ||||
Per:
|
(signed) “Xxxxxxx Xxxxxxxx”
|
XXXXXXX MINES CORP. | ||||
Per:
|
(signed) “Xxx X. Xxxxxxxxx”
|
- 42 -
COMPLIANCE WITH UNITED STATES SECURITIES LAWS
(a) | “Directed Selling Efforts” means “directed selling efforts” as that term is defined in
Regulation S. Without limiting the foregoing, but for greater clarity in this Schedule, it
means, subject to the exclusions from the definition of directed selling efforts contained in
Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected
to have the effect of, conditioning the market in the United States for any of the Securities
and includes the placement of any advertisement in a publication with a general circulation in
the United States that refers to the offering of such Securities; |
(b) | “Foreign Issuer” shall have the meaning ascribed thereto in Regulation S; |
(c) | “General Solicitation or General Advertising” means “general solicitation or general
advertising”, as used under Rule 502(c) under the U.S. Securities Act, including, but not
limited to, advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or on the Internet or broadcast over radio, television,
or telecommunications, including electronic display or the Internet, or any seminar or meeting
whose attendees had been invited by general solicitation or general advertising; |
(d) | “Institutional Accredited Investor” means an institutional “accredited investor” that
satisfies one or more of the requirements set forth in Rule 501(a)(1), (2), (3) or (7) of
Regulation D; |
(e) | “Regulation D” means Regulation D adopted by the SEC under the U.S. Securities Act; |
(f) | “Regulation S” means Regulation S adopted by the SEC under the U.S. Securities Act; and |
(g) | “SEC” means the United States Securities and Exchange Commission; |
(h) | “Securities” means the Offered Securities and the Qualified Securities; |
(i) | “Substantial U.S. Market Interest” means “substantial U.S. market interest” as that term is
defined in Regulation S; and |
(j) | “U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended; |
1. | It has not offered and sold, and will not offer and sell, any Special Warrants and FT Special
Warrants except (a) in an “offshore transaction”, as such term is defined in Regulation S, in
accordance with Rule 903 of Regulation S, or (b) in the case of Special Warrants, in the
United States as provided in paragraphs 2 through 13 below. Accordingly, none of
the Underwriter, its affiliates, nor any persons acting on its or their behalf, has made or
will make (except as permitted in paragraphs 2 through 13 below) (i) any offer to
sell or any solicitation of an offer to buy, any Special Warrants or FT Special Warrants to
any person in the United States, (ii) any sale of Special Warrants or FT Special Warrants to
any purchaser unless, at the time the buy order was or will have been originated, the
purchaser was outside the United States, or such Underwriter, affiliate or person acting on
behalf of either reasonably believed that such purchaser was outside the United States, or
(iii) any Directed Selling Efforts. |
2. | It has not entered and will not enter into any contractual arrangement with respect to the
distribution of the Special Warrants or FT Special Warrants, except with its U.S. Affiliate
with respect to the Special Warrants, any soliciting dealer group members (as described in the
Underwriting Agreement) or with the prior written consent of the Company. It shall require its
U.S. Affiliate and each soliciting dealer group member to agree, for the benefit of the
Company, to comply with, and shall use its best efforts to ensure that its U.S. Affiliate and
each soliciting dealer group member complies with, the same provisions of this Schedule “A” as
apply to such Underwriter as if such provisions applied to such U.S. Affiliate and soliciting
dealer group member. |
3. | All offers and sales of Special Warrants in the United States shall be made only to
Institutional Accredited Investors through the U.S. Affiliate in compliance with all
applicable U.S. federal and state broker-dealer requirements and in the manner contemplated in
this Schedule “A”. Such U.S. Affiliate is and will be, on the date of each offer and sale of
Offered Securities in the United States, duly registered as a broker-dealer pursuant to
Section 15(b) of the U.S. Exchange Act and the securities laws of each state in which such
offer or sale is made (unless exempted from the respective state’s broker-dealer registration
requirements) and a member of and in good standing with the Financial Industry Regulatory
Authority, Inc. |
4. | Offers and sales of Special Warrants in the United States shall not be made (i) by any form
of General Solicitation or General Advertising, or (ii) in any manner involving a public
offering within the meaning of Section 4(2) of the U.S. Securities Act. |
5. | Any offer, sale or solicitation of an offer to buy Special Warrants that has been made or
will be made in the United States was or will be made only to Institutional Accredited
Investors in transactions that are exempt from registration under the U.S. Securities Act
pursuant to Rule 506 of Regulation D and in transactions that are exempt from registration
under and in compliance with applicable state securities laws. |
6. | Immediately prior to soliciting any offeree in the United States, the Underwriter, the U.S.
