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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 23, 1997
CANYON RESOURCES CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-14329 84-0800747
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
14142 Denver West Parkway, Suite 250
Golden, CO 80401
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (303) 278-8464
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5 OTHER EVENTS
Canyon Resources Corporation (the "Registrant") entered into an Agency
Agreement with RBC Dominion Securities Inc. dated as of December 23, 1997,
pursuant to which, on December 30, 1997, the Registrant issued and sold
2,510,000 shares of its Common Stock, $.01 par value per share, at a price of
$1.00 per share.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
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1.1 Form of Agency Agreement dated as of December
23, 1997 between Canyon Resources Corporation
and RBC Dominion Securities Inc.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CANYON RESOURCES CORPORATION
Date: January 9, 1998 By: /s/ Gary C. Huber
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Gary C. Huber, Vice President
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EXHIBIT INDEX
EXHIBIT
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1.1 Form of Agency Agreement dated as of December 23, 1997 between
Canyon Resources Corporation and RBC Dominion Securities Inc.
4
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December 23, 1997
Canyon Resources Corporation
14142 Denver West Parkway
Suite 250
Golden, Colorado 80401
Attention: Richard H. DeVoto
President and Chief Executive Officer
Dear Sirs:
The undersigned, RBC Dominion Securities Inc. (the "Agent"),
understands that Canyon Resources Corporation, a Delaware corporation (the
"Company") proposes to issue and sell a minimum of 2,500,000 and a maximum of
5,000,000 shares of common stock of the Company (the "Shares") at a price of
$1.00 per share. On the basis of the representations and warranties and
subject to the terms and conditions set forth herein, the Agent hereby offers
to act, and upon acceptance hereof, the Company hereby appoints the Agent as
the Company's sole and exclusive agent to solicit, on a best efforts basis,
offers to purchase the Shares.
We understand that the Company has filed with the Securities and
Exchange Commission (the "SEC") pursuant to Rule 415 under the United States
Securities Act of 1933, as amended (the "1933 Act"), a registration statement
on Form S-3 (No. 333-18449) (such registration statement, as amended at the
time it became effective on January 7, 1997 under the 1933 Act, including the
exhibits thereto and the documents incorporated by reference therein, being
hereafter referred to as the "Shelf Registration Statement") and a related
prospectus dated January 7, 1997 (the "U.S. Shelf Prospectus") and has filed
with the Canadian Securities Authorities (as defined below) a Canadian shelf
prospectus (the "Canadian Shelf Prospectus") in the Provinces of Ontario
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and British Columbia (collectively, the "Canadian Jurisdictions") under the
provisions of National Policy Statement 45 of the Canadian Securities
Administrators ("NP 45") to register and qualify the offering and sale of,
among other securities, the Shares.
We understand that the Company wishes to distribute to the public in
the United States and in the Canadian Jurisdictions the Shares and to have such
shares listed on The American Stock Exchange ("AMEX"). To that end, the
Company has filed with the SEC pursuant to Rule 424 under the 1933 Act a U.S.
preliminary prospectus supplement dated December 19, 1997 (the "U.S.
Preliminary Prospectus Supplement") to the U.S. Shelf Prospectus and has filed
under NP 45 with the Canadian Securities Authorities in each of the Canadian
Jurisdictions, a Canadian preliminary prospectus supplement dated December 19,
1997 (the "Canadian Preliminary Prospectus Supplement") to the Canadian Shelf
Prospectus in respect of the distribution of the Shares.
We understand that the Company will prepare and file, without delay,
with the SEC pursuant to Rule 424 under the 1933 Act a final U.S. prospectus
supplement (the "U.S. Final Prospectus Supplement") to the U.S. Shelf
Prospectus in respect of the distribution of the Shares in the United States
and will prepare and file, without delay, in each of the Canadian Jurisdictions
pursuant to NP 45 a final Canadian prospectus supplement (the "Canadian Final
Prospectus Supplement", and together with the U.S. Final Prospectus Supplement,
the "Final Prospectus Supplement") in order to qualify the Shares for
distribution (or distribution to the public, as the case may be) in each of the
Canadian Jurisdictions.
In this Agreement all dollar references are to United States dollars
unless otherwise specifically indicated, and the following terms shall have the
following meanings ascribed to them:
"AGENT'S COMMISSION" means a commission of U.S.$0.08 per Share equal
to 8% of the purchase price of the Shares;
"BUSINESS DAY" means any day other than a Saturday or a Sunday on
which banks in Toronto, Ontario and in New York, New York, are open for the
conduct of business;
"CANADIAN PRELIMINARY PROSPECTUS" means the Canadian preliminary
prospectus dated November 7, 1997, including the documents incorporated by
reference therein;
"CANADIAN PROSPECTUS" means the Canadian final prospectus dated
November 21, 1997, including the documents incorporated by reference therein,
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as modified and supplemented by the Canadian Final Prospectus Supplement, and
as the same may be amended by any Supplementary Material;
"CANADIAN SECURITIES AUTHORITIES" means the securities commission or a
similar securities regulatory authority or administrator established pursuant
to Canadian securities laws in each of the Canadian Jurisdictions;
"CANADIAN SECURITIES LAWS" means, collectively, the applicable
securities laws of each of the Canadian Jurisdictions, the respective
regulations, rulings and orders made thereunder and the applicable published
policy statements issued by the Canadian Securities Authorities thereunder;
"EFFECTIVE DATE" means the date as of which the Registration Statement
became effective;
"ESCROW AGREEMENT" means the escrow agreement dated as of December 23,
1997 made between the Agent, the Trustee and the Company;
"PRELIMINARY PROSPECTUS SUPPLEMENTS" means, collectively, the Canadian
Preliminary Prospectus Supplement and the U.S. Preliminary Prospectus
Supplement;
"PROSPECTUSES" means the Canadian Prospectus and the U.S. Prospectus;
"REGISTRATION STATEMENT" means the Shelf Registration Statement,
including the documents incorporated by reference therein, and if amended, as
amended at the time such amendment becomes effective, and when supplemented, as
supplemented at the time such supplement is first filed with the SEC or
delivered to the Agent for use in offering the Shares in the United States
(unless the context indicates otherwise);
"SUBSIDIARIES" means Minera Hispaniola, S.A., CR Minerals Corporation,
CR Kendall Corporation, CR Montana Corporation, CR Briggs Corporation, CR
International Corporation, Canyon Resources Africa Ltd., Canyon de Panama,
S.A., Canyon Resources Venezuela, C.A., Canyon Resources (Chile) S.A., Canyon
Resources Tanzania, CR Brazil Corporation and Canyon Mineracao Do Brasil Ltda.;
"SUPPLEMENTARY MATERIAL" means any amendment or supplement to any or
all of the Preliminary Prospectus Supplements, the Prospectuses or the
Registration Statement, or any other supplemental documents or similar document
required to be filed under United States or Canadian securities laws, as the
case may be;
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"TRUSTEE" means CIBC Mellon Trust Company Limited;
"U.S. PRELIMINARY PROSPECTUS" means the U.S. Shelf Prospectus as
modified and supplemented by the U.S. Preliminary Prospectus Supplement dated
December 19, 1997, and as the same may be amended by any Supplementary Material
prior to the date of the U.S. Final Prospectus Supplement;
"U.S. PROSPECTUS" means the U.S. Shelf Prospectus including the
documents incorporated by reference therein, as modified and supplemented by
the U.S. Final Prospectus Supplement and as the same may be amended by any
Supplementary Material;
"U.S. SUBSIDIARIES" means CR Minerals Corporation, CR Kendall
Corporation, CR Montana Corporation, CR Briggs Corporation, CR International
Corporation, Canyon Resources Africa, Ltd. and CR Brazil Corporation;
"1933 ACT REGULATIONS" mean the rules and regulations of the SEC under
the 1933 Act; and
"1934 ACT" means the United States Securities Exchange Act of 1934, as
amended.
