EXHIBIT 4.3
Effective as of February
22, 2005
Kodiak Oil & Gas Corp.
Xxxxx 000, 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000
| Attention: |
Xx. Xxxx X. Xxxxxxxx
President and Chief Executive Officer
|
Dear Sir:
Re: Private Placement of
Common Shares
Xxxxxxxx
Capital Inc. (the “Agent”) understands that Kodiak Oil & Gas Corp. (the
“Corporation”) proposes to issue and sell up to 10,000,000 Common Shares (the
“Total Offered Shares”) on both a brokered and non-brokered basis at a price of
CDN $0.86 per Common Share by way of private placement.
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, on
a reasonable best efforts basis and in accordance with the terms hereof, up to 3,400,000
of the Total Offered Shares (the “Offered Shares”) for sale on the Closing Date
(as defined below) in the Selling Jurisdictions (as defined below) on a private placement
basis at the price of CDN $0.86 per Offered Share.
The
Agent shall be entitled, in connection with the sale of the Offered Shares, to retain as
sub-agents other registered investment dealers or brokers to participate in the
solicitation of offers to purchase the Offered Shares and may receive (for delivery to the
Corporation at the Closing Time (as defined below)) subscriptions for Offered Shares from
other registered investment dealers or brokers (where registration is necessary). The
Agent will have the exclusive right to select such sub-agents and the fees payable to such
sub-agents shall be for the account of the Agent. It is understood and agreed that the
Agent is under no obligation to purchase any of such Offered Shares, although it may
subscribe for Offered Shares if it so desires.
In
consideration for its services hereunder, the Agent shall be entitled to the fee provided
for in accordance with Section 2 hereof.
– 2 –
| |
(a) |
|
“Agency
Fee” shall have the meaning set forth in section 2 of this
Agreement; |
| |
(b) |
|
“Agent’s
counsel” means Xxxxxxx Xxxxx LLP or such other legal counsel as
the Agent may appoint; |
| |
(c) |
|
“Applicable
Securities Laws” includes all applicable securities, corporate
and other laws, rules, regulations, notices, policies and similar
instruments and proposed notices and policies; |
| |
(d) |
|
“Business
Day” means a day which is not a Saturday, Sunday or legal holiday
in Denver, Colorado or Calgary, Alberta; |
| |
(e) |
|
“Closing
Date” means March 17, 2005 or such other date as the Agent and
the Corporation may agree; |
| |
(f) |
|
“Closing
Time” means 10:00 a.m. (Calgary time) or such other time, on the
Closing Date, as the Agent and the Corporation may agree; |
| |
(g) |
|
“Common
Shares” means common shares in the capital of the Corporation; |
| |
(h) |
|
“Corporation’s
counsel” means Xxxxxx Xxxxxxx LLP, or such other legal counsel as
the Corporation may appoint; |
| |
(i) |
|
“Documents” means,
collectively: |
| |
|
(a) |
|
the
audited consolidated financial statements of the Corporation for the years
ended December 31, 2003 and 2002; |
| |
|
(b) |
|
the
management information circular and proxy statement of the Corporation dated
May 7, 2004 with respect to the annual meeting of shareholders of the
Corporation held on June 18, 2004; |
| |
|
(c) |
|
the
interim reports of the Corporation for the three months ended March 31, 2004,
the six months ended June 30, 2004 and the nine months ended September 30, 2004
including, without limitation, the unaudited financial statements of the
Corporation for such three, six and nine month periods; |
| |
|
(d) |
|
all
material change reports of the Corporation filed after December 31, 2003; and |
| |
|
(e) |
|
all
press releases of the Corporation subsequent to December 31, 2003; |
| |
(j) |
|
“Due
Diligence Session” shall have the meaning set forth in section 3(c) of
this Agreement; |
| |
(k) |
|
“Exchange” means
the TSX Venture Exchange or any successor thereto; |
| |
(l) |
|
“Financial
Statements” means, collectively, the comparative audited
financial statements of the Corporation for the financial year ended
December 31, 2003 and the unaudited interim financial statements of the
Corporation for the three months ended |
– 3 –
| |
March
31, 2004, the six months ended June 30, 2004 and the nine months ended September 30,
2004; |
| |
(m) |
|
“MI
45-102” means Multilateral Instrument 45-102: Resale of
Securities, as adopted on November 30, 2001 in the Selling
Jurisdictions and as amended; |
| |
(n) |
|
“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; |
| |
(o) |
|
“Securities
Commissions”means the securities commissions or similar
regulatory authorities in the Selling Jurisdictions; |
| |
(p) |
|
“Selling
Dealer Group” means the dealers and brokers other than the Agent
who participate in the offer and sale of the Offered Shares pursuant to
this Agreement; |
| |
(q) |
|
“Selling
Jurisdictions” means the provinces of Alberta, British Columbia
and Ontario, and certain other jurisdictions outside Canada, including the
United States of America; |
| |
(r) |
|
“Subscriber” means
any person who executes a Subscription Agreement which is accepted by the
Corporation; |
| |
(s) |
|
“Subscription
Agreements” means the agreements to be entered into between the
Subscribers and the Corporation with respect to the offering of the
Offered Shares; |
| |
(t) |
|
“Third
Parties” means any one or more persons other than the
Corporation; and |
| |
(u) |
|
“Transfer
Agent” means CIBC Mellon Trust Company in its capacity as
registrar and transfer agent for the Common Shares; and |
| |
(v) |
|
“United
States” means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia. |
The terms “affiliated”,
“misrepresentation”, “material change” and “material fact”
shall have the meanings ascribed thereto under the Applicable Securities Laws,
“distribution” means “distribution” or “distribution to the
public”, as the case may be, as defined under the Applicable Securities Laws and
“distribute” has a corresponding meaning.
In
consideration for its services hereunder, the Corporation agrees to pay the Agent on the
Closing Date a fee equal to 8.82% of the aggregate gross proceeds (the “Agency
Fee”) received by the Corporation on the sale of the Offered Shares.
