January 26, 2004
Kodiak Oil & Gas Corp.
Xxxxx 000,
0000 Xxxxxxxx
XXXXXX, XX 00000
| Attention: |
|
Xx.
Xxxx Xxxxxxxx
President and Chief Executive Officer |
Re: Proposed Issue and Sale of up to
$4,000,000 of Units
Xxxxxxxx Capital Inc. (the
“Agent”) understands as set forth below.
| 1. |
|
Kodiak
Oil & Gas Corp. (the “Corporation”) proposes to offer for
sale on a private placement basis up to $4,000,000 in Units at a price of $0.35
per Unit. |
| 2. |
|
The
proceeds from the issue and sale of the Units will be used by the Corporation
to fund the Pacific Rim Prospect and for general corporate purposes. |
Subject to the terms and conditions
hereof, the Agent hereby agrees to act as, and the Corporation hereby appoints the Agent
as, the sole and exclusive agent of the Corporation to offer the Units for sale on a
private placement basis in the Selling Jurisdictions and to use its best efforts to secure
subscriptions therefor, provided that the Agent shall not be under any obligation to
purchase any of the Units. The Agent shall be entitled, in its sole discretion, to engage
sub-agents and offer them as compensation any part of the sales commission described
below. The Agent shall, however, be under no obligation to engage any sub-agent.
In consideration for its services
hereunder, including acting as financial advisor to the Corporation and advising on the
terms and conditions of the distribution, the Agent shall be entitled to be paid the
commission provided for in section 9.1. For greater certainty, the services provided by
the Agent in connection herewith will not be subject to goods and services tax provided
for in the Excise Tax Act (Canada) (“GST”) and
taxable supplies will be incidental to the exempt financial services provided.
Set forth below are the further terms
and conditions of this agreement.
ARTICLE 1
INTERPRETATION
| 1.1 |
|
Wherever
used in this agreement the terms set forth below have the meanings ascribed thereto. |
| |
“Agent’s
Counsel” means Xxxxxxx Xxxxx LLP. |
| |
“Agent’s
Warrants” means a number of warrants equal to 8% of the number of
Units sold pursuant to the Offering, each warrant entitling the holder to acquire one
Common Share on or before the first anniversary of the Closing Date at a price of $0.50
per Common Share. |
| |
“Applicable
Securities Laws” includes, without limitation, all applicable
securities, corporate and other laws, rules, regulations, notices, policies and rulings of
the Selling Jurisdictions. |
| |
“Business
Day” means a day, other than a Saturday, Sunday or a statutory
holiday in Denver, Colorado. |
| |
“Closing
Date” means the date or dates on which the Offering is completed and
which is expected to take place on or about February 25, 2004, or such other date as the
Agent and the Corporation may agree upon in writing. |
| |
“Closing
Time” means 11:00 a.m. (Calgary time) or such other time, on the
applicable Closing Date, as the Agent and the Corporation may agree upon in writing. |
| |
“Common
Shares” means common shares in the capital of the Corporation. |
| |
“Corporation’s
Counsel” means Xxxxxx Xxxxxxx LLP. |
| |
“Documents”means,
collectively: |
| |
(a) |
|
the
audited consolidated financial statements of the Corporation for the years
ended December 31, 2002 and 2001; (b) the management information circular and
proxy statement of the Corporation dated June 23, 2003 with respect to the
annual meeting
of shareholders of the Corporation held on July 24, 2003; |
| |
(c) |
|
the
interim reports of the Corporation for the three months ended March 31,
2003, the six months ended June 30, 2003 and the nine months ended
September 30, 2003 including, without limitation, the unaudited financial
statements of the Corporation for such three, six and nine month periods; |
| |
(d) |
|
the
annual information form for the year ended December 31, 2002 dated September
22, 2003; |
| |
(e) |
|
all
material change reports of the Corporation filed after December 31, 2002;
and |
| |
(f) |
|
all
press releases of the Corporation subsequent to December 31, 2002. |
2
| |
“Exchange”means
the TSX Venture Exchange or any successor thereto. |
| |
“Financial
Statements” means, collectively, the comparative audited financial
statements of the Corporation for the fiscal year ended December 31, 2002 and the
unaudited interim financial statements of the Corporation for the three months ended March
31, 2003, the six months ended June 30, 2003 and the nine months ended September 30, 2003. |
| |
“MI
45-102” means Multilateral Instrument 45-102: Resale of
Securities, as adopted on November 30, 2001 in the Selling Jurisdictions and as
amended. |
| |
“Offering”means
the private placement offerings of Units described herein. |
| |
“Public
Record” means all information filed by or on behalf of the Corporation
with the Securities Commissions including, without limitation, the Documents and any other
information filed with any Securities Commission in compliance, or intended compliance,
with any Applicable Securities Laws. |
| |
“Securities
Commissions” means the securities commissions or similar regulatory
authorities in the Selling Jurisdictions. |
| |
“Selling
Jurisdictions” means the provinces of British Columbia, Alberta and
Ontario. |
| |
“Subscriber”means
any person who executes a Subscription Agreement that is accepted by the Corporation. |
| |
“Subscription
Agreements” means the subscription agreements for Units to be entered
into on the Closing Date between the Corporation and each of the Subscribers. |
| |
“Transfer
Agent” means CIBC Mellon Trust Company in its capacity as registrar
and transfer agent for the Common Shares. |
| |
“Unit”means
a unit consisting of one Common Share and one half of one Warrant. |
| |
“Warrant”
means a Common Share purchase warrant which entitles the registered holder to purchase one
Common Share at an exercise price of $0.50 per Common Share on or before the first
anniversary of the Closing Date. |
| 1.2 |
|
In addition, the terms “misrepresentation”,
“material change” and “material
fact” shall have the meanings ascribed thereto under the Applicable
Securities Laws, “distribution” or “distribution
to the public”, as the case may be, shall also have the meanings as
defined under the Applicable Securities Laws and
“distribute” has corresponding meaning. |
| 1.3 |
|
The terms “this agreement”,
“hereto”, “herein”,
“hereby”, “hereunder”,
“hereof” and similar expressions refer to the agreement of
the parties set forth herein and not to a particular paragraph or other portion of this
agreement. |
ARTICLE 2
THE OFFERING
| 2.1 |
|
The
Corporation represents and warrants to and covenants and agrees with the Agent that the
representations and warranties of the Corporation set forth in the Subscription
Agreements are |
3
3
| |
true
and correct and that the Corporation will fully comply with the covenants and agreements
of the Corporation set forth therein. |
| 2.2 |
|
The Agent agrees to obtain and to deliver to the Corporation at or prior to the Closing
Time a duly completed Subscription Agreement, a corporate placee registration form in the
form required by the Exchange, if applicable, and such other documents specifically