The following are the terms and conditions of the agreement between
the Company and the Agent:
1. The Company agrees to pay the Agent at each Time of Closing (as
defined below) the Agent's Commission in consideration of the services rendered
by the Agent in connection with the issue and sale of the Shares, which
services will include:
(i) acting as fiscal advisor of the Company in preparation of the
relevant documentation relating to the sale of the Shares;
(ii) assisting in the preparation of the Prospectuses prepared in
connection with the offering and distribution of the Shares
together with any Supplementary Material;
(iii) acting as the Company's sole and exclusive agent to solicit,
upon a best efforts basis, offers to purchase the Shares; and
(iv) otherwise advising and assisting the Company with respect to
the issue and sale of the Shares.
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2.(a) The Company shall not later than December 24, 1997 have prepared and
filed with the SEC pursuant to Rule 424(b) of the 1933 Act Regulations the U.S.
Final Prospectus Supplement.
(b) The Company shall have prepared and filed with the Canadian Securities
Authorities under applicable Canadian securities laws pursuant to NP 45 not
later than December 24, 1997 in the Canadian Jurisdictions the Canadian Final
Prospectus Supplement and shall have taken all other steps and proceedings that
may be necessary in order to qualify the Shares for distribution (or
distribution to the public, as the case may be) in each of the Canadian
Jurisdictions by the Canadian Agent under the provisions of Canadian securities
laws.
3. Prior to the filing of the U.S. Final Prospectus Supplement and the
Canadian Final Prospectus Supplement and, if applicable, prior to the filing
thereafter of any Supplementary Material, including on the intervening
weekends, the Company shall have allowed the Agent to participate fully in the
preparation of such documents and shall have allowed the Agent to conduct all
due diligence which the Agent may reasonably require to conduct in order to
fulfill its obligations as agent and in order to enable the Agent responsibly
to execute the certificate required to be executed by the Canadian Agent in the
Canadian Final Prospectus Supplement and in any Supplementary Material.
4. (a) On each Closing Date, the Company shall have caused a favourable legal
opinion to be delivered to the Agent by Parcel, Mauro, Hultin & Spaanstra, P.C.
to the effect that:
(i) The Company is a corporation duly incorporated and existing
under the laws of the State of Delaware with full corporate
power and corporate authority to own, lease and operate its
properties and assets and to conduct its business as described
in the Registration Statement and the Prospectuses, and is
duly qualified and in good standing in the State of Delaware;
(ii) Each of the U.S. Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of their incorporation, with full corporate power
and corporate authority to own, lease, and operate its
properties and assets and to conduct its business as described
in the Registration Statement and the Prospectuses; and all
the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and, to such counsel's
knowledge, the Company is the registered and beneficial owner
of that number of outstanding shares of capital stock of each
of the Subsidiaries as indicated in Schedule "A" hereto;
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(iii) The authorized capital of the Company consists of 100,000,000
shares of common stock and 10,000,000 shares of Preferred
Stock of which 41,107,074 shares of common stock and no shares
of Preferred Stock are currently outstanding; and the
authorized capital stock of the Company conforms in all
material respects as to legal matters to the description
thereof contained in the Prospectuses under the caption
"Description of Capital Stock";
(iv) The Shares have been duly authorized and, when issued and
delivered to the Agent against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
non-assessable and free of any preemptive or, to the knowledge
of such counsel, similar rights that entitle or will entitle
any person to acquire any Shares upon the issuance thereof by
the Company;
(v) The Company has the corporate power and corporate authority to
enter into this Agreement and to issue, sell and deliver the
Shares to be sold by it to the Agent as provided herein, and
this Agreement has been duly authorized, executed and
delivered by the Company and is a valid, legal and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that (A) enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (B) the remedy of
specific performance and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion
of the court before which the proceedings may be brought and
(C) rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or the public
policy underlying such laws;
(vi) None of the issuance, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, the
compliance by the Company with all provisions of this
Agreement, nor the consummation by the Company of the
transactions contemplated hereby conflicts or will conflict
with or constitutes or will constitute a breach of, or a
default under, the certificate or bylaws of the Company, nor
will any such action result in any violation of any existing
Colorado law or United States federal law or regulation
(assuming compliance with all applicable state securities and
Blue Sky laws) or, to such counsel's knowledge, in the breach
of or default under any of the terms, conditions or provisions
of any material license, permit, agreement or instrument
issued to the Company or to which the Company is a party, nor
will any such
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action result in any violation of any judgment, injunction,
order or decree known to such counsel, and applicable to the
Company or any of its properties, which violation would have a
material adverse effect on the Company and the Subsidiaries,
taken as a whole;
(vii) To such counsel's knowledge, no consent, approval,
authorization or other order, or registration or filing with,
any court, regulatory body, administrative agency or other
governmental body, agency, or official is required on the part
of the Company under Colorado law or United States federal law
or regulation (except as have been obtained under the 1933 Act
or the 1934 Act, such as may be required under state
securities laws in connection with the purchase and
distribution of the Shares by the Agent, and such as have been
obtained from AMEX) for the valid issuance and sale of the
Shares to the Agent as contemplated by this Agreement;
(viii) The choice of the laws of the Province of Ontario as the
governing law of this Agreement is a valid choice of law and
in an action brought before a court of competent jurisdiction
in the State of Colorado, the substantive laws of the Province
of Ontario would, to the extent specifically pleaded and
proved as a fact by expert evidence, be recognized and applied
by such court to all issues which under the conflict of laws
rules of the State of Colorado are to be determined in
accordance with the proper or governing law of this Agreement,
which issues would include those relating to the
enforceability of this Agreement provided that:
(a) such choice is legal under the laws of the Province
of Ontario; and
(b) such choice is made bona fide and is not made to
avoid the mandatory provisions of the law of the
jurisdiction that a Colorado court would, in the
absence of such choice, have applied; and
except that any such court will not apply:
(c) those laws of the Province of Ontario which it
characterizes as being of a revenue, penal or public
law nature, nor
(d) those laws of the Province of Ontario, the
application of which would be inconsistent with
"public policy" as such term is applied by the courts
in Colorado.
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In any such action, a Colorado court would apply the administrative
and procedural laws of the State of Colorado (including those
administrative and procedural laws relating to the enforceability of
this Agreement) and not the administrative or procedural laws of the
Province of Ontario.
