EXHIBIT 10.3
AGENCY AGREEMENT
February 28, 2006
AMG Oil Ltd.
1407 – 1050 Burrard Street
Vancouver, B.C. V6Z 2S3
Attention:
Garth Johnson, Chief Financial Officer
Dear Sirs:
Jones,
Gable & Company Limited (the “ Agent ”)
understands that AMG Oil Ltd. (the “ Corporation
”) proposes to issue and offer for sale, by way of private
placement, up to 6,000,000 units of the Corporation (the “
Units ”) at a price of U.S.$0.25 per Unit for
aggregate gross proceeds of up to U.S.$1,500,000 (the “
Offering ”). Each Unit is to be comprised of one (1)
share of common stock of the Corporation (each a “ Common
Share ”) and one non-transferable share purchase warrant
(each a “ Warrant ”), each Warrant entitling the
holder thereof to purchase one Common Share (each a “
Warrant Share ”) at an exercise price of U.S.$0.50 for
a period of (the “ Warrant Term ”) two years
following the Closing Date (as hereinafter defined); provided that
if after the later of: (i) the day the Registration Statement (as
hereinafter defined) has been declared effective by the United
States Securities and Exchange Commission (the “ SEC
”); and (ii) four months and one day from the Closing Date,
the closing price of the Common Shares on any exchange that the
Common Shares are listed or bulletin board on which the Common
Shares trade equals or exceeds U.S.$1.00 or more for 20 consecutive
trading days (the “ Acceleration Event ”), then
the Warrant Term shall be automatically reduced to 30 days from the
date of initial issuance of a news release by the Corporation
announcing the acceleration of the Warrant Term (or if such 30
th day is not a Business Day, then on the first Business
Day after such 30th day).
The
Agent further understands that, as part of the Offering, each
purchaser of Units shall also receive one non-transferable right
for each Unit purchased (a “ Right ” and all
such Rights to be issued under the Offering, together with all of
the Units, the “ Offered Securities ”), each
such Right entitling the purchaser to receive, for nominal
consideration, an additional 0.10 of one Unit in the event that the
Corporation has not filed with the SEC a Registration Statement and
had such Registration Statement declared effective by the SEC on or
before 5:00 p.m. (Toronto time) on the date that is 180 days
following the Closing Date (the “ Registration Filing
Deadline ”).
The
Agent hereby offers to act, and upon its acceptance hereof, the
Corporation hereby appoints the Agent, as the Corporation's
exclusive agent to offer the Offered Securities for sale, on a best
efforts basis, upon and subject to the terms and conditions set
forth herein. The Corporation understands that the Agent is not
obliged under any circumstances to purchase any of the Offered
Securities.
The
Agent may form and manage a group of Canadian investment dealers to
offer the Offered Securities for sale. Subject to the terms hereof,
the Corporation understands that no such investment dealer is
obliged under any circumstances to purchase any of the Offered
Securities. The Agent may determine the remuneration payable to
such investment dealers appointed by it, provided that any fee
charged by such investment dealers shall not exceed the
Agent’s Fee (as hereinafter defined) and shall be payable by
the Agent.
In
consideration of the services to be rendered to the Corporation by
the Agent pursuant to this agreement, at the Closing Time (as
hereinafter defined), the Corporation shall pay to the Agent a fee
equal to $8,500 plus GST and 6% of the gross proceeds from the
Offering received from Purchasers that purchase Units through the
Agent (the “ Agent’s Fee ”) and shall
issue to the Agent 360,000 compensation options (the “
Compensation Options ”) entitling the Agent to
purchase up to 360,000 Units, subject to adjustment as described
below (the “ Compensation Units ”), at an
exercise price of U.S.$0.25 per Compensation Unit at any time prior
to 5:00 p.m. (Toronto time) on the date which is two years
following the Closing Date. Each Compensation Unit shall be
comprised of one Common Share (each a “ Compensation
Share ” ) and one warrant (each a “
Compensation Warrant ”). Each whole Compensation
Warrant will entitle the holder thereof to purchase one Common
Share (each a “ Compensation Warrant Share ”) at
an exercise price of U.S.$0.50 and otherwise on the same terms and
subject to the same conditions as the Warrants forming part of the
Units; for greater certainty, the Compensation Warrants issuable
upon exercise of the Compensation Options shall expire on the
expiry date of the Warrants forming part of the Units,
notwithstanding the date of exercise of the Compensation Options.