referred to in the Subscription Agreement or as are required under Applicable Securities
Laws and supplied to the Agent by the Corporation for completion in connection with the
distribution of the Units, all of which shall have been duly executed by each of the
Subscribers. |
| 2.3 |
|
The Agent shall offer the Units for sale to the public, directly and/or through other duly
qualified investment dealers and brokers, only as permitted by Applicable Securities Laws
and upon the terms and conditions set forth in this agreement, at an offering price not
exceeding the price set forth on the first page of this agreement. The Agent will not
solicit offers to purchase or sell the Units so as to require registration of the Units or
filing of a prospectus with respect to the Units under the laws of any jurisdiction. |
| 2.4 |
|
The Agent will have the exclusive authority to appoint other registered dealers (or other
dealers duly qualified in their respective jurisdictions) as its sub-agents to assist in
the distribution contemplated hereby provided that any such sub-agents shall be approved
by the Corporation acting reasonably and any fees payable to such sub-agents shall be for
the account of the Agent. |
ARTICLE 3
DUE DILIGENCE REVIEW
| 3.1 |
|
Prior to the Closing Time, the Corporation shall allow the Agent the opportunity to
conduct required due diligence and to obtain, acting reasonably, satisfactory results
therefrom. In particular, the Corporation shall allow the Agent and the Agent’s
Counsel to conduct all due diligence which the Agent may reasonably require in order to
confirm the Public Record is accurate, complete and current in all material respects and
to fulfil the Agent’s obligations as a registrant. The Agent shall have the option to
terminate this agreement if its due diligence inquiries or investigations identify a
material adverse circumstance which existed either at the effective date of this
agreement, but which was not disseminated to the public, or occurred after the effective
date hereof but prior to the Closing Time. |
ARTICLE 4
DELIVERY OF DOCUMENTS
| 4.1 |
|
The Corporation shall, as soon as reasonably possible, deliver to the Agent as many copies
of the Documents as the Agent may reasonably request and such delivery shall constitute
the Agent’s authority to use the Documents in connection with the Offering of Units
for sale in the Selling Jurisdictions. |
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE CORPORATION
| 5.1 |
|
The Corporation represents and warrants to the Agent, and acknowledges that the Agent is
relying upon such representations and warranties, that: |
| |
(a) |
|
the
Corporation has been duly continued and organized and the Corporation is
validly subsisting under the laws of the Yukon Territory and has all
requisite corporate authority |
4
| |
and
power to carry on its business, as now conducted and as presently proposed
to be conducted by it, and to own its properties and assets; |
| |
(b) |
|
the
Corporation is qualified to carry on business and is validly existing under
the laws of each jurisdiction in which it carries on business; |
| |
(c) |
|
the
Corporation has no subsidiaries and the Corporation is not affiliated with,
nor is it a holding corporation of, any other body corporate; |
| |
(d) |
|
the
Corporation has conducted and is conducting its business in compliance in
all material respects with all applicable laws, rules and regulations and,
in particular, all applicable licensing and environmental legislation,
regulations or by-laws or other lawful requirements of any governmental or
regulatory bodies applicable to the Corporation of each jurisdiction in
which the Corporation carries on its business, and the Corporation holds
all licences, registrations and qualifications in all jurisdictions in
which the Corporation carries on its business which are necessary or
desirable to carry on the business of the Corporation as now conducted and
all such licenses, registrations or qualifications are valid and existing
and in good standing and none of such licenses, registrations or
qualifications contains any burdensome term, provision, condition or
limitation which has or is likely to have any material adverse effect on
the business of the Corporation as now conducted or as proposed to be
conducted (other than governmental royalties and income taxes), and,
except as disclosed by the Corporation in writing to the Agent, to the
knowledge of the Corporation, the Corporation has not received any notice
of proceedings relating to the revocation or modification of any such
licenses, registrations, permits, authorities or qualifications which, if
the subject of an unfavourable decision, ruling or finding, would
materially affect the business, operations, financial condition or
prospects of the Corporation; |
| |
(e) |
|
at
the Closing Time, the Warrants and the Agent’s Warrants will have been
created, and the Common Shares included in the Units will be duly and
validly authorized, allotted and reserved for issuance and upon receipt of
the purchase price therefore will be issued as fully paid and
non-assessable Common Shares; |
| |
(f) |
|
the
Common Shares issuable upon the exercise of the Warrants and the Agent’s
Warrants have been duly and validly authorized and allotted for issuance
and, upon exercise (including payment) of the Warrants or the Agent’s
Warrants, and compliance with all other terms of the Warrants or the Agent’s
Warrants, as the case may be, will be validly issued and outstanding as
fully paid and non-assessable. |
| |
(g) |
|
the
Corporation is not in default or breach of, and the execution and delivery
of, and the performance of and compliance with the terms of, this
agreement, the Subscription Agreement, the Warrants and the Agent’s
Warrants and the performance of any of the transactions contemplated
hereby and thereby by the Corporation, do not and will not result in any
breach of, or constitute a 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 constitute a default under, any applicable laws which
are material to the Corporation and its operations or any term or
provision of the articles, by-laws or resolutions of the directors or
shareholders of the Corporation, or any mortgage, note, indenture,
contract, agreement (written or oral), instrument, lease or other document
to which the Corporation is a party or by which it is bound on the Closing
Date, or any judgment, decree, order, statute, rule or regulation
applicable to the Corporation which default or breach might reasonably be |
5
| |
expected
to materially adversely affect the business, operations, capital or
condition (financial or otherwise) of the Corporation and its subsidiaries
(taken as a whole) or their respective properties or assets; |
| |
(h) |
|
the
Corporation has full corporate power and authority to enter into this
agreement and the Subscription Agreement and to create and issue the Units
(including the Warrants) and the Agent’s Warrants and to perform its
obligations set out herein and therein, and this agreement has been, and
the Subscription Agreements, the Warrants and the Agent’s Warrants
will be, on the Closing Date, duly authorized, executed and delivered by
