HAYWOOD SECURITIES INC.
Commerce Place, 400 Burrard Street
Suite 2000
Vancouver, British Columbia
V6C 3A6
September 3, 2004
Kimber Resources Inc.
Suite 215 – 800 West Pender Street
Vancouver, British Columbia.
V6C 2V6
Attention:
Robert Longe, President &
CEO
Dear Sirs:
We understand that Kimber
Resources Inc . (the "Company") proposes to issue (the
"Offering") up to 1,000,000 units at $1.50 per unit for gross
proceeds of $1,500,000, subject to the over-allotment option
described below. As used herein, “Units” includes both
the 1,000,000 units which are subject to the Offering and the
500,000 units which are subject to the over-allotment option and
“Unit” means any one of them. Each Unit will consist of
one common share (a “Share”) and one-half of one
non-transferable share purchase warrant (one whole warrant called a
“Warrant”). Each whole Warrant is exercisable for one
additional common share (a “Warrant Share”) for a
period of 18 months from the Closing Date (as hereinafter defined)
at a price of $1.80 per Warrant Share.
Subject to the terms and
conditions set forth below, the Company appoints Haywood Securities
Inc. (the "Agent") to act as the Company's sole and exclusive agent
in accordance with section 1.3 hereof.
All references to dollars or $
herein are to lawful currency of Canada, unless otherwise
indicated.
In this Agreement "Securities"
means the Shares, Warrants, Warrant Shares, Agent's Option,
Agent’s Warrants, Agent's Shares, Agent’s Warrant
Shares, Finance Units, Finance Shares, Finance Warrants and Finance
Warrant Shares (all as hereinafter defined). In this agreement
"business day" means any day except Saturday, Sunday or a statutory
holiday in Vancouver, British Columbia.
In this Agreement, the terms
“material change”, “material fact”,
“misrepresentation” and “distribution” have
the meanings ascribed thereto in the applicable securities
legislation of the Selling Jurisdictions.
1.
Offering
1.1
The
Agent will act as agent of the Company and use its commercially
reasonable efforts to arrange for purchasers ("Purchasers") for the
Units in the Provinces of British Columbia, Alberta and Ontario
(the "Selling Jurisdictions"), and in the United States and such
other jurisdictions as may be agreed upon by the Agent and the
Company.
1.2
The
sale of the Units to Purchasers where such sale would constitute a
distribution in British Columbia will be effected in a manner so as
to be exempt from the prospectus requirements of the Securities
Act (British Columbia) (the "B.C. Act"), pursuant to the
provisions of section 74(2)(4) of the B.C. Act or pursuant to Part
3 or Part 5 of Multilateral Instrument 45-103 ("MI45-103"). The
sale of
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Units to Purchasers where such
sale would constitute a distribution in Alberta will be effected in
such a manner so as to be exempt from the prospectus requirements
of the Securities Act (Alberta) (the "Alberta Act") pursuant
to section 122.2 of the Alberta Securities Commission Rules or
pursuant to Part 3 or Part 5 of MI45-103. The sale of the Units to
Purchasers where such sale would constitute a distribution in
Ontario will be effected in such manner so as to be exempt from the
prospectus requirements of the Securities Act (Ontario) (the
"Ontario Act") pursuant to section 2.3 of Rule 45-501 of the
Ontario Securities Commission. The sale of the Units to any
Purchaser who is a U.S. subscriber (being any “U.S.
Person” under Regulation S of the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”),
including (a) any natural person resident in the United States; (b)
any partnership or corporation organized or incorporated under the
laws of the United States; (c) any partnership or corporation
organized outside the United States by a U.S. Person principally
for the purposes of investing in securities not registered under
the U.S. Securities Act, unless it is organized or incorporated,
and owned, by U.S. accredited investors who are not natural
persons, estates or trusts; (d) any estate of which any executor or
administrator is a U.S. Person) will be effected only on the basis
of the “accredited investor” exemption from U.S.
federal registration requirements. ’'
1.3
The
Company hereby agrees that the Agent shall have an over-allotment
option of up to 500,000 additional Units to cover
over-subscriptions to the Offering, which additional Units shall be
subject to the same terms and conditions as apply to the 1,000,000
Units which are the subject of the Offering.