At the Closing Time, the Agent shall also receive one
non-transferable right (each, a “ Compensation Right
”) for each Compensation Option issued to the Agent, which
shall entitle the Agent to receive, for nominal consideration, an
additional 0.10 of one Compensation Unit for each Compensation Unit
purchased by the Agent (whether purchased before or after the
Registration Filing Deadline), in the event that the Corporation
has not filed with the SEC a Registration Statement and had such
Registration Statement declared effective by the Registration
Filing Deadline. The Compensation Options and the Compensation
Rights will be evidenced by one or more certificates (the “
Compensation Option Certificates ”). For greater
certainty, the Agent will not be acting as agent for Purchasers
that do not purchase the Units through the Agent and will not
receive any compensation therefrom.
With
the exception of the fee of $8,500, the Corporation and the Agent
acknowledge and agree that the services to be rendered by the Agent
in connection with the Offering by virtue of this agreement shall,
or shall be deemed to be, the supply of “financial
services” as defined in the Excise Tax Act (Canada).
Therefore, the Agent’s Fee and any additional consideration
to be paid by the Corporation shall not be subject to the goods and
services tax (“ GST ”). In the event it is
determined by a competent taxing authority that GST is payable by
the Corporation with respect to the services to be rendered by the
Agent, such GST shall be forthwith paid by the Corporation to such
competent taxing authority or to the Agent, as the case may be. For
greater certainty, the Corporation and the Agent acknowledge and
agree that if a separate fee would have been charged to the
Corporation for the supply of services that are not
“financial services” as defined in the Excise Tax
Act (Canada), such separate fee would not represent more than
50% of the total consideration payable to the Agent
hereunder.
DEFINITIONS
In
this agreement, in addition to the terms defined above or elsewhere
in this agreement, and unless otherwise indicated or the context
manifestly requires otherwise, the following terms shall have the
following meanings:
“ agreement ” means the
agreement resulting from the acceptance hereof by the
Corporation;
“ Agreements ” means this
agreement, the Subscription Agreements, the Registration Rights
Agreement, the Warrant Certificates, the Right Certificates and the
Compensation Option Certificates;
“ Business Day ” means a day
on which chartered banks are normally open for business in Toronto,
Ontario, excluding Saturday, Sunday or a statutory or civic
holiday;
“ Canadian Securities Laws ”
means all applicable securities laws in each of the Offering
Provinces and the respective regulations made thereunder, together
with applicable published policy statements, rules and orders of
the securities regulatory authorities in such province;
“ Closing ” means the
completion of the issue and sale by the Corporation of the Offered
Securities and the purchase by the Purchasers of the Offered
Securities pursuant to this agreement, which may, at the option of
the Agent, occur on one or more separate occasions, each of which
occasion shall be a “ Closing ” for the purposes
of this agreement;
“ Closing Date ” means
February 27, 2006 or such other date or dates as the Corporation
and the Agent may agree upon in writing;
“ Closing Time ” means 10:00
a.m. (Toronto time) on the Closing Date or such other time on the
Closing Date as the Corporation and the Agent may agree;
“ Compensation Securities ”
means, collectively, the Compensation Options, Compensation Units,
Compensation Shares, the Compensation Warrants, the Compensation
Warrant Shares, and the Compensation Rights;
“ Corporation’s Information
Record ” means all press releases, material change
reports, annual and interim financial statements and related
management’s discussion and analysis, technical reports,
annual information forms, proxy circulars and other documents which
have been filed by or on behalf of the Corporation with the
Canadian securities regulatory authorities and the SEC;
“ Directed Selling Efforts ”
means “directed selling efforts” as defined in Rule 902
of Regulation S;
“ Exchange ” means the OTC
Bulletin Board;
“ Financial Statements ”
means the audited consolidated balance sheets of the Corporation as
at September 30, 2005 and September 30, 2004, the audited
consolidated
statements of operations, changes in
stockholders' equity and cash flows of the Corporation for the
years ended September 30, 2005, September 30, 2004 and September
30, 2003, together with the notes thereto;
