UNDERWRITING AGREEMENT
Exhibit 99.1
October
26, 2020
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
XX X0X 0X0
Attention:
Xxxx Xxx
Executive
Chairman
The
undersigned, Mackie Research Capital Corporation
(“Mackie”),
Canaccord Genuity Corp. and Sprott Capital Partners LP (together
with Mackie, the “Underwriters” and each
individually an “Underwriter”), understand that
Silver Elephant Mining Corp. (the “Corporation”) proposes to issue
and sell 20,000,000 common shares of the Corporation
(“Common
Shares”) pursuant to a (final) short-form prospectus
as hereinafter in this Agreement provided (the “Offering” and the Common Shares to
be issued under the Offering being the “Offered Shares”) at a price of
$0.40 per Offered Share (the “Purchase Price”).
In
addition, the Corporation hereby grants to the Underwriters an
over-allotment option (“Over-Allotment Option”) to
purchase from the Corporation additional Common Shares
(“Over-Allotment
Shares”) each at the Purchase Price representing up to
15% of the number of Offered Shares contemplated in the previous
paragraph, which the Underwriters may elect at their discretion to
exercise, and which option is exercisable in whole or in part on
one or more occasions by notice given at any time up to and
including 30 days following the Closing Date (as defined below) to
cover over allotments and for market stabilization
purposes. Unless
otherwise specifically referenced or unless the context otherwise
requires, all references to “Offered Shares” herein
shall include the Over-Allotment Shares.
Subject
to the terms and conditions set out in this Agreement, the
Underwriters hereby severally offer to purchase from the
Corporation, or obtain subscriptions from substituted purchasers
for the purchase of, in the respective percentages set forth in
Section 15 hereof, and the Corporation
hereby agrees to sell to the Underwriters (or such substituted
purchasers), all but not less than all of the Offered Shares
pursuant to the Offering.
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
In this
Agreement:
“1933
Act” means the U.S. Securities Act of 1933, as
amended;
“1934
Act” means the U.S. Securities Exchange Act of 1934,
as amended;
“affiliate”
has the meaning given to it in National Instrument 45-106 –
Prospectus
Exemptions;
“Agreement”
means the agreement resulting from the acceptance by the
Corporation of the offers made by Mackie and the Underwriters by
this letter;
“Ancillary
Documents” means all agreements, certificates and
documents executed and delivered, or to be executed and delivered,
by the Corporation in connection with the transactions contemplated
by this Agreement;
“Applicable
Securities Laws”
means, collectively, and, as the context may require, the
securities Laws of each of the Qualifying Provinces and the
respective regulations and rules made under those securities Laws
together with all applicable published policy statements, blanket
orders and rulings of the Canadian Securities Regulators and all
discretionary orders or rulings, if any, of the Canadian Securities
Regulators applicable to the transactions contemplated by this
Agreement and the securities legislation and policies of each other
relevant jurisdiction together with applicable published policy
statements of the securities regulators in such other relevant
jurisdictions;
“associate”
has the meaning given to it in Section 1 of the Securities Act (Ontario);
“Auditors”
means Davidson & Company LLP, the auditors of the
Corporation;
“BCSC”
means the British Columbia Securities Commission;
“Business
Day” means a day that is not a Saturday, a Sunday or a
statutory or civic holiday in the City of Toronto;
“Canadian
Securities
Regulators” means the applicable securities
commission or regulatory authority in each of the Qualifying
Provinces;
“Claim”
has the meaning given to it in Section 12(a);
“Closing
Date” means November 12, 2020 or such earlier or later
date as the Underwriters may designate for the closing of the
Offering, provided that in no event (unless otherwise agreed to by
the Corporation) shall such date be later than the Latest Closing
Date;
“Closing
Time” means 8:00 a.m. (Toronto time) on the Closing
Date or such other time on the Closing Date as the Underwriters may
determine;
“COMIBOL”
means the Corporacion Minera de Bolivia, being the remaining party
to the mining production contract in respect to the Pulacayo Paca
Project, other than the Corporation or the Corporation
Subsidiaries;
“Common
Shares” has the meaning given to it in the first
paragraph of this Agreement;
“Compensation
Options” has the meaning given to it in Section
5;
“Contract”
means any written or oral agreement, indenture, contract, lease,
sublease, deed of trust, licence, option, or other legally
enforceable obligation of or in favour of the applicable
party;
“Corporation”
has the meaning given to it in the first paragraph of this
Agreement;
“Corporation
Subsidiaries” means the subsidiaries of the
Corporation listed in Schedule B attached hereto;
“Corporation’s
Counsel” means MLT Xxxxxx LLP;
“Corporation’s
Information Record” means: (i) any statement contained
in any press release, material change report, financial statement,
annual information form (including, in the case of the Corporation,
its Form 20F dated March 30, 2020), annual or interim report, proxy
circular or other document of the Corporation which has been or is
publicly disseminated by or with the consent of the Corporation,
whether pursuant to any Applicable Securities Laws or otherwise,
and which has been filed on SEDAR, and (ii) any information which
appears on the Corporation’s website;
“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 Agreement, 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 Offered
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 the Offered Shares;
“Disqualification
Event” has the meaning given to it in Section 2(c)(xv);
“distribution”,
“material
change” and “material fact” have the respective meanings given
to them in the Securities
Act (Ontario);
“Documents
Incorporated by Reference” means the annual
information form of the Corporation (being, in the case of the
Corporation, its Form 20F dated March 30, 2020), the management
information circular dated January 31, 2020, in connection with the
special meeting of shareholders of the Corporation that was held on
March 16, 2020, the management information circular dated May 25,
2020, in connection with the Corporation’s annual and special
meeting of shareholders held on July 7, 2020, the Financial
Information, and all other documents incorporated or deemed to be
incorporated by reference into the Prospectus and any Prospectus
Amendment by Applicable Securities Laws;
“due
inquiry”, when used in relation to the Corporation,
means after inquiries have been made of the appropriate officers,
employees, directors, legal counsel and auditors of the Corporation
who may reasonably be expected to have knowledge of facts which are
material with respect to the fact in question;
“Employee
Plans” has the meaning given to it in Section 7(bb);
“Enforceability
Qualifications” means that enforceability is subject
to bankruptcy, insolvency and other similar Laws affecting
creditors’ rights generally and to general principles of
equity;
“Expenses”
has the meaning given to it in Section 14;
“FCPA
Legislation” means all applicable foreign corrupt
practice Laws, including the Corruption of Foreign Public Officials
Act (Canada) and analogous provisions of the Bolivian
Penal Code and Law against Corruption, Illicit Enrichment,
and the Investigation of Assets, the United States
Foreign Corrupt Practices
Act;
“Final
U.S. Placement Memorandum” means the final U.S.
placement memorandum, in form satisfactory to the Corporation and
the Underwriters, including the Final Prospectus;
“Financial
Information” means the Corporation’s: (i)
audited consolidated financial statements and the notes thereto for
the financial years ended December 31, 2019 and 2018, together with
the report of the auditors thereon; and (ii) management’s
discussion and analysis of financial condition and results of
operations for the financial year ended December 31, 2019; (iii)
the Corporation’s unaudited interim financial statements and
the notes thereto for the three months and six months ended June
30, 2020; and (iv) management’s discussion and analysis of
financial condition and results of operations for the three months
and six months ended June 30, 2020;
“Final
Prospectus” means the (final) short form prospectus of
the Corporation relating to the proposed distribution of the
Offered Shares and any and all Documents Incorporated by Reference
therein;
“Final
Prospectus Date” means the date on which the Final
Prospectus is filed, which shall be no later than November 4, 2020
or such other date as the Corporation and the Underwriters may
determine;
“General
Solicitation” and “General Advertising” means
“general solicitation or general advertising”, as used
in Rule 502(c) under the 1933 Act, including advertisements,
articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio,
television or the Internet, or any seminar or meeting whose
attendees had been invited by general solicitation or general
advertising;
“Gibellini
Mineral Rights” has the meaning given to it in Section
7(hh);
“Gibellini
Project” means the Corporation’s Gibellini
vanadium project located in Nevada, United States, as more
particularly described in the Corporation’s Information
Record;
“Gibellini
Property Lessors” means the lessors of the Gibellini
Mineral Rights to the relevant Corporation
Subsidiaries;
“Gibellini
Technical Report” means the technical report dated May
29, 2018, and titled “Gibellini Vanadium Project, Eureka
County, Nevada, NI 43-101 Technical Report on Preliminary Economic
Assessment”, by Amec Xxxxxx Xxxxxxx;
“Gibellini
Title Opinion” has the meaning given to it in Section
10(f);
“Governmental
Authority” means any (i) multinational, federal,
provincial, state, municipal, local or other governmental or public
department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign; (ii) any subdivision or
authority of any of the foregoing; (iii) any quasi-governmental,
self-regulatory organization or private body exercising any
regulatory, expropriation or taxing authority under or for the
account of its members or any of the above (including the Stock
Exchange); or (iv) any arbitrator exercising jurisdiction over the
affairs of the applicable person, asset, obligation or other
matter;
“IFRS”
has the meaning given to it in Section 7(f)(ii);
“includes”
or “including”
means includes or including (as applicable) without limitation and
shall not be construed to limit any general statement which it
follows to the specific or similar items or matters immediately
following it;
“Indemnified
Party” has the meaning given to it in Section 12(a);
“knowledge”
means to the best of a Person’s knowledge, information and
belief after due inquiry;
“Latest
Closing Date” means November 19, 2020;
“Laws”
means any federal, provincial, state or municipal law, statute,
ordinance, regulation, rule, by-law, judgment, decree, order or
award of any authority having jurisdiction over the Corporation or
the Underwriters;
“Lien”
means any encumbrance or title defect of whatever kind or nature,
regardless of form, whether or not registered or registrable and
whether or not consensual or arising by Law (statutory or
otherwise), including any mortgage, lien, charge, pledge or
security interest, whether fixed or floating, or any assignment,
lease, option, right of pre-emption, privilege, encumbrance,
easement, hypothec, pledge, title retention agreement, reservation
of title, servitude, right of way, restrictive covenant, right of
use or any matter capable of registration against title or any
other right or claim of any kind or nature whatever which affects
ownership or possession of, or title to, any interest in, or the
right to use or occupy property or assets;
“Mackie”
has the meaning given to it in the first paragraph of this
Agreement;
“Material
Adverse Effect” means the effect resulting from any
event or change which has a material adverse effect on the
consolidated business, affairs, capital, operations or assets
(including assets in which the Corporation has a direct or indirect
economic interest) of the Corporation;
“misrepresentation”
means a misrepresentation as defined under the Applicable
Securities Laws or any of them or, where undefined under the
Applicable Securities Laws of a jurisdiction, means (i) an untrue
statement of a material fact, or (ii) an omission to state a
material fact that is required to be stated or that is necessary to
make a statement not misleading in light of the circumstances in
which it was made;
“NEO” has the meaning given to it in Form
51-102F6 Statement of Executive Compensation;
“NI
43-101” means National Instrument 43-101 –
Standards of Disclosure for
Mineral Projects;
“NI
44-101” means National Instrument 44-101 –
Short Form Prospectus
Distributions;
“Offering”
means the offering of 20,000,000 Offered Shares and up to 3,000,000
Over-Allotment Shares pursuant to this Agreement;
“Outstanding
Convertible Securities” means all options granted to
or by the Corporation (whether put or call options), including
options granted or proposed to be granted to officers, directors,
employees or consultants, share purchase or acquisition rights or
warrants and other convertible securities of the Corporation
outstanding as at the date of this Agreement, whether issued
pursuant to an established plan or otherwise;
“Over-Allotment
Closing” has the meaning given to that term in Section
9;
“Over-Allotment
Closing Date” means any date on which Over-Allotment
Shares will be purchased pursuant to this Agreement, with each such
date to be within 30 days of the Closing Date and, in any event, no
earlier than the Closing Date;
“Over-Allotment
Closing Time” means 8:00 a.m. (Toronto time) on the
subject Over-Allotment Closing Date or such other time on the
subject Over-Allotment Closing Date as the Corporation and the
Underwriters may mutually agree in writing;
“Over-Allotment
Option” has the meaning given to that term in the
second paragraph of this Agreement;
“Over-Allotment
Option Notice” has the meaning given to that term in
Section 9;
“Passport
System” means the passport system procedures provided
for under National Policy 11-202 – Process for Prospectus Reviews in Multiple
Jurisdictions and Multilateral Instrument 11-102 –
Passport
System;
“Person”
means a natural person, partnership, limited partnership, limited
liability partnership, syndicate, sole proprietorship, corporation
or company (with or without share capital), limited liability
company, trust, unincorporated association, joint venture or other
entity or authority;
“Preliminary
Prospectus” means the preliminary short form
prospectus of the Corporation to be filed relating to the proposed
distribution of the Offered Shares, and any and all Documents
Incorporated by Reference therein;
“Preliminary
Prospectus Date” means the date on which the
Preliminary Prospectus is filed, which shall be no later than
October 26, 2020 or such other date as the Corporation and the
Underwriters may determine;
“Preliminary
U.S. Placement Memorandum” means the preliminary U.S.
placement memorandum, in form satisfactory to the Corporation and
the Underwriters, including the Preliminary
Prospectus;
“Projects”
means, together, the Gibellini Project and the Pulacayo Paca
Project;
“Prospectus”
means, collectively, the Preliminary Prospectus, the Final
Prospectus and any Prospectus Amendment;
“Prospectus
Amendment” means any amendment to the Preliminary
Prospectus or the Final Prospectus and any and all Documents
Incorporated by Reference therein;
“Purchasers”
means, collectively, the purchasers of Offered Shares under the
Offering;
“Pulacayo
Paca Mineral Rights” has the meaning given to it in
Section 7(hh);
“Pulacayo
Paca Project” means the Corporation’s Pulacayo
Paca silver-lead-zinc development project located in Bolivia, as
more particularly described in the Corporation’s Information
Record;
“Pulacayo
Paca Technical Report” means the mineral resource
estimate technical report with an effective date of October 13,
2020 and titled “Mineral Resource Estimate Technical Report
for the Pulacayo Project, Potosi Department, Xxxxxxxx Xxxxxxxx
Province, Bolivia” prepared by Mercator Geological Services
Limited;
“Pulacayo
Paca Title Opinion” has the meaning given to it in
Section 10(f);
“Purchase
Price” means $0.40 per Offered Share;
“Qualified
Institutional Buyer” means a “qualified
institutional buyer” as defined in Rule 144A;
“Qualifying
Provinces” means all of the provinces of Canada other
than Québec;
“Regulation
D” means Regulation D under the 1933 Act;
“Regulation
S” means Regulation S under the 1933 Act;
“Rule
144A” means Rule 144A under the 1993 Act;
“SEC”
means the U.S. Securities and Exchange Commission;
“SEDAR”
means the System for Electronic Document Analysis and Retrieval of
the Canadian Securities Administrators;
“Selling
Dealer Group” means the dealers and brokers other than
the Underwriters who participate in the offer and sale of the
Offered Shares;
“Stock
Exchange” means the Toronto Stock
Exchange;
“subsidiary”
has the meaning given to it in National Instrument 45-106 –
Prospectus
Exemptions;
“Substantial
U.S. Market Interest” means “substantial U.S.
market interest” as that term is defined in Regulation
S;
“Tax
Act” means
the Income Tax Act
(Canada), as amended, re-enacted or replaced from time to
time;
“Technical
Reports” means, together, the Gibellini Technical
Report and the Pulacayo Paca Technical Report;
“Title
Opinions” means, together, the Gibellini Title Opinion
and the Pulacayo Paca Title Opinion;
“Transfer
Agent” means Computershare Trust Company of
Canada;
“Underwriter”
and “Underwriters” have the respective
meanings given to them in the first paragraph of this
Agreement;
“Underwriters’
Counsel” means XxXxxxxx Xxxxxxxx
LLP;
“Underwriting
Fee” means the underwriting fee in respect of the
Offering, as provided in Section 5;
“United
States” means the United States of America, its
territories and possessions, any state of the United States and the
District of Columbia; and
“U.S.