1.4
In consideration of the services performed by the Agent under this
Agreement, which services shall include:
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(a)
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acting as the
Company's agent to solicit offers to purchase the Units;
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(b)
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advising the
Company with respect to the private placement of the Units;
and
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(c)
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co-ordinating
and review of the private placement documentation and assisting in
the preparation of the form of subscription agreement, including
any form, questionnaire, and undertaking incorporated therein or
appended thereto, (collectively, the "Subscription Agreement") to
be entered into between the Company and each of the Purchasers to
be used in connection with the Offering;
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the Company agrees to pay to the
Agent at the Time of Closing (as defined in section 9.1 hereof) a
commission (the "Agent’s Commission") equal to 8% of the
gross proceeds received under the Offering, payable in cash, and to
issue to the Agent an option (the "Agent's Option"), entitling the
Agent to purchase that number of Units (the "Agent’s Units")
equal to 10% of the aggregate number of Units sold pursuant to the
Offering until 4:30 p.m. (Vancouver time) on the first business day
that is 18 months from the Closing Date at a price of $1.80 per
Agent’s Unit. Each Agent's Unit shall have the same terms as
the Units sold under the Offering, and shall be comprised of one
common share (an "Agent's Share") and one-half of one warrant (one
whole warrant called an "Agent's Warrant"). Each Agent's Warrant
will entitle the holder to purchase one additional common share (an
"Agent's Warrant Share") for a period of 18 months from the Closing
Date at a price of $1.80 per Agent's Warrant Share.
1.5
The
Company will also pay the Agent a corporate finance fee of 40,000
units, (the "Finance Units") plus GST, payable in cash, on the same
terms as the Units being sold as part of the Offering, at a deemed
price of $1.50 per Unit, for the Agent's services in connection
with the coordination and review of the Offering. The Finance Units
shall be comprised of one common share (a "Finance Share") and
one-half of one common share purchase warrant (one whole warrant
called a "Finance Warrant"). Each Finance Warrant will entitle the
holder to purchase one additional common
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share (a "Finance Warrant Share")
for a period of 18 months from the Closing Date at a price of $1.80
per Finance Warrant Share.
1.6
The
Company agrees that the Agent will be permitted to appoint other
registered dealers (or other dealers duly qualified in their
respective jurisdictions) as its agents to assist in the Offering
and that the Agent may determine the remuneration payable by the
Agent to such other dealers appointed by it.
1.7
The
Warrants, the Finance Warrants and the Agent's Warrants will be
governed by the terms and conditions set out in the certificates
representing the Warrants (together, the "Warrant Certificates")
or, at the sole discretion of the Company, a warrant indenture
dated as of the Closing Date between the Company and Computershare
Trust Company of Canada governing the Warrants, and the Agent's
Option will be governed by the terms and conditions set out in the
certificate representing the Agent's Option (the "Agent's Option
Certificate").
1.8
The Warrant Certificates and Agent's Option Certificate will be in
forms acceptable to the Agent acting reasonably and will contain,
among other things, provisions for the appropriate adjustment in
the class, number and price of the Warrant Shares, Agent's Shares,
Agent's Warrants, Agent's Warrant Shares and Finance Warrant Shares
issued upon the exercise of the Warrants, the Agent’s Option,
the Agent’s Warrants or the Finance Warrants, as applicable,
upon the occurrence of certain events, including any subdivision,
consolidation or reclassification of the common shares of the
Company, payments of stock dividends or the amalgamation or other
reorganization of the Company.
2.