“ misrepresentation ”,
“ material fact ”, “ material
change ” and “ distribution ” have the
respective meanings ascribed thereto in the Securities Act
(British Columbia), except as otherwise expressly provided
herein;
“ Offering Provinces ” means
the Provinces of Ontario and British Columbia and such other
provinces of Canada agreed to by the Agent and the
Corporation;
“ Purchasers ” means the
persons who acquire Offered Securities from the Corporation by
executing Subscription Agreements accepted by the Corporation, and
permitted assignees or transferees of such persons from time to
time;
“ Registration Rights Agreement
” means the agreement to be entered into between the
Corporation and the Agent on or before the Closing Date pursuant to
which the Corporation shall grant certain registration rights to
the Purchasers in respect of the Underlying Shares;
“ Registration Statement ”
means a registration statement with respect to the resale of the
Underlying Shares prepared in the appropriate form as prescribed by
the SEC;
“ Regulation S ” means
Regulation S adopted by the SEC under the U.S. Securities
Act;
“ Right Certificates ” means
the certificates evidencing the Rights to be executed by the
Corporation, in form and substance satisfactory to the Corporation
and the Agent;
“ Subscription Agreement ”
means a subscription agreement executed by a Purchaser and accepted
by the Corporation in the form agreed upon by the Agent and the
Corporation;
“ Subsidiaries ” means the
companies, if any, which are under the control of the Corporation
where control means the right to elect a majority of the directors
of such companies;
“ Underlying Shares ” means,
collectively, the Common Shares forming part of the Units, the
Warrant Shares, the Compensation Shares, the Compensation Warrant
Shares and, in the event that the Corporation fails to file a
Registration Statement and have the Registration Statement declared
effective by the SEC by the Registration Filing Deadline, “
Underlying Shares ” includes the Common Shares forming
part of the Rights Units and the Common Shares issuable upon
exercise of the Warrants forming part of the Rights Units and, for
the purposes of clarity, includes any additional Compensation
Shares issuable to the Agent as a result of the exercise of
Compensation Options granted pursuant to the Compensation Rights
and Compensation Warrant Shares issuable pursuant to the exercise
of Compensation Warrants issued pursuant to the exercise of such
Compensation Options;
“ U.S. Exchange Act ” means
the United States Securities Exchange Act of 1934, as
amended;
“ U.S. Person ” means a U.S.
Person as that term is defined in Regulations S;
“U.S. Securities Act”
means the United States Securities
Act of 1933, as amended; and
“ Warrant Certificates ”
means the certificates evidencing the Warrants to be executed by
the Corporation, in form and substance satisfactory to the
Corporation and the Agent.
INTERPRETATION
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. Unless otherwise inconsistent
therewith, references in this agreement to sections, subsections,
paragraphs and other subdivisions are to sections, subsections,
paragraphs and other subdivisions of this agreement. In this
agreement, words importing the singular number only include the
plural and vice versa and words importing gender include all
genders.
TERMS AND CONDITIONS
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1.
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Sale on Exempt
Basis. The Agent
shall:
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(a)
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offer for sale and sell the
Offered Securities in Canada only in the Offering Provinces in
compliance with all applicable Canadian Securities Laws and
pursuant to Regulation S or outside of Canada and the United States
in compliance with applicable laws and pursuant to Regulation S;
provided that any offer or sale in any jurisdiction other than an
Offering Province shall be effected in a manner exempt from the
applicable prospectus or registration requirements under the
securities legislation of the jurisdiction in which such Purchaser
resides;
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(b)
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offer the Offered Securities only
in accordance with Rule 903 of Regulation S, and accordingly
neither the Agent, its affiliates, nor any person acting on its
behalf has made or will make:
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(i)
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any offer to sell, or any
solicitation of an offer to buy, Offered Securities to any U.S.