Accredited Investor” means an “accredited
investor,” as defined in Rule 501(a) of Regulation
D;
“U.S.
Affiliate” means the U.S. registered broker-dealer
affiliate of an Underwriter.
Unless
otherwise expressly provided in this Agreement, words importing
only the singular number include the plural and vice versa and words importing gender
include all genders. References to “sections” are to
the appropriate section of this Agreement.
All
funds referred to in this Agreement shall be in Canadian
dollars.
The
division of this Agreement into sections, subsections, paragraphs
and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect the construction
or interpretation of this Agreement.
Any
action or payment required or permitted to be taken or made
hereunder on a day which is not a Business Day shall or may be, as
the case may be, taken or made on the next succeeding Business Day,
except when otherwise prescribed by Applicable Securities Laws or
rules and policies of the Stock Exchange, with the same force and
effect as if taken or made within the period for the taking or
making of such action.
TERMS AND CONDITIONS
1.
Qualification
of Prospectus by the Corporation for the Offering
(a)
The Corporation
shall as soon as possible and in any event by no later than 5:00
p.m. (Toronto time) on the Preliminary Prospectus Date, have (i)
prepared and filed the Preliminary Prospectus and other related
documents in respect of the proposed distribution of the Offered
Shares in accordance with NI 44-101 and the Passport System; and
(ii) obtained from the BCSC a receipt issued in accordance with the
Passport System, evidencing that a receipt has been issued or has
been deemed to have been issued for the Preliminary Prospectus in
each Qualifying Province.
(b)
The Corporation
shall, as soon as possible after any comments of the Canadian
Securities Regulators have been satisfied and in any event by no
later than 5:00 p.m. (Toronto time) on the Final Prospectus Date,
have (i) prepared and filed the Final Prospectus and other related
documents in respect of the proposed distribution of the Offered
Shares in accordance with NI 44-101 and the Passport System, and
(ii) obtained a receipt issued in accordance with the Passport
System evidencing that a receipt has been issued or deemed to have
been issued for the Final Prospectus in each Qualifying Province,
and shall have fulfilled and complied with, to the reasonable
satisfaction of the Underwriters, the Applicable Securities Laws
required to be fulfilled or complied with by the Corporation to
enable the Offered Shares to be lawfully distributed to the public
in the Qualifying Provinces through the Underwriters or any other
investment dealers or brokers registered in the subject Qualifying
Province.
(c)
Until the
completion of the distribution of the Offered Shares, the
Corporation shall promptly take all additional steps and
proceedings that from time to time may be required under the
Applicable Securities Laws in each Qualifying Province to continue
to qualify the Offered Shares for distribution or, in the event
that the Offered Shares have, for any reason, ceased to so qualify,
to again qualify the Offered Shares for distribution.
(d)
Prior to the filing
of the Prospectus, the Corporation shall have permitted the
Underwriters to participate fully in the preparation of the
Prospectus and shall have allowed the Underwriters to conduct all
due diligence investigations that they reasonably require in order
to fulfil their obligations as Underwriters under the Applicable
Securities Laws and in order to enable them responsibly to execute
the certificate in such Prospectus required to be executed by
them.
(e)
The Underwriters
shall distribute the Offered Shares to the public, directly and
through other investment dealers and brokers, only as permitted by
Applicable Securities Laws and upon the terms and conditions set
forth in the Prospectus and in this Agreement.
The
Underwriters agree not to distribute the Offered Shares in such
manner as to require registration of any of the Offered Shares or
the filing of a prospectus or any similar document under the Laws
of any jurisdiction outside the Qualifying Provinces or to subject
the Corporation to any materially burdensome continuous disclosure
or other similar reporting requirements under the Laws of any
jurisdiction outside of the Qualifying Provinces to which it is not
currently subject. The Underwriters agree that they will not offer
or sell any of the Offered Shares constituting a part of their
allotment within the United States except, if applicable, for
offers and sales of the Offered Shares in the United States by the
U.S. Affiliates of the Underwriters in accordance with Section
2(c) below.
Any
agreements between the Underwriters and the members of any banking
or selling group will contain similar restrictions to those
contained in this Section 2(a).
(b)
Representations, Warranties and Covenants of the Corporation as to
U.S. Offers and Sales of Offered Shares
The
Corporation hereby represents, warrants and covenants to and with
the Underwriters that:
(i)
the Corporation is,
and on the Closing Date will be, a “foreign issuer” (as
such term is defined in Regulation S) and reasonably believes that
there is no Substantial U.S. Market Interest with respect to the
Common Shares;
(ii)
the Corporation is
not, and as a result of the sale of the Offered Shares contemplated
hereby will not be, registered or required to be registered under
the United States Investment Company Act of 1940, as
amended;
(iii)
except with respect
to offers and sales to substituted purchasers that are U.S.
Accredited Investors and to Qualified Institutional Buyers, in each
case in reliance upon an exemption from the registration
requirement under the 1933 Act and in the manner described in this
Section 2, neither the Corporation nor
any of its affiliates, and assuming the representations, warranties
and covenants of the Underwriters are true and accurate, nor any
person acting on its or their behalf, has made or will make, in
connection with offers and sales of the Offered Shares pursuant to
this Agreement: (A) any offer to sell, or any solicitation of an
offer to buy, any Offered Shares to a person in the United States;
or (B) any sale of Offered Shares unless, at the time the buy order
was or will have been originated, either (i) the purchaser is
outside the United States or (ii) the Corporation, its affiliates,
and any person acting on their behalf reasonably believe that the
purchaser is outside the United States;
(iv)
none of the
Corporation or any of its affiliates or, assuming the
representations, warranties and covenants of the Underwriters are
true and accurate, any Person acting on its or their behalf, has
made or will make any Directed Selling Efforts in the United States
with respect to the Offered Shares or has taken or will take any
action that would cause the exemptions from registration under the
1933 Act provided by Rule 144A, Rule 506(b) of Regulation D and/or
Section 4(a)(2) of the 1933 Act and applicable blue sky laws or the
exclusion from the registration requirements of the 1933 Act
afforded by Rule 903 of Regulation S, to be unavailable for offers
and sales of the Offered Shares pursuant to this
Agreement;
(v)
none of the
Corporation, any of its affiliates or, assuming the
representations, warranties and covenants of the Underwriters are
true and accurate, any Person acting on its or their behalf has
engaged or will engage in any form of General Solicitation or
General Advertising in any manner involving a public offering
within the meaning of Section 4(a)(2) of the 1933 Act, with respect
to offers or sales of the Offered Shares in the United
States;
(vi)
the Corporation has
not offered or sold, for a period of six months prior to the
commencement of the Offering, and will not offer or sell any
securities in a manner that would be integrated with the offer and
sale of the Offered Shares and would cause the exemption from
registration provided by Rule 506(b) of Regulation D to be
unavailable for offers and sales of Offered Shares in the United
States;
(vii)
none of the
Corporation, any of its affiliates or, assuming the
representations, warranties and covenants of the Underwriters are
true and accurate, any Person acting on any of their behalf has
taken or will take any action in violation of Regulation M under
the 1934 Act in connection with the offer and sale of the Offered
Shares;
(viii)
none of the
Corporation or any of its predecessors or affiliates has been
subject to any order, judgment or decree of any court of competent
jurisdiction temporarily, preliminarily or permanently enjoining
such Person for failure to comply with Rule 503 of Regulation
D;
(ix)
at the date hereof
and as of the Closing Date, the Offered Shares are not and will not
be (i) part of a class listed on a national securities exchange
registered under Xxxxxxx 0 xx xxx 0000 Xxx, (xx) quoted in a U.S.
automated inter-dealer quotation system (within the meaning of such
term in Rule 144A), or (iii) convertible or exchangeable at an
effective conversion premium (calculated as specified in paragraph
(a)(6) of Rule 144A) of less than ten percent for securities so
listed or quoted;
(x)
so long as any of
the Offered Shares are outstanding and are "restricted securities"
within the meaning of Rule 144(a)(3) under the 1933 Act and cannot
be sold pursuant to Rule 144(b)(1) under the 1933 Act, the
Corporation will, if it is not subject to the reporting
requirements of Section 13 or Subsection 15(d) of the 1934 Act or
the information furnishing requirements of Rule 12g3-2(b)
thereunder or if it is subject to such reporting requirements and
fails to comply therewith, provide to any holder of those
restricted securities, or to any prospective purchaser of those
restricted securities designated by a holder, upon the request of
that holder or prospective purchaser, at or prior to the time of
sale, the information required to be provided by Rule 144A(d)(4)
under the 1933 Act (so long as that requirement is necessary in
order to permit holders of the restricted securities to effect
resales under Rule 144A;
(xi)
the Corporation
will, within prescribed time periods, prepare and file any forms or
notices required under the 1933 Act or applicable blue sky laws in
connection with the offer and sale of the Offered Shares, including
but not limited to filing a Form D, if applicable, with the
SEC;
(xii)
With respect to the
Offered Shares to be offered and sold hereunder in reliance on Rule
506(b) of Regulation D (the “Regulation D Offering”), if any,
none of the Corporation, any of its predecessors, any affiliated
issuer of the Corporation, any director or executive officer of the
Corporation, any other officer of the Corporation participating in
the offering of the Offered Shares, any beneficial owner of 20% or
more of the Corporation’s outstanding voting equity
securities, calculated on the basis of voting power, or any
promoter connected with the Corporation in any capacity at the time
of sale of the Offered Shares (each, a “Issuer Covered Person” and,
together, “Issuer Covered
Persons”) is subject to any Disqualification Event.
The Corporation is not disqualified from relying on Rule 506 of
Regulation D for any of the reasons stated in Rule 506(d)
thereunder in connection with the issuance and sale of the Offered
Shares pursuant to the Regulation D Offering. The Corporation has
furnished to each purchaser, a reasonable time prior to the date
hereof, a description in writing of any matters that would have
triggered disqualification under Rule 506(d) but which occurred
before September 23, 2013, in each case, in compliance with the
disclosure requirements of Rule 506(e) thereunder. The Corporation
has not paid and will not pay, nor is it aware of any other Person
that has paid or will pay, directly or indirectly, any remuneration
to any Person (other than any Issuer Covered Person or any
Underwriter Covered Person (as defined below)) for solicitation of
purchasers in the Regulation D Offering; and
(xiii)
neither the
Corporation nor any of its predecessors has had the registration of
a class of securities under the 1934 Act revoked by the SEC
pursuant to Section 12(j) of the 1934 Act and any rules or
regulations promulgated thereunder.
Each of
the Underwriters severally represents, warrants and covenants to
and with the Corporation that:
(i)
it acknowledges
that the Offered Shares have not been and will not be registered
under the 1933 Act or the securities Laws of any state of the
United States and may be offered and sold only in transactions
exempt from or not subject to the registration requirements of the
1933 Act and state securities laws;
(ii)
it has not offered
or sold, and will not offer or sell, any of the Offered Shares
constituting part of its allotment except, (A) outside the United
States in an “offshore transaction” in accordance with
Rule 903 of Regulation S or (B) in the United States as provided in
this Section 2(c). Accordingly, except
as provided in this Section 2(c),
neither the Underwriter nor any of its affiliates nor any Persons
acting on its or their behalf, (i) has made or will make any offer
to sell, or any solicitation of any offer to buy, any Offered
Shares to a person in the United States, (ii) has made or will make
any sale of Offered Shares unless, at the time the buy order was or
will have been originated, either the purchaser is outside the
United States or the Underwriter, its affiliates and any Person
acting on their behalf reasonably believe that the purchaser is
outside the United States, or (iii) has engaged or will engage in
any Directed Selling Efforts in the United States with respect to
the Offered Shares;
(iii)
it has not entered
and will not enter into any contractual arrangement with respect to
the distribution of the Offered Shares, except with its affiliates,
any Selling Dealer Group members or with the prior written consent
of the Corporation. It shall require its U.S. Affiliate and each
Selling Dealer Group member to agree, for the benefit of the
Corporation, to comply with, and shall use its best efforts to
ensure that its U.S. Affiliate complies with, and use its
commercially reasonable efforts to cause each Selling Dealer Group
member to comply with, the provisions of this Section 2(c) applicable to such Underwriter as if such
provisions applied to such U.S. Affiliate or Selling Dealer Group
member;
(iv)
it will solicit,
and will cause each U.S. Affiliate to solicit, offers for the
Offered Shares in the United States only from, and will offer the
Offered Shares only to, and it and they have offered and solicited
only from and to, persons it has reasonable grounds to believe and
reasonably believes to be Qualified Institutional Buyers (in the
case of a person offered Offered Shares pursuant to Rule 144A) or
U.S. Accredited Investors (in the case of a person offered Offered
Shares pursuant to Rule 506(b) of Regulation D and/or Section
4(a)(2) of the 1933 Act and similar exemptions under applicable
state securities laws), as the case may be;
(v)
all offers and
sales of the Offered Shares in the United States shall be made
through its U.S. Affiliate in compliance with all applicable U.S.
federal and state broker-dealer requirements. Each U.S. Affiliate
is, and on the date of each offer or sale will be, duly registered
as a broker-dealer pursuant to Section 15(b) of the 1934 Act, will
be duly registered as a broker-dealer under the laws of each state
in which it has offered or sold or will offer or sell the Offered
Shares (except where an exemption from state broker-dealer
registration requirements is available), and is a member in good
standing with the Financial Industry Regulatory Authority,
Inc.;
(vi)
in connection with
offers and sales of Offered Shares in the United States (i) no
General Solicitation or General Advertising has been or shall be
used by it, its representatives or its affiliates, and (ii) such
offers and sales have not been and shall not be made in any manner
involving a public offering within the meaning of Section 4(a)(2)
of the 1933 Act;
(vii)
any offer, sale or
solicitation of offers to buy the Offered Shares that has been made
or will be made in the United States was or will be made only to
(i) U.S. Accredited Investors on a substituted purchaser basis
pursuant to Rule 506(b) of Regulation D and/or Section 4(a)(2) of
the 1933 Act and similar exemptions under applicable U.S. state
securities Laws or (ii) Qualified Institutional Buyers pursuant to
the exemption from the registration requirements of the 1933 Act
provided by Rule 144A;
(viii)
the Underwriter,
acting through its U.S. Affiliate, may offer the Offered Shares in
the United States only to offerees with respect to which it has a
pre-existing relationship and has reasonable grounds to believe are
U.S. Accredited Investors or Qualified Institutional
Buyers;
(ix)
each such offeree
in the United States shall be provided with a copy of either the
Preliminary U.S. Placement Memorandum or the Final U.S. Placement
Memorandum. Each purchaser of Offered Shares in the United States
shall be provided, prior to the time of purchase of any Offered
Shares, with a copy of the Final U.S. Placement Memorandum. No
other written material shall be used in connection with the offer
and sale of the Offered Shares;
(x)
prior to any sale
of Offered Shares in the United States, it shall cause each U.S.
purchaser thereof that is a U.S. Accredited Investor to execute a
subscription agreement substantially in the form attached as
Exhibit II to the Final U.S. Placement Memorandum;
(xi)
prior to any sale
of Offered Shares in the United States, it shall cause each U.S.
purchaser thereof that is Qualified Institutional Buyer to execute
a Qualified Institutional Buyer letter substantially in the form
attached as Exhibit I to the Final U.S. Placement
Memorandum;
(xii)
at least one
Business Day prior to the Closing Date, the Transfer Agent will be
provided with a list of all purchasers of the Offered Shares in the
United States;
(xiii)
each Underwriter
shall severally, and not jointly and severally, be liable to the
Corporation under this section with respect to any breach by its
U.S. Affiliate of the United States selling restrictions contained
herein;
(xiv)
on the Closing
Date, it, together with its U.S. Affiliate selling Offered Shares
in the United States, will provide a certificate, substantially in
the form of Schedule “D” to this Agreement, relating to
the manner of the offer and sale of the Offered Shares in the
United States. If it does not deliver such certificate, it will be
deemed to represent and warrant to the Corporation, as at such
closing, that none of it, any of its affiliates or any person
acting on any of their behalf has offered or sold any of the
Offered Shares in the United States;
(xv)
with respect to
the Regulation D Offering to substituted purchasers that are U.S.