– 4 –
| 3. |
|
Covenants
of the Corporation |
| |
(a) |
|
The
Corporation will duly, punctually and faithfully perform all the obligations
to be performed by it under the Subscription Agreements which the
Corporation accepts. |
| |
(b) |
|
The
Corporation will use its best efforts to give effect to and complete all of
its obligations under this Agreement. |
| |
(c) |
|
Without
limiting the scope of the due diligence inquiries the Agent may conduct,
the Corporation shall make available its directors, officers, employees
and other consultants to answer any questions which the Agent may have and
to participate in one or more due diligence sessions to be held prior to
the Closing Date (the “Due Diligence Session”); the Agent shall
distribute a list of written questions to be answered in advance of such
Due Diligence Session and the Corporation shall provide written responses
to such questions in advance of the Due Diligence Session. |
| |
(d) |
|
during
the period commencing with the date hereof and ending on the conclusion of
the distribution of the Offered Shares, 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 3(d),
notwithstanding this obligation, the Corporation shall be entitled to comply with
Applicable Securities Laws; |
| |
(e) |
|
during
the period commencing with the date hereof and ending on the conclusion of
the distribution of the Offered Shares, promptly inform the Agent of the full
particulars of: |
– 5 –
| |
|
(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 Offered Shares, |
| |
|
(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 Offered Shares; |
| |
(f) |
|
use
the net proceeds from the sale of the Offered Shares to fund the
Corporation’s share of the exploration and drilling programs in
respect of its Pacific Rim properties in the Green River Basin in Wyoming,
including its coalbed methane and conventional tight gas prospects, and
the Corporation’s oil prospects in the Williston Basin of Eastern
Montana and Western North Dakota over the next 12 months and for general
administrative purposes; |
| |
(g) |
|
file
a duly completed and executed Form 45-102F2 pursuant to MI 45-102 within 10
days of the Closing Date; |
| |
(h) |
|
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; |
| |
(i) |
|
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; |
| |
(j) |
|
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 3(d) and take such steps, which in the
Agent’s opinion, acting reasonably, may be necessary or advisable to
comply with Applicable Securities Laws; |
| |
(k) |
|
make
all necessary arrangements with the Exchange so that the Offered Shares
shall be listed and posted for trading on the Exchange as soon as
practicable after the Closing Time; and |
| |
(l) |
|
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 |
– 6 –
| |
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. |
From
the date hereof until the Closing Time, the Corporation will promptly inform the Agent of
the full particulars of any material change (actual, anticipated or threatened) in its
business, operations, capital or condition (financial or otherwise) or its properties or
assets and 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 responses provided by the Corporation at the Due
Diligence Session untrue, false or misleading in a material respect, provided that if the
Corporation is uncertain as to whether a material change, change, occurrence or event of
the nature referred to in this paragraph has occurred, it shall promptly inform the Agent
of the full particulars of the occurrence giving rise to the uncertainty and shall consult
with the Agent as to whether the occurrence is of such nature.
| 5. |
|
Representations,
Warranties and Covenants of the Corporation |
The
Corporation represents and warrants to the Agent, and acknowledges that the Agent is
relying upon such representations and warranties:
| |
(a) |
|
the
Corporation has been duly incorporated and organized and is validly existing
under the laws of the Yukon Territory and has all requisite corporate
authority 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 has no subsidiaries and is not affiliated with, nor is it a
holding corporation of, any other body corporate, nor is it a partner of
any partnership; |
| |
(c) |
|
the
Corporation is duly registered and qualified to carry on business and is
validly subsisting under the laws of each jurisdiction in which it carries
on its business; |
| |
(d) |
|
the
Corporation has full corporate power and authority to issue the Offered
Shares and upon issuance, such Offered Shares will be issued as fully paid
and non-assessable; |
| |
(e) |
|
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
and the Subscription Agreements by the Corporation, or any of the
transactions contemplated hereby or thereby 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,
would result in a breach of or constitute a default under, any term or
provision of the articles, by-laws or resolutions of the Corporation, or
any indenture, mortgage, note, contract, agreement (written or oral),
instrument, lease or other document to which either the Corporation is a
party or by which it is bound, or any judgment, decree, order, statute,
rule or |
– 7 –
| |
regulation
applicable to the Corporation, which default or breach might reasonably be expected to
materially adversely affect the business, operations, capital or condition (financial or
otherwise) of the Corporation or its assets; |
| |
(f) |
|
the
Corporation has full corporate right, power and authority to enter into this
Agreement and the Subscription Agreements and the Corporation has the full
corporate right, power and authority to perform its obligations set out
therein, and this Agreement and the Subscription Agreements have been or
will be, as the case may be, duly authorized, executed and delivered by
the Corporation and are legal, valid and binding obligations of the
Corporation enforceable against the Corporation in accordance with their
terms subject to the general qualifications that: |
| |
|
(i) |
|
enforceability
may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights
generally; and |
| |
|
(ii) |
|
equitable
remedies, including the remedies of specific performance and injunctive
relief, are available only in the discretion of the applicable court; and |
| |
|
(iii) |
|
rights
to indemnify and contribution may be limited by applicable law; |
| |
(g) |
|
the
Corporation does not have any material debts, liabilities or obligations
(absolute, contingent or otherwise) other than as set forth in the
Financial Statements; |
| |
(h) |
|
there
has not been any material adverse change in the capital, assets,
liabilities or obligations (absolute, accrued, contingent or otherwise) of
the Corporation from the position set forth in the Financial Statements
and there has not been any adverse material change in the business,
operations, capital or condition (financial or otherwise) or results of
the operations of the Corporation since December 31, 2003; 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, and the Corporation has not incurred,
assumed or suffered any liability (absolute, accrued, contingent or
otherwise) or entered into any transaction which is or may be material to
the Corporation and is not in the ordinary course of business; |
| |
(i) |
|
there
are no actions, suits, proceedings or inquiries including, to the
knowledge of the Corporation, pending or threatened against or affecting
the Corporation at law or in equity or before or by any federal,
provincial, state, county, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which in any way
materially adversely affect, or may in any way materially adversely
affect, the business, operations or condition (financial or otherwise) of
the Corporation or its assets or which affect or may affect the
distribution of the Offered Shares; |
– 8 –
| |
(j) |
|
the
Corporation has not incurred, assumed or suffered any liability (absolute,
accrued, contingent or otherwise) or entered into any transaction, which
is or may be material to the Corporation and is not in the ordinary course
of business; |
| |
(k) |
|
the
Corporation is not a party to or bound by any material agreement of
guarantee, indemnification (other than an indemnification of directors and
officers in accordance with the by-laws of the Corporation and applicable
laws, and indemnification obligations in favour of agents or underwriters
of securities offerings) or any other like commitment of the obligations,
liabilities (contingent or otherwise) of indebtedness of any other person; |
| |
(l) |
|
the
Corporation does not have any loans or other indebtedness currently
outstanding to or from any of its shareholders, officers, directors or
employees or any other person not dealing at arm’s length with the
Corporation; |
| |
(m) |
|
the
authorized capital of the Corporation consists of 100,000,000 Common Shares,