Person, to any person purchasing for the benefit or account of a
U.S. Person, or any person in the United States;
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(ii)
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any sale of Offered Securities
unless, at the time the buy order was or will have been originated
the Purchaser is:
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(1)
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outside the
United States; or
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(2)
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the Agent and any person acting
on its behalf reasonably believe that the purchaser is outside the
United States; nor
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(iii)
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any Directed Selling Efforts in
the United States with respect to the Offered Securities or the
Compensation Securities.
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(c)
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offer for sale and sell the
Offered Securities only to such Purchasers and in such manner so
that, pursuant to the provisions of Canadian Securities Laws, no
prospectus or offering memorandum need be filed or delivered in
connection therewith;
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(d)
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not offer for sale or sell the
Offered Securities in any jurisdiction where the Corporation may be
subject to liability in connection with the sale of the Offered
Securities which is materially more onerous than the liability to
which it may be subject under Canadian Securities Laws;
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(e)
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obtain from each Purchaser an
executed Subscription Agreement and Registration Rights Agreement
subject to acceptance by the Corporation;
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(f)
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ensure that all offers and sales
of the Offered Securities prior to the expiration of the
distribution compliance period specified in Category 3 (paragraph
(b)(3)) in Rule 903 shall be made only in accordance with the
provisions of Rule 903 or Rule 904; pursuant to registration of the
securities under the U.S. Securities Act; or pursuant to an
available exemption from the registration requirements of the U.S.
Securities Act; and
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(g)
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not engage in hedging
transactions with regard to Offered Securities prior to the
expiration of the distribution compliance period specified in
Category 3 (paragraph(b)(3)) in Rule 903, unless in compliance with
the U.S. Securities Act.
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2.
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Filings.
The Corporation undertakes to file
or cause to be filed all forms or undertakings required to be filed
by the Corporation and the Purchasers, respectively, in connection
with the purchase and sale of the Offered Securities so that the
distribution of the Offered Securities may lawfully occur without
the necessity of filing a prospectus or an offering memorandum in
the Offering Provinces or elsewhere, and the Agent undertakes to
use its reasonable best efforts to cause Purchasers to complete and
file, if required, any forms or undertakings required by the
Canadian Securities Laws or any other applicable securities laws.
All such filings shall be made by the Corporation on behalf of the
party legally responsible to file the same and all fees payable in
connection with such filings shall be at the sole expense of the
Corporation.
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3.
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No Offering
Memorandum. Neither the
Corporation nor the Agent shall (i) provide to prospective
purchasers an offering memorandum within the meaning of Canadian
Securities Laws; or (ii) cause the sale of the Offered Securities
to be advertised in printed public media of general and regular
paid circulation, radio, television or telecommunications,
including electronic display and the internet. The Corporation
represents and warrants that the documents made available to the
Agent for distribution to prospective purchasers in connection with
the offering and sale of the Offered Securities are the
Subscription Agreement, the term sheet and publicly filed documents
and such documents do not constitute an offering memorandum under
Canadian
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Securities Laws. The Agent
represents and warrants that it shall only distribute to
prospective purchasers the Subscription Agreement, the term sheet
and publicly filed documents. The Agent further represents and
warrants that it shall offer for sale and sell the Offered
Securities only in those jurisdictions contemplated in subsection
1(a) and not elsewhere, without the express consent of the
Corporation.
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4.