Accredited Investors, neither the Underwriter, nor their U.S.
Affiliates, nor any of their respective general partners or
managing members, nor any director or executive officer of any of
the foregoing, nor any other officer of any of the foregoing
participating in the Regulation D Offering (each, an
“Underwriter Covered
Person” and, together, “Underwriter Covered Persons”), is
subject to any of the “Bad Actor” disqualifications
provisions described in Rule 506(d) under the 1933 Act (a
“Disqualification
Event”). The Underwriter shall provide prompt written
notice to the Corporation of any Disqualification Event relating to
any Underwriter Covered Person, or any event that would, with the
passage of time, become such a Disqualification Event prior to the
Closing. Neither the Underwriter, nor its U.S. Affiliate has paid
or will pay, nor is it aware of any other Person that has paid or
will pay, directly or indirectly, any remuneration to any Person
(other than Underwriter Covered Persons and Issuer Covered Persons)
for solicitation of subscribers of Offered Shares;
(xvi)
it will inform, and
will cause its U.S. Affiliate to inform, all purchasers of the
Offered Shares in the United have not been and will not be
registered under the 1933 Act and are “restricted
securities” as defined in Rule 144(a)(3) under the 1933 Act
and are being offered and sold to them without registration under
the 1933 Act in reliance upon the exemption from such registration
pursuant to Rule 144A, Rule 506(b) and/or Section 4(a)(2) thereof,
as applicable;
(xvii)
the Underwriter
acknowledges that the Compensation Options and the Common Shares
issuable upon exercise of the Compensation Options (collectively,
the “Compensation
Securities”) have not been and will not be registered
under the 1933 Act, and the Compensation Options may not be
exercised in the United States or by, or for the account or benefit
of, any U.S. person (as defined in Regulation S) or person in the
United States, except pursuant to an exemption from the
registration requirements of the 1933 Act. In connection with the
issuance of the Compensation Securities, each of the Underwriters
represents and warrants that (i) it is not a U.S. person and it is
not acquiring the Compensation Securities in the United States, or
on behalf of a U.S. person or a person located in the United
States, (ii) this Agreement was executed and delivered outside the
United States and (iii) it is acquiring the Compensation
Securities, as principal for its own account and not for the
benefit of any other person. The Underwriters agree that they will
not engage in any Directed Selling Efforts with respect to any
Compensation Securities; and
(xviii)
neither the
Underwriter, nor any of its affiliates nor any Person acting on any
of their behalf has taken or will take any action in violation of
Regulation M under the 1934 Act in connection with the offer and
sale of the Offered Shares.
(d)
Additional Representations and Warranties of the
Underwriters
Except
as may be disclosed in the Prospectus, each of the Underwriters
represents and warrants that, to its knowledge, the Corporation is
not a “related issuer” or “connected
issuer” of such Underwriter within the meaning of National
Instrument 33-105 – Underwriting Conflicts of the Canadian
Securities Regulators.
(a)
Deliveries on Filings in Relation to the Offering
Immediately prior
to the filing of the Preliminary Prospectus or the Final
Prospectus, as the case may be, the Corporation shall deliver to
each of the Underwriters (and in the case of Section 3(a)(iv) below the Corporation shall use its
reasonable best efforts to deliver):
(i)
a copy of the
Preliminary Prospectus or the Final Prospectus, as the case may be,
signed and certified as required by the Applicable Securities Laws
in Canada, and including in each case a copy of all Documents
Incorporated by Reference;
(ii)
a copy of any other
document required to be filed by the Corporation in compliance with
the Applicable Securities Laws;
(iii)
in the case of
the Final Prospectus, a “long-form” comfort letter of
the Auditors, dated as of the Final Prospectus Date (with the
requisite procedures to be completed by the Auditors within two
Business Days of the Final Prospectus Date), addressed to the
Underwriters and the directors of the Corporation, in form and
substance satisfactory to the Underwriters, acting reasonably, with
respect to certain financial and accounting information relating to
the Corporation in the Final Prospectus, including such information
contained in all Documents Incorporated by Reference, which letter
shall be in addition to the Auditors’ report incorporated by
reference into the Prospectus and the Auditors’ comfort
letters addressed to the Canadian Securities Regulators;
and
(iv)
prior to or
concurrent with the filing of the Final Prospectus, evidence
satisfactory to the Underwriters and the Underwriters’
counsel, acting reasonably, that the Offered Shares have been
conditionally approved for listing on the Stock Exchange, subject
to satisfaction of certain usual conditions set forth
therein.
(b)
Prospectus Amendments
In the
event that the Corporation is required to prepare a Prospectus
Amendment, the Corporation shall also prepare and deliver promptly
to each of the Underwriters signed and certified copies of such
Prospectus Amendment along with all Documents Incorporated by
Reference that have not been previously delivered. Any Prospectus
Amendments shall be in form and substance satisfactory to the
Underwriters, acting reasonably. Concurrently with the delivery of
any Prospectus Amendment, the Corporation shall deliver to each of
the Underwriters, with respect to such Prospectus Amendment,
documents similar to those referred to in Section 3(a)(iii) and (iv).
(c)
Representations as to the Prospectus and Prospectus
Amendments
Delivery of the
Preliminary Prospectus, the Final Prospectus and any Prospectus
Amendments shall constitute a representation and warranty by the
Corporation to the Underwriters that as at the date of
delivery:
(i)
all information and
statements (except information relating solely to and furnished by
the Underwriters specifically for inclusion therein) contained in
the Prospectus, including all Documents Incorporated by Reference,
are true and correct in all material respects and contain no
misrepresentation and constitute full, true and plain disclosure of
all material facts relating to the Corporation and the Offered
Shares;
(ii)
no material fact or
information has been omitted from such disclosure (except that no
representation or warranty is given regarding facts or information
relating solely to the Underwriters) that is required to be stated
in such disclosure or is necessary to make the statements or
information contained in such disclosure not misleading in light of
the circumstances under which they were made; and
(iii)
such documents
comply in all material respects with the requirements of the
Applicable Securities Laws in Canada.
Such
deliveries shall also constitute the Corporation’s consent to
the Underwriters’ use of the Prospectus for the distribution
of the Offered Shares in the Qualifying Provinces in compliance
with the provisions of this Agreement and Applicable Securities
Laws.
The
Corporation shall use its commercially reasonable best efforts to
cause commercial copies of the Prospectus to be delivered to the
Underwriters without charge, in such numbers and in such cities as
the Underwriters may reasonably request by oral instructions to the
printer of such documents. Such delivery of the Prospectus shall be
effected as soon as possible after filing the subject Prospectus
with the Canadian Securities Regulators and obtaining the
applicable receipt therefor, but, in any event, with respect to the
Final Prospectus, on or before 5:00 p.m. (Toronto time) on the
first Business Day following the Final Prospectus
Date.
(e)
Notice of Completion of Distribution
After
the Closing Time and any Over-Allotment Closing Time, the
Underwriters shall:
(i)
use their
commercially reasonable best efforts to complete the distribution
of the applicable Offered Shares as promptly as possible;
and
(ii)
give prompt written
notice to the Corporation when, in the opinion of the Underwriters,
they have completed distribution of such Offered Shares, including
notice as to the total proceeds realized in each of the Qualifying
Provinces.
During
the period from the date of this Agreement to the Closing Date the
Corporation shall promptly notify the Underwriters in writing
of:
(i)
any material change
(actual, anticipated, contemplated or threatened, financial or
otherwise) in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of the
Corporation;
(ii)
any change in any
material fact (which for the purposes of this Agreement shall be
deemed to include the disclosure of any previously undisclosed
material fact) contained in the Prospectus or otherwise in the
Corporation’s Information Record, including all Documents
Incorporated by Reference; and
(iii)
the occurrence or
discovery of a material fact or event, which fact or change is, or
may be, of such a nature as to render any statement in the
Prospectus or otherwise in the Corporation’s Information
Record misleading or untrue or which would result in a
misrepresentation in the Prospectus or otherwise in the
Corporation’s Information Record or which would result in the
Prospectus or the Corporation’s Information Record not
complying (to the extent that such compliance is required) with the
Applicable Securities Laws in Canada.
The
Corporation will in good faith discuss with the Underwriters as
promptly as possible any circumstance or event which is of such a
nature that there is or ought, in the discretion of the Corporation
acting reasonably, to be consideration given as to whether there
may be a material change or change in a material fact or other
matter as described in this Section 4(a), and the Corporation shall promptly, and
in any event within any applicable time limitation, comply, to the
reasonable satisfaction of the Underwriters, with all applicable
filings and other requirements under Applicable Securities Laws as
a result of such fact or change. However, the Corporation shall not
file any Prospectus Amendment or other document without first
consulting with the Underwriters with respect to the form and
content thereof and obtaining approval from the Underwriters, which
approval will not be unreasonably withheld. The Corporation shall
cooperate in all respects with the Underwriters to allow and assist
the Underwriters to participate fully in the preparation of any
Prospectus Amendment or other document and shall allow the
Underwriters to conduct any and all due diligence which in the
opinion of the Underwriters is required in order to enable the
Underwriters to responsibly execute any certificates required to be
executed by the Underwriters in any Prospectus Amendment to fulfill
their obligations under Applicable Securities Laws. The Corporation
shall in good faith discuss with the Underwriters any fact or
change in circumstances (actual, anticipated, contemplated or
threatened, financial or otherwise) which is of such a nature that
there is reasonable doubt whether written notice need be given
under this Section 4(a).
(b)
Change in Applicable Securities Laws
If,
during the period of distribution to the public of the Offered
Shares, there shall be any change in the Applicable Securities Laws
which, in the opinion of the Underwriters and the Corporation,
acting reasonably, requires the filing of a Prospectus Amendment,
the Corporation shall, to the satisfaction of the Underwriters,
acting reasonably, promptly prepare and file such Prospectus
Amendment with the appropriate securities regulatory authority in
each of the Qualifying Provinces where such filing is required, and
the provisions of Section 4(a) will apply, mutatis mutandis.
(c)
Change in Closing Date Following Material Change
If a
material change or a change in a material fact occurs prior to the
Closing Date and as a result thereof the Corporation is required,
pursuant to Applicable Securities Laws, to file a Prospectus
Amendment, then, subject to Section 11, the Closing Date shall be, unless the
Corporation and the Underwriters otherwise agree in writing, the
fourth Business Day following the later of:
(i)
the date on which
all applicable filings or other requirements of the Applicable
Securities Laws with respect to such material change or change in a
material fact have been complied with in all Qualifying Provinces
and any appropriate receipts obtained for such filings and notice
of such filings from the Corporation or the Corporation’s
Counsel have been received by the Underwriters; and
(ii)
the date upon which
the commercial copies of the Prospectus Amendment have been
delivered in accordance with Section 3(d);
provided,
however, in no event shall the Closing Date be later than the
Latest Closing Date.
In
return for their services in acting as underwriters to the
Corporation in respect of the Offering, in assisting in the
preparation of the Prospectus, in participating in and managing
selling or other groups for the sale of the Offered Shares, in
distributing the Offered Shares both directly and to other
registered dealers as brokers, and in performing administrative
work in connection with the distribution of the Offered Shares, the
Corporation agrees to pay to the Underwriters at the Closing Time
or the Over-Allotment Closing Time, as applicable, a cash
underwriting fee of 6.0% of the aggregate gross proceeds of the
Offered Shares purchased at such time. Further, at the Closing Time
or the Over-Allotment Closing Time, as applicable, and subject to
regulatory approval under applicable Laws, the Corporation shall
issue to the Underwriters such number of non-transferable
compensation options (the “Compensation Options”) as is equal
to 6.0% of the number of Offered Shares purchased at such time.
Each Compensation Option shall entitle the holder thereof to
purchase one Common Share at an exercise price of $0.40 for a
period of 12 months following the Closing Date. Such underwriting
fee shall be payable, and the Compensation Options shall be issued,
as provided in Section 6(a) and
Section 15.
The
Offering shall be completed at the Closing Time at the offices of
the Corporation’s Counsel, or at such other place in Toronto
or Vancouver as the Underwriters and the Corporation may agree. At
the Closing Time, the Corporation shall deliver to the Underwriters
(i) one or more definitive share certificates representing the
Offered Shares (or, if so requested by Mackie, electronic deposit
of the Offered Shares) registered in the name of CDS & Co., or
in such other name or names as Mackie may notify the Corporation in
writing not less than 24 hours prior to the Closing Time, and (ii)
certificates representing the Compensation Options registered in
such names as Mackie notifies the Corporation prior to the Closing
Time against payment by the Underwriters to the Corporation of the
Purchase Price (net of the amount of the aggregate Underwriting Fee
and the Expenses, without duplication) in lawful money of Canada by
bank draft or wire transfer of immediately available funds to an
account designated by the Corporation.
The
Corporation shall, prior to the Closing Date, make all necessary
arrangements for delivery of definitive certificates representing
the Compensation Options and, if applicable, share certificate(s)
representing the Offered Shares on the Closing Date.