Representations and Warranties of the Company
2.1
The Company represents and warrants to the Agent and to and for the
benefit of the Purchasers and acknowledges that the Agent and the
Purchasers are relying upon such representations and warranties, as
follows:
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(a)
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the Company has
been duly incorporated, amalgamated or continued and organized and
is validly existing under the laws of its jurisdiction of its
incorporation, amalgamation or continuance and is duly qualified to
carry on its business and is in good standing in respect of the
filing of annual reports in its jurisdiction of incorporation, and
has all requisite corporate power and authority to carry on its
business as now conducted and as currently proposed to be conducted
and to own, lease and operate its property and assets;
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(b)
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the Company has
no subsidiaries other than Minera Monterde, S. de R.L. de
C.V.;
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(c)
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the Company is
and will at the Time of Closing (as hereinafter defined) be a
reporting issuer in good standing under the securities laws of the
Provinces of British Columbia, Alberta and Ontario (collectively,
the "Reporting Jurisdictions") and no material change relating to
the Company has occurred with respect to which the requisite
material change report has not been filed under any applicable
securities laws in the Reporting Jurisdictions and no such
disclosure has been made on a confidential basis;
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(d)
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the Company has
full corporate power and authority to undertake the Offering and to
issue the Securities;
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(e)
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at the Time of
Closing (as hereinafter defined), the Warrants, the Agent's Option
and the Finance Warrants will be duly and validly created,
authorized and issued, and the Warrant Shares, the Agent's Warrant
Shares, the Agent's Shares and the Finance Warrant
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Shares will be
duly and validly authorized, allotted and reserved for issuance
upon exercise of the Warrants, the Agent's Option and the Finance
Warrants, respectively, and the Warrant Shares, and the Agent's
Warrant Shares and the Finance Warrant Shares will, upon exercise
of the Warrants and Agent's Option, and Finance Warrants
respectively, be issued as fully paid and non-assessable
securities;
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(f)
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at the Time of
Closing, the common shares of the Company will be listed on the
Toronto Stock Exchange (the "Exchange");
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(g)
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at the Time of
Closing, the Shares and the Finance Shares will be issued as fully
paid and non-assessable securities;
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(h)
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the authorized
capital of the Company consists of 80,000,000 common shares without
par value, of which 27,504,070 common shares are issued and
outstanding as at the date hereof as fully paid and
non-assessable;
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(i)
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the Company has
full corporate power and authority to enter into this Agreement and
the Subscription Agreements, and to perform its obligations set out
herein and therein, and each of this Agreement and the Subscription
Agreements has been, or will be upon execution and delivery
thereof, duly authorized, executed and delivered by the Company and
constitutes, or will constitute when executed and delivered, a
legal, valid and binding obligation of the Company enforceable in
accordance with their respective terms;
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(j)
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the Company is
not in default or breach of, and the execution and delivery of each
of this Agreement and the Subscription Agreements, and the
performance of the transactions contemplated thereby will not
result in a breach of, and do not create a state of facts which,
after notice or lapse of time or both, will result in a breach of,
and do not and will not conflict with, any of the terms, conditions
or provisions of the constating documents, resolutions or by-laws
of the Company or any indenture, contract, agreement (written or
oral), instrument, lease or other document to which the Company is
a party or by which the Company is or will be contractually bound
as of the Time of Closing;
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(k)
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except for the
Mexican mineral concession described in the Public Record (as
defined below) as the “Group 5 concession”, which
expired in June 2004 and title to which has not been renewed by the
Company, the Company is the beneficial owner of or has the right to
acquire the mineral interests in the mining properties, business
and assets referred to in the prospectuses, annual information
forms, offering memoranda, material change reports and press
releases filed with the Securities Commissions in the Reporting
Jurisdictions on or during the twelve (12) months preceding the
date hereof (collectively, the "Public Record") and any and all
agreements pursuant to which the Company holds or will hold any
such interest in property, business or assets are in good standing
in all material respects according to their terms, and the
properties are in good standing in all material respects under the
applicable statues and regulations of the jurisdictions in which
they are situated;
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(l)
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the Public
Record is in all material respects accurate and omit no facts, the