the Corporation, and this agreement is and the Subscription Agreements,
the Warrants and the Agent’s Warrants will be, on the Closing Date,
legal, valid and binding obligations of the Corporation enforceable
against the Corporation in accordance with their respective terms, subject
to the general qualifications that: |
| |
|
(i) |
|
enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganization or
other laws affecting creditors’ rights generally, |
| |
|
(ii) |
|
enforceability
may be limited by general principles of equity, including the limitation
that the grant of equitable remedies, including specific performance, is
discretionary and may not be available, |
| |
|
(iii) |
|
the
equitable or statutory powers of the courts in Canada having jurisdiction to
stay proceedings before them and the execution of judgments, and |
| |
|
(iv) |
|
rights
to indemnity and contribution hereunder may be limited under applicable
law; |
| |
(i) |
|
there
has not been any material change or adverse material change in the assets,
liabilities or obligations (absolute, accrued, contingent or otherwise) or
in the business operations, capital or condition (financial or otherwise)
or in the results of the operations of the Corporation from the position
set forth in the Financial Statements or as otherwise disclosed in the
Documents or in press releases made by the Corporation and publicly
disseminated; and since that date there have been no material facts,
transactions, events or occurrences which could materially adversely
affect the capital, assets, liabilities (absolute, accrued, contingent or
otherwise), business, operations or condition (financial or otherwise) or
results of the operations of the Corporation which have not been disclosed
in the Public Record; |
| |
(j) |
|
the
Financial Statements fairly present in all material respects, in accordance
with generally accepted accounting principles in Canada, consistently
applied, the financial position and condition of the Corporation as at the
dates thereof and the results of the operations of the Corporation for the
periods then ended and reflect all assets, liabilities and contingent
liabilities of the Corporation as at the dates thereof; |
| |
(k) |
|
to
the knowledge of the Corporation, after due inquiry, there has not occurred
any material spills, emissions or pollution on any property of the
Corporation or for which the Corporation may be responsible, nor is the
Corporation the subject of any outstanding stop orders, control orders,
clean-up orders or reclamation orders under applicable environmental laws
and regulations; |
6
| |
(l) |
|
except
as disclosed in the Financial Statements, there are no actions, suits,
proceedings or inquiries, including, to the Corporation’s knowledge,
pending or threatened against or affecting the Corporation at law or in
equity or before or by any United States, Canadian or other federal,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which in any way
materially adversely affects, or may in any way materially adversely
affect, the assets, properties, business, operations, capital or condition
(financial or otherwise) of the Corporation or which affects or may affect
the distribution of the Units and the Corporation has no knowledge of any
existing ground on which any such actual, suit, proceeding or inquiry
might be commenced with any reasonable likelihood of success; |
| |
(m) |
|
the
information and statements set forth in the Public Record as at the date
hereof, as it relates to the Corporation, are true, correct, and complete
and do not contain any misrepresentation as of the respective dates of
such information or statements, and no material change has occurred in
relation to the Corporation which is not disclosed in the Public Record,
and the Corporation has not filed any confidential material change reports
which continue to be confidential; |
| |
(n) |
|
the
authorized capital of the Corporation consists of 100,000,000 Common Shares
of which 14,373,675 Common Shares are duly issued and outstanding as at
the date hereof, all of which Common Shares are fully paid and
non-assessable; |
| |
(o) |
|
other
than pursuant to the provisions of this agreement and other than (i) options
to acquire 1,287,000 Common Shares held by officers, directors, employees
and consultants of the Corporation under the Corporation’s stock
option plan, and (ii) 2,448,749 warrants entitling the holders
thereof to purchase 2,448,749 Common Shares, as of the date of this
agreement, no person, firm, corporation or other entity holds any
securities convertible or exchangeable into securities of the Corporation
or now has any agreement, warrant, option, right or privilege (whether
pre-emptive or contractual) being or capable of becoming an agreement,
option or right for the purchase, subscription or issuance of any unissued
shares, securities (including convertible securities) or warrants of the
Corporation; |
| |
(p) |
|
except
as disclosed in the Public Record, the Corporation has duly and on a
timely basis filed all material tax returns required to be filed by it,
has paid all material taxes due and payable by it and has paid all
material assessments and re-assessments and all other material taxes,
governmental charges, penalties, interest and other fines due and payable
by it and which are claimed by any governmental authority to be due and
owing and adequate provision has been made for taxes payable for any
completed fiscal period for which tax returns are not yet required and
there are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the filing of any tax return or payment
of any tax, governmental charge or deficiency by the Corporation and, to
the Corporation’s knowledge, there are no actions, suits,
proceedings, investigations or claims threatened or pending against the
Corporation in respect of material taxes, governmental charges or
assessments or any matters under discussion with any governmental
authority relating to taxes, governmental charges or assessments asserted
by any such authority; |
| |
(q) |
|
the
issued and outstanding Common Shares are listed and posted for trading on
the Exchange; |
7
| |
(r) |
|
the
minute books of the Corporation are materially up-to-date and contain the
minutes of all meetings and all the resolutions of directors and
shareholders thereof; |
| |
(s) |
|
the
Corporation is a “reporting issuer” or has equivalent status in
the Provinces of British Columbia and Alberta and is not in default of any
requirement in relation thereto; |
| |
(t) |
|
the
Corporation is a “qualifying issuer” under MI 45-102; |
| |
(u) |
|
CIBC
Mellon Trust Company is the duly appointed registrar and transfer agent of
the Corporation with respect to its Common Shares; |
| |
(v) |
|
other
than as provided for in this agreement, the Corporation has not incurred
any obligation or liability, contingent or otherwise, for brokerage fees,
finder’s fees, agent’s commission or other similar forms of
compensation with respect to the transactions contemplated herein; |
| |
(w) |
|
no
Securities Commission or any other securities commission or similar
regulatory authority has issued any order preventing or suspending trading