Certificates issued
to any purchaser that has purchased as a U.S. Accredited Investor
pursuant to the exemption from the registration requirements
afforded by Rule 506(b) of Regulation D and/or Section 4(a)(2) of
the 1933 Act and similar exemptions under applicable state
securities laws in the manner required by Section 2 of this
Agreement shall be individually certificated and shall bear the
required legends in accordance with the Final U.S. Placement
Memorandum.
The
Corporation shall pay all fees and expenses payable to the Transfer
Agent and CDS & Co., if applicable, in connection with the
preparation, delivery and certification of the Offered Shares
contemplated by this Section 6(b) and the fees and expenses payable to the
Transfer Agent in connection with the initial or additional
transfers as may be required in the course of the distribution of
the Offered Shares.
7.
Representations
and Warranties of the Corporation
The
Corporation hereby represents, warrants and covenants to and with
the Underwriters, for the benefit of the Underwriters and in trust
for the benefit of the Purchasers, and acknowledges that the
Underwriters and the Purchasers are relying upon such
representations and warranties in purchasing the Offered Shares
that:
(a)
Good Standing of the Corporation. The
Corporation has been duly amalgamated and is validly existing under
the Business Corporations
Act (British Columbia) and is current and up to date with
all filings required to be made by it, and has all requisite
corporate power and authority to carry on its business as currently
conducted, and to own, lease and operate its properties and assets
and to carry out the transactions contemplated by this Agreement
and the Ancillary Documents and carrying out the obligations
hereunder and thereunder, and has all requisite corporate power to
carry on its business as presently proposed to be conducted by it.
The Corporation is duly qualified or authorized to transact
business and is in good standing (in respect of the filing of
annual returns where required or other information filings under
applicable corporations information legislation) in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business.
(b)
Subsidiaries. Other than the
Corporation Subsidiaries, the Corporation has no other
subsidiaries. The Corporation beneficially owns, directly or
indirectly, the percentages indicated in Schedule “B”
hereto of the issued and outstanding shares in the capital of the
Corporation Subsidiaries free and clear of all Liens of any kind
whatsoever other than as adequately disclosed in the
Corporation’s Information Record, all of such shares have
been duly authorized and validly issued and are outstanding as
fully paid and non-assessable shares (or the equivalent legal
concept in another jurisdiction), and no Person has any right,
agreement or option for the purchase from the Corporation of any
interest in any of such shares or for the issue or allotment of any
unissued shares in the capital of the Corporation Subsidiaries or
any other security convertible into or exchangeable for any such
shares. Each of the Corporation Subsidiaries has been duly
incorporated and is validly existing under the Laws of its
jurisdiction of incorporation and has all requisite corporate
power, capacity and authority to own, lease and operate, as
applicable, its properties, permits and assets and conduct its
business as currently conducted, and has all requisite corporate
power to conduct its business as presently proposed to be conducted
by it, and each of the Corporation Subsidiaries is current with all
material filings required to be made under its jurisdiction of
incorporation and all other jurisdictions in which it exists or
carries on any material business.
(c)
Share Capital of the Corporation. As of
the date hereof, the authorized share capital of the Corporation
consists of an unlimited number of Common Shares. As of October 23,
2020 (prior to giving effect to the Offering), 154,920,228 Common
Shares (and no other shares) are issued and outstanding (and such
Common Shares have been issued as fully paid and non-assessable
shares), provided that there have been no exercise of any warrants
listed in Schedule “A” on the date hereof. As of the
date hereof, other than as described in Schedule “A” to
this Agreement and other than pursuant to this Agreement, there are
no Outstanding Convertible Securities of the Corporation or any
Corporation Subsidiary.
(d)
Authorization. The Corporation has full
corporate power and authority to issue the Offered Shares and the
Compensation Options. The Offered Shares, and any Common Shares
issued upon exercise of the Compensation Options, when issued and
upon receipt by the Corporation of the full consideration therefor,
will have been duly and validly issued as fully paid and
non-assessable.
(e)
Absence of Rights. Except as adequately
disclosed in the Corporation’s Information Record, there is
no right, agreement or option, present or future, contingent or
absolute, or any right capable of becoming a right, agreement or
option, for the issue or allotment of any unissued Common Shares
(or other shares in the capital of the Corporation) or any other
agreement or option, for the issue or allotment of any unissued
Common Shares (or other shares in the capital of the Corporation)
or any other security convertible into or exchangeable for any
Common Shares (or other shares in the capital of the Corporation)
or to require the Corporation to purchase, redeem or otherwise
acquire any of the issued and outstanding Common
Shares.
(f)
Financial Information. The Financial
Information:
(i)
presents fairly, in
all material respects, the consolidated financial position of the
Corporation, and the consolidated results of its operations and its
cash flows, for the periods specified in such Financial
Information;
(iii)
does not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was
made, with respect to any period covered by the Financial
Information.
(g)
Off Balance Sheet. The Corporation has
not engaged in any “off balance sheet” or similar
financing.
(h)
Liabilities. To the Corporation’s
knowledge, neither the Corporation nor any of the Corporation
Subsidiaries has any liabilities, obligations, indebtedness or
commitments, whether accrued, absolute, contingent or otherwise,
which are not adequately disclosed or referred to in the Financial
Information, other than liabilities, obligations or indebtedness or
commitments incurred after the last period covered by the Financial
Information in the normal course of business and which would not
reasonably be expected to have a Material Adverse
Effect.
(i)
Non-Contravention. Neither the
Corporation nor any Corporation Subsidiary is in violation of its
constating documents. None of the Offering, the execution, delivery
and performance of this Agreement or the Ancillary Documents or the
consummation of the transactions contemplated herein and therein,
including the issue of the Offered Shares and the Compensation
Options, does or will:
(i)
subject to
compliance by the Underwriters with the provisions of this
Agreement, require the consent, approval, authorization, order or
agreement of, or registration or qualification with, any
Governmental Authority or other Person, except:
(A)
such as have been
obtained, or
(B)
such as may be
required under the Applicable Securities Laws and the policies of
the Stock Exchange and will be obtained by the Closing Time, as
applicable; or
(ii)
conflict with, or
result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to
the loss of or Lien upon any of the consolidated properties or
assets of the Corporation under any provision of:
(A)
the constating
documents of the Corporation or the comparable organizational
documents of any Corporation Subsidiary, or
(B)
subject to the
filings and other matters referred to in the immediately following
sentence:
i.
any Contract to
which the Corporation or any Corporation Subsidiary is a party or
by which any of their respective properties or assets are
bound;
ii.
any Law applicable
to the Corporation or any Corporation Subsidiary or any of their
respective properties or assets; or
iii.
any authorization
held or obtained by the Corporation or any Corporation
Subsidiary,
other
than any such conflicts, violations, defaults, rights, losses or
Liens that would not, in any case of (i) or (ii) above,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(j)
Independent Accountants. The
accountants who reported on the Financial Information are
independent with respect to the Corporation within the meaning of
Applicable Securities Laws. There has never been any reportable
event (within the meaning of NI 51-102) with the current auditors
or any former auditors of the Corporation.
(k)
Material Assets. The Corporation
directly or indirectly, has good and full marketable right to, and
interest in and profits derived from the assets of the Corporation
and the Corporation Subsidiaries reflected in the
Corporation’s Information Record and the most recent draft of
the Prospectus, free and clear of all Liens (except as otherwise
adequately disclosed in the Corporation’s Information Record
and the most recent draft of the Prospectus). The interests of the
Corporation and the Corporation Subsidiaries, the Gibellini Project
Lessors and COMIBOL, as applicable, in the Gibellini Mineral Rights
and in the Pulacayo Paca Mineral Rights are as described in the
Corporation Information Record (subject to the qualifications as to
be provided in the relevant Title Opinion). Any and all Contracts
pursuant to which the Corporation or any Corporation Subsidiary
holds material assets or is entitled to the use of or acquire
ownership of material assets (whether directly or indirectly)
(including in respect of a Project, subject to the qualifications
to be provided in the relevant Title Opinion) are valid and
subsisting agreements in full force and effect, enforceable in
accordance with their respective terms, and there is currently no
material default of any of the provisions of any such agreements
nor has any such default been alleged, and the Corporation, after
making due enquiries, is not aware of any disputes with respect
thereto and such assets are in good standing under the applicable
Laws of the jurisdictions in which they are situate, and all
leases, licences, concessions, mineral rights and claims pursuant
to which the Corporation and the Corporation Subsidiaries, the
Gibellini Project Lessors and COMIBOL derive their interests
(whether legal or beneficial) in such material assets are in good
standing (subject to the qualifications to be provided in the
applicable Title Opinion) and there has been no material default
under any such leases, licences, concessions, mineral rights or
claims and all taxes required to be paid with respect to such
assets to the date hereof have been paid.
(l)
Technical Information. The Corporation
has filed all technical reports as required by NI 43-101 for each
mineral project on a property material to the Corporation, and the
current technical reports have been prepared in material compliance
with the requirements thereof. The technical information set forth
in the Corporation’s Information Record, including relating
to the estimates by the Corporation of mineral resources, has been
reviewed and approved by qualified persons (as defined in NI
43-101) and, in all cases, the resource information has been
prepared in accordance with Canadian industry standards set forth
in NI 43-101, and the information upon which the estimates of
resources were based was, at the time of delivery thereof, complete
and accurate in all material respects and there have been no
material adverse changes to such information since the date of
delivery or preparation thereof. The Gibellini Technical Report is
the sole “current” technical report of the Corporation
in respect of the Gibellini Project for the purposes of NI 43-101
and no material information was withheld from the authors thereof
for the purposes of preparing the Gibellini Technical Report and,
to the knowledge of the Corporation, all information provided to
such authors for such purposes is true and accurate and not
misleading and was given in good faith. The Pulacayo Paca Technical
Report is the sole “current” technical report of the
Corporation in respect of the Pulacayo Paca Project for the
purposes of NI 43-101 and no material information was withheld from
the authors thereof for the purposes of preparing the Pulacayo
Technical Report and, to the knowledge of the Corporation, all
information provided to such authors for such purposes is true and
accurate and not misleading and was given in good faith. All
statements of fact relating to the Corporation and the Corporation
Subsidiaries and their respective activities contained in the
Technical Reports are true and accurate in all material respects as
of the respective dates thereof and no such fact has been omitted
therefrom (or information withheld) the omission of which would
make any statement of fact therein misleading. To the knowledge of
the Corporation, there have been no material changes to such
information since the date of delivery or preparation thereof,
except as adequately disclosed in the Corporation’s
Information Record.
(m)
Exploration and Development Activities.
To the knowledge of the Corporation:
(i)
all assessments or
other work required to be performed within the areas covered by the
Gibellini Mineral Rights and the Pulacayo Paca Mineral Rights in
respect of the Projects have been performed to date and the
Corporation and the Corporation Subsidiaries (and the Gibellini
Property Lessors and COMIBOL) have complied in all material
respects with all applicable Laws in this regard, as well as with
regard to legal, contractual obligations to third parties in this
regard except for any non-compliance that could not, either
individually or in the aggregate, have a Material Adverse
Effect;
(ii)
there are no
expropriations or similar proceedings against any property in which
the Corporation has a direct or indirect economic interest or any
related mining claim; and
(iii)
all exploration and
development activities conducted on premises in which the
Corporation has a direct or indirect economic interest, including
within the areas covered by the Gibellini Mineral Rights and the
Pulacayo Paca Mineral Rights, have been conducted in all respects
in accordance with good mining and engineering practices and all
applicable workers’ compensation and health and safety and
workplace Laws have been duly complied with, except where the
failure to so conduct operations could not reasonably be expected
to have a Material Adverse Effect.
(iv)
Environmental Laws. To the
Corporation’s knowledge (i) neither the Corporation or any
Corporation Subsidiary, nor any Gibellini Project Lessor or COMIBOL
is in violation of any federal, provincial, state, local, municipal
or foreign Law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of human
health, the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife,
including Laws relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products
(collectively, “Hazardous
Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, “Environmental Laws”) except where
such violations would not be reasonably expected, on an individual
or aggregate basis, to have a Material Adverse Effect, (ii) the
Corporation and the Corporation Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their
requirements, except where the failure to have such permits,
authorizations and approvals would not reasonably be expected, on
an individual or aggregate basis, to have a Material Adverse
Effect, and (iii) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, Liens, notices of non-compliance or
violation, investigation or proceedings relating to any
Environmental Laws against the Corporation or any Corporation
Subsidiary or any Gibellini Project Lessor or COMIBOL, which if
determined adversely, would reasonably be expected to have a
Material Adverse Effect. Other than for ongoing legislative
reporting, there are no environmental audits, evaluations,
assessments, studies or tests that were commissioned by the
Corporation or any Corporation Subsidiary respecting the business,
operations, properties or facilities of the Corporation or any
Corporation Subsidiary or in which it has a direct or indirect
economic interest.
To the
Corporation’s knowledge, neither the Gibellini Mineral Rights
nor the Pulacayo Mineral Rights are located in any environmental
conservation unit, whether ‘full protection units’ or
‘sustainable use units’, nor in their buffer zones, or
Aboriginal protection areas.
There
is no tailings dam (or water dam) within, or within a radius of 100
km outside of, the areas covered by the Gibellini Mineral Rights or
the Pulacayo Mineral Rights. The Gibellini Mineral Rights and the
Pulacayo Minerals Rights are not located within any tailings (or
water) dam rescue zones.
(v)
Conduct of Business; Possession of Licenses
and Permits. The Corporation and each Corporation Subsidiary
has conducted and is conducting its business in compliance in all
material respects with all applicable Laws of each jurisdiction in
which it carries on business. The Corporation and each Corporation
Subsidiary possesses such permits, certificates, licenses,
approvals, consents and other authorizations (collectively,
“Governmental
Licenses”) issued by the appropriate federal,
provincial, state, local or foreign, as applicable, Governmental
Authorities necessary to own, lease, stake or maintain the mining
rights and property claims and other property interests and to
conduct the business now operated, including to conduct exploration
at their various projects, except where the failure to possess such
permits, certificates, licenses, approvals, consents or
authorizations would not reasonably be expected to have a Material
Adverse Effect. The Corporation and each Corporation Subsidiary is
in compliance with the terms and conditions of all such
Governmental Licenses, and is not in violation of, or in default
under, applicable Laws (including Environmental Laws) of any
Governmental Authorities having, asserting or claiming jurisdiction
over the Corporation or any Corporation Subsidiary or over any part
of the Corporation’s or any Corporation Subsidiary’s
operations or assets except where such non-compliance, violation or
default would not reasonably be expected to have a Material Adverse
Effect. To the knowledge of the Corporation, all of the
Governmental Licenses are valid and in full force and effect.
Neither the Corporation nor any Corporation Subsidiary has received
any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses.
(vi)
Material Contracts. All of the material
Contracts of the Corporation and the Corporation Subsidiaries
(collectively, the “Material
Contracts”) have been adequately disclosed in the
Corporation’s Information Record and if required under the
Applicable Securities Laws have been filed at the
Corporation’s profile on SEDAR. Neither the Corporation nor
any Corporation Subsidiary has received notification from any party
claiming that the Corporation or any Corporation Subsidiary is in
material breach or default under any Material
Contract.