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Covenants of the
Corporation
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(a)
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The Corporation hereby covenants
with the Agent and the Purchasers that:
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(i)
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the Corporation will use its best
efforts at all times for the period of twenty-four (24) months from
the Closing Date to remain a reporting issuer in all such provinces
where it is presently a reporting issuer, or has similar status,
not in default of any requirements of the Canadian Securities Laws
applicable in such provinces;
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(ii)
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the Corporation will use its best
efforts to maintain the quotation of the Common Shares on the
Exchange, or in the event the Common Shares become listed on the
Toronto Stock Exchange, TSX Venture Exchange, the American Stock
Exchange, the New York Stock Exchange or NASDAQ, maintain the
listing of the Common Shares on such exchange at all times until at
least twenty-four (24) months from the Closing Date;
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(iii)
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as promptly as practicable after
the Closing Date, the Corporation will file the Registration
Statement with the SEC and thereafter use its best efforts to have
the Registration Statement declared effective by the
SEC;
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(iv)
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none of the Corporation, any of
its affiliates, or any person acting on their behalf has, directly
or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of any of the Offered Securities under
the U.S. Securities Act or cause this offering of the Offered
Securities to be integrated with prior or concurrent offerings by
the Corporation for purposes of the U.S. Securities Act or any
applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the
Corporation are listed or designated. None of the Corporation, its
affiliates and any person acting on their behalf will take any
action or steps referred to in the preceding sentence that would
require registration of any of the Offered Securities under the
U.S. Securities Act or cause the offering of the Offered Securities
to be integrated with other offerings;
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(v)
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the Corporation will take all
steps necessary to: (A) authorize the execution and delivery of the
Agreements; (B) authorize the issue of the Underlying Shares and
ensure that sufficient unreserved Common Shares are available for
the issuance of the Underlying Shares; (C) authorize the
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creation of the Warrants, the
Rights, the Compensation Options and the Compensation Rights; and
(D) ensure that the Underlying Shares are or will be upon their
issue listed and posted for trading on the Exchange or any other
stock exchange on which the Common Shares are listed for trading
from time to time;
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(vi)
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the Corporation will fulfill all
legal requirements applicable to it to permit the offering and sale
of the Offered Securities including, without limitation, compliance
with all Canadian Securities Laws, to enable the Offered Securities
to be offered for sale and sold to Purchasers without the necessity
of filing a prospectus or registration statement in the Offering
Provinces or in any other jurisdiction;
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(vii)
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the Corporation will at all times
prior to the Closing Date allow the Agent and its representatives
to conduct all due diligence which the Agent may reasonably require
and will use its best efforts to make available the
Corporation’s senior management, counsel, auditors,
independent engineers and other applicable experts to answer any
questions which the Agent (or another syndicate member) has or may
have, including, without limiting the generality of the foregoing,
any questions posed at one or more due diligence sessions to be
held prior to the Closing Time, for which the Agent (or its
counsel) shall distribute in advance a list of written questions to
be answered thereat;
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(viii)
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the Corporation will use its best
efforts to fulfill, at or prior to the Closing Date, each of the
conditions set out in Section 10;
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(ix)
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the Corporation will forthwith
after the Closing file such documents as may be required under the
Canadian Securities Laws relating to the Offering which, without
limiting the generality of the foregoing, shall include a Form
45-106F1 as prescribed under the Canadian Securities Laws;
and
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(x)
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the Corporation shall provide the
Agent with five days notice before filing the Registration
Statement.
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5.
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Material Changes.
If at any time after the date hereof
until Closing there occurs any material change or material changes
(actual, proposed or prospective) in the business, affairs,
operations, assets, liabilities, capital or prospects of the
Corporation considered as a whole, the Corporation
shall:
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(a)
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promptly notify the Agent, in
writing, providing full particulars of any such change;
and
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(b)
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file or cause to be filed with
promptness, and in any event within any statutory limitation period
therefor, any document required to be filed with any regulatory
body having jurisdiction and comply with all requirements of any
applicable securities legislation of such jurisdiction.
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The Corporation shall in good
faith discuss with the Agent any change in circumstances (actual,
proposed or prospective) in respect of which there is reasonable
doubt whether written notice should be given to the Agent pursuant
to this section.
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6.