of any securities of the Corporation, the Corporation is not in default of
any material requirement of Applicable Securities Laws and, if the
representations and warranties made by Subscribers in the Subscription
Agreements are accurate, the Corporation is entitled to avail itself of
the applicable prospectus exemptions available under such Applicable
Securities Laws in respect of the trades in its securities to Subscribers
resident in the Selling Jurisdictions as contemplated by this agreement; |
| |
(x) |
|
to
the knowledge of the Corporation, no other party is in default in the
observance or performance or any term or obligation to be performed by it
under any contract to which the Corporation is a party or by which it is
bound which is material to the business of the Corporation and, to the
knowledge of the Corporation, no event has occurred with which notice or
lapse of time or both would directly or indirectly constitute such a
default, in any such case which default or event would reasonably be
expected to have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Corporation; |
| |
(y) |
|
to
the knowledge of the Corporation, no insider of the Corporation has a present
intention to sell any securities of the Corporation held by it; |
| |
(z) |
|
the
Corporation does not have reason to believe that the Corporation does not
have title to or the right to produce and sell its mineral, petroleum,
natural gas and related hydrocarbons (for the purposes of this clause, the
foregoing are referred to as the “Interests”)
and does represent and warrant that the Interests are free and clear of
adverse claims created by, through or under the Corporation, except as
disclosed in the Public Record or those arising in the ordinary course of
business, which are not material in the aggregate, and, to the knowledge
of the Corporation after due inquiry, the Corporation holds its Interests
under valid and subsisting leases, licenses, permits, concessions,
concession agreements, contracts, subleases, reservations or other
agreements and; |
| |
(aa) |
|
any
and all operations of the Corporation have been conducted in accordance with
good practices applicable to its industry of operation and in material
compliance with applicable laws, rules, regulations, orders and directions
of government and other competent authorities. |
8
ARTICLE 6
COVENANTS
| 6.1 |
|
The
Corporation covenants and agrees with the Agent that the Corporation shall: |
| |
(a) |
|
duly,
punctually and faithfully perform all the obligations to be performed, and
covenants made, by it under this agreement, the Subscription
Agreements, the Warrants and the Agent’s Warrants; |
| |
(b) |
|
during
the period commencing with the date hereof and ending on the conclusion
of the distribution of the Units, promptly inform the Agent in
writing of the full particulars of: |
| |
|
(i) |
|
any
material change (actual, anticipated or threatened) in the assets,
liabilities (absolute, contingent or otherwise), capital, business,
operations or condition (financial or otherwise) of the Corporation, |
| |
|
(ii) |
|
any
change in any material fact contained or referred to in the Public Record, |
| |
|
(iii) |
|
the
occurrence of a material fact or event which, in any such case, is, or may
be, of such a nature as to: render any part of the Public Record
untrue, false or misleading in a material respect; result in a
misrepresentation in any part of the Public Record, or result in any
part of the Public Record not complying with Applicable Securities
Laws, or |
| |
|
(iv) |
|
the
discovery by the Corporation of any misrepresentation in any part of the
Public Record, |
| |
provided
the Corporation shall in good faith discuss with the Agent any change in circumstances
(actual, proposed or prospective) which is of such a nature that there is reasonable doubt
whether notice in writing need be given to the Agent pursuant to this section 6.1(b),
notwithstanding this obligation, the Corporation shall be entitled to comply with
Applicable Securities Laws; |
| |
|
(c) |
|
during
the period commencing with the date hereof and ending on the conclusion of
the distribution of the Units, promptly inform the Agent of the full
particulars of: |
| |
|
(i) |
|
any
request of any Securities Commission for any amendment to the Public Record
or for any additional information which may be material to the
distribution of the Units, |
| |
|
(ii) |
|
the
issuance by any Securities Commission, the Exchange or other securities
commission or similar regulatory authority or by any other competent
authority of any order to cease or suspend trading of any securities of
the Corporation or of the institution or threat of institution of any
proceedings for that purpose, or |
| |
|
(iii) |
|
the
receipt by the Corporation of any communication from any Securities
Commission, the Exchange or other securities commission or similar
regulatory authority or any other competent authority relating to the
Public Record or the distribution of the Units; |
9
| |
(d) |
|
use
the net proceeds from the Offering of Units to fund the Corporation’s
Pacific Rim Prospect and for general corporate purposes, including the
repayment of a note to CP Resources LLC, a private company with common
directors with the Corporation, in the amount of US$264,000 for the
drilling of the initial two xxxxx on the Pacific Rim Prospect; |
| |
(e) |
|
file
a duly completed and executed Form 45-102F2 pursuant to MI 45-102 within 10
days of the Closing Date; |
| |
(f) |
|
use
its best efforts to maintain its status as a “reporting issuer” or
equivalent status in at least one of the Selling Jurisdictions until the date that is six
months from the Closing Date; |
| |
(g) |
|
during
the period commencing on the date hereof and ending on the date which is
30 days following the Closing Date, promptly provide to the Agent, for
review prior to the publication, filing or issuance thereof any proposed
document, including without limitation, any press release, annual
information form, material change report or information circular, which is
or may be deemed to be part of the Public Record; |
| |
(h) |
|
promptly
comply with Applicable Securities Laws to the satisfaction of the Agent
and the Agent’s Counsel with respect to any change or occurrence of
the nature referred to in section 6.1(b) and take such steps, which in the
Agent’s opinion, acting reasonably, may be necessary or advisable to
comply with Applicable Securities Laws; |
| |
(i) |
|
make
all necessary arrangements with the Exchange so that the Common Shares
issuable on the Closing Date and upon the subsequent exercise of the
Warrants and Agent’s Warrants shall be listed and posted for trading
on the Exchange as soon as practicable after the Closing Time; and |
| |
(j) |
|
except
for the issuance by the Corporation of options to acquire Common Shares
and the issuance of Common Shares upon the exercise of such options, all
in accordance with the past practices of the Corporation, from the Closing
Date until the date that is 90 days following the Closing Date, not offer,
or announce the offering of, or enter into or make or announce any
agreement to issue, sell or exchange any Common Shares to the public or