(vii)
Restrictions on Dividends or Business.
There is not, in the constating documents, by-laws or in any
Contract or other instrument or document to which the Corporation
is a party, any restriction upon or impediment to, the declaration
or payment of dividends by the directors of the Corporation or the
payment of dividends by the Corporation to the holders of its
Common Shares. No Corporation Subsidiary is currently prohibited,
directly or indirectly, under any Contract or other instrument to
which it is a party or is subject, from paying any dividends to the
Corporation, from making any other distribution on such Corporation
Subsidiary’s outstanding equity securities, from repaying to
the Corporation any loans or advances to such Corporation
Subsidiary from the Corporation or from transferring any of such
Corporation Subsidiary’s properties or assets to the
Corporation or any other Corporation Subsidiary. Neither the
Corporation nor any Corporation Subsidiary is a party to or bound
or affected by any Contract containing any covenant which expressly
limits the freedom of the Corporation or any Corporation Subsidiary
to compete in any line of business, transfer or move any of its
assets or operations or which materially or adversely affects the
consolidated business practices, operations or condition of the
Corporation, except as adequately disclosed in the
Corporation’s Information Record.
(viii)
No Material Adverse Effect. Since
December 31, 2019, (i) there has been no change in the consolidated
condition (financial or otherwise), or in the consolidated
properties, capital, affairs, prospects, operations, assets or
liabilities of the Corporation, whether or not arising in the
ordinary course of business, which would reasonably be expected to
give rise to a Material Adverse Effect and except as adequately
disclosed in the Corporation's Information Record, and (ii) there
have been no transactions entered into by the Corporation, other
than those in the ordinary course of business, which are material
with respect to the Corporation, except as adequately disclosed in
the Corporation’s Information Record.
(ix)
Absence of Changes. Since December 31,
2019, the Corporation and each Corporation Subsidiary has carried
on business in the ordinary course and, except as adequately
disclosed in the Corporation’s Information Record, there has
not been:
(x)
any material change
in the consolidated assets, liabilities or obligations (absolute,
accrued, contingent or otherwise), business, business prospects,
condition (financial or otherwise) or results of operations of the
Corporation, other than those changes occurring in the ordinary
course of business, none of which (either singly or taken together)
has had or would have a Material Adverse Effect to the
Corporation;
(xi)
except as
contemplated in this Agreement, any material change in the share
capital or long-term debt of the Corporation;
(xii)
any declaration,
setting aside or payment of any dividend or other distribution with
respect to any shares in the capital of the Corporation or any
direct or indirect redemption, purchase or other acquisition of any
shares; or
(xiii)
any change in
accounting or tax practices followed by the
Corporation.
(n)
Absence of Proceedings. To the
Corporation’s knowledge, there is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or other Governmental Authority, domestic or foreign, now pending
or, to the knowledge of the Corporation, threatened against or
affecting the Corporation or any Corporation Subsidiary, or any
Gibellini Property Lessor or COMIBOL which has not been adequately
disclosed in the Corporation’s Information Record, or which
if determined adversely would reasonably be expected to have a
Material Adverse Effect, or which, if determined adversely, would
reasonably be expected to materially adversely affect the
consummation of the transactions contemplated in this Agreement or
the performance by the Corporation of its obligations hereunder or
under any of the Ancillary Documents.
(o)
Outstanding Judgements. There is no
outstanding judgement, order, decree, arbitral award or decision of
any court, tribunal or other Governmental Authority against the
Corporation or any Corporation Subsidiary or any Gibellini Property
Lessor or COMIBOL, which could reasonably by expected to result in
a Material Adverse Effect.
(p)
No Insolvency. Neither the Corporation
nor any Corporation Subsidiary has committed an act of bankruptcy
or sought protection from its creditors from any court or pursuant
to any Law, proposed a compromise or arrangement to its creditors
generally, taken any proceeding with respect to a compromise or
arrangement, taken any proceeding to have itself declared bankrupt
or wound up, as the case may be, taken any proceeding to have a
receiver appointed of any part of its assets, had any encumbrancer
or receiver take possession of any of its property, had an
execution or distress become enforceable or levied upon any portion
of its property or had any petition for a receiving order in
bankruptcy or application for a bankruptcy order filed against it,
and at the Closing Time neither the Corporation nor any Corporation
Subsidiary will be an insolvent person (as that term is defined in
the Bankruptcy and Insolvency
Act (Canada)).
(q)
Unlawful Payment. To the knowledge of
the Corporation, neither the Corporation nor any Corporation
Subsidiary, nor any employee or agent of the Corporation or any
Corporation Subsidiary, has made any unlawful contribution or other
payment to any person holding, or candidate for, any federal,
state, provincial or other public office, Canadian or foreign, or
failed to disclose fully any contribution, in violation of any Law,
or made any payment, to any federal, state, provincial or other
governmental officer or official, Canadian or foreign, or other
person charged with similar public or quasi-public duties, other
than payments required or permitted by applicable Laws. Without
limiting the generality of the foregoing, to the knowledge of the
Corporation, neither the Corporation or any Corporation Subsidiary,
nor any employee or agent of the Corporation or any Corporation
Subsidiary, has violated FCPA Legislation.
(r)
Brokerage Fees. Other than the
Underwriters, there is no person acting or, to the knowledge of the
Corporation, purporting to act at the request of the Corporation,
who is entitled to any brokerage or finder's fees in connection
with the Offering.
(s)
Authorization of Documents, etc. This
Agreement has been, and at the Closing Time each of the Ancillary
Documents, and the transactions contemplated herein and therein,
will have been, duly authorized, executed and delivered by the
Corporation and, in each case, will be a legal, valid and binding
obligation of, and be enforceable against, the Corporation in
accordance with its terms (subject to the Enforceability
Qualifications). All corporate action required to be taken by the
Corporation for the authorization, issuance, sale and delivery of
the Offered Shares has been validly taken at the date hereof or
will have been taken by the Closing Date.
(t)
No Default of Securities Laws. The
Corporation is not in default of any requirement of Applicable
Securities Laws which would reasonably be expected to have a
Material Adverse Effect on the Offering or the
Corporation.
(u)
Disclosure. All information which has
been prepared or compiled by the Corporation relating to the
Corporation and its business, properties and liabilities, and
either filed on SEDAR or provided to the Underwriters, including
all financial, marketing, sales, technical mining and operational
information, is as of the date of such information, true and
correct in all material respects, and no material fact or facts
have been omitted therefrom which would make such information
misleading. In addition, the Corporation has filed all documents
required to be filed by it under the Applicable Securities Laws and
the documents filed by the Corporation constituting the
Corporation’s Information Record did not contain a
misrepresentation at the time of their filing on
SEDAR.
(v)
No Default. Neither the Corporation nor
any Corporation Subsidiary is in default of any material term,
covenant or condition under or in respect of any judgment, order,
agreement or instrument to which it is a party or to which it or
any of the material property or assets (including any royalty or
interest therein) thereof are or may be subject, and no event has
occurred and is continuing, and no circumstance exists which has
not been waived, which constitutes a default in respect of any
Contract to which the Corporation or any Corporation Subsidiary is
a party entitling any other party thereto to accelerate the
maturity of any amount owing thereunder or which could reasonably
be expected to have a Material Adverse Effect.
(w)
Voting Agreements. The Corporation is
not party to any agreement, nor is the Corporation aware of any
agreement, which in any manner affects the voting control of any of
the securities of the Corporation or a Corporation
Subsidiary.
(x)
Shareholder Agreements. Neither the
Corporation nor, to the knowledge of the Corporation, any
shareholder of the Corporation is a party to any shareholders
agreement, pooling agreement, voting trust or other similar type of
arrangements in respect of outstanding securities of the
Corporation.
(y)
Interest of Insiders; Conflicts. Other
than as adequately disclosed in the Corporation’s Information
Record, to the knowledge of the Corporation:
(A)
none of the
directors, officers or employees of the Corporation or the
Corporation Subsidiaries, any known holder of more than 10% of any
class of shares of the Corporation, or any known associate or
affiliate of any of the foregoing persons (as such terms are
defined in the Securities
Act (Ontario)), has had any material interest, direct or
indirect, in any material transaction within the previous two years
or has any material interest in any proposed material transaction
involving the Corporation or a Corporation Subsidiary which, as the
case may be, materially affected, is material to or will materially
affect the Corporation or any of the Corporation Subsidiaries. To
the knowledge of the Corporation, no insider of the Corporation
(within the meaning of Applicable Securities Laws) has a present
intention to sell any securities of the Corporation;
(B)
no officer,
director or employee of the Corporation or any Corporation
Subsidiary, and no person which is an affiliate or associate of one
or more of the foregoing, owns, directly or indirectly, any
interest in (except for shares representing less than 10% of the
outstanding shares of any class or series of any publicly traded
company), or is an officer, director, employee or consultant of any
person which is, or is engaged in, a business competitive with the
Corporation or any Corporation Subsidiary, as applicable, which, in
either case, materially adversely impacts, or can reasonably be
expected to materially and adversely impact, on their ability to
duly and properly perform their services to the Corporation or any
Corporation Subsidiary;
(C)
to the knowledge of
the Corporation, no officer, director, employee or security holder
of the Corporation or any of the Corporation Subsidiaries has any
cause of action or other claim whatsoever against, or owes any
amount to, the Corporation or any Corporation Subsidiary, as
applicable, in connection with its business except for claims in
the ordinary and normal course of the business such as for accrued
vacation pay or other amounts or matters which would not be
material to the Corporation on a consolidated basis;
and
(D)
neither the
Corporation nor any Corporation Subsidiary owes any monies to, has
any present loans to, or borrowed any monies from or is otherwise
indebted to, any officer, director, employee, shareholder or any
person not dealing at “arm’s length” (as such
term is defined in the Tax Act) with any of them except for usual
employee reimbursements and compensation paid in the ordinary and
normal course of its business. To the Corporation’s
knowledge, except as adequately disclosed in the
Corporation’s Information Record and usual employee or
consulting arrangements made in the ordinary and normal course of
business, neither the Corporation nor any Corporation Subsidiary is
a party to any Contract or understanding with any officer,
director, employee, shareholder or any other person not dealing at
arm’s length with it.
The
directors and executive officers of the Corporation and the
Corporation Subsidiaries who are NEOs and their compensation
arrangements (as applicable) with the Corporation and the
Corporation Subsidiaries, as applicable, whether as directors,
officers or employees are, in all material respects, as disclosed
in the Corporation’s Information Record.
(z)
Interest in Revenues. Except as
adequately disclosed in the Corporation’s Information Record,
no officer, director, employee or any other person not dealing at
arm’s length with the Corporation (within the meaning of the
Tax Act), or to the knowledge of the Corporation, any associate or
affiliate of such person, owns, has or is entitled to any royalty,
net profits interest, carried interest, licensing fee, or any other
Liens or claims of any nature whatsoever which are based on the
revenues, profits, results of mineral project exploitation or other
economic measure of the Corporation.
(aa)
Employees. All material employment
agreements, severance agreements and change of control agreements
in respect of any NEOs, and all Employee Plans have been, in all
material respects, adequately disclosed in the Corporation’s
Information Record. The Corporation and the Corporation
Subsidiaries are in material compliance with all Laws respecting
employment and employment practices, terms and conditions of
employment, occupational health and safety, pay equity and wages,
and there is not currently any labour disruption or conflict
involving the Corporation or any Corporation Subsidiary. Neither
the Corporation nor any Corporation Subsidiary is a party to a
collective bargaining agreement. To the best of the
Corporation’s knowledge, there are no union organizing
efforts being made at the Corporation or the Corporation
Subsidiaries.
(bb)
Employee Plans. Each material plan, if
any, for retirement, bonus, stock purchase, profit sharing, stock
option, deferred compensation, severance or termination pay,
insurance, medical, hospital, dental, vision care, drug, sick
leave, disability, salary continuation, legal benefits,
unemployment benefits, vacation, incentive or otherwise contributed
to or required to be contributed to, by the Corporation or any
Corporation Subsidiary for the benefit of any current or former
director, officer, employee or consultant (collectively, the
“Employee
Plans”) has been maintained in material compliance
with its terms and with the requirements prescribed by any and all
Laws that are applicable to such Employee Plan. The Corporation
does not have, and has not had, any pension plan (as such term is
defined in the relevant legislation of the applicable
jurisdiction). All material accruals for unpaid vacation pay,
premiums for unemployment insurance, health premiums, federal or
provincial pension plan premiums, accrued wages, salaries and
commissions and Employee Plan payments have been reflected in the
books and records of the Corporation.
(cc)
Indebtedness. Neither the Corporation
nor any Corporation Subsidiary has guaranteed or otherwise given
security for or agreed to guarantee or give security for any
liability, debt or obligation of any other person.
(dd)
Insurance. The properties and assets of
the Corporation and the Corporation Subsidiaries are insured
against loss or damage with responsible insurers on a basis
consistent with insurance obtained by reasonably prudent
participants in comparable businesses, and such coverage is in full
force and effect, and the terms of any policies in respect thereof
have not been breached and the insured has not failed to promptly
give any notice or present any material claim
thereunder.
(ee)
Taxes. All tax returns, reports,
elections, remittances and payments of the Corporation and the
Corporation Subsidiaries required by applicable Law to have been
filed or made in any applicable jurisdiction, have been filed or
made (as the case may be), and are substantially true, complete and
correct, and all taxes of the Corporation and of the Corporation
Subsidiaries have been paid or accrued in the Financial Information
(except in any case in which the failure to file, pay or accrue
such taxes would not result in a Material Adverse
Effect).
(ff)
Reporting Issuer. The Corporation is a
“reporting issuer” (or its equivalent), and at the
Closing Time will be, a “reporting issuer” (or its
equivalent) in all provinces of Canada, other than Quebec and, in
each case, not in default of any requirement of Applicable
Securities Laws. The Corporation has made timely disclosure of all
material changes relating to it and no such disclosure has been
made on a confidential basis and there is no material change
relating to the Corporation which has occurred with respect to
which the requisite material change statement has not been
filed.