Affiliate, and any person acting on its or their behalf had or will have reasonable grounds to
believe and did or will believe that each such offeree, and any person on behalf of whom such
offeree is acquiring the Special Warrants, is an Institutional Accredited Investor, and at the
time of completion of each sale to any such offerees, the Underwriter, the U.S. Affiliate, and
any person acting on its or their behalf had or will have reasonable grounds to believe and
did or will believe, that each purchaser purchasing Special Warrants and any person on behalf
of whom such purchaser is
acquiring Special Warrants is an Institutional Accredited Investor. |
- A2 -
7. | The Underwriter acting through its U.S. Affiliate, may offer the Special Warrants in the
United States only to offerees with respect to which the Underwriter has a pre-existing
relationship such that the Underwriter and its U.S. Affiliate are in a position to determine
that the offeree, or beneficial purchaser, if any, for whom the offeree is acting as trustee
or Underwriter, has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Special Warrants and the
Special Warrant Shares. |
8. | Prior to the completion of any sale of Special Warrants in the United States, each U.S.
purchaser will be required to execute a Subscription Agreement in form satisfactory to the
Company, the Underwriters and the Company’s U.S. counsel. |
9. | It will inform, and cause its U.S. Affiliate to inform, all purchasers of the Special
Warrants in the United States that the Special Warrants and the Special Warrant Shares have
not been and will not be registered under the U.S. Securities Act or applicable state
securities laws and the Special Warrants are being offered and sold to them without
registration under the U.S. Securities Act in reliance on Rule 506 of Regulation D and in
reliance upon similar exemptions under applicable state securities laws. |
10. | At least one business day prior to the Closing Time, the transfer agent will be provided with
a list of all purchasers of the Special Warrants in the United States. |
11. | At closing, the Underwriter will either (i) together with its U.S. Affiliate, provide a
certificate, substantially in the form of Appendix I to this Schedule A, relating to the
manner of the offer and sale of the Special Warrants in the United States, or (ii) be deemed
to have represented and warranted to the Company, as of the Closing Time, that it did not and
will not offer or sell any of the Special Warrants in the United States. |
12. | None of the Underwriter, its U.S. Affiliate, or any person acting on their behalf has taken
or will take, directly or indirectly, any action in violation of Regulation M under the U.S.
Exchange Act, in connection with the offer and sale of the Special Warrants or the FT Special
Warrants. |
13. | None of the Underwriter, its affiliates, or any person acting on its or their behalf will
solicit the exchange of the Offered Securities or will pay, give or receive any commission or
other remuneration, directly or indirectly, for soliciting the exchange of the Offered
Securities. |
14. | The Company is a Foreign Issuer and reasonably believes that there is no Substantial U.S.