of which as at the date hereof, 34,810,540 Common Shares are issued and
outstanding as fully paid and non-assessable; |
| |
(n) |
|
other
than pursuant to the provisions of this Agreement and other than options
to acquire 3,152,000 Common Shares held by officers, directors, and
employees and consultants of the Corporation under the Corporation’s
stock option plan, and 2,824,643 outstanding warrants, there are no
outstanding securities convertible or exchangeable into any securities or
ownership interests of the Corporation, or any agreement, warrant, option,
right or privilege being or capable of becoming an agreement, warrant,
option or right for the purchase of any unissued securities of the
Corporation; |
| |
(o) |
|
the
Corporation has duly filed all tax returns required to be filed by it, has
paid all taxes due and payable by it and has paid all assessments and
re-assessments and all other 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, other than those that are
not reasonably expected to have a material adverse effect on the
Corporation, 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 there
are no actions, suits, proceedings, investigations or claims, to the
Corporation’s knowledge, threatened or pending against the
Corporation in respect of 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; |
| |
(p) |
|
no
authorization, approval or consent of any court or governmental authority or
agency is required to be obtained by the Corporation in connection with
the sale and delivery of the Offered Shares; |
– 9 –
| |
(q) |
|
the
form and terms of the definitive certificates representing the Common Shares
are in due and proper form under the laws governing the Corporation; |
| |
(r) |
|
the
minute books of the Corporation contain full, true and correct copies of the
constating documents of the Corporation and copies of all minutes of all
meetings and all consent resolutions of the directors, committees of
directors and shareholders of the Corporation, and all such meetings were
duly called and properly held and all such resolutions were properly
adopted except to the extent that any such failure could not reasonably be
expected to have a material adverse effect on the Corporation; |
| |
(s) |
|
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; |
| |
(t) |
|
there
are no material contracts or agreements to which the Corporation is a
party or by which it is bound. For the purposes of this paragraph, any
contract or agreement pursuant to which the Corporation will, or may
reasonably be expected to result in, a requirement of the Corporation to
expend more than an aggregate of $100,000 or receive or be entitled to
receive revenue of more than $100,000 in either case during any 12 month
period, or is out of the ordinary course of business of the Corporation,
shall be considered to be material; |
| |
(u) |
|
the
Corporation is not a party to any contracts of employment which may not be
terminated on one month’s notice or which provide for payments
occurring on a change of control of the Corporation, except for guaranteed
one year contracts for three employees of the Corporation; |
| |
(v) |
|
although
it does not warrant title, the Corporation does not have reason to believe
that it does not have good and marketable title to or the irrevocable
right to produce and sell its petroleum, natural gas, bitumen 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 all liens, charges, encumbrances,
restrictions or adverse claims created by, through or under the
Corporation, other than any liens or encumbrances that may be outstanding
pursuant to credit agreements with the Corporation’s bank, and 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 interest under valid and subsisting leases,
licenses, permits, consessions, concession agreements, contracts,
subleases, reservations or other agreements; |
| |
(w) |
|
any
and all operations of the Corporation and to the knowledge of the
Corporation, any and all operations by third parties, on or in respect of
the assets and properties of the Corporation, have been conducted in
accordance with good oil and gas industry practices and in material
compliance with applicable laws, rules, regulations, orders and directions
of government and other competent authorities; |
– 10 –
| |
(x) |
|
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 legislation, regulations or by-laws or other lawful
requirements of any governmental or regulatory bodies (“Environmental
Laws”) of each jurisdiction in which it carries on business relating
to the protection of the environment, occupational health and safety or
the processing, use, treatment, storage, disposal, discharge, transport or
handling of any pollutants, contaminants, chemicals or industrial, toxic
or hazardous wastes or substances (“Hazardous Substances”) or
the licensing thereof and the Corporation holds all licenses,
registrations, permits, authorities and qualifications in all
jurisdictions in which the Corporation carries on its business which is
necessary or desirable to carry on the business of the Corporation as now
conducted and as presently proposed to be conducted, and all such
licenses, registrations, permits, authorities and qualifications are valid
and existing and in good standing and none of such licenses,
registrations, permits, authorities or qualifications contains any
burdensome term, provision, condition or limitations 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, the
Corporation has not received notice of any 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 adversely affect the
business, operations, financial condition or prospects of the Corporation,
the Corporation has not received any notice of, or been prosecuted for, an
offence alleging non-compliance with any Environmental Laws, and the
Corporation has not settled any allegation of non-compliance short of
prosecution, and there are no orders or directions relating to
environmental matters requiring any work, repairs, construction or capital
expenditures to be made with respect to any of the assets of the
Corporation nor has the Corporation received notice of any of the same; |
| |
(y) |
|
the
Corporation is not in default of any material requirement of Applicable
Securities Laws and the Corporation is entitled to avail itself of the
applicable prospectus exemptions available under the Applicable Securities
Laws in respect of the trades in its securities to Subscribers as
contemplated by this Agreement; |
| |
(z) |
|
there
has not occurred any material spills, emissions or pollution of any
property of the Corporation, or for which the Corporation is or may be
responsible, nor is the Corporation the subject of any outstanding stop
orders, control orders, clean-up orders of reclamation orders under
applicable environmental laws and regulations; |
| |
(aa) |
|
the
representations and warranties made by the Corporation in the Subscription
Agreements are, or will be, true and correct as of the date at which they
are made; |
| |
(bb) |
|
the
books of account and other records of the Corporation, whether of a
financial or accounting nature or otherwise, have been maintained in
accordance with prudent business practices; |
– 11 –
| |
(cc) |
|
to
the knowledge of the Corporation as at the date of this Agreement, no insider
of the Corporation has the present intention to sell any securities of the
Corporation; |
| |
(dd) |
|
all
filings by the Corporation pursuant to which the Corporation has received or
is entitled to receive government incentives have been made in accordance,
in all material respects, with all applicable legislation and contain no
misrepresentations of material fact or omit to state any material fact
which could cause any amount previously paid to the Corporation or
previsously accrued on the accounts thereof to be recovered or disallowed; |
| |
(ee) |
|
any
and all operations of the Corporation and to the knowledge of the
Corporation, any and all operations by third parties, on or in respect of
the assets and properties of the Corporation, have been conducted in
accordance with applicable laws, rules, regulations, orders and directions
of government and other competent authorities; |
| |
(ff) |
|
the
responses given by management on behalf of the Corporation in the Due
Diligence Session shall, to the knowledge of management, after reasonable
inquiry, be true, correct and complete in all material respects as at the
time such responses are given; |
| |
(gg) |
|
the
Corporation shall comply with all the covenants and agreements made by it in
the Subscription Agreements; and |
| |
(hh) |
|
with
respect to offers and sales in the United States, the Corporation makes the
representations applicable to the Corporation contained in Schedule
“A” hereto. |
| |
It
is further agreed by the Corporation that all representations, warranties and covenants
in this section 5 made by the Corporation to the Agent, as supplemented pursuant to