securities convertible or exchangeable into Common Shares without the
prior consent of the Agent, such consent not to be unreasonably withheld. |
| 6.2 |
|
The
Agent covenants and agrees with the Corporation that the Agent shall: |
| |
(a) |
|
obtain
from each Subscriber an executed Subscription Agreement and all applicable
undertakings, questionnaires and other forms required under the Applicable
Securities Laws for completion in connection with the distribution of the
Units; |
| |
(b) |
|
conduct
activities in connection with the proposed offer and sale of the Units in
compliance with all Applicable Securities Laws and applicable securities laws
in the other jurisdictions and cause a similar covenant to be contained in
any agreement entered into with any selling group members; and, without
limitation, agrees that it will not make available to prospective
purchasers of Units any document or material which would constitute an
offering memorandum as defined under Applicable Securities Laws; |
10
| |
(c) |
|
not
solicit subscriptions for the Units, trade in Units or otherwise do any act
in furtherance of a trade of Units outside of the Selling Jurisdictions
except such trades or acts as may be in compliance with the applicable
securities laws thereof and which will not result in any registration,
reporting or other filing or compliance obligation of any type being
imposed upon the Corporation in any jurisdiction that is not a Selling
Jurisdiction and without the express written consent of the Corporation;
and |
| |
(d) |
|
not
advertise the proposed Offering or sale of the Units in the printed media of
general and regular paid circulation, radio, television, or
telecommunications, including electronic display. |
ARTICLE 7
CLOSING
| 7.1 |
|
The
issue and sale of the Units shall be completed at the Closing Time at the offices of
Xxxxxxx Xxxxx LLP, 4500 Bankers Hall East, 000 — 0xx Xxxxxx X.X., Xxxxxxx, XX X0X
0X0 or at such other place as the Corporation and the Agent may agree. Subject to the
satisfaction of the conditions set forth in Article 8, the Agent, on each Closing Date,
shall deliver to the Corporation: |
| |
(a) |
|
all
completed Subscription Agreements (including any applicable documents
specifically referred to in the Subscription Agreements); and |
| |
(b) |
|
a
cheque or bank draft payable to the Corporation in Calgary in an amount equal
to the aggregate of all subscriptions of Units delivered to and accepted
by the Corporation on such Closing Date, net of the Agent’s
commission and expenses to be paid on such Closing Date; |
| |
against
delivery by the Corporation of definitive certificates representing, in the aggregate, all
of the Common Shares and Warrants comprising the Units subscribed for on such Closing Date
registered in such name or names as the Agent shall direct the Corporation in writing not
less than one Business Day prior to the applicable Closing Date, together with the
Agent’s Warrants, as set forth in section 9.1 and such other documents and actions
required pursuant to section 8.1. |
| 7.2 |
|
Except where the Corporation is aware of a material misrepresentation in a Subscription
Agreement, the Corporation may not reject any properly completed Subscription Agreements
which are in compliance with Applicable Securities Laws unless the number of Units
subscribed for pursuant to all Subscription Agreements on a Closing Date tendered by the
Agent exceed the maximum number of Units to be sold under this agreement on such Closing
Date, in which case, Subscription Agreements representing the over-allotment shall, after
consultation with the Agent, be rejected or amended. |
ARTICLE 8
CONDITIONS OF CLOSING
| 8.1 |
|
The obligations of the Agent hereunder shall be conditional upon the Agent receiving, and
the Agent shall have the right on the Closing Date on behalf of Subscribers for Units to
withdraw all subscriptions delivered and not previously withdrawn by Subscribers unless
the Agent receives, on the Closing Date: |
11
| |
(a) |
|
a
legal opinion of the Corporation’s Counsel addressed to the Agent, the
Agent’s Counsel and the Subscribers, in form and substance reasonably
satisfactory to the Agent, with respect to such matters as the Agent may
reasonably request relating to the Offering, the issuance and sale of the
Units subscribed for on the applicable Closing Date, including, without
limitation: |
| |
|
(i) |
|
the
due incorporation, continuation or amalgamation, as the case may be, and
valid existence of the Corporation, |
| |
|
(ii) |
|
the
due registration or qualification of the Corporation to carry on business
under the laws of each jurisdiction in which the Corporation carries on a material
portion of its business as now conducted by it, |
| |
|
(iii) |
|
the
corporate power and capacity of the Corporation, |
| |
|
(iv) |
|
the
authorized capital of the Corporation, |
| |
|
(v) |
|
the
Common Shares included in the Units (and the Common Shares issuable upon
exercise of the Warrants and the Agent’s Warrants) to be issued
have been duly authorized, allotted and reserved for issuance and
will, when issued, be issued as fully paid and non-assessable, |
| |
|
(vi) |
|
the
due creation and issuance of the Warrants and the Agent’s Warrants, |
| |
|
(vii) |
|
the
due authorization, execution, delivery and enforceability of this agreement,
and the Subscription Agreements, the Warrants and the Agent’s
Warrants, by the Corporation and the fulfillment of the terms hereof
and thereof, |
| |
|
(viii) |
|
that
the execution and delivery of this agreement and the Subscription
Agreements, and the sale, delivery and the distribution of the Units,
do not and will not result in a breach of, and do not and will not
create a set of facts which, after notice or lapse of time or both,
conflict with any terms, conditions or provisions of the articles of
the Corporation, the by-laws or any resolutions of the directors or
shareholders of the Corporation, or, so far as the Corporation’s
Counsel is aware, any indenture, contract, agreement (written or
oral), instrument, lease or other document to which the Corporation
is a party or by which it is bound, |
| |
|
(ix) |
|
compliance
with all Applicable Securities Laws including, without limitation,
the receipt of all necessary regulatory approvals (including, without
limitation, the conditional approval of the Exchange) relating to the
distribution of the Units and the Agent’s Warrants, |
| |
|
(x) |
|
the
distribution of the Units in the Selling Jurisdictions, |
| |
|
(xi) |
|
the
first trade in Common Shares and the Warrants comprising the Units and the
Common Shares issuable upon exercise of the Warrants and the Agent’s
Warrants, |
12
| |
|
(xii) |
|
the
Common Shares comprising the Units and the Common Shares issuable upon
exercise of the Warrants and the Agent’s Warrants, having been
conditionally approved for listing on the Exchange, and |
| |
|
(xiii) |
|
all
such other matters as the Agent and Agent’s Counsel may reasonably
request. |
| |
It
is understood that the Corporation’s Counsel may rely on certificates of officers of
the Corporation and governmental authorities, the Transfer Agent and the Exchange as to
relevant matters of fact; |