(gg)
Accounting Controls. The Corporation
and each of the Corporation Subsidiaries maintains, and will
maintain, a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with IFRS
and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(hh)
Mineral Rights. The material mining
licenses, claims, leases and other mineral property rights
(including the exploration authorizations and mining concessions
and applications for exploration authorizations and/or mining
concessions, as the case may be) in respect of the Gibellini
Project (the “Gibellini
Mineral Rights”) and in respect of the Pulacayo Paca
Project (the “Pulacayo Paca
Mineral Rights”) are set forth on Schedule
“C”, which schedule is a complete and accurate list of
all such rights. All such Gibellini Mineral Rights and Pulacayo
Paca Mineral Rights are validly held (directly or indirectly) by
the Corporation, the Corporation Subsidiaries, the Gibellini
Property Lessors or COMIBOL, as applicable, subject to the
qualifications to be set out in the applicable Title Opinion. Such
Gibellini Mineral Rights and Pulacayo Paca Mineral Rights are free
and clear of any material Liens and no material royalty is payable
in respect of any of them, except as described in Schedule
“C” or adequately disclosed in the Corporation’s
Information Record. Except as adequately disclosed in the
Corporation’s Information Record, no other mineral or
property rights are necessary for the conduct of the
Corporation’s or any Corporation Subsidiary’s business
as presently conducted and as contemplated in the
Corporation’s Information Record; and there are no material
restrictions on the ability of the Corporation or any Corporation
Subsidiary to use, access, transfer or otherwise explore or exploit
any such mineral or property rights except as required by
applicable Law and as adequately disclosed in the
Corporation’s Information Record. Except as adequately
disclosed in the Corporation’s Information Record, and except
in respect of permits to be obtained in the ordinary course that
are reasonably expected to be received by the Corporation or a
Corporation Subsidiary in a timely fashion, the Corporation and the
Corporation Subsidiaries, the Gibellini Property Lessors or
COMIBOL, as applicable, beneficially and legally own the Gibellini
Mineral Rights and Pulacayo Paca Mineral Rights necessary to carry
on the current and proposed exploration and exploitation
activities. In respect of all such Gibellini Mineral Rights and
Pulacayo Paca Mineral Rights:
(i)
neither the
Corporation nor any Corporation Subsidiary has received or has
knowledge of there having been issued any notice of default of any
of the terms or provisions of the Gibellini Mineral Rights or
Pulacayo Paca Mineral Rights;
(ii)
the execution,
delivery and performance of this Agreement and the Ancillary
Documents by the Corporation, and the consummation of the
transactions contemplated herein, will not cause a default or
termination, or give rise to the right of termination, or rights of
first refusal or other pre-emptive rights under any of the
Gibellini Mineral Rights or Pulacayo Paca Mineral
Rights;
(iii)
all exploration
permits, leases, concessions, licenses and mining rights or claims
payments, rentals, taxes, rates, assessments, renewal fees and
other governmental charges owing in respect of the Gibellini
Mineral Rights and the Pulacayo Paca Mineral Rights have been paid
in full up to the date of this Agreement except as would not have a
Material Adverse Effect;
(iv)
the Gibellini
Mineral Rights and the Pulacayo Paca Mineral Rights are in good
standing in all material respects with respect to the performance
of all material obligations required under applicable Law
(including the performance of all required exploration and
exploitation work, the performance of all minimum assessment work
and the timely filing of any reports, applications and further
documents) and the condition of any related surface rights is in
compliance with all Laws and all orders of all Governmental
Authorities having jurisdiction, including in respect of any
material Environmental Laws; and
(v)
there is no actual
or, to the knowledge of the Corporation, threatened adverse claim
against, or challenge to, the ownership of, or title to, the
Gibellini Mineral Rights or Pulacayo Paca Mineral
Rights.
(ii)
Aboriginal Claims. To the knowledge of
the Corporation, there are no claims with respect to Aboriginal
rights currently, or pending or threatened, with respect to either
of the Projects or in respect of any other properties in which the
Corporation has a direct or indirect economic interest. Without
limiting the foregoing, neither the Gibellini Mineral Rights nor
the Pulacayo Paca Mineral Rights are located in an area designated
or in the process of being designated as traditionally occupied by
any Aboriginal group (indigenous reserves).
(jj)
No Cease Trade Orders. No securities
commission in any jurisdiction has issued any order which is
currently outstanding preventing or suspending trading in any
securities of the Corporation, no such proceeding is, to the
knowledge of the Corporation, pending, contemplated or threatened,
and the Corporation is not in default of any requirement of
Applicable Securities Laws, except such as would not have or would
not reasonably be expected to have a Material Adverse
Effect.
(kk)
Stock Exchange Listing. The Corporation
is in compliance in all material respects with the current listing
requirements and all other applicable rules and regulations of the
Stock Exchange and has not taken any action which would be
reasonably expected to result in the delisting or suspension of the
Common Shares on or from the Stock Exchange.
(ll)
Transfer Agent and Registrar.
Computershare Trust Company of Canada, at its principal offices in
Vancouver, British Columbia, has been duly appointed as the
transfer agent and registrar for the Common Shares.
(mm)
Money Laundering Laws. The operations
of the Corporation and the Corporation Subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the money laundering
Laws of all relevant jurisdictions, the rules and regulations
thereunder and any related Laws issued, administered or enforced by
any Governmental Authority (collectively, the “Money Laundering Laws”), and no
action, suit or proceeding by or before any court or other
Governmental Authority or any arbitrator non-Governmental Authority
involving the Corporation or any Corporation Subsidiary with
respect to the Money Laundering Laws is, to the best knowledge of
the Corporation, pending or threatened.
(nn)
No Pending Changes to Law, etc. The
Corporation is not aware of any pending change or contemplated
change to any applicable Law that could reasonably be expected to
materially affect the business of the Corporation or the business
or legal environment under which the Corporation or any Corporation
Subsidiary operates.
(oo)
Corporate Records. The minute books and
corporate records of the Corporation and the Corporation
Subsidiaries made or to be made available to the
Underwriters’ Counsel in connection with the
Underwriters’ due diligence investigations of the Corporation
and the Corporation Subsidiaries for the period from its date of
incorporation to the date of examination thereof, are the original
minute books and records of such companies or true copies thereof
and contain copies of all proceedings (or certified copies thereof)
of the shareholders, the boards of directors and all committees of
the boards of directors of such companies and there have been no
other proceedings of the shareholders, boards of directors or any
committee of the boards of directors of such companies that are
required to be included in such minute books and records to the
date of review of such corporate records and minute books not
reflected in such minute books and corporate and other records
other than those which have been disclosed to the Underwriters in
writing and those which are or are not material in the context of
the Corporation.
The
representations and warranties of the Corporation contained in this
Agreement shall survive the completion of the transactions
contemplated under this Agreement in accordance with Section
17.
8.
Covenants
of the Corporation
The
Corporation hereby covenants to and with the Underwriters, on their
own behalf and on behalf of the Purchasers, as applicable, as
follows:
(a)
the Corporation
will cause the Offered Shares to be validly issued as fully-paid
and non-assessable;
(b)
the Corporation
will use its commercially reasonable efforts to obtain the
necessary consents from the Stock Exchange for the issuance of the
Offered Shares on such conditions as are acceptable to the
Underwriters and the Corporation, acting reasonably;
(c)
the Corporation
will use its commercially reasonable efforts to arrange for the
listing and posting for trading of the Offered Shares on the Stock
Exchange upon their issue;
(d)
the Corporation
shall ensure that the Offered Shares have the attributes
corresponding in all material respects to the description thereof
set forth in, as applicable, this Agreement and the Prospectus;
and
(e)
the Corporation
agrees that it shall obtain prior approval of the Underwriters as
to the content and form of any press release relating to the
Offering, such approval not to be unreasonably withheld or delayed.
In addition, if required by Applicable Securities Laws, any press
release announcing or otherwise referring to the Offering shall
include (i) an appropriate notation on each page as follows:
“Not for distribution to U.S. news wire services, or
dissemination in the United States”; and (ii) a prominent
notation of a cautionary statement to the following effect:
“This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”) or any state
securities laws and may not be offered or sold within the United
States unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such
registration is available.”.
(a)
The Over-Allotment Option shall
be exercisable, in whole or in part, and from time to time, by the
Underwriters by giving written notice to the Corporation on or
before a date that is not later than 30 days following the Closing
Date. Any such election to purchase Over-Allotment Shares may be
exercised only by written notice from the Mackie, on behalf of the
Underwriters, to the Corporation (the “Over-Allotment
Option Notice”) by 8:30 a.m. (Toronto
time) on or before the 30th
day following the
Closing Date, such notice to set forth: (i) the aggregate number of
Over-Allotment Shares to be purchased; and (ii) the date for the
purchase of the Over-Allotment Shares, provided that such date
shall not be less than two Business Days (as defined herein)
following the date of such notice. Pursuant to the Over-Allotment
Option Notice, the Underwriters shall severally, and not jointly,
nor jointly and severally, purchase in their respective percentages
set out in Section 15(a) of this Agreement, and the
Corporation shall deliver and sell, the number of Over-Allotment
Shares indicated in such notice, in accordance with the provisions
of this Agreement.
(b)
The obligation of the Underwriters to purchase the
Over-Allotment Shares at the Over-Allotment Option Closing Time (in
the event that the Over-Allotment Option is exercised by the
Mackie) shall be subject to the accuracy in all material respects
of the representations and warranties of the Corporation contained
in this Agreement (other than those subject to materiality, which
should be true and correct in all respects) as of the
Over-Allotment Closing Date and the performance in all material
respects by the Corporation of its obligations under this
Agreement. Any such closing shall be referred to as an
“Over-Allotment
Closing” and shall be
conducted in the same manner as the closing of Offered Shares on
the Closing Date. At any Over-Allotment Closing, the Corporation
and the Underwriters shall make all necessary payments and the
Corporation shall, at its sole expense, deliver all of the
certificates, opinions and other documents to be delivered by it on
the Closing Date, each updated to the date of any such
Over-Allotment Closing, provided that the Corporation shall not be
required to deliver updated Title Opinions and opinions and
certificates of status in respect of the Corporation Subsidiaries
as of the Over-Allotment Closing Date.
10.
Conditions
The
Underwriters’ obligation to purchase the Offered Shares on
the Closing Date shall be subject to the following
conditions:
(a)
the representations
and warranties of the Corporation contained in this Agreement shall
be true and correct in all material respects (or, if qualified by
materiality or Material Adverse Effect, in all respects) as at
Closing Time, with the same force and effect as if made on Closing
Time, after giving effect to the transactions contemplated by this
Agreement;
(b)
the Corporation
shall have complied in all material respects with all of its
applicable obligations under this Agreement and satisfied all the
applicable terms and conditions of this Agreement on its part to be
complied with or satisfied, other than conditions which have been
waived, at or prior to the Closing Time;
(c)
receipt by the
Underwriters of a certificate or certificates dated the Closing
Date signed by the Chief Executive Officer and Chief Financial
Officer of the Corporation, or such other Person(s) as may be
acceptable to the Underwriters, certifying for and on behalf of the
Corporation and not in their personal capacity:
(i)
that there has been
no material adverse change, financial or otherwise, to such date in
the business, affairs, operations, assets, liabilities (contingent
or otherwise) or capital of the Corporation from that disclosed in
the Corporation’s Information Record as it exists as of the
date of this Agreement;
(ii)
that no order,
ruling or determination having the effect of ceasing or suspending
trading in the Common Shares or any other securities of the
Corporation has been issued and no proceedings for such purposes
are pending or, to the knowledge of the Persons signing such
certificate, contemplated or threatened;
(iii)
that the
Corporation has complied with all applicable terms and conditions
of this Agreement to be complied with by the Corporation (unless
waived by Mackie on behalf of the Underwriters) at or prior to
Closing Time;
(iv)
that the
representations and warranties of the Corporation contained herein
are true and correct in all material respects (or, if qualified by
materiality or Material Adverse Effect, in all respects) as of the
Closing Time with the same force and effect as if made at and as of
the Closing Time after giving effect to the transactions
contemplated by this Agreement; and
(v)
such other matters
as the Underwriters and the Underwriters’ Counsel may
reasonably request;
(d)
receipt by the
Underwriters of a certificate dated the Closing Date signed by an
appropriate officer of the Corporation, addressed to the
Underwriters and the Underwriters’ Counsel, with respect to
the constating documents of the Corporation, the authorizing
resolutions related to this Agreement, the Prospectus and the
incumbency and specimen signatures of signing officers and
directors;
(e)
receipt by the
Underwriters of favourable legal opinions customary for
transactions of this nature, dated as of the Closing Date, from the
Corporation’s Counsel with respect to all such matters as the
Underwriters may reasonably request including, (i) the valid
existence of the Corporation; (ii) the authorized and issued
capital of the Corporation; (iii) the enforceability of this
Agreement and the certificates representing Compensation Options;
(iv) the creation, authorization, issue and distribution of the
Offered Shares and Compensation Options; and (v) the qualification
under Applicable Securities Laws of the distribution of the Offered
Shares, it being understood that the Corporation’s Counsel
may rely on the opinions of local counsel acceptable to them as to
matters governed by the Laws of jurisdictions other than the
Province of British Columbia or Canada and may rely, to the extent
appropriate in the circumstances, as to matters of fact on
certificates of officers of the Corporation as to matters which
specifically relate to the Corporation;
(f)
the Underwriters
will have received legal opinions, dated as of the Closing Date and
addressed to the Underwriters, in form and substance acceptable to
the Underwriters, acting reasonably, as to (i) the title and
ownership interests in the Gibellini Project (including, for
greater certainty, the Xxxxxx-XxXxx deposit) and the registered
Liens thereon (the "Gibellini Title
Opinion") and (ii) the title and ownership interests in the
Pulacayo Paca Project and the registered Liens thereon (the
"Pulacayo Paca Title Opinion"), and each such legal
opinion shall be consistent in all material respects to the
relevant disclosure in the Corporation’s Information
Record;
(g)
receipt by the
Underwriters of a letter from the Auditors, dated the Closing Date,
in form and substance satisfactory to the Underwriters, acting
reasonably, addressed to the Underwriters and the directors of the
Corporation, bringing the information contained in the “long
form” comfort letter or letters referred to in Section
3(a)(iii) forward to the Closing Time,
provided that such comfort letter shall be based on a review by the
Auditors having a cut-off date not more than two Business Days
prior to the Closing Date;
(h)
if any of the
Offered Shares are sold in the United States, receipt by the
Underwriters of an opinion of U.S. counsel, dated the Closing Date,
to the effect that no registration is required under the 1933 Act
in connection with sale of the Offered Shares, provided that such
offer, sale and delivery of Offered Shares in the United States is
made in compliance with this Agreement and provided further that it
being understood that no opinion is expressed as to any subsequent
resale of any Offered Shares;
(i)
receipt by the
Underwriters of a certificate from the Transfer Agent dated the
Closing Date, and signed by an authorized officer of the Transfer
Agent confirming the issued capital of the
Corporation;
(k)
evidence
satisfactory to the Underwriters and the Underwriters’
Counsel, acting reasonably, that the Offered Shares have been
conditionally approved for listing on the Stock
Exchange;
(l)
receipt by the
Underwriters of such further certificates, opinions of counsel and
other documentation from the Corporation as may be contemplated
herein or as the Underwriters or Underwriters’ Counsel may
reasonably request; provided, however, that the Underwriters shall
request any such certificate or document within a reasonable period
prior to the Closing Time that is sufficient for the Corporation to
obtain and deliver such certificate, opinion or
document;
(m)
the Underwriters
will have received favourable legal opinions, dated the Closing
Date and addressed to the Underwriters, from counsel to the
Corporation, as to (i) the incorporation and existence of each
Corporation Subsidiary through which the Corporation directly or
indirectly holds an economic interest in a Project, (ii) such
Corporation Subsidiaries having the requisite corporate power and
capacity to own and lease their properties and assets and to
conduct their businesses as presently carried on, and (iii) the
registered ownership of the issued and outstanding shares of such
Corporation Subsidiaries, and as to such other legal matters which
the Underwriters’ Counsel may reasonably
request;
(n)
the Underwriters
will have received certificates of status and/or compliance (or the
equivalent), where issuable under applicable Law, for the
Corporation and each of the Corporation Subsidiaries to which
paragraph (m) above applies, each dated within two days of the
Closing Date, or such other reasonable period as may be dictated by
local requirements; and
(o)
prior to the
Closing Time, the Underwriters, Underwriters’ Counsel and the
Underwriters’ technical consultants will have been provided
with timely access to all information reasonably required to permit
them to conduct a due diligence investigation of the Corporation
and its consolidated business operations, properties, assets,
affairs, prospects and financial condition, including access to
management of the Corporation (including its qualified person(s)
for purposes of NI 43-101), the Corporation’s auditors, the
authors of the Technical Reports and the legal counsel of the
Corporation in connection with one or more due diligence sessions
to be held prior to the Closing Time.