Market Interest in the Common Shares. |
15. | The Company is not, and as a result of the sale of the Special Warrants or FT Special
Warrants and the issuance of the Qualified Securities contemplated hereby will not be, an
“investment company” registered or required to be registered under the United States
Investment Company Act of 1940, as amended. |
- A3 -
16. | Except with respect to offers and sales of Special Warrants to Institutional Accredited
Investors within the United States in reliance upon an exemption from registration under the
U.S. Securities Act as set forth herein, none of the Company, its affiliates, or any person
acting on its or their behalf, has made or will make: (A) any offer to sell, or any
solicitation of an offer to buy, any Special Warrants or FT Special Warrants to any person in
the United States; or (B) any sale of such securities unless, at the time the buy order was or
will have been originated, the purchaser is (i) outside the United States, or (ii) the
Company, its affiliates, and any person acting on their behalf reasonably believes that the
purchaser is outside the United States. |
17. | During the period in which the Special Warrants are offered for sale, none of the Company,
its affiliates, or any person acting on its or their behalf has made or will make any Directed
Selling Efforts, or has taken or will take any action that would cause the exemption afforded
by Rule 506 of Regulation D or Rule 903 of Regulation S to be unavailable for offers and sales
of the Special Warrants and FT Special Warrants pursuant to this Agreement. |
18. | None of the Company, any of its affiliates or any person acting on its or their behalf have
engaged or will engage in any form of General Solicitation or General Advertising with respect
to offers or sales of the Special Warrants in the United States or have acted or will act in
any manner involving a public offering within the meaning of Section 4(2) of the U.S.
Securities Act. |
19. | The Company has not, for a period of six months prior to the commencement of the Offering,
sold, offered for sale or solicited any offer to buy any of its securities in the United
States in a manner that would be “integrated” with the Offering and that would cause the
exemption afforded by Section 4(2) of the U.S. Securities Act and Rule 506 of Regulation D or
the exclusion from registration provided by Rule 903 of Regulation S to be unavailable for
offers and sales of the Special Warrants and the FT Special Warrants, as applicable. |
20. | During the period in which the Special Warrants and FT Special Warrants are offered for sale,
none of the Company, its affiliates, or any person acting on its or their behalf (other than
the Underwriters, their affiliates and any person acting on their behalf, as to which no
representation is made) has taken or will take, directly or indirectly, any action that would
constitute a violation of Regulation M under the U.S. Exchange Act. |
21. | The Company shall cause a Form D to be filed with the SEC within 15 days of the first sale of
Special Warrants to a person in the United States and shall make such other filings as shall
be required by applicable state securities laws to secure exemption from registration under
such securities laws for the sale of the Special Warrants in such states. |
22. | Neither the Company nor any of the predecessors or affiliates thereof has been subject to any
order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or
permanently enjoining such person for failure to comply with Rule 503 of Regulation D
concerning the filing of notice of sales on Form D. |
23. | The Company will not pay or give any commission or other remuneration, directly or
indirectly, for soliciting the exchange of the Offered Securities. |