(ix) The laws of the State of Colorado would permit an action to be
brought in the appropriate courts of the State of Colorado on
a final and conclusive foreign judgment in personam in respect
of this Agreement, which is not impeachable as void or
voidable under the internal laws of the foreign jurisdiction,
for a definite sum of money;
(x) To the knowledge of such counsel, neither the Company nor the
Subsidiaries is (A) in violation of its certificate of
incorporation or in material violation of its bylaws or (B) in
default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note
or other evidence of indebtedness specifically identified to
such counsel (collectively, "Material Agreements"), except as
has been disclosed in the Prospectuses or where any such
default or defaults in the aggregate would not have a material
adverse effect on the Company and the Subsidiaries, taken as a
whole;
(xi) The Registration Statement has become effective under the 1933
Act, and to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act and no proceedings therefor
have been instituted or are threatened by the SEC. Any filing
of the U.S. Prospectus in connection with the offering of the
Shares on a delayed basis pursuant to Rule 415 under the 1933
Act as required pursuant to Rule 424(b) under the 1933 Act has
been made in accordance with Rule 424(b) under the 1933 Act;
(xii) The Registration Statement and the U.S. Prospectus comply as
to form in all material respects with the requirements for
registration statements on Form S-3 under the 1933 Act and the
rules and regulations of the SEC thereunder; it being
understood, however, that such counsel need express no opinion
with respect to the financial statements, schedules and other
financial and statistical data included in the Registration
Statement or the U.S. Prospectus. In passing upon the
compliance as to form of the Registration Statement and the
U.S. Prospectus, such counsel may assume that the statements
made and incorporated by reference therein are correct and
complete;
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(xiii) To the knowledge of such counsel, (A) other than as described
or contemplated in the U.S. Prospectus, there are no legal or
governmental proceedings pending or threatened against the
Company or the Subsidiaries which are material to the Company
and the Subsidiaries taken as a whole, or to which the Company
or the Subsidiaries, or any of their respective properties is
subject which are material to the Company and the Subsidiaries
taken as a whole, that are required to be described in the
U.S. Prospectus and (B) there are no agreements, contracts,
indentures, leases or other documents relating to the Company,
of a character that are required to be described in the U.S.
Prospectus that are not described as required, as the case
may be;
(xiv) The statements made in the Canadian Prospectus relating to
United States federal income tax laws and regulations under
"Certain United States Federal Tax Consequences to Canadian
Holders", to the extent that the foregoing statements
constitute matters of law or legal conclusions, have been
reviewed by such counsel and fairly present the information
disclosed therein in all material respects;
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the United States and Canadian counsel to the Company, and
the Agent's representatives at which the contents of the Registration Statement
and the U.S. Prospectus and related matters were discussed, and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the U.S. Prospectus and has not made an independent
check or verification thereof (subject to subparagraph (xiv) above), during the
course of such participation (relying as to materiality to the extent deemed
appropriate by such counsel, upon the statements of officers and other
representatives of the Company), no facts have come to such counsel's attention
that cause it to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the U.S. Prospectus, as of its dates
and as of each Closing Date, as applicable, contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; it being understood that such counsel need express no belief
with respect to the financial statements, schedules and other financial and
statistical data included in the Registration Statement or the U.S. Prospectus.
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(b) On each Closing Date, the Company shall have caused a favourable legal
opinion to be delivered to the Agent by Stikeman, Elliott, special Canadian
counsel to the Company (who may rely on the opinions of local counsel
acceptable to counsel to the Agent as to the qualification of the Shares for
sale to the public and as to other matters governed by the laws of
jurisdictions other than the provinces in which they are qualified to practice
and may rely, to the extent appropriate in the circumstances, as to matters of
fact on certificates of officers, public officials or of the auditors of the
Company) to the effect that:
(i) the statements in the Canadian Final Prospectus Supplement
under "Eligibility for Investment" are accurate in all
material respects;
(ii) to the knowledge of such counsel, no order having the effect
of ceasing or suspending the distribution of the Shares has
been issued by any Canadian Securities Authority and no
proceedings for that purpose have been instituted or
threatened by any Canadian Securities Authority;
(iii) [intentionally deleted]
(iv) all necessary documents have been filed and proceedings taken
under the laws of each of the Canadian Jurisdictions to
qualify the Shares for distribution to the public, as the case
may be, in such jurisdictions, through registrants registered
under the applicable Canadian securities laws in such
provinces who comply with the relevant provisions of such
laws.
(v) the statements made in the Canadian Final Prospectus
Supplement, relating to Canadian federal income tax laws and
regulations under "Certain Canadian Federal Income Tax
Considerations", to the extent that the foregoing statements
constitute matters of law or legal conclusions, have been
reviewed by such counsel and fairly present the information
disclosed therein in all material respects;
(vi) On the basis that the Company is duly incorporated and that
this Agreement has been duly and validly authorized, executed
and delivered by the Company, this Agreement constitutes a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to
the usual qualifications.
(c) On each Closing Date, the Agent shall have received favourable legal
opinions from Skadden, Arps, Slate, Meagher & Flom, U.S. counsel to the Agent
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as to the matters set forth in paragraphs 4(a)(x) and (xi) and from Cassels
Brock & Blackwell, Canadian counsel to the Agent, as to the matters set forth
in paragraphs 4(b) (i), (iv) and (v).
5. On each Closing Date, the Company shall cause to be delivered to the
Agent by its auditors comfort letters dated the date of each Closing Date, and
addressed to the Agent and the directors of the Company, in form and substance
reasonably satisfactory to the Agent, relating to the verification of financial
information and accounting data contained in the U.S. Prospectus (including
information incorporated therein by reference) relating to the Company and
matters involving changes or developments since the respective dates as of
which specified financial information is given in the U.S. Prospectus to a date
not more than two business days prior to the date of such letters. Such letter
shall further state that such auditors are independent public accountants
within the meaning of the 1933 Act and the 1933 Act Regulations, and that in
their opinion the audited financial statements of the Company included or
incorporated in the Registration Statement and the U.S. Prospectus comply as to
form in all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations. A similar letter shall be delivered
to the Agent with respect to any Supplementary Material.
6. The closing of the purchase and sale of the Shares herein provided for
shall be completed at the offices of Stikeman, Elliott, Commerce Court West,
Suite 5500, Toronto, Ontario, at 10:00 a.m. (Toronto time) on December 30, 1997
or at such other time and/or on such other date, not later than February 28,
1998, and at such other location, as the Company and the Agent may agree upon
(each of such times and dates a "Time of Closing" and a "Closing Date",
respectively). At the Time of Closing on each Closing Date, the Company shall
deliver to the Agent:
(i) one share certificate, or such number of share certificates as
the Agent may otherwise direct, representing the Shares to be
issued on the respective Closing Date. The share
certificate(s) shall be registered in the name of and
delivered to the Agent or in such other name or names as shall
be designated by the Agent in writing by 8:00 a.m., Toronto
time on each Closing Date; and
(ii) the requisite legal opinions and comfort letters as
contemplated above and such further documentation as may be
contemplated herein or as counsel to the Agent may reasonably
require;
against payment of the purchase price for the Shares to be issued on the
respective Closing Date. Amounts representing the purchase price for the
Shares shall be deposited with the Trustee in accordance with the terms of the
Escrow Agreement. For greater certainty, on the respective Closing Date and
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upon satisfaction of the terms of the Escrow Agreement, the purchase price for
the Shares to be issued on the respective Closing Date shall be paid by the
Trustee in accordance with the terms of the Escrow Agreement by certified
cheque payable to Stikeman, Elliott in trust for the benefit of the Company net
of the Agent's Commission, which commission amount shall be made payable by
certified cheque by the Trustee to the Agent.