omission of which makes the Public Record, or any particulars
therein, misleading or incorrect;
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(m)
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the Company is
not a party to, and the Company has not granted any agreement,
warrant, option, right or privilege capable of becoming an
agreement, for the purchase, subscription or issuance of any of its
securities except as disclosed in the Public Record;
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(n)
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except as
disclosed in the Public Record, no actions, suits, inquiries or
proceedings are pending or, to the knowledge of the Company, are
contemplated or threatened to which the Company is a party or to
which the property of the Company or any of its Subsidiaries is
subject that would result individually or in the aggregate in any
material adverse change in the operations, business or condition
(financial or otherwise) of the Company;
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(o)
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the audited
annual financial statements of the Company as at and for the year
ended June 30, 2003 and the unaudited financial statements of the
Company as at and for the nine month period ended March 31, 2004
(collectively the "Financial Statements") present fairly, in all
material respects, the financial position of the Company as at the
dates set out therein and the results of its operations and the
changes in its financial position for the periods then ended, in
accordance with generally accepted Canadian accounting
principles;
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(p)
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except as
disclosed in the Public Record, there has not been any material
change in the assets, liabilities or obligations (absolute,
accrued, contingent or otherwise) of the Company as set forth in
the Financial Statements and there has not been any material
adverse change in the business, operations or condition (financial
or otherwise) or results of the operations of the Company, since
March 31, 2004 and since that date there have been no material
facts, transactions, events or occurrences which could materially
adversely affect the business of the Company;
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(q)
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other than the
Agent and its agents, there is no person, firm or corporation
acting or purporting to act at the request of the Company, who is
entitled to any brokerage or finder's fee in connection with the
transactions contemplated herein and in the event that any person,
firm or corporation acting or purporting to act for the Company
establishes a claim for any fee from the Agent, the Company
covenants to indemnify and hold harmless the Agent with respect
thereto and with respect to all costs reasonably incurred in
defense thereof;
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(r)
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to the best of
its knowledge, the Company has conducted and is conducting its
business in compliance with all applicable laws, by-laws, rules and
regulations of each jurisdiction in which its business is carried
on and holds all licences, registrations, permits, consents or
qualifications (whether governmental, regulatory or otherwise)
required in order to enable its business to be carried on as now
conducted or as proposed to be conducted, and all such licences,
registrations, permits, consents and qualifications are valid and
subsisting and in good standing;
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(s)
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the Company has
not received any notice of proceedings relating to the revocation
or modification of any license, registration, permit, consent or
qualification referred to in paragraph (r) above which, if the
subject of an unfavourable decision, ruling or finding, would
materially adversely affect the conduct of the business,
operations, condition (financial or otherwise) or income of the
Company;
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(t)
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except for a
cease trade order issued by the British Columbia Securities
Commission in June 2003 in respect of interim financial statements
which were mailed to shareholders but not SEDAR-filed before the
deadline specified therefor, which cease trade order was revoked
shortly after it was issued, no order ceasing or suspending trading
in securities of the Company or prohibiting the sale of securities
by the Company has been issued and no
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proceedings for
this purpose have been instituted, are pending, contemplated or
threatened;
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(u)
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the Company has
not, directly or indirectly, declared or paid any dividend or
declared or made any other distribution on any of its common shares
or securities of any class, or, directly or indirectly, redeemed,
purchased or otherwise acquired any of its common shares or
securities or agreed to do any of the foregoing;
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(v)
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there is not,
in the constating documents or by-laws of the Company or in any
agreement, mortgage, note, debenture, indenture or other instrument
or document to which the Company is a party, any restriction upon
or impediment to the declaration or payment of dividends by the
directors of the Company or the payment of dividends by the Company
to the holders of its common shares, as long as any dividends are
paid out of monies properly available under applicable corporate
laws for the payment of dividends;
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(w)
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Computershare
Trust Company of Canada has been duly appointed as the transfer
agent and registrar for all of the outstanding common shares of the
Company;
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(x)