- A4 -
(i) | the undersigned U.S. Affiliate is on the date hereof and was on the date of
each offer and sale of Special Warrants in the United States a duly registered broker
or dealer with the SEC and under the securities laws of each state in which such
offers and subsequent sales by the Company were made (unless exempted from the
respective state’s broker-dealer registration requirements) and a member of and in
good standing with the Financial Industry Regulatory Authority, Inc.; |
(ii) | all offers and sales of Special Warrants in the United States have been
effected in accordance with all applicable U.S. federal and state broker-dealer
requirements; |
(iii) | immediately prior to contacting any offeree in the United States, we had
reasonable grounds to believe and did believe that each offeree was an Institutional
Accredited Investor and, on the date hereof, we continue to believe that each such
person purchasing Special Warrants from us is an Institutional Accredited Investor; |
(iv) | no form of General Solicitation or General Advertising was used by us in
connection with the offer or sale of the Special Warrants in the United States; |
(v) | prior to any sale of Special Warrants in the United States, we obtained
properly completed and executed Subscription Agreements, in the form agreed to by the
Company and the Underwriters, from all purchasers; and |
(vi) | the offering of the Special Warrants in the United States has been
conducted by us in accordance with the terms of the Underwriting Agreement, including
Schedule “A” thereto. |
[NAME OF UNDERWRITER] | [NAME OF U.S. AFFILIATE] | |||||||
By:
|
By: | |||||||
Title: | Title: |
- Appendix I - 2 -
Security | Number | Expiry Date | Exercise Price ($) | |||
Share Purchase Warrants
|
2,225,000 exercisable for 6,408,000 Common Shares | March 1, 2011 | $10.42 per share ($30.00 per warrant) |
Weighted | ||||||||||||
Average | Weighted Average | |||||||||||
Range of Exercise | Remaining | Exercise Price per | ||||||||||
Price per Share | Contractual Life | Number of Common | Share | |||||||||
($) | (Years)(2) | Shares | ($) | |||||||||
$1.37 to $4.99 |
3.53 | 5,335,325 | $ | 2.03 | ||||||||
$5.00 to $9.99 |
3.90 | 1,036,439 | $ | 5.75 | ||||||||
$10.00 to $11.84 |
0.07 | 30,825 | $ | 10.84 | ||||||||
Stock options outstanding: |
3.57 | 6,402,589 | (1) | $ | 2.67 |
(1) | Options outstanding expire between December 2010 and October 2016. |
|
(2) | Remaining contractual life calculated effective December 6, 2010. |
VANADIUM | ||||||||||
STATE | PROJECT | PROPERTY | URANIUM ROYALTY | ROYALTY | HELD BY | |||||
Arizona
|
Canyon Mine | Canyon 74, 75 | 3.5% Weighted Average Price | 7% NSR | Gulf Oil | |||||
2.25% Yellowcake | None | Uranerz | ||||||||
All remaining Canyon claims | 3.5% Weighted Average Price | 7% NSR | Gulf Oil | |||||||
XX-0, XX-0, XX-0, What XX-0, Xxxx, Xxxx, XXX000, Xxxx |
1% of average Trade Tech Long Term U3O8 Value for 3 months preceding uranium concentrate production | Pathfinder Mines Corporation |
||||||||
Colorado
|
Carnation Mine | Carnation 1-5 | 10% Gross Value | 10% Gross Value | CC. Xxxxxx Successors | |||||
Carnation Frac. 1 | 10% Gross Value | 10% Gross Value | Shiprock Ltd. Successors | |||||||
Xxxxxxx Xxxxx | All Xxxxx and Xxxxxxx Claims | 9% of Value (w/adjustments) | 9% of Value (w/adjustments) | Sundance Oil | ||||||
Xxxxx 1 only | 2.5% from Sundance Royalty | H.D. Xxxxx | ||||||||
Sunday | GMG, GMG0, GMG 1 Claims | 12.5% Circular 5 | 12.5% Value of Ore | Icke, Doudy, Xxxxxx |
VANADIUM | ||||||||||
STATE | PROJECT | PROPERTY | URANIUM ROYALTY | ROYALTY | HELD BY | |||||
GMG 2-5, 8-13 claims | 10% Circular 5 | 10%Value of Ore | Icke, Doudy, Xxxxxx | |||||||
Monogram Mesa | Xxxxxx | 4% of Ux Long Term U3O8 Price | 2% of Market Price V2O5 | Xxxxxx | ||||||