7. The Company covenants and agrees with the Agent that:
(i) the Company shall use its reasonable best efforts, in
cooperation with the Agent, to register or qualify the Shares
for offering and sale under the applicable securities or Blue
Sky laws of such states of the United States as the Agent may
reasonably designate and to maintain such qualifications in
effect for so long as required for the distribution of the
Shares and will file such consents to service of process or
other documents necessary or appropriate in order to effect
such registration or qualification; provided, however, that
the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is
not otherwise so subject;
(ii) the Company will advise the Agent promptly (A) of the filing
of the Prospectuses and of any amendment of or supplement
thereto, (B) of any request by any Canadian Securities
Authority or the SEC for any amendment of or supplement to the
Registration Statement or the Prospectuses or for additional
information and (C) of the institution or, to the extent known
by the Company, threatening by the SEC or any Canadian
Securities Authority of any stop order proceedings in respect
of the Registration Statement or the Prospectuses, or any
proceedings, with respect to the suspension of the
qualification of the Shares for distribution in any
jurisdiction or with respect to any order to cease trade any
securities of the Company in any jurisdiction;
(iii) the Company will use its reasonable best efforts to prevent
the issuance of any stop order, cease trading order or
suspension referred to in (ii) above and to obtain as soon as
possible the lifting of any such stop order, cease trading
order or suspension, if issued;
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(iv) on or before February 28, 1998, the Company will not (A) file
any amendment to the Registration Statement or make or file
any amendment or supplement to the Prospectuses of which the
Agent shall not previously have been advised or to which the
Agent shall reasonably object in writing after being so
advised or (B) so long as, in the written opinion of counsel
for the Agent (a copy of which shall be delivered to the
Company), a prospectus is required to be delivered in
connection with sales by any Agent or dealer, file any
information, documents or reports pursuant to the Canadian
Securities Laws or the 1934 Act, without delivering a copy of
such information, documents or reports to the Agent, prior to
or concurrently with such filing;
(v) the Company will promptly inform the Agent in writing during
the period of distribution of the Shares of the full
particulars of any change (including, without limitation, any
material change (as defined in the Securities Act (Ontario)),
whether actual, anticipated or threatened, in the financial
condition, assets, liabilities, business or operations of the
Company and the Subsidiaries taken as a whole or of the
happening of any event which (A) insofar as the Canadian
Securities Laws are concerned, is, or may be, of such a nature
as to render the Canadian Prospectus untrue, false or
misleading in a material respect, or would result in such
document containing a misrepresentation (as defined in the
Securities Act (Ontario)) or not complying with the Canadian
Securities Laws or which change or event would reasonably be
expected to have a significant effect on the market price or
value of the Shares and (B) insofar as the 1933 Act is
concerned, makes any statement of a material fact made in the
Registration Statement or the U.S. Prospectus untrue or which
requires the making of any additions to or changes in the
Registration Statement or the U.S. Prospectus in order to
state a material fact required by the 1933 Act or the 1933 Act
Regulations to be stated therein or necessary in order to make
the statements therein (1) in the case of the Registration
Statement, not misleading and (2) in the case of the U.S.
Prospectus, in light of the circumstances under which they
were made, not misleading;
(vi) the Company will furnish to the Agent and counsel for the
Agent, without charge, facsimile or conformed signed copies of
the Registration Statement (including exhibits thereto) and
will use its reasonable best efforts to promptly deliver after
the execution hereof and for so long as delivery of a
prospectus by an Agent may be required by the 1933 Act or
Canadian Securities Laws, as many copies of the U.S.
Preliminary Prospectus Supplement and the
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U.S. Prospectus Supplement and any Supplementary Material as
the Agent may reasonably request in the City of New York, and
as many commercial copies of each of the Canadian Preliminary
Prospectus and the Canadian Prospectus Supplement and any
Supplementary Material as the Canadian Agent may reasonably
request in the city of Toronto for the purposes contemplated
by Canadian Securities Law. If during such period of time any
event of the type described in paragraph 7(v) hereof shall
occur, or if it is necessary to supplement or amend the
Prospectuses to comply with the 1933 Act, the Canadian
Securities Laws or any other law, the Company will forthwith
prepare and, subject to the provisions of paragraph 7(iv)
above, file with the SEC and the Canadian Securities
Authorities, as applicable, an appropriate supplement or
amendment thereto and will expeditiously furnish to the Agent
and dealers such number of copies thereof as the Agent may
reasonably request. In the event that the Company and the
Agent agree that the Prospectuses should be amended or
supplemented, the Company, if reasonably requested by the
Agent, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment
or supplement; Alternatively, in the event that the material
change is adverse and is not related solely to the Agent (and
in the reasonable opinion of the Agent would be expected to
have a significant adverse effect on the market price or value
of the Shares) and such change occurs prior to the Time of
Closing, the Agent may, within 48 hours from the time of
notice of such change, advise the Company that the Agent will
decline to participate in the filing of any such amendment and
thereupon the parties hereto shall be relieved of their
respective obligations under this Agreement. The Company
shall in good faith discuss with the Agent any change in
circumstances (actual, anticipated, contemplated or
threatened) which is of such a nature that there may be a
reasonable doubt as to whether written notice need be given to
the Agent under the provisions of this section 7; each
delivery to the Agent made pursuant to this paragraph 7(vi)
shall constitute consent by the Company to the use by the
Agent and other investment dealers and brokers of such
documents in connection with the offering of the Shares for
sale in the United States and in all of the Canadian
Jurisdictions, subject to the provisions of the 1933 Act, the
1933 Act Regulations and all relevant Canadian Securities
Laws;
(vii) the Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance
with the description set forth under "Use of Proceeds" in the
Prospectuses;
<PAGE> 15
-15-
(viii) the Company will make generally available to its security
holders (within the meaning of Rule 158 of the 1933 Act
Regulations) a consolidated earnings statement, which need not
be audited, covering a twelve-month period commencing after
the effective date of the Registration Statement and ending
not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated
earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act;
(ix) for a period of 90 days after the date of this Agreement, the
Company will not, without the prior written consent of the
Agent (which consent shall not be unreasonably withheld or
delayed), offer, sell, contract to sell or otherwise dispose
of any shares of common stock (or any securities convertible
into or exercisable or exchangeable for shares of common
stock) or grant any options or warrants to purchase shares of
common stock, provided, however, that the Company may grant
options to purchase shares of common stock pursuant to the
Company's equity incentive plans for employees, officers,
directors and consultants and may issue shares of common stock
pursuant to the exercise of options granted under the
Company's stock option plans or pursuant to the currently
outstanding warrants of the Company as disclosed in the
Registration Statement;
(x) the Company will indemnify the Agent for registration, issue,
stamp, documentary, transfer or sales taxes that they or any
of them might be required to pay in respect of the issue, sale
or delivery of the Shares to the Agent;
(xi) the Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation
of the price of the Shares; and
(xii) the Company will use its best efforts to have the Shares
listed, subject to notice of issuance, on AMEX concurrently
with the filing of the U.S. Final Prospectus Supplement.