The
following are the termination rights of the Underwriters in respect
of the Offering.
If,
prior to the subject Closing Time, (a) any enquiry, action, suit,
investigation or other proceeding whether formal or informal, is
instituted, threatened or announced or any order is made by any
federal, provincial or other Governmental Authority or by any stock
exchange or other regulatory authority in relation to the
Corporation, or there is any change of Law or the interpretation or
administration thereof, which, in the reasonable opinion of an
Underwriter operates to prevent or materially restrict or suspend
or materially adversely affect the distribution or trading of the
Offered Shares; or (b) a cease trade order is made or threatened in
respect of the Corporation by any securities commission in Canada
or other competent regulatory authority, then such Underwriter
shall be entitled, at its option and in accordance with Section
11(e), to terminate its obligations
under this Agreement in respect of such securities by written
notice to that effect given to the Corporation at any time prior to
Closing Time.
If,
prior to Closing Time, there should occur or be discovered any
change of the nature contemplated in Section 4(a), (other than, in each case, a change
relating solely to one or more of the Underwriters), in each case
which, in the opinion of an Underwriter, might reasonably be
expected to have a significant adverse effect on the market price
or value of the Offered Shares, as applicable, such Underwriter
shall be entitled in respect of such securities, at its option and
in accordance with Section 11(e), to
terminate its obligations under this Agreement by written notice to
that effect given to the Corporation at any time prior to the
Closing Time.
If,
prior to the Closing Time, there should develop, occur or come into
effect or existence any event, action, state, condition or major
financial occurrence of national or international consequence
(including, without limitation, any natural catastrophe, any
outbreak or escalation of war, hostilities or terrorism, any
declared pandemic of a serious contagious disease, or national
emergency or similar event) or any new Law or regulation is enacted
(including a change in any existing law or regulation), inquiry or
other occurrence of any nature whatsoever (including the COVID-19
outbreak, to the extent that there is any material adverse
development related thereto after October 20, 2020), or similar
event or the escalation thereof, which in the opinion of an
Underwriter, seriously adversely affects, or involves, or will, or
could reasonably be expected to, seriously adversely affect, or
involve, the financial markets or the business, operations or
affairs of the Corporation and the Corporation Subsidiaries, taken
as a whole, then such Underwriter shall be entitled at its option
and in accordance with Section 11(e),
to terminate its obligations under this Agreement by written notice
to that effect given to the Corporation at any time prior to the
Closing Time.
(d)
Conditions
The
Corporation agrees that all terms and conditions contained in this
Agreement shall be construed as conditions and complied with so far
as they relate to acts to be performed or caused to be performed by
it, that it will use its reasonable best efforts to cause such
terms and conditions to be complied with, and that any breach or
failure by the Corporation to comply with any such terms or
conditions that has not been rectified to the satisfaction of the
Underwriters (acting reasonably) within 48 hours of when such
Underwriter provides notice to the Corporation of the same shall
entitle any of the Underwriters to terminate its obligations to
purchase the Offered Shares by giving notice to that effect to the
Corporation at or prior to the Closing Time, unless otherwise
expressly provided in this Agreement. The Underwriters may waive,
in whole or in part, or extend the time for compliance with, any
terms and conditions without prejudice to their rights in respect
of any other of such terms and conditions or any other or
subsequent breach or non-compliance, provided that any such waiver
or extension shall be binding upon the Underwriters only if such
waiver or extension is in writing and signed by each relevant
Underwriter.
The
rights of termination contained in Sections 11(a), (b), and
(c) may be exercised by any relevant
Underwriter and are in addition to any other rights or remedies any
of the Underwriters may have in respect of any default, act or
failure to act or noncompliance by the Corporation in respect of
any of the matters contemplated by this Agreement or otherwise. In
the event of any such termination, there shall be no further
liability on the part of the relevant Underwriter(s) to the
Corporation or on the part of the Corporation to the relevant
Underwriter(s) except in respect of any liability which may have
arisen or may arise after such termination under the indemnity,
contribution and expense provisions of Sections 12, 13 and
14. A notice of termination given by
an Underwriter under Sections 11(a),
(b), or (c) shall not be binding upon any other
Underwriter. A copy of any notice of termination shall be provided
to the other Underwriter.
The
Corporation agrees to indemnify and save harmless each of the
Underwriters and any U.S. Affiliate of an Underwriter that sells
any Offered Shares during the distribution, and each of their
respective directors, officers, employees and agents (collectively,
the “Indemnified
Parties” and each an “Indemnified Party”) from and
against all losses (other than a loss of profits), claims
(including shareholder actions, derivative or otherwise), actions,
damages, liabilities, costs or expenses, joint or several,
including reimbursement to the Underwriters upon demand of the
aggregate amount paid in reasonable settlement of any actions,
suits, proceedings, investigations or claims and the reasonable
fees and expenses of their counsel that may be incurred in advising
with respect to and/or defending any action, suit, proceeding,
investigation or claim that may be made or threatened against any
Indemnified Party or in enforcing this indemnity (collectively,
“Claims” and
each, a “Claim”)
in any way caused by, or arising directly or indirectly from, or in
consequence of:
(i)
any information or
statement (except any statement relating solely to the Underwriters
or any of them) contained in a Prospectus, in the
Corporation’s Information Record or in any certificate of the
Corporation delivered under this Agreement which at the time and in
the light of the circumstances under which it was made contains or
is alleged to contain a misrepresentation;
(ii)
any omission or
alleged omission to state in a Prospectus, in the
Corporation’s Information Record or any certificate of the
Corporation delivered under this Agreement, any fact (except facts
relating solely to the Underwriters or any of them) required to be
stated in such document or necessary to make any statement in such
document not misleading in light of the circumstances under which
it was made;
(iii)
any order made or
enquiry, investigation or proceedings commenced or threatened by
any Canadian Securities Regulator or other competent authority
based upon any untrue statement or omission or alleged untrue
statement or alleged omission or any misrepresentation or alleged
misrepresentation (except a statement or omission or alleged
statement or omission relating solely to the Underwriters) in a
Prospectus, in the Corporation’s Information Record or based
upon any failure to comply with Applicable Securities Laws (other
than any failure to comply by the Underwriters), preventing or
restricting the trading in or the sale or distribution of the
Offered Shares in any of the Qualifying Provinces (except any such
order, inquiry, investigation or proceeding caused solely by the
Underwriters or any of them);
(iv)
the non-compliance
or alleged non-compliance by the Corporation with any Applicable
Securities Laws, including any non-compliance with continuous
disclosure obligations or any statutory requirement to make any
document available for inspection, except as caused solely by the
Underwriters or any of them; or
(v)
the Corporation is
in breach of any material term, condition or covenant of this
Agreement or any material representation or warranty given by the
Corporation in this Agreement is or becomes false,
provided that, if
and to the extent that a court of competent jurisdiction in a final
judgment from which no appeal can be made or a regulatory authority
in a final ruling from which no appeal can be made shall determine
that the liabilities, claims, actions, suits, proceedings, losses,
costs, damages or expenses resulted from the gross negligence,
fraud or wilful misconduct of an Indemnified Party claiming
indemnity, this indemnity shall cease to apply to such Indemnified
Party.
The
Corporation also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or
otherwise) to the Corporation or any Person asserting claims on
behalf of or in right of the Corporation for or in connection with
this Agreement or the Offering, except to the extent any losses,
expenses, claims, actions, damages or liabilities incurred by the
Corporation are determined by a court of competent jurisdiction in
a final judgement that has become non-appealable to have resulted
from the gross negligence or wilful misconduct of such Indemnified
Party.
(b)
Notification of Claims
If any Claim is asserted against any Indemnified
Party, such Indemnified Party will notify the Corporation as soon
as possible of the nature of such Claim, but failure to notify the
Corporation shall not relieve the Corporation of any obligation
which it may have to such Indemnified Party under this
Section 12 except to the extent by which the Corporation is
prejudiced by such failure, and the Corporation shall be entitled
(but not required) to assume the defence of any suit brought to
enforce such Claim. However, the defence shall be conducted through
legal counsel acceptable to the Indemnified Party, acting
reasonably, and no settlement of any such Claim or admission of
liability may be made by the Corporation or the Indemnified Party
without the prior written consent of the other party, such consent
not to be unreasonably withheld and the Corporation shall not be
liable for any settlement of any such Claim unless it has consented
in writing to such settlement, such consent not to be unreasonably
withheld.
(c)
Right of Indemnity in Favour of Others
With respect to any Indemnified Party who is not
a party to this Agreement, the Underwriters shall obtain and hold
the rights and benefits of this Section 12
in trust for and on behalf of such
Indemnified Party.
In any such Claim, the Indemnified Party shall
have the right to retain separate counsel to act on his or its
behalf; provided that the fees and disbursements of such counsel
shall be paid by the Indemnified Party unless: (i) the Corporation
and the Indemnified Party shall have mutually agreed to the
retention of the other counsel; (ii) the Corporation has not
assumed the defence of the Claim within 30 days of receiving
written notice of such Claim; or (iii) the named parties to any
such Claim (including any added third or impleaded party) include
both the Indemnified Party and the Corporation and the
representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests
between them; provided that the Corporation shall only be required
to pay the fees of one set of counsel in a jurisdiction pursuant to
this Section 12(d)
for all Indemnified
Parties.
Notwithstanding the other provisions of this
Section 12, the
foregoing rights of indemnity set out in Section 12(a)
hereof shall not enure to any
Indemnified Party if the Corporation has complied with the
provisions of Sections 3 and 4 hereof
and the claim for indemnification relates to a Person asserting a
Claim in respect of an alleged untrue statement or alleged omission
from any document, including the Prospectus, and such Person was
not, on a timely basis after such compliance by the Corporation,
provided with a copy of the Prospectus which corrects such alleged
untrue statement or alleged omission and which was required, under
applicable Law, to be delivered to such Person by such Indemnified
Party.
(a)
Contribution from the Corporation
In order to provide for a just and equitable
contribution in circumstances in which the indemnity provided in
Section 12 (as modified by Section 12(e))
would otherwise be available in accordance with its terms but is,
for any reason, other than as a result of the terms of Section 12
held to be unavailable to or unenforceable by the Underwriters or
enforceable otherwise than in accordance with its terms, the
Corporation and the relevant Underwriter(s) shall contribute to the
aggregate of all claims, expenses, costs and liabilities and all
losses (other than loss of profits relating to the distribution of
the Offered Shares) of a nature contemplated by Section
12 in
such proportions so that the relevant Underwriter(s) are
responsible for the portion represented by the percentage that the
aggregate fee actually paid by the Corporation to the relevant
Underwriter(s) in respect of the Offering bears to the aggregate
offering price of the securities issued under the Offering, and the
Corporation is responsible for the balance. The relevant
Underwriter(s) shall not in any event be liable to contribute, in
the aggregate, any amounts in respect of the Offering in excess of
such aggregate fee or any portion of such fee actually received in
respect of the Offering. Notwithstanding the foregoing, no Person
who has been determined by a court of competent jurisdiction in a
final judgment from which no appeal can be made to have engaged in
any fraud, wilful misconduct or fraudulent misrepresentation shall
be entitled to claim contribution from any Person who has not also
been determined by a court of competent jurisdiction in a final
judgment from which no appeal can be made to have engaged in such
fraud, wilful misconduct or fraudulent
misrepresentation.
(b)
Right of Contribution in Addition to Other Rights
The rights to contribution provided in this
Section 13 shall
be in addition to and not in derogation of any other right to
contribution which the Underwriters or the Corporation may have by
Law.
(c)
Right of Contribution in Favour of Others
With respect to this Section 13, the
Corporation acknowledges and agrees that the Underwriters are
contracting on their own behalf and as agents for their directors,
officers, employees and agents.
Whether
or not the transactions contemplated by this Agreement are
completed, except as specifically provided below, all expenses of
or incidental to the transactions set out in this Agreement shall
be borne by the Corporation without duplication including expenses
payable in connection with the qualification of the Offered Shares
for distribution to the public, the fees and disbursements of the
Corporation’s Counsel, the reasonable fees (which shall not
exceed $125,000 in the aggregate excluding taxes and disbursements)
of the Underwriters’ Counsel, the reasonable out-of-pocket
expenses of the Underwriters (including travel expenses, hotel
accommodations and meals in connection with road shows and
marketing activities) (together with the fees and disbursements of
Underwriters’ Counsel, the “Expenses”), the fees and expenses
of the Auditors, the fees relating to listing the Offered Shares on
the Stock Exchange, and all costs incurred in connection with the
preparation and printing of each Prospectus and the certificates
representing the Offered Shares. The Corporation shall also be
responsible for any exigible Harmonized Sales Tax on the foregoing
amounts.
Subject
to the terms and conditions hereof, the obligation of the
Underwriters to purchase the Offered Shares shall be several and
not joint. The percentage of the aggregate number of the Offered
Shares to be separately purchased and paid for by the Underwriters
shall be as follows:
|
Mackie
Research Capital Corporation
|
50.0%
|
|
Canaccord
Genuity Corp.
|
30.0%
|
|
Sprott
Capital Partners LP
|
20.0%
|
Subject
to Section 15(b), if one of the Underwriters (the “Refusing
Underwriter”) fails to purchase their percentage of the
Offered Shares at the Closing Time, then the other Underwriter (the
“Continuing Underwriter”) shall have the right, but
shall not be obligated, to purchase such Offered Shares. If the
Continuing Underwriter does not purchase all the Offered Shares of
the Refusing Underwriter, the Corporation shall be entitled to
terminate its obligations under this Agreement in respect of the
Offering without further liability of the Corporation to the
Continuing Underwriter, on the one hand, or on the part of the
Continuing Underwriter to the Corporation, on the other hand,
except in respect of any liability which may have arisen or may
arise under Sections 12, 13 and 14. Nothing in this Section 15
shall relieve any Refusing Underwriter from liability to the
Corporation.
(b)
Rights to Purchase of the Other Underwriters
If one
or more, but not each, of the Underwriters shall exercise their
right of termination under Section 11 in respect of the Offering,
then the other Underwriter(s) shall have the right, but shall not
be obligated, to purchase all of the percentage of Offered Shares
which would otherwise have been purchased by such Underwriter(s)
which have so exercised their right of termination.