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Representations and Warranties
of the Corporation. The
Corporation represents and warrants to the Agent and the
Purchasers, and acknowledges that the Agent and the Purchasers are
each relying upon such representations and warranties in entering
into this agreement and the Subscription Agreements or purchasing
Offered Securities, as the case may be, that:
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(a)
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the Corporation has been duly
incorporated and organized and is validly existing under the laws
of the jurisdiction of its incorporation and has all requisite
corporate capacity, power and authority to carry on its business as
now conducted by it and as is presently proposed to be conducted by
it and to own, lease and operate its assets;
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(b)
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the Corporation has no
Subsidiaries;
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(c)
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the Corporation is duly qualified
to carry on business under the laws of the jurisdiction in which it
carries on its business or proposes to carry on business and is in
good standing in each of such jurisdictions;
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(d)
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the Corporation is actively
seeking to acquire a resource or oil and gas property;
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(e)
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the Corporation holds all
material licences, registrations, permits, consents or
qualifications required in order to enable its business to be
carried on as now conducted or as proposed to be conducted, and all
such licences, certificates, registrations, permits, consents and
qualifications are valid and subsisting and in good standing and
the Corporation has not received any notice of proceedings related
to the revocation or modification of any such licence,
registration, permit, consent or qualification;
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(f)
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the Corporation has conducted and
is conducting its business in material compliance with all
applicable laws, by-laws, rules and regulations of each
jurisdiction in which that business is carried on and the
Corporation is not aware of any fact or circumstance that would
reasonably be expected to have a material adverse effect upon the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Corporation on a consolidated
basis;
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(g)
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no consent, approval, permit,
authorization, order of or filing with any court or governmental
agency or body is required by the Corporation for the execution and
delivery of and the performance by the Corporation of its
obligations under this agreement, except as may be required under
the Canadian Securities Laws, the U.S. Securities Act and
applicable state securities laws, all of which have been or will be
obtained or filed, as the case may be, in a timely manner in
accordance with such laws and rules;
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(h)
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none of the execution and
delivery of the Agreements, the performance by the Corporation of
its obligations thereunder, the issuance and sale of the Offered
Securities hereunder, the issuance of the Warrants, the issuance of
the Compensation Options and the Compensation Rights to the Agent,
or the issuance of the Underlying Shares will: (A) conflict with or
result in a breach of or create a state of facts which, after
notice or lapse of time or both, will result in a breach of (i) any
statute, rule or regulation applicable to the Corporation; (ii)
Canadian Securities Laws or any other securities laws; (iii) the
constating documents, by- laws or resolutions of the directors (or
any committee thereof) or shareholders of the Corporation which are
in effect at the date hereof, (iv) any mortgage, note, indenture,
contract, agreement, instrument, lease or other document to which
the Corporation is a party or by which it is bound; or (v) any
judgement, decree or order binding the Corporation or its
properties or assets; (B) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, stock exchange, securities association or
other third party, except: (i) such as have been obtained; or (ii)
such as may be required (and shall be obtained prior to the Closing
Time) under Canadian Securities Laws; or (C) give rise to any lien,
charge or claim in or with respect to the properties or assets of
the Corporation or the acceleration of or the maturity of any debt
under any indenture, mortgage, lease, agreement or instrument
binding or affecting the Corporation or any of its properties or
assets;
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(i)
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the Financial
Statements:
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(i)
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have been prepared in accordance
with United States generally accepted accounting principles applied
on a basis consistent with those of preceding fiscal
periods;
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(ii)
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present fully, fairly and
correctly the consolidated assets, liabilities and financial
condition of the Corporation as at the dates at which they were
prepared and the consolidated results of its operations, changes in
stockholders' equity and cash flows for the periods then
ended;
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(iii)
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are in accordance with the
consolidated books and records of the Corporation; and
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(iv)
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contain and reflect all necessary
adjustments for the fair presentation on a consolidated basis of
the results of its operations, changes in stockholders' equity and
cash flows for the periods covered thereby,
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and,
since September 30, 2005, other than as publicly disclosed in the
Corporation’s Information Record, there has not been any
material adverse change in the consolidated financial position of
the Corporation or the Corporation's consolidated assets,
liabilities or undertaking (including, without limitation, any
write-down of assets), or the capital stock of the
Corporation;
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(j)
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the Corporation has not filed any
tax returns and the Corporation is not aware of any tax
deficiencies or interest or penalties accrued or accruing, or
alleged to be accrued or accruing, thereon with respect to the
Corporation where, in any of the above cases, it would reasonably
be expected to result in any material adverse change in the
condition, financial or otherwise, or business prospects of the
Corporation;
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(k)
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the Corporation is, and will at
the Closing Time be, a reporting issuer in good standing under the
securities laws of the Province of British Columbia and has a class
of equity securities registered pursuant to Section 12(g) of the
U.S. Exchange Act and, pursuant thereto, is obligated to file
periodic and other reports and schedules with the SEC and is
current in, and will at the Closing Time be current in, filing all
such periodic reports and schedules and the Corporation has
complied with its obligations under Canadian Securities Laws to
make 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 and with respect to which the requisite material change
report has not been filed under Canadian Securities
Laws;
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(l)
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the Corporation has taken no
action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Shares under the U.S.