8. The Company represents and warrants to the Agent that:
(i) the Company meets the requirements for use of Form S-3 under
the 1933 Act Regulations. The Registration Statement as of the
Effective Date complied, and the U.S. Preliminary Prospectus
complies and the U.S. Prospectus as of its date and on each
<PAGE> 16
-16-
Closing Date will comply, in all material respects with the
applicable requirements of the 1933 Act, the 1933 Act
Regulations and the 1934 Act and the rules thereunder; the
Registration Statement does not contain an untrue statement of
a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading; and each of the U.S. Preliminary Prospectus
the U.S. Prospectus (together with any amendment or supplement
thereto) will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they are made, not misleading; provided, however,
that the Company makes no representations or warranties as to
the information in such documents relating solely to or
provided in writing by the Agent;
(ii) the Company has complied and will comply, in each case in all
material respects, with all requirements of the 1933 Act and
the 1933 Act Regulations with respect to the preparation and
filing of the Registration Statement;
(iii) at the time the Company filed the Canadian Prospectus, the
Company was eligible to use the Multijurisdictional Disclosure
System provided for in NP 45 and at the respective times of
filing and at all times subsequent to the filing thereof
during the distribution of the Shares, each of the Canadian
Preliminary Prospectus and the Canadian Prospectus complied or
will comply with the requirements of NP 45 and will not
contain any misrepresentation (as defined in the Securities
Act (Ontario)); provided, however, that the Company makes no
representations or warranties as to the information in such
documents relating solely to or provided in writing by the
Agent;
(iv) the delivery by the Company to the Agent of each of the
Registration Statement, the U.S. Preliminary Prospectus
Supplement, the U.S. Prospectus Supplement and any
Supplementary Material pursuant to paragraph 7(vi) shall
constitute the Company's representation and warranty to the
Agent that, at the respective times of such delivery, the
information and statements contained therein (except
information relating solely to or provided in writing by the
Agent) are true and correct in all material respects and do
not omit to state any material fact which is necessary to make
the statements therein not misleading; and the delivery by the
Company to the Agent of each of the Canadian Preliminary
Prospectus, the Canadian Prospectus Supplement and any
Supplementary Material pursuant to paragraph 7(vi) shall
<PAGE> 17
-17-
constitute the Company's representation and warranty to the
Agent that, at the respective times of such delivery, the
information and statements contained and incorporated by
reference therein (except information and statements relating
solely to the Agent or provided in writing to the Company by
the Agent) are true and correct in all material respects,
contain no misrepresentation (as defined in the Securities Act
(Ontario)) and constitute full, true and plain disclosure of
all material facts relating to the Company and the
Subsidiaries taken as a whole and to the Shares and that no
material fact has been omitted therefrom which is necessary to
make the statements therein not misleading in light of the
circumstances in which they were made;
(v) the Company has an authorized share capital of 100,000,000
shares of common stock and 10,000,000 shares of Preferred
Stock of which 41,107,074 shares of common stock and no shares
of Preferred Stock are currently outstanding; all the
outstanding shares of common stock of the Company have been
duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar
rights; the Shares to be issued and sold by the Company have
been duly authorized and, when issued and delivered to the
Agent against payment therefor in accordance with the terms
hereof, will be validly issued, fully paid and non-assessable
and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in
the Registration Statement and the Prospectuses;
(vi) except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto),
subsequent to the respective dates as of which such
information is given in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), there
has been no change (actual, proposed or prospective) in the
financial condition, business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of the
Company or the Subsidiaries which may reasonably be expected
to have a material adverse effect on the financial condition,
assets, liabilities, business, operations or capital of the
Company and the Subsidiaries taken as a whole (a "Material
Adverse Effect"); and
(vii) the Company is a corporation duly organized and existing under
the laws of the state of Delaware with full corporate power
and corporate authority to own, lease and operate its
properties and assets and to conduct its business as presently
conducted and as described in the Registration Statement and
the Prospectuses, and
<PAGE> 18
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is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction where the nature of
its properties or the conduct of its business requires such
registration or qualification, except where the failure so to
register or qualify does not and will not have a Material
Adverse Effect; all the outstanding shares of capital stock of
the Subsidiaries have been duly authorized and validly issued,
are fully paid and non-assessable, and are owned in the
proportions disclosed in Schedule "A" hereto by the Company
directly, free and clear of any lien, adverse claim, security
interest, equity or other encumbrance, except as set forth in
Schedule "A";
(viii) each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing in the jurisdiction of
its incorporation, with full corporate power and corporate
authority to own, lease and operate its properties and to
conduct its business as presently conducted and described in
the Registration Statement and the Prospectuses, and is duly
registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature
of its properties or assets or the conduct of its business
requires such registration or qualification, except where the
failure so to register or qualify does not have a Material
Adverse Effect;
(ix) neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor
the consummation by the Company of the transactions
contemplated hereby (i) requires any consent, approval,
authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or
other governmental body, agency or official on the part of the
Company under Colorado or United States federal law or
regulation (except such as may be required for the
registration or qualification of the Shares under the 1933
Act, the 1934 Act, Blue Sky laws of the various states of the
United States and other jurisdictions, AMEX and any Canadian
securities laws) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default
under, the certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of the
Subsidiaries or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default
under, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is
a party or by which either of them or any of their respective
properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction,
order or decree applicable to the Company or any of the
Subsidiaries or their respective properties, or will result in
the creation or imposition
<PAGE> 19
-19-
of any lien, charge or encumbrance upon any property or assets
of the Company or any of the Subsidiaries pursuant to the
terms of any agreement or instrument to which any of them is a
party or by which any of them may be bound or to which any of
the property or assets of any of them is subject, in each case
in a manner which would have a Material Adverse Effect;
(x) Coopers & Lybrand L.L.P. who have certified the financial
statements of the Company included in the Registration
Statement and the Prospectuses (or any amendment or supplement
thereto), are, and during the periods covered by its report
were, auditors of the Company, and are independent auditors
with respect to the Company as required by the 1933 Act;
(xi) the execution and delivery of, and the performance by the
Company of its obligations under this Agreement have been duly
and validly authorized by the Company, and this Agreement has
been duly executed and delivered by the Company and
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except (i) the enforceability hereof or thereof may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) the remedy of
specific performance and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion
of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution hereunder or
thereunder may be limited by federal, provincial or state
securities laws or the public policy underlying such laws;
(xii) the Company and the Subsidiaries each has such permits,
approvals, licenses, franchises and authorizations of
governmental or regulatory authorities ("Permits") as are
necessary to own its respective properties and to conduct its
business in the manner described in the Prospectuses, except
where the failure to have any such Permit would not have a
Material Adverse Effect and subject to such qualifications as
may be set forth in the Prospectuses; the Company and the
Subsidiaries each has fulfilled and performed all its material
obligations with respect to such Permits and no event has
occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualification as may
be set forth in the Prospectuses; and, except as described in
the Prospectuses, none of such Permits contains any
restriction
<PAGE> 20
-20-
that is materially burdensome to the Company or any of the
Subsidiaries in any manner different from other companies in
the same industry as the Company;
(xiii) the Company is not and, upon sale of the Shares to be issued
and sold in accordance with this Agreement and upon
application of the net proceeds to the Company from such sale
as described in the Prospectuses under the caption "Use of
Proceeds", will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xiv) since January 1, 1995, the Company has filed in a timely
manner each document or report required to be filed by it
pursuant to its continuous reporting obligations under the
1934 Act and the rules and regulations thereunder; each such
document or report, together with any amendments thereto, at
the time it was filed conformed, as applicable, in all
material respects, to the requirements of the 1934 Act and the
rules and regulations thereunder; and none of such documents
or reports contained an untrue statement of any material fact
or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(xv) except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto) and
except as would not individually or in the aggregate have a
Material Adverse Effect, (i) the Company and each of the
Subsidiaries are in compliance with all applicable
Environmental Laws (as hereafter defined), (ii) the Company
and each of the Subsidiaries have all Permits, required under
any applicable Environmental Laws and are each in compliance
with their requirements, (iii) there are no pending or, to the
knowledge of the Company, threatened Environmental Claims (as
hereafter defined) against the Company or its Subsidiaries,
and (iv) there are no circumstances known to the Company with
respect to any property or operations of the Company or its
Subsidiaries that could reasonably be anticipated to form the
basis of an Environmental Claim against the Company or its
Subsidiaries. In addition, based upon the Company's reviews,
conducted in the ordinary course of its business, of the
effect of Environmental Laws on the business and operations of
the Company and its Subsidiaries, the Company has reasonably
concluded that, except as disclosed in the Registration
Statement and the Prospectuses (or any amendment or supplement
thereto), the costs and liabilities under Environmental Laws
(including, without limitation, any capital or operating
expenditures required for
<PAGE> 21
-21-
clean-up, closure or rehabilitation of properties or
compliance with Environmental Laws or any Permit, any related
constraints on operating activities and potential liabilities
to third parties) would not, singularly or in the aggregate,
have a Material Adverse Effect.
For purposes of this subsection, the following terms have the
following meanings: "Environmental Law" means any United
States (or other applicable jurisdiction's) federal,
provincial, state, local or municipal statute, law, rule,
regulation, ordinance, code, policy, guideline or rule of
common law and any judicial or administrative interpretation
thereof, including any judicial or administrative order,
consent decree or judgment, relating to the environment,
health, safety or any chemical, material, contaminant, waste
or other substance, exposure to which is prohibited, limited
or regulated by any governmental authority. "Environmental
Claim" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, lien, notice of
noncompliance or violation, investigation or proceeding
relating in any way to any Environmental Law;
(xvi) The Shares have received conditional approval for listing,
subject to official notice of issuance, on AMEX;
<PAGE> 22
-22-
9. The Agent represents, warrants, covenants and agrees to and with the
Company that:
(i) the Agent shall offer the Shares for sale to the public,
directly and through other investment dealers and brokers in
Canada or through its affiliated registered broker-dealer in
the United States and through other broker dealers in the
United States, as the case may be (the "Selling Firms"), only
as permitted by applicable law, and upon the terms and
conditions set forth in the Prospectuses and in this
Agreement. The Agent agrees that it will not distribute the
Prospectuses or publish any prospectus, circular,
advertisement or other offering material in any jurisdiction
other than the Canadian Jurisdictions or the United States, in
such manner as to require registration of the Shares or the
filing of a prospectus or any similar document with respect to
the Shares by the Company therein and to require each of the
other Selling Firms to agree not to distribute the Shares
except as permitted by this Agreement.
For purposes of this paragraph, the Agent shall be entitled to
assume that the Shares are qualified or registered for
distribution by duly qualified investment dealers and brokers
in any Canadian Jurisdiction where a receipt or similar
document for the Canadian Prospectus shall have been obtained
from the applicable securities regulatory authority following
the filing of the Canadian Prospectus.
(ii) the Agent will require each of the other Selling Firms to
agree to comply with all applicable requirements of Ontario
Securities Commission Policy Statement No. 5.1, in connection
with the distribution of the Shares and Rules 10b-6 and 10b-7
under the 1934 Act and the rules of the National Association
of Securities Dealers Inc.
(iii) Notwithstanding the foregoing provisions of this section 9,
the Agent will not be liable to the Company under this section
9 with respect to a default by another Selling Firm under this
section 9 if the Agent is not also in default.
10. The Agent shall have received at the Time of Closing on each Closing
Date a certificate dated the respective Closing Date addressed to the Agent and
signed by any two senior officers of the Company reasonably acceptable to the
Agent, certifying for and on behalf of the Company to the best of the
knowledge, information and belief of the persons signing such certificates
after having made reasonable inquiries, to the effect that the Company has
complied in all material respects with all covenants and satisfied in all
material respects all terms and conditions of this Agreement on its part to be
complied with and satisfied at or
<PAGE> 23
-23-
prior to the Time of Closing on the respective Closing Date; that, except as
may have been the subject of a Supplementary Material filed with the Canadian
Securities Authorities and/or with the SEC pursuant to clause 7(vi), there has
been no material adverse change (actual, proposed or prospective) in the
financial condition, business, affairs, operations, assets, liabilities
(contingent or otherwise) or capital of the Company and its Subsidiaries taken
as a whole from the date hereof to the respective Closing Date; that the
representations and warranties of the Company contained herein are true and
correct in all material respects as of the Time of Closing with the same force
and effect as if made at and as of the Time of Closing after giving effect to
the transactions contemplated hereby; that no stop order suspending the
effectiveness of the Registration Statement or the U.S. Prospectus, order
suspending the qualification for distribution of the Shares in any Canadian
Jurisdiction, or order, ruling or determination having the effect of ceasing or
suspending trading in any securities of the Company, has been issued and no
proceedings for such purpose are pending or, to the knowledge of the signers,
contemplated or threatened; and that the representations and warranties of the
Company arising by reason of the delivery of the Prospectuses are true and
correct in all material respects as of the Time of Closing on the respective
Closing Date as if the Prospectuses had been delivered to the Agent and dated
the respective Closing Date.