16.
Survival
of Representations and Warranties
The
representations, warranties, obligations and agreements of the
Corporation and the Underwriters contained in this Agreement made
as of the date hereof and in any certificate delivered pursuant to
this Agreement or in connection with the purchase and sale of the
Offered Shares shall survive the purchase and sale of the Offered
Shares, and shall continue in full force and effect, unaffected by
any subsequent disposition of the Offered Shares by the
Underwriters or the termination of the relevant
Underwriter(s)’ obligations in accordance with the time
periods set forth in applicable Laws (except in the case of fraud
in which case no time limit will apply), and shall not be limited
or prejudiced by any investigation made by or on behalf of the
relevant Underwriter(s) in connection with the preparation of the
Prospectus.
Without
the prior written consent of Mackie, on behalf of the Underwriters,
such consent not to be unreasonably withheld or
delayed:
a.
for a period
beginning on the date of this Agreement and ending 120 days after
the Closing Date, the Corporation agrees not to issue any Common
Shares or securities convertible or exercisable into Common Shares
other than for purposes of (i) directors’, officers’ or
employee stock options, or other Common Share plans in existence or
adopted by the Corporation’s board of directors as of the
date hereof, or (ii) other outstanding rights issued as at the date
hereof;:
b.
for a period
beginning on the date of this Agreement and ending 90 days after
the Closing Date, none of the directors, senior officers and
insiders of the Corporation will, directly or indirectly, offer,
sell, contract to sell, lend, swap, or enter into any other
agreement to transfer the economic consequences of, or otherwise
dispose of or deal with, or publicly announce any intention to
offer, sell, contract to sell, grant or sell any option to
purchase, hypothecate, pledge, transfer, assign, purchase any
option or contract to sell, lend, swap or enter into any agreement
to transfer the economic consequences of, or otherwise dispose of
or deal with, whether through the facilities of a stock exchange,
by private placement or otherwise, securities of the Corporation
held by them, directly or indirectly, provided that Mackie's
consent shall not be required in connection with (a) the exercise
of previously issued options or other convertible securities, (b)
transfers among a shareholder's affiliates for tax or other
planning purposes, (c) a tender or sale by a shareholder of
securities of the Corporation in or pursuant to a take-over bid or
similar transaction involving a change of control of the
Corporation, (d) the sale of up to $500,000 of Common Shares
primarily to fund the exercise of previously issued options or
other convertible securities.
18.
Time
of the Essence
Time
shall be of the essence of this Agreement.
19.
Governing
Law
This
Agreement shall be governed by and construed in accordance with the
Laws of the Province of British Columbia and the Laws of Canada
applicable therein and the courts of the Province of British
Columbia shall have non-exclusive jurisdiction over any dispute
hereunder.
Unless
otherwise expressly provided in this Agreement, any notice or other
communication to be given under this Agreement shall be in
writing:
(a)
to the Corporation
at:
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000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000
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Xxxxxxxxx, XX X0X
0X0
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Attention:
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Xxxx Xxx, Executive
Chairman
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Email:
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xxxxxxxxxx@xxxxx.xxx
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with a
copy (which will not constitute notice) to:
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MLT Xxxxxx
LLP
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Suite 2600 - 0000
Xxxx Xxxxxxxx Xxxxxx
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Xxxxxxxxx, Xxxxxxx
Xxxxxxxx X0X 0X0
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Attention:
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Mahdi
Shams
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Email:
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XXxxxx@xxxxxxxx.xxx
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(b)
to the
Underwriters:
Mackie
Research Capital Corporation
000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx
Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
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Attention:
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Xxxxx Xxxxxxxxxxxxx |
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Email:
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xxxxxxxxxxxxxx@xxxxxxxxxxxxxx.xxx
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Canaccord Genuity
Corp.
000 Xxx
Xxxxxx, Xxxxx 0000
XX Xxx
000
Xxxxxxx, Xxxxxxx
X0X 0X0
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Attention:
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Xxxxx XxXxxxxx |
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Email:
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xxxxxxxxx@xxx.xxx
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Sprott
Capital Partners LP
Royal
Bank Plaza, South Tower
000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
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Attention:
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Xxxxx Xxxxx |
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Email:
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xxxxxx@xxxxxx.xxx
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with a
copy (which will not constitute notice) to:
XxXxxxxx
Xxxxxxxx LLP
00
Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
TD Xxxx
Xxxxx
Xxxxxxx,
Xxxxxxx
Xxxxxx
X0X 0X0
Attention: Xxxx
Xxxxxxx
Email:
xxxxxxxx@xxxxxxxx.xx
or to
such other address as any of the parties may designate by notice
given to the others.
Each
notice shall be personally delivered to the addressee or sent by
electronic transmission to the addressee and (i) a notice which is
personally delivered shall, if delivered on a Business Day, be
deemed to be given and received on that day and, in any other case,
be deemed to be given and received on the first Business Day
following the day on which it is delivered; and (ii) a notice which
is sent by electronic transmission shall be deemed to be given and
received on the first Business Day following the day on which it is
sent (with confirmed transmission).
21.
Authority
of Xxxxxx
Xxxxxx
is hereby authorized by Canaccord Genuity Corp. and Sprott Capital
Partners LP to act on its behalf and the Corporation shall be
entitled to and shall act on any notice given in accordance with
Section 20 or agreement entered
into by or on behalf of the Underwriters by Mackie, which represent
and warrant that they have irrevocable authority to bind the
Underwriters, except in respect of any consent to a settlement
pursuant to Section 12 (which consent shall be given by the
Indemnified Party), a notice of termination pursuant to Section
11 (which notice may be given by any
of the Underwriters), or any waiver pursuant to Section 12 (which waiver must be signed by all of the
Underwriters). Mackie shall take reasonable steps to consult with
the other Underwriter concerning any matter in respect of which it
acts as representative of the Underwriters.
22. No
Fiduciary Duty
The
Corporation hereby acknowledges that (i) the purchase and sale of
the Offered Shares pursuant to this Agreement is an
arm’s-length commercial transaction between the Corporation,
on the one hand, and each of the relevant Underwriter(s) and any
affiliate through which it may be acting, on the other, (ii) each
of the Underwriters is acting as principal and not as an agent or
fiduciary of the Corporation and (iii) the Corporation’s
engagement of each of the Underwriters in connection with the
Offering and the process leading up to the Offering is as
independent contractors and not in any other capacity. Furthermore,
the Corporation agrees that it is solely responsible for making its
own judgments in connection with the Offering (irrespective of
whether any of the Underwriters has advised or is currently
advising the Corporation on related or other matters). The
Corporation agrees that it will not claim that the Underwriters
have rendered advisory services of any nature or respect, or owes
an agency, fiduciary or similar duty to the Corporation, in
connection with such transaction or the process leading
thereto.
23. Conflict
of Interest
The
Corporation: (i) acknowledges and agrees that each Underwriter has
certain statutory obligations as registrants under the Applicable
Securities Laws and has fiduciary relationships with its clients;
and (ii) consents to each Underwriter acting hereunder while
continuing to act for its clients. To the extent that either
Underwriter’s statutory obligations as registrant under the
Applicable Securities Laws or fiduciary relationships with its
clients conflict with its obligations hereunder, such Underwriter
will be entitled to fulfil its statutory obligations as registrant
under the Applicable Securities Laws and its fiduciary duties to
its clients. Nothing in this Agreement will be interpreted to
prevent an Underwriter from fulfilling its statutory obligations as
registrant under the Applicable Securities Laws or to satisfy its
fiduciary duties to its clients. For greater certainty, nothing in
this section releases the Underwriters from its obligations under
this Agreement except to the extent reasonably necessary to fulfill
its statutory obligations as registrant under the Applicable
Securities Laws or satisfy its fiduciary duties to its
clients.
24. Further
Assurances
The
parties hereto covenant and agree to sign such other documents, do
and perform and cause to be done and performed such further and
other acts and things as may be necessary or desirable in order to
give full effect to this Agreement and every provision of
it.
25. Assignment
and Enurement
No
party to this Agreement may assign this Agreement, any part hereof
or its rights hereunder without the prior written consent of the
other parties. Subject to the foregoing, this Agreement shall enure
to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
26. Invalidity
In the
event that any provision or part of this Agreement will be deemed
void or invalid by a court of competent jurisdiction, the remaining
provisions or parts shall be and remain in full force and effect.
If, in any judicial proceeding, any provision of this Agreement is
found to be so broad as to be unenforceable, it is hereby agreed
that such provision shall be interpreted to be only so broad as to
be enforceable.
27. Advertisements
The
Corporation acknowledges that the Underwriters shall have the right
following closing of the Offering, at their own expense, to place
such advertisement or advertisements relating to the Offering as
the Underwriters may consider desirable or appropriate and as may
be permitted by applicable Law.
28.
Entire
Agreement
The
provisions contained herein constitute the entire agreement among
the parties effective as of the date hereof and supersede all
previous communications, representations, understandings and
agreements among the parties with respect to the subject matter
hereof, whether verbal or written, including the letter agreement
between Mackie and the Corporation, dated and accepted on October
20, 2020, as amended. Notwithstanding the foregoing, the provisions
of paragraph 17 of such letter remains in effect.
29.
Counterparts
This
Agreement may be executed by any one or more of the parties to this
Agreement in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
[Execution
Page Follows]
If the
foregoing is in accordance with your understanding and is agreed to
by you, please signify your acceptance by executing the enclosed
copies of this letter where indicated below and returning them to
Mackie, upon which this letter as so accepted shall constitute an
Agreement among us.
Yours
very truly,
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MACKIE RESEARCH CAPITAL CORPORATION
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|
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By:
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"Xxxxx Xxxxxxxxxxxxx"
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|
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Name:
Xxxxx GreifenbergerTitle: Managing Director, Investment
Banking
|
|
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CANACCORD GENUITY CORP.
|
|
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By:
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"Xxxxx XxXxxxxx"
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|
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Name:
Xxxxx McMasterTitle: Director, Investment Banking
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|
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SPROTT CAPITAL PARTNERS LP, by its general partner, SPROTT CAPITAL
PARTNERS GP INC.
|
|
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By:
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"Xxxxx
Xxxxx"
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|
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Name:
Xxxxx WargoTitle: Managing Director and Head of Investment
Banking
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The
foregoing offer is accepted and agreed to as of the date first
above written.
Yours
very truly,
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By:
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"Xxxx
Xxx"
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|
|
Name:
Xxxx LeeTitle: Executive Chairman
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SCHEDULE “A”
DETAILS AS TO OUTSTANDING CONVERTIBLE SECURITIES
Please note that these values are as at close of business on
October 23, 2020.
CURRENT OUTSTANDING WARRANTS
27,834,667
CURRENT OUTSTANDING OPTIONS
10,385,000
SCHEDULE “B”
INTERESTS IN CORPORATION SUBSIDIARIES
SCHEDULE “C”
DETAILS OF THE MINERAL RIGHTS
Gibellini Mineral Rights
Attached
hereto as Exhibit 1 to this Schedule “C”.
Pulacayo Mineral Rights
Attached
hereto as Exhibit 2 to this Schedule “C”.
SCHEDULE D
UNDERWRITERS’ CERTIFICATE
In
connection with the private placement in the United States of
common shares of Silver Elephant Mining Corp. (the
“Offered
Securities”) pursuant to the Underwriting Agreement
made as of October 26, 2020 between Silver Elephant Mining Corp.
and the Underwriters named therein (the “Underwriting Agreement”), each of
the undersigned and [name of U.S.
broker-dealer affiliate], its U.S. broker-dealer affiliate
(the “U.S.
Affiliate”) do hereby certify as follows:
(a)
we have offered and
sold the Offered Securities in the United States exclusively
through the U.S. Affiliate, which is duly registered as a
broker-dealer pursuant to Section 15(b) of the 1933 Act, is duly
registered as a broker-dealer under the laws of each U.S. state in
which it has offered or sold the Offered Securities (except where
an exemption from state broker-dealer registration requirements is
available) and is a member of and is in good standing with the
Financial Industry Regulatory Authority, Inc. on the date
hereof;
(b)
all offers and
sales of the Offered Securities by us in the United States have
been effected in accordance with all applicable U.S. federal and
state broker-dealer requirements;
(c)
each offeree in the
United States or, each offeree that is, or is acting for the
account or benefit of, a person in the United States that we
offered the Offered Securities was provided with a copy of either
the Preliminary U.S. Placement Memorandum or the Final U.S.
Placement Memorandum, each purchaser in the United States, or each
purchaser acting for the account or benefit of, a person in the
United States that we have arranged to purchase Offered Securities
from the Corporation was provided with a copy of the Final U.S.
Placement Memorandum, and we have not used any other written
material in connection with the offer and sale of the Offered
Securities;
(d)
immediately prior
to making any offer or solicitation to an offeree in the United
States we had reasonable grounds to believe and did believe that
each offeree was either (i) a Qualified Institutional Buyer, in the
case of a person that was offered the Offered Securities as
principal, or (ii) a U.S. Accredited Investor, in the case of a
person that we have arranged to purchase Offered Securities as a
substituted purchaser, and, on the date hereof, we continue to
believe that each purchaser that we have arranged to purchase
Offered Securities from us as principal is a Qualified
Institutional Buyer and that each purchaser that we have arranged
to purchase Offered Securities as a substituted purchaser in the
United States is a U.S. Accredited Investor;
(e)
no General
Solicitation or General Advertising was used by us in connection
with the offer or sale of the Offered Securities in the United
States;
(f)
prior to any sale
of the Offered Securities in the United States, we caused each U.S.
purchaser that was a U.S. Accredited Investor to execute a
subscription agreement substantially in the form attached as
Exhibit II to the Final U.S. Placement Memorandum;
(g)
prior to any sale
of the Offered Securities in the United States, we caused each U.S.
purchaser that was a Qualified Institutional Buyer to execute a
Qualified Institutional Buyer letter substantially in the form
attached as Exhibit I to the Final U.S. Placement
Memorandum;
(h)
with respect to the
Offered Securities offered and sold pursuant to the Underwriting
Agreement in reliance upon Rule 506(b) of Regulation D, if any,
none of the Underwriter Covered Persons is subject to any
Disqualification Event except for a Disqualification Event covered
by Rule 506(d)(2) of Regulation D and a description of which has
been furnished in writing to the Corporation prior to the date
hereof, or in the case of a Disqualification Event occurring after
the date hereof, prior to the Closing Date, and we have not paid or
nor will we pay, nor are we aware of any other person that has paid
or will pay, directly or indirectly, any remuneration to any person
(other than the Underwriter Covered Persons or Issuer Covered
Persons) for solicitation of purchasers of the Offered Securities;
and
(i)
the offering of the
Offered Securities has been conducted by us in accordance with the
terms of the Underwriting Agreement.
Terms
used in this certificate have the meanings given to them in the
Underwriting Agreement.
DATED
this ___ day of ____________, 2020.
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[NAME
OF UNDERWRITER]
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[NAME
OF U.S. AFFILIATE]
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By:
________________________
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By:
________________________
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Name:
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Name:
|
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Title:
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Title:
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