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the Company has
taken or will take all steps as may be necessary to comply with the
requirements of the applicable securities laws of the Selling
Jurisdictions and such other jurisdictions in which the Units are
sold and the Company is entitled to avail itself of the applicable
prospectus and registration exemptions available under the
applicable securities laws of the Selling Jurisdictions in respect
of the trades in the Units to Purchasers resident in those
jurisdictions and in respect of the distribution of the Agent's
Option and the Finance Units to the Agent;
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(y)
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the
Subscription Agreements to be entered into between the Company and
the Purchasers and any other written or oral representations made
by the Company to a Purchaser or potential Purchaser in connection
with the Offering will be accurate in all material respects and
will omit no fact, the omission of which will make such
representation misleading;
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(z)
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the Company is
not a "reporting issuer" in any jurisdiction other than the
Reporting Jurisdictions;
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(aa)
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all filings
made by the Company under which it has received or is entitled to
government loans or incentives, have been made in accordance, in
all material respects, with applicable legislation and contain no
misrepresentations of a material fact or omit to state any material
fact which could cause any amount previously paid to the Company or
previously accrued on the accounts thereof to be recovered or
disallowed;
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(bb)
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the minute
books of the Company are true and correct in all material respects
and contain the minutes of all meetings and all resolutions of the
directors and shareholders thereof, except for the minutes of the
extraordinary general meeting held on May 28, 2004;
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(cc)
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on or before
Closing, the Company has taken or will take all reasonable steps
necessary to obtain the consent of the Exchange and has complied or
will comply with all other regulatory requirements applicable on
the offering and sale of the Units on a "private placement" basis
as contemplated by the Offering;
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(dd)
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the auditors of
the Company who audited the consolidated financial statements of
the Company most recently delivered to the security holders of the
Company and delivered their report with respect thereto, were at
the relevant time independent chartered accountants;
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(ee)
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the Company has
established on its books and records reserves that are adequate for
the payment of all taxes not yet due and payable and there are no
liens for taxes on the assets of the Company; there are no audits
known by the Company's management to be pending of the tax returns
of the Company (whether federal, provincial, local or foreign) and
there are no claims which have been or may be asserted relating to
any such tax returns, which audits and claims, if determined
adversely, would result in the assertion by any government agency
of any deficiency that would have a material adverse effect on the
assets, properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company;
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(ff)
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neither Canada
Customs and Revenue Agency, the Internal Revenue Service of the
United States or any other taxation authority has asserted or, to
the best of the Company's knowledge, threatened to assert any
assessment, claim or liability for taxes due or to become due in
connection with any review or examination of the tax returns of the
Company filed for any year which would have a material adverse
effect on the assets, properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Company;
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(gg)
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the Company is
not a party to any material contracts other than as disclosed by
the Company to counsel for the Agent;
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(hh)
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each of the
material contracts to which the Company is a party has been duly
authorized, executed and delivered by the Company and is a legal,
valid and binding obligation of the Company enforceable in
accordance with their respective terms;
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(ii)
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all of the
representations and warranties made by the Company in this
Agreement will continue to be true and correct as of the Time of
Closing (as hereinafter defined).
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3.
Representations and Warranties of the Agent
3.1
The
Agent represents and warrants to the Company and acknowledges that
the Company will be relying upon such representations and
warranties in entering into this Agreement, that:
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(a)
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it holds all
licenses and permits that are required for carrying on its business
in the manner in which such business has been carried
on;
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(b)
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it has good and
sufficient right and authority to enter into this Agreement and
complete its transactions contemplated under this Agreement on the
terms and conditions set forth herein;
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(c)
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it is
appropriately registered under the
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