11.(a) The Company covenants and agrees to protect and indemnify the Agent, its
affiliated broker-dealer in the United States and their respective directors,
officers, employees and agents and each person who controls any U.S. Dealer
within the meaning of Section 15 of the 1933 Act, against all losses, claims,
damages, liabilities, costs or expenses caused or incurred by reason of:
(i) any statement, other than any statement relating solely to the
Agent or provided in writing to the Company by the Agent,
contained in either the Canadian Preliminary Prospectus or the
Canadian Prospectus, or in any Supplementary Material in
respect thereof which at the time and in the light of the
circumstances under which it was made contains or is alleged
to contain a misrepresentation (as defined in the Securities
Act (Ontario)); or
(ii) the omission or alleged omission to state in either of the
Canadian Preliminary Prospectus, the Canadian Prospectus or
any Supplementary Material in respect thereof or any
certificate of the Company or any officer thereof delivered
hereunder or pursuant hereto, any material fact other than a
material fact relating solely to the Agent or provided in
writing to the Company by the Agent required to be stated
therein or necessary to make any statement therein not
misleading in the light of the circumstances under which it
was made; or
<PAGE> 24
-24-
(iii) any order made or inquiry, investigation or proceeding
commenced or threatened by any Canadian Securities Authority
(not based upon the activities of the Agent or its banking or
selling group members, if any) based upon any untrue statement
or omission or alleged untrue statement or omission or any
misrepresentation or alleged misrepresentation in the Canadian
Preliminary Prospectus, the Canadian Prospectus or any
Supplementary Material in respect thereof, which prevents or
restricts trading in the Shares or the distribution or
distribution to the public, as the case may be, of the Shares
in any of the Canadian Jurisdictions; or
(iv) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally
filed or in any amendment thereof, or in any U.S. Preliminary
Prospectus or U.S. Prospectus, or in any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided that this indemnity does not apply to any loss,
claim, damage, liability, cost or expense to the extent
arising out of an untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company
by the Agent expressly for use in the Registration Statement
or the U.S. Prospectus (or any amendment or supplement
thereto);
and provided, further, that the foregoing indemnity agreements with
respect to any Preliminary Prospectus shall not inure to the benefit
of any Agent from whom the person asserting any such losses, claims,
damages or liabilities bought Shares, or any person controlling the
Agent, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Agent to such
person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities.
(b) If any action, suit or proceeding shall be brought against the Agent
or any person controlling the Agent in respect of which indemnity may be sought
against the Company, the Agent or such controlling person shall promptly
notify the Company, and the Company shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. The Agent or
any such controlling person shall have the right to employ separate counsel in
any such action, suit or proceeding and to participate in the defense thereof,
but
<PAGE> 25
-25-
the fees and expenses of such counsel shall be at the expense of the Agent or
such controlling person unless (i) the Company has agreed in writing to pay
such reasonable fees and expenses, (ii) the Company has failed to assume the
defense and employ counsel, or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both the Agent or such
controlling person and the Company and the Agent or such controlling person
shall have been advised reasonably and in good faith by its counsel in writing
that representation of such indemnified party and the Company by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Company shall not have the right to assume the defense of such action,
suit or proceeding on behalf of the Agent or such controlling person). It is
understood, however, that the Company shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all the Agent and such controlling persons not having
actual or potential differing interests with the Company or among themselves,
which firm shall be designated in writing by the Agent, and that all such fees
and expenses shall be reimbursed as they are incurred. The Company shall not
be liable for any settlement of any such action, suit or proceeding effected
without its written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless the Agent, to the
extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of
such settlement or judgment.
(c) The Agent and its affiliated registered broker-dealer in the United
States covenants and agrees, severally and not jointly, to protect and
indemnify the Company, its directors, officers, employees and agents and each
person who controls the Company within the meaning of Section 15 of the 1933
Act, to the same extent as the foregoing indemnity from the Company to the
Agent, but only with respect to information relating solely to the Agent or
furnished in writing by or on behalf of the Agent expressly for use in the
Registration Statement, any Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, or any
such controlling person based on the Registration Statement, any Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against the Agent pursuant to this
paragraph (c) the Agent shall have the rights and duties given to the Company
by paragraph (b) above (except that if the Company shall have assumed the
defense thereof the Agent shall not be required to do so, but may employ
separate counsel therein and participate in
<PAGE> 26
-26-
the defense thereof, but the fees and expenses of such counsel shall be at the
Agent's expense), and the Company, its directors, any such officer, and any
such controlling person shall have the rights and duties given to the Agent by
paragraph (b) above.
(d) If the indemnification provided for in this Section 11 is unavailable
to an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Agent on the other hand from the offering of the Shares,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and the Agent on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Agent on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions
received by the Agent, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company on the one hand and the
Agent on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Agent on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by a pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 11, the Agent shall not be
required to contribute any amount in excess of the amount by which the total
price of the Shares distributed to the public exceeds the amount of any damages
which the Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent
<PAGE> 27
-27-
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 11 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 11 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Agent or any person controlling any
Agent, the Company, its directors or officers or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Agent or any
person controlling the Agent, or to the Company, its directors or officers or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
11.
12. The Company agrees to pay the following costs and expenses and all
other costs and expenses incident to the performance by it of its obligations
hereunder: (i) the preparation, printing or reproduction, and filing with the
Canadian Securities Authorities and the SEC of the registration statement
(including financial statements and exhibits thereto), each of the Preliminary
Prospectuses, the Prospectuses, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including postage, air
freight and delivery (including postage, air freight charges and charges for
counting and packaging)) of such copies of the registration statement, each
Preliminary Prospectus, the Prospectuses, and all amendments or supplements to
any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the original
issuance and sale of the Shares; (v) the listing of the Shares on AMEX; (vi)
the registration or
<PAGE> 28
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qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 7(vi) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Agent relating
to the preparation, printing or reproduction, and delivery of the preliminary
and supplemental Blue Sky Memoranda and such registration and qualification);
(vii) the filing fees and the reasonable fees and expenses of counsel for the
Agent in connection with any filings required to be made with the National
Association of Securities Dealers, Inc.; (viii) the transportation and other
expenses incurred by or on behalf of representatives of the Company in
connection with presentations to prospective purchasers of the Shares; (ix) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company; and (x) all of
the expenses of the Agent including the reasonable fees and disbursements of
its counsel.
If this Agreement shall terminate or shall be terminated pursuant to
any provisions hereof (otherwise than pursuant to Section 15(b) hereof) or if
this Agreement shall be terminated by the Agent because of any failure or
refusal on the part of the Company to comply, in any material respect, with the
terms or fulfill any of the conditions of this Agreement other than by reason
of a default by the Agent, the Company agrees to reimburse the Agent for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel for the Agent) incurred by the Agent in connection herewith. The
Company shall not in any event be liable to any of the Agent for the loss of
anticipated profits from the transactions covered by this Agreement.
13. The obligation of the Agent to solicit offers to purchase the Shares
shall be subject to the accuracy in all material respects of the
representations and warranties of the Company herein as of each Time of Closing
and to the due fulfillment and compliance in all material respects by the
Company with its covenants herein contained and to the condition that no stop
order suspending the effectiveness of the Registration Statement and no order
ceasing trading in the Shares shall have been issued and no proceedings for
either such purpose shall have been instituted or threatened.
14. All warranties, representations, covenants and agreements of the
Company herein contained or contained in documents submitted pursuant to this
Agreement and in connection with the transaction of purchase and sale herein
contemplated shall survive the purchase of the Shares and continue in full
force and effect unaffected by any subsequent disposition of the Shares or any
of them.