| |
(b) |
|
a
certificate of the Corporation dated the Closing Date, addressed to the Agent
and signed on the Corporation’s behalf by two senior officers of the
Corporation acceptable to the Agent, acting reasonably, certifying that: |
| |
|
(i) |
|
the
Corporation has complied with and satisfied all covenants, terms and
conditions of this agreement on its part to be complied with or satisfied
at or prior to the Closing Time, |
| |
|
(ii) |
|
the
representations and warranties of the Corporation set forth in this
agreement and, where applicable, in the Subscription Agreements are true
and correct at the Closing Time, as if made at such time, |
| |
|
(iii) |
|
no
event of the nature referred to in sections 10.2(a), (b), (c), (d) or (f) has
occurred or to the knowledge of such officers is pending, contemplated or
threatened, |
| |
|
(iv) |
|
the
Corporation has made and/or obtained, on or prior to the Closing Time, all
necessary filings, approvals, consents and acceptances of applicable
regulatory authorities and under any applicable agreement or document to
which the Corporation is a party or by which it is bound in respect of the
execution and delivery of this agreement and the Subscription Agreements,
the offering and sale of the Units and the consummation of the other
transactions contemplated hereby, and |
| |
|
(v) |
|
such
other matters as may be reasonably requested by the Agent or Agent’s
Counsel; |
| |
(c) |
|
evidence
satisfactory to the Agent that the Corporation has obtained all necessary
conditional approvals of the Exchange for the issuance of the Units and
the listing of the Common Shares comprising the Units and the Common Shares
issuable upon exercise of the Warrants and the Agent’s Warrants,
subject only to the filing of any documents and payment of any fees which
may be required by the Exchange; |
| |
(d) |
|
definitive
certificates representing, in the aggregate, all of the Common Shares and
Warrants comprising the Units, in each case subscribed for on the Closing
Date registered in such name or names as the Agent shall notify the
Corporation in writing not less than 24 hours prior to the Closing Time
provided that such certificates registered in such names may, subject to
receipt by the Corporation and the Transfer Agent of a satisfactory
indemnity, be delivered in advance of the Closing Date to the Agent or
such other parties in such locations as the Agent may direct and the Agent
and the Corporation may agree upon; |
13
| |
(e) |
|
duly
completed and executed copies of the Subscription Agreements, each in form
and substance reasonably satisfactory to the Agent and the Agent’s
Counsel; |
| |
(f) |
|
the
commission provided for in section 9.1; and (g) the Agent’s Warrants. |
| |
The
foregoing conditions are for the sole benefit of the Agent, and may be waived in whole or
in part by the Agent at any time and without limitation, the Agent shall have the right,
on behalf of potential Subscribers, to withdraw all Subscription Agreements delivered and
not previously withdrawn or rescinded by such persons if such conditions are not met. If
any of the foregoing conditions are not met, the Agent may terminate its obligations under
this agreement without prejudice to any other remedies it may have. |
ARTICLE 9
COMMISSION AND EXPENSES
| 9.1 |
|
In consideration for its services hereunder, the Corporation agrees to (i) pay to the
Agent at the Closing Time a cash commission equal to the amount of 8% of the gross
subscription proceeds from the sale of the Units; and (ii) deliver to the Agent the
Agent’s Warrants. |
| 9.2 |
|
Whether or not the transactions contemplated herein shall be completed, all reasonable
costs and expenses of or incidental to the distribution of the Units, including, without
limitation, all costs and expenses of or incidental to the private placement of the Units,
the fees and expenses of Corporation’s Counsel, the fees and expenses of local
counsel retained by Corporation’s Counsel, the fees and expenses of the
Corporation’s auditors, the reasonable fees, expenses and disbursements of
Agent’s Counsel, the reasonable out-of-pocket expenses of the Agent relating to this
transaction and all other costs and expenses relating to this transaction shall be borne
by the Corporation and paid forthwith upon receiving an account therefor. |
ARTICLE 10
EARLY TERMINATION
| 10.1 |
|
All representations, warranties, covenants, terms and conditions of this agreement shall
be construed as conditions. The Agent may waive in whole or in part any breach of, default
under or non-compliance by the Corporation with, any representation, warranty, covenant,
term or condition hereof, or extend the time for compliance therewith, without prejudice
to any of its rights in respect of any other representation, warranty, covenant, term or
condition hereof, or any other breach of, default under or non-compliance with any other
representation, warranty, covenant, term or condition hereof, provided that any such
waiver or extension shall be binding on the Agent only if the same is in writing. |
| 10.2 |
|
In addition to any other remedies which may be available to the Agent, the Agent shall be
entitled, at its option, to terminate and cancel, without any liability on the
Agent’s part, the Agent’s obligations under this agreement if, at or prior to
the Closing Time: |
| |
(a) |
|
any
order to cease or suspend trading in any securities of the Corporation, or
prohibiting or restricting the distribution of the Units or proceedings
are announced or commenced for the making of any such order, by any
Securities Commission or similar regulatory authority, the Exchange or by
any other competent authority, and has not been rescinded, revoked or
withdrawn; |
14
| |
(b) |
|
any
inquiry, investigation (whether formal or informal) or other proceeding in
relation to the Corporation or any of its directors or senior officers is
announced, commenced or threatened by any Securities Commission or similar
regulatory authority, the Exchange or any other competent authority or any
order is issued under or pursuant to any statute of Canada or of any of
the provinces or jurisdictions of Canada, or any other applicable law or
regulatory authority, or there is any change of law, regulation or policy
or the interpretation or administration thereof, which, in the opinion of
the Agent, acting reasonably, operates to materially prevent, restrict or
affect trading in the Common Shares and which has not been rescinded,
revoked or withdrawn; |
| |
(c) |
|
there
shall occur an event, or, the Agent’s due diligence investigations
shall identify or discover an event, fact or circumstance, (actual,
contemplated or threatened) which constitutes a material change or any
change in a material fact or occurrence of a material fact or event in
respect of the business, operations, assets or affairs (financial or
otherwise) of the Corporation as disclosed in the Public Record, which in
the Agent’s sole opinion, acting reasonably, could be reasonably
expected to have a material adverse effect on the market price or value of
the Warrants or the Common Shares; |
| |
(d) |
|
there
should develop, occur or come into effect or existence any event, action,