Utah
|
Beaver | Utah Lease 27247 | 8% Gross Value | 4% Gross Value | State Institutional Trust Lands Administration |
|||||
Beaver | Utah Lease 27248 | 8% Gross Value | 4% Gross Value | State Institutional Trust Lands Administration |
||||||
Beaver & XxXxx | Xxxx Ranches 1-B | 12.5% Circular 5 if processed | 12.5% Vanadium Base | Xxxx Royalties | ||||||
Beaver & XxXxx | Xxxx Ranches 1-A Lease | 12.5% Circular 5 if processed | 12.5% vanadium base | Xxxx Royalties | ||||||
La Xxx | Xxxx Pine Lodge | 4%-10% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Xxxx Royalties Ltd. | ||||||
XxXxx | Xxxx Claims | NUEXCO x 4.5 x “grade adjustment” x lbs x 0.075 | Carvan Index x “grade value” x Lbs V2O5 |
Pogues, Xxxxxxx, Xxxxxx |
||||||
Xxxx Block | County Lease | 3.9% to 12.5% Gross value schedule | 3% to 12.5% gross value schedule | Xxx Xxxx Xxxxxx |
- X0 -
XXXXXXXX | ||||||||||
XXXXX | PROJECT | PROPERTY | URANIUM ROYALTY | ROYALTY | HELD BY | |||||
Xxxx Block | Crested and T&A Claims | 3%-8% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Eight private individuals |
||||||
Xxxx Block | Xxxx- Xxxxxxx Lease | 12.5% Circular 5 if processed; 50% interest | 12.5% Vanadium base; 50% interest | Xxxxxxx et xx | ||||||
Xxxx Block | Section 31, 4 & 5 | 4%-10% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Xxxx Royalties Ltd. | ||||||
Xxxx Block | Xxxxx Xxxxxx Xxxxxx Estate | 3%-8% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Xxxxx Xxxxxx Xxxxxx Estate 50% Interest |
||||||
Xxxx Block | Xxxxxx Estate | 3%-8% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Xxxxxx Estate 50% Interest |
||||||
Lisbon Valley | Section 6 | 4%-10% Sliding Scale Based on Ux Long Term U308 Price |
2%-6% Sliding Scale based on Ryan’s Notes Published V205 price |
Xxxx Royalties Ltd. |
- C3 -
VANADIUM | ||||||||||
STATE | PROJECT | PROPERTY | URANIUM ROYALTY | ROYALTY | HELD BY | |||||
Pandora & Snowball | Pandora Claims | 10% Of value of $1.50/lb @ 0.10% ore grade up to 10% of value of $3.50 if ore is 0.20% | 10% of value (w/adjustments) | Xxxxxx Xxxxx (Xxxxxx) |
||||||
Pandora & Xxxxxxxx | Xxxxxx Claims | 10% of value in ore (w/adjustments) | 10% of value in ore (w/adjustments) | Xxxxxx Xxxxx (Xxxxxx) |
||||||
Pandora & Snowball | Snowball Claims | 12.5% Fair Market Value | 12.5% market Value | Xxxxxxx and Xxxxxxx | ||||||
Pandora & Snowball | Pine Lodge Lease | 15% Circular 5 if processed | 15% vanadium base | Xxxx Royalties | ||||||
Pandora & Snowball | Utah Lease 18301 | 8% Gross Value | 4% Gross Value | State Institutional Trust Lands Administration |
||||||
Utah Lease 18301 | 8% Gross Value | 4% Gross Value | MEPNA | |||||||
Rim Mine | Boy, Humbug, Humbug 1 Claims | 15% Circular 5 | 15% Value on vanadium base |
Ace & Xxxxxxx Xxxxxxx Heirs |
||||||
Xxxxxxxx Lease | 7.5% Circular 5 | 7.5% of Value (w/adjustments) | Harley and Xxxxx Xxxxxxxx | |||||||
Rim Mine | Utah Lease 51574 | 8% Gross Value | 4% Gross value | State Institutional Trust Lands Administration |
||||||
Xxxxx Mountains | Utah State Lease | 8% Yellowcake less taxes and minor deductions | 4% Gross Value less taxes | State Institutional Trust Lands Administration |
||||||
TIC Claims | 4% Yellowcake less taxes and minor deductions | 2% Gross Value | Xxxxxxxxx Xxxxx |
- C4 -
DATE OF NOTICE OF | ||||||||||
CLAIMANT | MECHANIC’S LIEN | AMOUNT OF LIEN (US$) | PROPERTY | MATTER | ||||||
Xxxxxx Machinery Company |
August 26, 2010 | 1,508,829.53 | White Mesa Mill | Construction of Cell 4B | ||||||
Xxxxxxx Powder Co.
|
September 1, 2010 | 453,553.56 | White Mesa Mill | Construction of Cell 4B | ||||||
KGL Associates Inc.
|
September 14, 2010 (amending Previous Notice Dated August 18, 2010) | 2,456,818.56 | White Mesa Mill | Construction of Cell 4B |
- C5 -