15.(a) All terms and conditions of this Agreement shall be construed as
conditions, and any material breach or failure by the Company to comply with
any such term or condition shall entitle the Agent to terminate its obligation
to solicit offers to purchase the Shares and, on behalf of purchasers, to
terminate
<PAGE> 29
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their respective obligations to purchase Shares by written notice to that
effect given to the Company prior to the Time of Closing on the Closing Date.
It is understood that the Agent may waive, in whole or in part, or extend the
time for, compliance with any of such terms and conditions without prejudice to
the rights of the Agent in respect of any other such term or condition or any
other or subsequent breach or non-compliance with that or any other term or
condition, provided that to be binding on the Agent any such waiver or
extension must be in writing.
(b) The obligations of the Agent contained in this Agreement may also be
terminated by the Agent in the event that prior to the Time of Closing on the
Closing Date:
(i) there should develop, occur or come into effect any occurrence
of national or international consequence or any action,
government regulation or inquiry which, in the reasonable
opinion of the Agent, seriously adversely affects, or will
seriously adversely affect, the financial markets in Canada or
the United States generally or the business of the Company; or
(ii) a banking moratorium is declared by any federal, provincial or
state authority in either Canada or the United States or
trading in securities generally on AMEX is suspended; or
(iii) the state of the financial markets in the United States or
Canada is such that, in the reasonable opinion of the Agent it
would be impracticable to proceed with a public offering of
the Shares;
then in either case the Agent may terminate its obligations under this
Agreement to solicit offers to purchase Shares by written notice to
that effect (which notice shall specify the particular reason for the
termination) given to the Company prior to the Time of Closing on the
Closing Date.
(c) If any inquiry, investigation or other proceeding should be made,
threatened or announced or any order should be issued under or pursuant to any
statute of Canada or of any of the provinces comprising the Canadian
Jurisdictions or of the United States or by any official of any stock exchange
in Canada or the United States or by any other regulatory authority having
jurisdiction over a material portion of the business and affairs of the Company
or otherwise except for any such inquiry, investigation, proceeding or order
based upon the activities or the alleged activities of the Agent or its banking
or selling group and not of the Company, which in the reasonable opinion of the
Agent will prevent the distribution of the Shares in the Canadian Jurisdictions
or in the United States or operate to prevent or adversely restrict trading in
shares of common stock of the Company, the Agent shall be entitled, at its
option and in
<PAGE> 30
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addition to any other remedies it might have, to terminate the obligations of
the Agent under this Agreement by written notice to that effect given to the
Company at or at any time prior to the Time of Closing on a Closing Date.
16. If the Agent shall elect to terminate its obligation to solicit offers
to purchase the Shares as aforesaid, whether the reason for such termination is
within or beyond the control of the Company, the liability of the Company
hereunder shall be limited to the indemnity referred to in section 11 and the
payment of expenses referred to in section 12 to the extent provided therein.
17. The Agent and any members of its banking or its selling groups may
offer the Shares only in those jurisdictions where they may lawfully be offered
for sale at the initial offering price. The Agent shall give prompt notice to
the Company when, in the opinion of the Agent, distribution has ceased, and
shall also give notice to the Company of the amount of Shares distributed in
each state or province. The Agent will allow the Company to review any sales
memoranda for use by its employees, in connection with the marketing of the
Shares prior to any use thereof and prior to such memoranda being filed with
any Canadian or United States regulatory authority.
18. In all dealings hereunder, the parties hereto shall be entitled to act
and rely upon any statement, request, notice or agreement on behalf of any
Agent made or given by the Agent.
19. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in the case of the Company
at its address on page 1 hereof with a copy to the Company's Chief Financial
Officer and to Parcel, Mauro, Hultin & Spaanstra, P.C., 1801 California Street,
Suite 3600, Denver, Colorado, 80202, Attention: Leslie Speed, and in the case
of the Agent as follows:
(i) if to RBC Dominion Securities Inc.
To: RBC Dominion Securities Inc.
P.O. Box 50
Royal Bank Plaza
Toronto, Ontario
M5J 2W7
Attention: David Scott
with a copy to:
Cassels Brock & Blackwell
Scotia Plaza
<PAGE> 31
-31-
Suite 2100
40 King Street West
Toronto, Ontario
M5H 3C2
Attention: Norman F. Findlay
20. This agreement shall be governed by and interpreted in accordance with
the laws of the Province of Ontario and the parties hereto attorn to the
non-exclusive jurisdiction of the courts of the Province of Ontario and time
shall be of the essence hereof.
21. The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
22. This Agreement may be executed in several counterparts which, taken
together, shall constitute one and the same instrument.
23. It is understood that the Company will require further financing and
that this offering is the first step in developing a long-term relationship
with the Agent. As such, the Company will notify the Agent in writing of the
terms of any equity financing that it requires or proposes to obtain within the
period of twelve (12) months following the final Closing Date and the Agent
will have a right of first refusal for a period of fifteen (15) days thereafter
to commit to complete such equity financing. The structure, terms and
conditions of said financing(s) will be negotiated at that time in accordance
with the terms and conditions standard in the industry for the type of
financing proposed and will be subject to the parties entering into a formal
agency/underwriting agreement. However, it is anticipated that the Agent will
be the lead agent for the next financing proposed by the Company.
If this letter accurately reflects the terms of the transaction which
we are to enter into and if such terms are agreed to by the Company, please
communicate acceptance of the Company by executing and returning five (5)
copies of this letter where indicated below.
Yours very truly,
RBC DOMINION SECURITIES INC.
<PAGE> 32
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Per:
------------------------
The foregoing accurately reflects the terms of the transaction which
we are to enter into and such terms are agreed to by Canyon Resources
Corporation.
DATED as of the 23rd day of December, 1997.
CANYON RESOURCES CORPORATION
Per:
------------------------
<PAGE> 33
SCHEDULE "A"
SUBSIDIARIES
SUBSIDIARY JURISDICTION PERCENT OWNERSHIP
---------- ------------ -----------------
CR Kendall Corporation Colorado 100%
CR Montana Corporation Colorado 100%
CR Minerals Corporation Colorado 100%
CB Briggs Corporation Colorado 100%
Minera Hispaniola S.A. (1) Dominican Republic 40%
CR Brazil Corporation Colorado 100%
Canyon Mineracao Do Brasil Ltda Brazil 100%(2)
CR International Corporation Colorado 100%
Canyon Resources (Chile) S.A. Chile 100%
Canyon Resources Africa Ltd. Colorado 90%
Canyon Resources Tanzania Ltd. Tanzania 90%
Canyon De Panama, S.A. Panama 100%
Canyon Resources
Venezuela, C.A. (3) Venezuela 90%
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(1) Subject to Option to Purchase Agreement in favour of Energold Mining
Ltd.
(2) This entity is a wholly-owned subsidiary of CR Brazil Corporation.
(3) During the past two years, the Company has not made any filings in
Venezuela to maintain the status of this corporation. This
corporation owns no property and has no assets. The Company does not
know whether this entity validly exists under Venezuelan law.
SECURITY INTERESTS, ETC.
The outstanding shares of capital stock of CR Briggs Corporation owned
by the Company have been pledged as collateral under the Loan Agreement dated
December 6, 1995, among the Company, CR Briggs Corporation and Banque Paribas
as Agent.