state, condition or major financial occurrence of national or
international consequence or any action by government, law or regulation,
enquiry or other such occurrence which, in the sole opinion of the Agent,
acting reasonably, materially adversely affects the financial markets or
the business, operations or affairs of the Corporation such that it would
not be practicable to market the Units or which would render the Units
unsaleable; |
| |
(e) |
|
the
state of the financial markets or of the industry or markets in which the
Corporation operates is or becomes such that the Units cannot, in the
reasonable opinion of the Agent, be successfully or profitably marketed;
or |
| |
(f) |
|
the
Corporation shall be in breach of, default under or non-compliance with any
material representation, warranty, covenant, term or condition of this
agreement or the Subscription Agreements. |
| 10.3 |
|
The Agent may exercise any or all of the rights provided for in sections 8.1, 10.1 or 10.2
notwithstanding any act or thing taken or done by the Agent or any action by the Agent,
whether before or after the occurrence of any material change, including, without
limitation, any act of the Agent related to the Offering or continued Offering of the
Units for sale and the Agent shall only be considered to have waived or be estopped from
expressing or relying upon any of its rights under or pursuant to sections 8.1, 10.1 or
10.2 if such waiver or estoppel is in writing and expressly waives or estops such exercise
or reliance. |
| 10.4 |
|
Any termination pursuant to the terms of this agreement shall be effected by notice in
writing delivered to the Corporation; provided that no termination shall discharge or
otherwise affect any obligation of the Corporation under section 9.2 or Article 11 if the
closing of the Offering has occurred. The rights of the Agent to terminate its obligations
hereunder are in addition to, and without prejudice to, any other remedies it may have. |
15
ARTICLE 11
INDEMNIFICATION AND
CONTRIBUTION
| 11.1 |
|
The Corporation shall indemnify and save the Agent, and each of the Agent’s
directors, officers, employees and advisors (collectively “Indemnified
Persons” and singularly an “Indemnified
Person”) harmless against and from all liabilities, claims, demands,
losses (other than losses of profit in connection with, the distribution of the Units),
costs, damages, fines, penalties and expenses (collectively, the
“Liabilities”) to which such persons or companies may be
subject or which such persons or companies may suffer or incur, whether under the
provisions of any statute or otherwise, in any way caused by, or arising directly or
indirectly from or in consequence of: |
| |
(a) |
|
any
information or statement contained in the Public Record (other than any
information or statement relating solely to the Agent and furnished to the
Corporation by the Agent expressly for inclusion in the Public Record)
which is or is alleged to be untrue or any omission or alleged omission to
provide any information or state any fact the omission of which makes or
is alleged to make any such information or statement untrue or misleading
in light of the circumstances in which it was made; |
| |
(b) |
|
any
misrepresentation or alleged misrepresentation (except a misrepresentation
which is based upon information relating solely to and provided to the
Corporation by the Agent expressly for inclusion in the Public Record)
contained in the Public Record; |
| |
(c) |
|
any
prohibition or restriction of trading in the securities of the Corporation
or any prohibition or restriction affecting the distribution of the Units
imposed by any competent authority if such prohibition or restriction is
based on any misrepresentation or alleged misrepresentation of a kind
referred to in section 11.1(a); |
| |
(d) |
|
any
order made or any inquiry, investigation (whether formal or informal) or
other proceeding commenced or threatened by any one or more competent
authorities into the affairs of the Corporation relating to or affecting
the distribution of the Units other than any such order, inquiry,
investigation or other proceeding based solely upon the activities or
alleged activities of the Agent (or selling group members, if any); or |
| |
(e) |
|
any
breach of, default under or non-compliance by the Corporation with any
representation, warranty, covenant, term or condition of this agreement,
the Subscription Agreements or any requirement of Applicable Securities
Laws. |
| |
The
Corporation hereby waives its right to recover contribution from the Agent with respect to
any liability of the Corporation by reason of or arising out of any misrepresentation in
the Public Record. |
| |
With
respect to any person or corporation in respect of which indemnification is or might
reasonably be considered to be provided for in this Article 11 and who is not a party to
this agreement, the Agent shall obtain and hold the rights and benefits of this Article 11
in trust for and on behalf of such person or corporation. |
| |
The
Corporation agrees that in case any legal proceedings or investigation shall be brought
against or initiated against the Corporation by any governmental commission, regulatory
authority, the Exchange, a court, or other entity having regulatory authority, and an
Indemnified Person or other representatives of the Agent shall be required to testify in
connection therewith or shall be required to respond to procedures designed to discover
information regarding, in |
16
| |
connection
with, or by reason of the performance of professional services rendered to the
Corporation by the Agent, the Corporation shall pay the Agent the reasonable costs
(including an amount to reimburse the Agent for time spent by its personnel in connection
therewith on a per diem basis and out-of-pocket expenses incurred by their
personnel in connection therewith) as they occur unless such proceedings or
investigations shall be brought or initiated as a result of any actions or inaction of
the Agent, or any selling group members, if any. |
| 11.2 |
|
If any claim contemplated by section 11.1 shall be asserted against any Indemnified
Person, such Indemnified Person shall notify the Corporation as soon as possible of the
nature of such claim and the Corporation shall be entitled (but not required) to assume
the defense of any suit brought to enforce such claim; provided however, that the defense
shall be through legal counsel selected by the Corporation and acceptable to the
Indemnified Person acting reasonably and that no settlement may be made by the Corporation
or the Indemnified Person without the prior written consent of the other, such consent not
to be unreasonably withheld. The Indemnified Person shall have the right to retain its own
counsel in any proceeding relating to a claim contemplated by section 11.1 if: |
| |
(a) |
|
the
Corporation or the Indemnified Person has been advised by counsel that there
are legal defenses available to the Indemnified Person which are different
from or additional to defenses available to the Corporation (in which case
the Corporation shall not have the right to assume the defense of such