Exchange Act nor has the Corporation received any notification that
the SEC is contemplating terminating such registration;
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(m)
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no portion of the
Corporation’s Information Record contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, as at its
date of filing;
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(n)
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the authorized capital of the
Corporation consists of 100,000,000 Common Shares of which as at
February 26, 2006 and as of Closing, 16,600,000 Common Shares are
issued and outstanding as fully paid and non-assessable shares of
the Corporation;
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(o)
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Computershare Trust Company, Inc.
at its principal offices in the City of Golden, Colorado, has been
duly appointed as the registrar and transfer agent for the Common
Shares;
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(p)
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the Common Shares are traded on
the Exchange and no order ceasing or suspending trading in any
securities of the Corporation or prohibiting the issue and sale of
securities by the Corporation has been issued and, to the best of
the Corporation's knowledge, no proceedings for such purpose have
been instituted or are pending, contemplated or
threatened;
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(q)
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the attributes of the Offered
Securities, the Warrants, the Compensation Options and the
Compensation Rights, and of all securities forming part thereof
or
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issuable upon exercise thereof
shall conform in all material respects with the description thereof
in this agreement and the Subscription Agreements;
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(r)
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each of the form of certificate
representing the Common Shares, the Warrant Certificate, the Right
Certificate and the Compensation Option Certificate has been duly
approved by the directors of the Corporation, does not conflict
with the constating documents of the Corporation and, to the extent
applicable, is in proper form under the laws of the State of Nevada
and complies with the rules of the Exchange;
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(s)
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the Corporation is not a party to
nor has it granted any agreement, warrant, option or right or
privilege capable of becoming an agreement, for the purchase,
subscription or issuance of any Common Shares or securities
convertible into or exchangeable for Common Shares other than
pursuant to the Offering;
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(t)
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each of the Agreements has been,
is or will be upon execution thereof, duly authorized, executed and
delivered by the Corporation and constitutes, or will constitute
when executed, a legal, valid and binding obligation of the
Corporation enforceable against the Corporation in accordance with
its terms except that: (i) the enforcement thereof may be limited
by bankruptcy, insolvency and other laws affecting the enforcement
of creditors' rights generally; (ii) rights of indemnity,
contribution and waiver of contribution thereunder may be limited
under applicable law; and (iii) equitable remedies, including,
without limitation, specific performance and injunctive relief, may
be granted only in the discretion of a court of competent
jurisdiction;
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(u)
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other than the Agent, there is no
person, firm or company acting or purporting to act at the request
of the Corporation, who is entitled to any brokerage, agency,
finder's or similar fee in connection with the transactions
contemplated herein;
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(v)
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the Corporation has not, directly
or indirectly, declared or paid any dividend or declared or made
any other distribution on any of its shares or securities of any
class, or, directly or indirectly, redeemed, purchased or otherwise
acquired any of its shares or securities or agreed to do any of the
foregoing;
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(w)
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there is not, in the articles or
by-laws of the Corporation or in any agreement, mortgage, note,
debenture, indenture 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
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