Section 10(d) hereof, shall also be deemed to be made for the benefit of the Subscribers
as if the Subscribers were also parties hereto (it being agreed that the Agent is acting
for and on behalf of the Subscribers for this purpose). |
| (a) |
|
The
Corporation shall indemnify and save the Agent, and the Agent’s agents,
directors, officers, employees, shareholders, partners and affiliates,
harmless against and from all liabilities, claims, demands, losses (other
than losses of profit in connection with the distribution of the Offered
Shares) costs, damages and expenses to which the Agent, or any of the Agent’s
agents, directors, officers, employees, shareholders, partners or
affiliates may be subject or which the Agent, or any of the Agent’s
agents, directors, officers, employees, shareholders, partners or
affiliates 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: |
| |
|
(i) |
|
any
information or statement relating to or provided by the Corporation 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 |
– 12 –
| |
is
alleged to make any such information or statement untrue or misleading in light of
the circumstances in which it was made; |
| |
|
(ii) |
|
any
misrepresentation or alleged misrepresentation made by the Corporation to
the Agent; |
| |
|
(iii) |
|
any
prohibition or restriction of trading in the securities of the Corporation
or any prohibition or restriction affecting the distribution of 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 subparagraph 6(a)(i) or 6(a)(ii); |
| |
|
(iv) |
|
any
order made or any inquiry, investigation (whether formal or informal) or
other proceeding commenced or threatened by any one or more competent
authorities (not based upon the activities or the alleged activities of
the Agent or its banking or selling group members, if any) relating to or
materially affecting the trading or distribution of the Offered Shares; |
| |
|
(v) |
|
any
misrepresentation contained herein or any breach of, default under or
non-compliance by the Corporation with any representation, warranty, term
or condition of this Agreement, a Subscription Agreement or any
requirement of Applicable Securities Laws; or |
| |
|
(vi) |
|
the
exercise by any Subscriber of any contractual or statutory right of
rescission in connection with the purchase of the Offered Shares; |
| |
provided
that in the event and to the extent that a court of competent jurisdiction shall
determine (or the parties hereto mutually agree in writing) that any proceedings or
liabilities in respect of which indemnity may be sought resulted solely from the gross
negligence, fraud, wilful misconduct or fraudulent misrepresentation of any party
entitled to indemnity hereunder, this indemnity shall not apply. |
| |
The
Agent shall be entitled, as trustee, to enforce the obligations contained herein on
behalf of any other party entitled to indemnity or contribution hereunder. |
| |
The
Corporation agrees that in case any legal proceedings or investigation shall be brought
against or initiated against the Corporation by any securities commission, regulatory
authority, stock exchange, court, or other entity having regulatory authority, and any
representative 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
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
thereof (including an amount to reimburse the Agent for time spent by its personnel in
connection therewith on such individuals’ usual per diem rates and out-of-pocket
expenses incurred by its personnel in connection therewith), as they occur. |
– 13 –
| |
(b) |
|
If
any claim contemplated by paragraph 6(a) shall be asserted against any of the
persons or corporations in respect of which indemnification is or might
reasonably be considered to be provided for in such paragraph, such person
or corporation (the “Indemnified Person”) shall notify the
Corporation (the “Indemnifying Party”), as soon as possible of
the nature of such claim (provided that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of any
liability which the Indemnifying Party may have hereunder except and to
the extent that any such delay or failure to give notice as herein
required prejudices the defence of such claim or results in any material
increase in the liability which the Indemnifying Party has under this
indemnity) and the Indemnifying Party shall be entitled (but not required)
to assume the defense of any suit brought to enforce such claim, provided
however, that the defence shall be through legal counsel selected by the
Indemnifying Party and acceptable to the Indemnified Person acting
reasonably and that no settlement may be made by the Indemnifying Party 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 paragraph 6(a) if: |
| |
|
(i) |
|
the
Indemnified Person has been advised by counsel that there may be a
reasonable legal defence available to the Indemnified Person which is
different from or additional to a defence available to the Indemnifying
Party (in which case the Indemnifying Party shall not have the right to
assume the defence of such proceedings on the Indemnified Person’s
behalf); |
| |
|
(ii) |
|
the
Indemnifying Party shall not have taken the defence of such proceedings and
employed counsel within ten (10) days after notice of commencement of such
proceedings; or |
| |
|
(iii) |
|
the
employment of such counsel has been authorized by the Indemnifying Party in
connection with the defense of such proceeding; |
| |
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 Indemnifying Party,
provided that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and expenses
of more than one separate law firm (in addition to any local counsel) for all such
Indemnified Persons. |
| |
(c) |
|
The
Corporation shall not, without Agent’s prior consent, settle,
compromise, consent to the entry of any judgment in or otherwise seek to
terminate any action, suit, proceeding, investigation or claim in respect
of which indemnification may be sought hereunder (whether or not an
Indemnified Person is a party thereto) unless such settlement, compromise,
consent or termination includes a release of each Indemnified Person from
any and all liabilities arising out of such action, suit, proceeding,
investigation or claim. No admission of liability for any |
– 14 –
| |
proceeding
shall be made without the consent of the Indemnified Persons affected, such consent not
to be unreasonably withheld or delayed. No admission of liability shall be made by an
Indemnified Person without the consent of the Corporation, such consent not to be
unreasonably withheld or delayed, and the Corporation shall not be liable for any
settlement or any proceeding made without their consent, such consent not to be
unreasonably withheld or delayed. |
| |
(d) |
|
The
rights to indemnification provided in this Section 6 shall be in
addition to, and without prejudice to, any other rights or remedies which
any Indemnified Person may have. |
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,
for any reason, held by a court to be unavailable from the Indemnifying Party on ground of
policy or otherwise, each of the Indemnifying Party and the party or parties seeking
indemnification shall contribute to the aggregate liabilities, claims, demands, losses
(other than losses of profit in connection with the distribution of the Offered Shares),
costs, damages and expenses (including legal or other expenses reasonably incurred in
connection with 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 Indemnifying Party on the one hand, and by the party or parties
seeking indemnity on the other hand, from the offering of the Offered
Shares; or |
| |
(b) |
|
if
the allocation provided by paragraph 7(a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in paragraph 7(a) above 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, commissions or omissions or other
matters which resulted in such liabilities, claims, demands, losses,
costs, damages or expenses as well as any other relevant equitable
considerations. |
For the purposes of this section 7,
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 fees but before deducting expenses) bear to
the fees received by the Agent.
The
parties hereto agree that it would not be just and equitable if contributions pursuant to
this Agreement were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
immediately preceding paragraphs. The rights to contribution provided in this section 7
shall be in addition to, and without prejudice to, any other right to contribution which
the parties hereto may have.
Any
liability of the Agent under this section 7 shall be limited to the amount payable to the
Agent under section 2 hereof.
– 15 –
The
obligations under the indemnity and right of contribution provided herein shall apply
whether or not the transactions contemplated by this Agreement are completed and shall
survive the completion of the transactions contemplated under this Agreement and the
termination of this Agreement.
Whether
or not the transactions contemplated herein shall be completed, all costs and expenses of
or incidental to the creation, issuance and distribution of the Offered Shares shall be
borne by the Corporation, including, without limitation, the fees payable pursuant to the
Applicable Securities Laws, the fees and expenses of the Corporation’s counsel, the
reasonable fees and expenses of any special counsel retained by the Corporation’s
counsel, the fees and expenses of the Corporation’s auditors, transfer agents,
engineers and other outside consultants, the reasonable fees and expenses of Agent’s
counsel and the reasonable out-of-pocket expenses of the Agent relating to this
transaction and all other costs and out-of-pocket expenses relating to this transaction.
The Agent shall provide to the Corporation receipts or other documentation evidencing
reasonable out-of-pocket expenses for which the Agent is seeking reimbursement.
| |
(a) |
|
The
Agent may terminate its obligations hereunder, by written notice to the
Corporation, in the event that after the date hereof and at or prior to
the Closing Time: |
| |
|
(i) |
|
any
order to cease or suspend trading in any securities of the Corporation, or
prohibiting or restricting the distribution of the Offered Shares is made,
or proceedings are announced, commenced or threatened for the making of
any such order, by any securities commission or similar regulatory
authority or by any other competent authority, and has not been rescinded,
revoked or withdrawn; |
| |
|
(ii) |
|
the
state of the financial markets or the energy industry is such that the
Offered Shares cannot, in the sole opinion of the Agent acting reasonably,
be successfully marketed; |
| |
|
(iii) |
|
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 or by any other competent authority if, in the
reasonable opinion of the Agent, the announcement, commencement or
threatening thereof materially adversely affects or may materially
adversely affect the trading or distribution of the Offered Shares; |
| |
|
(iv) |
|
there
shall have occurred any material adverse change (actual, contemplated or
threatened) or any change in a material fact or occurrence of a material
fact or event or event of the nature described in paragraph 4, as
determined by the Agent in its sole discretion, acting reasonably, in
respect of the business, operations, capital or condition (financial or |
– 16 –
| |
otherwise) of the Corporation or its
properties, assets, liabilities or obligations (absolute, accrued, contingent
or otherwise); |
| |
|
(v) |
|
there
should develop, occur or come into effect or existence any event, action,
state, condition or financial occurrence, or any catastrophe of national
or international consequence, any law or regulation, or any other
occurrence of any nature whatsoever, which, in the sole opinion of the
Agent acting reasonably, materially adversely affects, or involves, or
will materially adversely affect, or involve, the financial markets or the
business, operations or affairs of the Corporation, such that it would not
be practical (in the sole opinion of the Agent) to market the Offered
Shares; |
| |
|
(vi) |
|
the
Corporation shall be in breach of, default under or non-compliance with, in
any material respect, any representation, warranty, term or condition of
this Agreement or the Subscription Agreements; or |
| |
|
(vii) |
|
the
Agent shall determine that there exists any fact or circumstance not
generally disclosed by the Corporation at the date hereof, which would
have, in the opinion of the Agent, acting reasonably, a significant
adverse effect on the market price or value of the Offered Shares. |
| |
(b) |
|
The
Agent may exercise any or all of the rights provided for in paragraph 9(a)
or sections 10 or 14 notwithstanding any material change, change, event or
state of facts and notwithstanding any act or thing taken or done by the
Agent or any inaction by the Agent, whether before or after the occurrence
of any material change, change, event or state of facts including, without
limitation, any act of the Agent related to the offering of the Offered
Shares for sale and the Agent shall only be considered to have waived or
be estopped from exercising or relying upon any of its rights under or
pursuant to paragraph 9(a) or sections 10 or 14if such waiver or
estoppel is in writing and specifically waives or estoppes such exercise
or reliance. |
| |
(c) |
|
If
the Closing Date has not occurred on or before April 15, 2005, either the
Corporation or the Agent may terminate its obligations under this
Agreement by written notice to the other. |
| |
(d) |
|
The
Corporation and the Agent may terminate this Agreement at any time by mutual
agreement in writing signed by the Corporation and the Agent. |
| |
(e) |
|
Any
termination pursuant to the terms of this Agreement shall be effected by
notice in writing delivered to the Corporation or the Agent, as the case
may be, provided that no termination shall discharge or otherwise affect
any obligation of the parties under sections 6, 7 or 8 herein. The right
of either party to terminate its obligations hereunder is in addition to,
and without prejudice to, any other remedies it may have. |
– 17 –
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 the Subscribers to withdraw
all Subscription Agreements delivered and not previously withdrawn by Subscribers unless
the Agent receives, at or prior to the Closing Time:
| |
(a) |
|
A
legal opinion of the Corporation’s counsel addressed to the Agent and
Agent’s counsel, in form and substance reasonably satisfactory to the
Agent and Agent’s counsel, with respect to such matters as the Agent
and Agent’s counsel may reasonably request relating to the offering
of the Offered Shares, including, without limitation, that: |
| |
|
|
(A) |
|
has
been duly incorporated, is validly subsisting and is current and up to date in
respect of all corporate filings required under the laws of the jurisdiction of
its incorporation; |
| |
|
|
(B) |
|
has
all requisite power and authority to carry on its business as now conducted by
it and to own its properties and assets; and |
| |
|
|
(C) |
|
is
qualified to carry on business under the laws of the jurisdictions in which it
carries on a material portion of its business; |
| |
|
(ii) |
|
the
Corporation has all necessary corporate power and authority to enter into
this Agreement and the Subscription Agreements and the Corporation has all
necessary corporate power and authority to perform its obligations set out
herein and therein, and this Agreement and the Subscription Agreements
have been duly authorized, executed and delivered by the Corporation and
constitute legal, valid and binding obligations of the Corporation,
enforceable against the Corporation in accordance with their terms subject
to laws relating to creditors’ rights generally and except that
rights to indemnity and contribution may be limited or unavailable by
applicable law; |
| |
|
(iii) |
|
the
execution and delivery of this Agreement and the Subscription Agreements by
the Corporation and the fulfillment of the terms thereof by the
Corporation and the performance of and compliance with the terms of this
Agreement and the Subscription Agreements by the Corporation do not and
will not result in a 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 or any term or provision of the articles, by-laws of the
Corporation or, of which counsel is aware, 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, of which such counsel is aware, which might reasonably be expected
to |
– 18 –
| |
materially
adversely affect the business, operations, capital or condition
(financial or otherwise) of the Corporation; |
| |
|
(iv) |
|
the
form and terms of the definitive certificates representing the Common Shares
have been approved and adopted by the directors of the Corporation and are
in due and proper form under the laws governing the Corporation; |
| |
|
(v) |
|
the
Common Shares have been duly created, authorized and issued as fully paid
and non-assessable; |
| |
|
(vi) |
|
the
offering, sale, issuance and delivery of the Offered Shares by the
Corporation to the Subscribers in accordance with the Subscription
Agreements are exempt, either by statute, regulation or order, from the
registration and prospectus requirements of the Applicable Securities Laws
in the Selling Jurisdictions and no prospectus will be required and no
other document must be filed, proceeding taken or approval, permit,
consent, authorization or authority obtained in any of the Selling
Jurisdictions to permit such offering, sale and delivery of the Offered
Shares by the Corporation to the Subscribers, except for the filing by the
Corporation, within the prescribed time periods, of the required reports
of such sale and the payment by the Corporation of applicable fees
relating thereto; |
| |
and
as to the authorized and issued capital of the Corporation, the first trade in the
Offered Shares and all other legal matters, including compliance with the Applicable
Securities Laws, in any way connected with the issuance, sale and delivery of the Offered
Shares as the Agent may reasonably request. |
| |
It
is understood that the Corporation’s counsel may rely on the opinions of local
counsel acceptable to it as to matters governed by the laws of jurisdictions other than
Alberta or Canada and on certificates of officers of the Corporation 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 its Chief Executive Officer
and one other senior officer of the Corporation satisfactory to the Agent,
acting reasonably, certifying that: |
| |
|
(i) |
|
the
Corporation has complied with and satisfied all terms and conditions of this
Agreement and the Subscription Agreements on its part to be complied with
or satisfied at or prior to the Closing Time; |
| |
|
(ii) |
|
the
representations, warranties and covenants of the Corporation set forth in
this Agreement and the Subscription Agreements are true and correct at the
Closing Time, as if made at such time; |
| |
|
(iii) |
|
no
event of a nature referred to in subparagraph 9(a)(i), (iii), (iv) or (v) has
occurred or to the knowledge of such officers is pending, contemplated or |
– 19 –
| |
threatened
excluding with respect to subparagraphs 9(a)(iii), (iv) or (v) any obligation to make a
determination as to the Agent's opinion; |
| |
|
(iv) |
|
no
order, ruling or determination having the effect of ceasing or suspending
trading in any securities of the Corporation or prohibiting or restricting
the distribution of the Offered Shares has been made, or proceedings have
been announced, commenced or, to the knowledge of the Corporation,
threatened for the making of any such order, ruling or determination by
any securities commission or similar regulatory authority or by any other
competent authority, and has not been rescinded, revoked or withdrawn,
and, to the knowledge of such officers, no proceedings for such purpose
are pending, contemplated or threatened; |
| |
|
(v) |
|
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
by the Corporation, the offering and sale of the Offered Shares and the
consummation of the other transactions contemplated hereby (subject to
completion of filings with certain regulatory authorities following the
Closing Date; and |
| |
|
(vi) |
|
such
other matters as may be reasonably requested by the Agent or Agent’s
counsel. |
| |
(c) |
|
Executed
copies of the Subscription Agreements in form and substance reasonably
satisfactory to the Agent and the Agent’s counsel. |
| |
(d) |
|
Confirmation
of additional representations and warranties as may be reasonably
requested by the Agent to address special issues identified during the
course of the Agent’s due diligence review. |
| |
Subject
to the compliance by the Agent with its obligations hereunder, the Corporation may not
reject any properly completed Subscription Agreement unless: (i) the number of Common
Shares subscribed for pursuant to all the Subscription Agreements and tendered by the
Agent, exceeds the maximum number of Common Shares to be sold under this Agreement; or
(ii) the issuance of Offered Shares pursuant to any such Subscription Agreement would
breach or violate Applicable Securities Laws. |
The
sale of the Offered Shares shall be completed at the Closing Time at the offices of
Agent’s counsel or at such other place as the Corporation and the Agent may agree.
Subject to the conditions set forth in section 10 herein, the Agent, on the Closing Date,
shall deliver to the Corporation:
| |
(a) |
|
all
completed Subscription Agreements and where applicable, all completed forms
required by the Applicable Securities Laws; and |
– 20 –
| |
(b) |
|
a
certified cheque(s) or bank draft(s) payable to the Corporation at par in
Calgary, or wire transfer of funds, in an amount equal to the aggregate
amount of all of the subscriptions for Offered Shares delivered to and
accepted by the Corporation, less the fees, expenses and disbursements
provided for in Sections 2 and 8 herein (or effect payment in such other
manner as the Corporation and the Agent may agree); |
| |
against
delivery by the Corporation of: |
| |
(c) |
|
the
opinions, certificates and documents referred to in section 10 above; and |
| |
(d) |
|
definitive
certificates representing, in the aggregate, all of the Offered Shares
subscribed for in the name of Xxxxxxxx Capital Inc. or in such name or
names as the Agent shall notify the Corporation in writing not less than
twenty-four (24) hours prior to the Closing Time provided such
certificates registered in such names may, subject to receipt by the
Corporation 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. |
The
Agent shall have the option to terminate this Agreement if its due diligence inquiries or
investigations identify a material adverse circumstance which either existed as at the
effective date of this Agreement but which was not disclosed in writing to the Agent or
which occurred after the effective date hereof but prior to the Closing Time.
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 Attention: Xx. Xxxx X. Xxxxxxxx,
at the above address, fax no. (000) 000-0000 and a copy to:
| |
Xxxxxx Xxxxxxx LLP
Xxxxxx Court
1000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, XX
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 Xxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxxx XxXxxxxxxx
Fax No.: (000) 000-0000 |
– 21 –
| |
and a copy to:
Xxxxxxx Xxxxx LLP
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Mr. J. Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000 |
or to such other address as the party
may designate by notice given to the other. Each communication shall be personally
delivered to the addressee or sent by fax transmission to the addressee, and:
| |
(a) |
|
a
communication which is personally delivered shall, if delivered before 4:00
p.m. (local time) on a Business Day, be deemed to be given and received on
that day and, in any other case be deemed to be given and received on the
first Business Day following the day on which it is delivered; and |
| |
(b) |
|
a
communication which is sent by fax transmission shall, if sent on a Business
Day before 2:00 p.m. (local time), be deemed to be given and received on
that day and, in any other case, be deemed to be given and received on the
first Business Day following the day on which it is sent. |
| |
(a) |
|
All
terms and conditions of this Agreement to be performed by the Corporation
shall be construed as conditions, and any breach or failure to comply with
any material terms and conditions shall entitle the Agent to terminate its
obligations hereunder by written notice to that effect given to the
Corporation prior to the Closing Time. The Agent may waive in whole or in
part any breach of, default under or non-compliance with any
representation, warranty, term or condition hereof, or extend the time for
compliance therewith, without prejudice to its rights in respect of any
other representation, warranty, term or condition hereof or any other
breach of, default under or non-compliance with any other representation,
warranty, term or condition hereof, provided that any such waiver or
extension shall be binding on the Agent only if the same is in writing. |
| |
(b) |
|
All
terms and conditions of this Agreement to be performed by the Agent shall be
construed as conditions, and any breach or failure to comply with any
material terms and conditions shall entitle the Corporation to terminate
its obligations to sell the Offered Shares by written notice to that
effect given to the Agent prior to the Closing Time. The Corporation may
waive in whole or in part any breach of, default under or non-compliance
with any representation, warranty, term or condition hereof, or extend the
time for compliance therewith, without prejudice to its rights in respect
of any other representation, warranty, term or condition hereof or any
other breach of, default under or non-compliance with any other
representation, warranty, term or condition hereof, provided that any such
waiver or extension shall be binding on the Corporation only if the same is
in writing. |
– 22 –
| 15. |
|
Survival
of Representations and Warranties |
All
representations, warranties, 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 Offered Shares, if any, and the termination
of this Agreement and shall continue in full force and effect for the benefit of the Agent
and the Corporation regardless of any investigation by or on behalf of the Agent with
respect thereto.
The
Agent covenants and agrees with the Corporation that it will:
| |
(a) |
|
conduct
activities in connection with the proposed offer and sale of the Offered
Shares in compliance with all the Applicable Securities Laws and cause a
similar covenant to be contained in any agreement entered into with any
Selling Dealer Group established in connection with the distribution of
the Offered Shares; |
| |
(b) |
|
not
advertise the proposed offering or sale of the Offered Shares in the printed
media of general and regular paid circulation, radio, television or
telecommunications including electronic display; |
| |
(c) |
|
not
solicit subscriptions for the Offered Shares, trade in Offered Shares or
otherwise do any act in furtherance of a trade of Offered Shares outside
of the Selling Jurisdictions, provided that the Agent may offer the
Offered Shares in the United States of America only in accordance with the
restrictions set forth in Schedule “A” hereto, and may offer the
Offered Shares outside of Canada and the United States in accordance with
applicable laws; and |
| |
(d) |
|
not
take any actions or make available to prospective subscribers any documents
or materials which would constitute or require the Corporation to prepare
an offering memorandum as defined under Applicable Securities Laws of the
Selling Jurisdictions. |
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 or
provisions had never been contained herein.
| 18. |
|
Relationship
Between the Corporation and the Agent |
The
Corporation (i) acknowledges and agrees that the Agent may have certain statutory
obligations as a registrant under the Applicable Securities Laws and may have fiduciary
relationships with its clients; (ii) acknowledges and agrees that the Agent is neither the
agent of the Corporation nor otherwise a fiduciary of the Corporation; and (iii) 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 the Applicable Securities
Laws or fiduciary relationships with its clients (if any) conflict with its obligations
hereunder, the Agent shall be entitled to fulfill its
– 23–
statutory
obligations as registrants under the 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 the Applicable Securities Laws
or to act as a fiduciary of its clients.
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.
Time
shall be of the essence of this Agreement.
| 21. |
|
Counterpart
Execution |
This Agreement
may be executed in one or more counterparts each of which so executed shall constitute an
original and all of which together shall constitute one and the same agreement.
It
is understood that the terms and conditions of this Agreement supersede any previous
verbal or written agreement between the Agent and the Corporation.
– 24 –
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 the Agent.
| |
XXXXXXXX CAPITAL INC.
Per: ______________________________________ |
ACCEPTED AND AGREED to as of this
22nd day of February, 2005.
KODIAK OIL & GAS CORP.
Per: _______________________
SCHEDULE “A”
TERMS AND CONDITIONS
FOR
UNITED STATES OFFERS AND
SALES
| |
This
is Schedule “A” to the Agency Agreement (the “Agreement”) between
Kodiak Oil & Gas Corp.and Xxxxxxxx Capital Inc. dated as of February 22, 2005. |
| 1. |
|
As
used in this Schedule “A”, capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the
Agreement and the following terms shall have the meanings indicated: |
| |
(a) |
|
“Affiliate” means
an “affiliate” as that term defined in Rule 501(b) of Regulation D. |
| |
(b) |
|
“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 “A”, 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 the Common Shares and includes the placement of any
advertisement in a publication with a “general circulation in the
United States” that refers to the offering of Common Shares; |
| |
(c) |
|
“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended; |
| |
(d) |
|
“Foreign
Issuer” means a “foreign issuer” as that term is defined in
Regulation S. Without limiting the foregoing, but for greater clarity in
this Schedule “A”, it means any issuer that is (a) the government
of any country, or of any political subdivision of a country, other than
the United States; or (b) a corporation or other organization incorporated
under the laws of any country other than the United States, except an
issuer meeting the following conditions: (1) more than 50% of the
outstanding voting securities of such issuer are directly or indirectly
owned of record by residents of the United States; and (2) any of the
following: (i) the majority of the executive officers or directors are
United States citizens or residents, (ii) more than 50% of the assets of
the issuer are located in the United States, or (iii) the business of the
issuer is administered principally in the United States; |
| |
(e) |
|
“General
Solicitation” and “General Advertising” mean “general
solicitation” and “general advertising”, respectively, as
used in Rule 502(c) of Regulation D, including, without limitation,
advertisements, articles, notices or other communication published in any
newspaper, magazine or similar media or on the internet or broadcast over
television, radio or the internet, or any seminar or meeting whose
attendees had been invited by general solicitation or general advertising; |
– 2 –
| |
(f) |
|
“Institutional
Accredited Investor” means an institution that is an “accredited
investor” within the meaning of Rule 501(a)(i), (a)(2), (a)(3), or
(a)(7) of Regulation D; |
| |
(g) |
|
“Investment
Company Act” means the United States Investment Company Act of 1940,
as amended; |
| |
(h) |
|
“Regulation
D” means Regulation D adopted by the SEC under the Securities Act; |
| |
(i) |
|
“Regulation
S” means Regulation S adopted by the SEC under the Securities Act; |
| |
(j) |
|
“SEC” means
the United States Securities and Exchange Commission; |
| |
(k) |
|
“Securities
Act” means the United States Securities Act of 1933, as amended; |
| |
(l) |
|
“Substantial
U.S. Market Interest” means “substantial U.S. market interest” as
that term is defined in Regulation S; and |
| |
|
(m) |
|
“U.S.
Placement Agent” means Westminster Securities Corporation. |
| 2. |
|
The
Agent represents, warrants and agrees as follows: |
| |
(a) |
|
The
Agent acknowledges that the Common Shares have not been and will not be
registered under the Securities Act and that the Common Shares may not be
offered or sold within the United States except pursuant to the exemption
from the registration requirements of the Securities Act provided by
Section 4(2) thereof and Rule 506 promulgated thereunder, and represents
and agrees that neither the Agent nor the U.S. Placement Agent, nor any
person acting on their behalf (A) has made or will make any Directed
Selling Efforts in connection with the offer and sale of the Common
Shares, or (B) has made or will make (except as contemplated by, and
pursuant to the terms of, Section 2(c) this Schedule “A”) (x)
any offer to sell or solicitation of any offer to buy the Common Shares to
any person in the United States or (y) any sale of the Common Shares to
any person unless, at the time the order to purchase such Common Shares
was placed, such person was outside the United States or the seller of
such Common Shares and any person acting on its behalf reasonably believed
that, at the time the order to purchase such Common Shares was placed,
such person was outside the United States. |
| |
(b) |
|
The
Agent agrees that all offers and sales in the United States shall be made in
compliance with all applicable federal and state laws and regulations
governing registration and conduct of broker-dealers. |
| |
(c) |
|
The
Agent agrees that the Common Shares may be offered and sold in the United
States pursuant only pursuant to Section 4(2) of the Securities Act and
Rule 506 promulgated thereunder and, thereunder, only to persons
reasonably believed by the Agent to be Institutional Accredited Investors.
The Agent agrees, further, that all offers to sell and solicitation of
offers to buy Common Shares in the United |
– 3 –
| |
States
shall be made by the U.S. Placement Agent in accordance with, and in transactions that
do not require registration or qualification under, state securities (“blue sky”)
laws, and that all sales to persons in the United States shall be made only to persons
that have duly completed, executed and delivered a subscription agreement in a form
agreed between the Corporation and the Agent. |
| |
(d) |
|
The
U.S. Placement Agent is a duly registered broker-dealer with the United
States Securities and Exchange Commission and is a member of and in good
standing with the National Association of Securities Dealers, Inc. |
| |
(e) |
|
Neither
the Agent nor its affiliates nor the U.S. Placement Agent nor any other
person acting on its behalf has engaged or will engage in any form of
General Solicitation or General Advertising or Directed Selling Efforts in
connection with the offer and sale of the Common Shares. |
| |
(f) |
|
At
the closing, the Agent and the U.S. Placement Agent will provide a
certificate, substantially in the form of Exhibit I to this Schedule
“A”, relating to the manner of the offer and sale of the Common
Shares in the United States. |
| 3. |
|
The
Corporation represents, warrants and agrees as follows: |
| |
(a) |
|
The
Corporation represents that it is, and as of the date of issuance of the
Common Shares will be, a Foreign Issuer and that as of the date hereof
there is and as of the date of the issuance of the Common Shares the
Corporation reasonably believes there will be no Substantial U.S. Market
Interest in the Common Shares. |
| |
(b) |
|
The
Corporation represents that at the date hereof and at the date of the sale
of the Common Shares it is not, and is not required to be, registered as
an “investment company” pursuant to the provisions of the
Investment Company Act. |
| |
(c) |
|
The
Corporation represents and agrees that neither it nor any of its affiliates,
nor any person (other than the Agent and the U.S. Placement Agent as to
which the Corporation makes no representation) acting on behalf of it or
its affiliates: |
| |
|
(i) |
|
has
made or will make any Directed Selling Efforts in connection with the offer and
sale of the Common Shares, or has taken or will take any action, including any
Directed Selling Efforts, that would cause the exemption afforded by Section
4(2) of the Securities Act or Rule 506 of Regulation D or the exclusion from
registration afforded by Regulation S to be unavailable for offers and sales of
the Common Shares pursuant to the Agreement; |
| |
|
(ii) |
|
in
connection with the offer or sale of the Common Shares has engaged or will
engage in any General Solicitation or General Advertising; and |
– 4 –
| |
|
(iii) |
|
other
than offers and sales outside the United States in accordance with Regulation
S, within the six month period prior to the date hereof has offered or sold any
securities of the Corporation. |
Except with respect to offers or
sales to Institutional Accredited Investors within the United States in reliance upon an
exemption from registration under the U.S. Securities Act in accordance with the terms of
the Agreement and this Schedule “A”, neither the Corporation nor any of its
affiliates, nor any person acting on its or their behalf (other than the Agent and the
U.S. Placement Agent as to which the Corporation makes no representation), has made or
will make: (A) any offer to sell, or any solicitation of an offer to buy, any Common
Shares to a U.S. Person or a person in the United States; or (B) any sale of Common Shares
unless, at the time the buy order was or will have been originated, the purchaser is (i)
outside the United States or (ii) the Corporation, its affiliates, and any person acting
on their behalf reasonably believes that the purchaser is outside the United States.
EXHIBIT I
U.S. PLACEMENT
AGENT’S CERTIFICATE
In connection with the private
placement in the United States of special warrants (the “Special Warrants”) in
the capital of Kodiak Oil & Gas Corp. (the “Corporation”) pursuant to the
agency agreement dated as of February 22, 2005 (such agreement, including Schedule
“A” thereto, the “Agreement”) between the Corporation and Xxxxxxxx
Capital Inc. (the “Agent”), the undersigned does hereby certify on behalf of the
Agent as follows:
| |
(d) |
|
Westminster
Securities Corporation (the “Placement Agent”) is a duly
registered broker-dealer with the United States Securities and Exchange
Commission and is a member of and in good standing with the National
Association of Securities Dealers, Inc. on the date hereof; |
| |
(e) |
|
all
offers and sales of the Common Shares in the United States have been
effected by the Placement Agent in accordance with all applicable U.S.
federal and state laws governing the registration and conduct of brokers
and dealers; |
| |
(f) |
|
all
offers and sales of Common Shares in the United States were made to
institutions reasonably believed to be Institutional Accredited Investors; |
| |
(g) |
|
no
form of General Solicitation or General Advertising was used by us in
connection with the offer and sale of the Common Shares, including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or the internet or broadcast over
radio, television or the internet, or any seminar or meeting whose
attendees had been invited by general solicitation or general advertising,
in connection with the offer or sale of the Common Shares in the United
States; |
| |
(h) |
|
the
Placement Agent has delivered to purchasers of the Common Shares in the
United States, a copy of the same information relating to the Corporation
as provided to subscribers in Canada and have not used any written
material other than such documents in connection therewith; |
| |
(i) |
|
immediately
prior to transmitting any documents to offerees, 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 purchaser of the Common Shares is an Institutional Accredited
Investor; and |
| |
(j) |
|
the
offering of the Common Shares in the United States has been conducted by us
in accordance with the terms of the Agreement. |
Terms used in this certificate have
the meanings given to them in the Agreement unless otherwise defined herein.
Dated:
___________________, 2005
XXXXXXXX CAPITAL INC.
By __________________________
Name:
Title: |
WESTMINSTER SECURITIES CORPORATION
By __________________________
Name:
Title: |