proceedings on the Indemnified Person’s behalf); |
| |
(b) |
|
the
Corporation shall not have taken the defense of such proceedings and
employed counsel within 10 days after notice of commencement of such
proceedings; or |
| |
(c) |
|
the
employment of such counsel has been authorized by the Corporation in
connection with the defense of such proceedings; |
| |
and,
in any such event, the reasonable fees and expenses of such Indemnified Person’s
counsel (on a solicitor and his client basis) shall be paid by the Corporation provided
that in no event shall the Corporation be required to pay the fees and disbursements of
more than one set of counsel in any single jurisdiction for all Indemnified Persons. |
| 11.3 |
|
In order to provide for just and equitable contribution in circumstances in which the
indemnification provided for in this agreement is due in accordance with its terms but is,
in whole or in part, for any reason, held by a court to be unavailable from the
Corporation on grounds of policy or otherwise, the Corporation and the party or parties
seeking indemnification shall contribute to the aggregate Liabilities (including legal or
other expenses reasonably incurred in connection with the investigation or defense of the
same) to which they may be subject or which they may suffer or incur: |
| |
(a) |
|
in
such proportion as is appropriate to reflect the relative benefit received by
the Corporation on the one hand, and by the party or parties seeking
indemnity on the other hand, from the Offering; or |
| |
(b) |
|
if
the allocation provided by section 11.3(a) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in section 11.3(a) but also to reflect the relative
fault of the party or parties seeking indemnity, on the one hand, and the
parties from whom indemnity is sought, on the other hand, in connection
with the statements or omissions or other matters which resulted in such
Liabilities, as well as any other relevant equitable considerations. |
17
| |
The
relative benefits received by the Corporation, on the one hand, and the Agent on the other
hand shall be deemed to be in the same proportion that the total proceeds of the Offering
received by the Corporation (net of Agent’s commissions but before deducting
expenses) bear to the fees received by the Agent. In any event, the Corporation and the
Agent agree that any contribution of the Agent should be limited to the fees paid to the
Agent in connection with the distribution of the Units. The Corporation agrees that it
would not be just and equitable if contributions pursuant to this agreement were
determined by any other method of allocation than those referred to above. |
| |
The
rights to contribution provided in this section 11.3 shall be in addition to, and without
prejudice to, any other right to contribution which the Agent may have. |
ARTICLE 12
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS, TERMS AND
CONDITIONS
| 12.1 |
|
It is understood that all representations, warranties, covenants, indemnities, terms and
conditions herein or contained in certificates or documents submitted pursuant to or in
connection with the transactions contemplated herein shall survive the payment by the
Agent for the Units and the termination of this agreement and shall continue in full force
and effect for the benefit of the Agent regardless of any investigation by or on behalf of
the Agent with respect thereto. |
ARTICLE 13
NOTICES
| 13.1 |
|
Any notice or other communication to be given hereunder shall, in the case of notice to be
given to the Corporation, be addressed to the Corporation to the President, at the above
address, fax no. (000) 000-0000 and to Xxxxxx Xxxxxxx XXX, Xxxxxx Xxxxx, 0000 – 000
Xxxx Xxxxxx, Xxxxxxxxx, X.X., X0X 0X0, Attention: Xxxxxxx X. Xxxxx, fax no. (000) 000-0000
and, in the case of notice to be given to the Agent, be addressed to: |
| |
Xxxxxxxx Capital Inc.
0000, 000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx XxXxxxxxxx
Fax No: (000) 000-0000 |
| |
Xxxxxxx Xxxxx LLP
4500 Bankers Hall East
000 – 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: J. Xxxxxxx Xxxxxx
Fax No. (000) 000-0000 |
Any
such notice or other communication shall be in writing and may be given by fax or
delivery, and shall be deemed to be have been given upon being faxed (provided that such
time falls before 5:00 p.m. (Calgary time) on a Business Day, otherwise notice shall be
deemed to have been so given on the next Business Day) or upon receipt if delivered.
18
ARTICLE 14
GENERAL
| 14.1 |
|
It is the intention of the Corporation to constitute the Agent as a trustee for the
Subscribers in respect of the benefit of the representations, warranties and covenants of
the Corporation set forth in this agreement. |
14.2 The Corporation:
| |
(a) |
|
acknowledges
and agrees that the Agent has certain statutory obligations as a
registrant under the Applicable Securities Laws and has fiduciary
relationships with the Subscribers in connection with this transaction
(its “clients”); |
| |
(b) |
|
acknowledges
and agrees that the Agent is not a fiduciary of the Corporation; and |
| |
(c) |
|
consents
to the Agent acting hereunder while continuing to act for its clients. |
| |
To
the extent that the Agent’s statutory obligations as a registrant under Applicable
Securities Laws or fiduciary relationships with its clients conflicts with its obligations
hereunder the Agent shall be entitled to fulfil its statutory obligations as a registrant
under Applicable Securities Laws and its duties to its clients. Nothing in this agreement
shall be interpreted to prevent the Agent from fulfilling its statutory obligations as a
registrant under Applicable Securities Laws or to act as a fiduciary of its clients. |
| 14.3 |
|
If one or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this agreement, but this
agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. |
| 14.4 |
|
This agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein and each of the parties
hereto irrevocably attorns to the jurisdiction of the courts of the Province of Alberta. |
| 14.5 |
|
Time
shall be of the essence of this agreement. |
| 14.6 |
|
This agreement may be executed in one or more counterparts and delivered by facsimile,
each of which so executed shall constitute an original and all of which together shall
constitute one and the same agreement. |
| 14.7 |
|
This agreement represents the entire agreement of the parties hereto relating to the
subject matter hereof and there are no representations, warranties, covenants or other
agreements relating to the subject matter hereof except as stated or referred to herein. |
19
| 14.8 |
|
It is understood that the terms and conditions of this agreement supersede any previous
verbal or written agreement between the Agent and the Corporation with respect to the
subject matter hereof. |
If the foregoing is in accordance
with your understanding and is agreed to by you, please confirm your acceptance by signing
the enclosed copies of this letter at the place indicated and by returning the same to
Agents’ Counsel.
| |
XXXXXXXX CAPITAL INC.
By:
|
ACCEPTED AND AGREED to effective as
of the date of this Agreement
KODIAK OIL & GAS CORP.
By:
