Exhibit 10.3
 
 
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July 7, 2016

SILVER BULL RESOURCES, INC.
Suite 1610, 777 Dunsmuir Street
Vancouver, BC V7Y 1K4
Canada

Attention: Tim Barry
                   Chief Executive Officer

Dear Sirs:

Re:            Provision of Placement Agent Services for your Private Placement

This letter (the “Agreement”) confirms the terms on which Sprott Global Resource
Investments, Ltd., a California limited partnership (“SGRIL” or the “Placement
Agent”), agrees to provide services as a placement agent (the “Services”) in
respect of a private placement (the “Placement”) by Silver Bull Resources, Inc.
(the “Company”) of up to 3,340,000 units (the “Units”) at a price of C$ 0.15 per
Unit for proceeds of up to C$ 501,000.

SGRIL understands that:

(a) the common shares of the Company (the “Common Shares”) are listed on the
Toronto Stock Exchange (the “Exchange”);

(b) each Unit will consist of one Common Share (a “Unit Share”) and one
non-transferable share purchase warrant (a “Warrant”) entitling the purchase of
one Common Share (a “Warrant Share”) for three years from the closing of the
Placement (the “Closing”) at a price of C$ 0.16;

(c) if, commencing on the fourth month after the Closing, the closing price of
the Common Shares on the Exchange is higher than C$ 0.30 for any 20 consecutive
trading day period then on the 20th consecutive trading day of any such period
(the “Acceleration Trigger Date”) the expiry date of the Warrants may be
accelerated to the 20th trading day after the Acceleration Trigger Date by the
issuance, within three trading days of the Acceleration Trigger Date, of a news
release announcing such acceleration;

(d) if, at the time of exercise of the Warrant, the Company is no longer an
issuer subject to the reporting requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, of the United States of America
(the “Exchange Act”), then the Warrant may be exercised by means of a Cashless
Exercise Right in the same manner as the Compensation Warrants (as described and
defined below); and

 

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SILVER BULL RESOURCES, INC.
July 7, 2016
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(e) the Placement is subject to the approval of the Exchange.

The Placement is further described in the attached Term Sheet and any terms set
out in the Term Sheet but not in this Agreement shall be incorporated into, and
form a part of, this Agreement. In the event of a discrepancy between the terms
of this Agreement and the Term Sheet, this Agreement shall govern.

Description of Services

The Services shall include:

(a) locating and introducing to the Company potential qualified investors
(“Investors”) in the United States of America, its states, territories and
possessions, and the District of Columbia (collectively, the “United States”)
and outside of the United States and Canada with whom the Placement Agent has
pre-existing business relationships and who the Placement Agent reasonably
believes are qualified to participate in the Placement who might be willing to
purchase Units on an exempt private placement basis;

(b) facilitating communication between the Company and the Investors and
arranging for the Investors to receive, or directing them where to obtain,
corporate and business related information of the Company from the Company’s
website, SEDAR and EDGAR;

(c) introducing the Investors to the Company’s management and, if requested,
assisting the Investors in completing a subscription agreement in the form
provided by the Company to SGRIL for the Placement (“Subscription Agreement”);
and

(d) gathering and forwarding the completed Subscription Agreements and the funds
therefor to the Company to hold such funds, in trust, pending the Closing.

The Placement Agent shall provide the Services in compliance with all applicable
laws and regulations. The Company shall be under no obligation to accept
subscriptions for Units from all or any of the Investors introduced by the
Placement Agent.

Relationship between the Parties

The Company acknowledges and confirms that:

(a) the Placement Agent shall not have any liability to the Company if it is
unable to locate any, or a sufficient number of, purchasers for the Placement;

(b) there is no agreement, commitment, arrangement or understanding pursuant to
which the Placement Agent will act as advisor in respect of the Placement or in
respect of a subsequent offering of securities of the Company; and

(c) the Placement Agent shall not bear any responsibility or assume any
liability for any statements made by the Company to the Investors in connection
with the Placement, including the accuracy of any representations made by the
Company to any Investors in the Subscription Agreements provided by the Company.

 
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
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Placement Agent’s Fee and Expenses

In consideration of the Services, the Placement Agent will, in respect of Units
purchased by Investors introduced by, or whose subscriptions are attributable to
the efforts of, the Placement Agent (excluding any Units that may be purchased
by the Placement Agent), be:

(a) paid a fee equal to 6.0% of the proceeds from such Units; and

(b) issued that number of non-transferable warrants (“Compensation Warrants”) as
is equal to 6.0% of the number of such Units, each Compensation Warrant
entitling the Placement Agent to purchase, for two years from the Closing and
subject to the same acceleration provisions as the Warrants, one Warrant Share
at a price equal to the greater of C$ 0.15 and the five day volume weighted
average trading price preceding notice of the Placement to the Exchange.

(collectively, the “Placement Agent’s Fee”)

For the avoidance of doubt, the Placement Agent will not be entitled to any
Placement Agent’s Fee in connection with a subscription from any Investor not
introduced to the Company by the Placement Agent.  As of the date hereof, the
Company anticipates that one investor not introduced to the Company by the
Placement Agent will participate in the Placement, which investor is an entity
organized in the British Virgin Islands.  The Placement Agent acknowledges that
the payment of the Placement Agent’s Fee is subject to the approval of the
Exchange.

The Placement Agent’s Fee will be paid, issued and delivered on or promptly
after the Closing as directed in writing or e-mail by the Placement Agent.

If, at the time of exercise of the Compensation Warrant, the Company is no
longer an issuer subject to the reporting requirements of Section 13(a) or 15(d)
of the Exchange Act, then the Compensation Warrant may be exercised by means of
a “cashless exercise” (the “Cashless Exercise Right”) whereby the Placement
Agent shall be entitled to receive that number of Warrant Shares resulting from
the following formula:

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Where:

A = the average closing price for the Common Shares as quoted on the Exchange
for the five consecutive trading days immediately preceding the date on which
the Placement Agent elects to exercise the Compensation Warrant by means of the
Cashless Exercise Right.

B = the then applicable exercise price of the Compensation Warrant.

X = the number of Warrant Shares that would otherwise have been issuable had the
Placement Agent elected to exercise the Compensation Warrant by means of a cash
exercise.

Conduct of the Services

The Placement Agent acknowledges that the Units, Unit Shares, Warrants,
Compensation Warrants and Warrant Shares have not been, and will not be,
registered under the Securities Act of 1933, as amended, of the United States
(the “1933 Act”) or applicable state securities laws and may only be offered and
sold in transactions not subject to, or pursuant to exemptions from, the
registration requirements of the 1933 Act (and applicable state securities law).
Accordingly, SGRIL shall restrict the Services to the location, identification
and introduction to the Company of Investors who are:
 
 

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July 7, 2016
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(a) (i) resident in the United States, or a “U.S. person” (as defined in Rule
902(k) of Regulation S (“Regulation S”) under the 1933 Act; “U.S. Person”), (ii)
purchasing for the account or benefit of a U.S. Person or person in the United
States, or (iii) in the United States when they receive the initial offer of, or
subscribe for, the Units, and SGRIL has reason to believe the Investors are in
the United States, and each of such Investors in (i), (ii) and (iii)
(collectively, “U.S. Purchasers”) is an “accredited investor” (as defined in
Rule 501(a) of Regulation D (“Regulation D”) under the 1933 Act; an “Accredited
Investor”) but the term “U.S. Purchasers” does not include persons excluded from
the definition of U.S. Person pursuant to Rule 902(k)(2)(vi) of Regulation S or
persons holding accounts excluded from the definition of U.S. Person pursuant to
Rule 902(k)(2)(i) of Regulation S, solely in their capacities as holders of such
accounts; or

(b) outside of the United States and Canada, are not U.S. Purchasers and are
able to purchase such securities in an “offshore transaction” (as such term is
defined in Rule 902(h) of Regulation S; “Offshore Transaction”) in accordance
with Rule 903 of Regulation S and applicable local securities laws (“Offshore
Purchasers”).

Placement Agent’s Representations, Warranties and Covenants

The Placement Agent represents and warrants to, and covenants with, the Company
that:

(a) it is a validly created limited partnership with its head office at the
address set out on the first page hereof;

(b) the execution and delivery of and performance by the Placement Agent of this
Agreement have been authorized by all necessary actions on the part of the
Placement Agent;

(c) this Agreement has been duly executed and delivered by the Placement Agent,
and constitutes a legal, valid and binding agreement of the Placement Agent
enforceable against it in accordance with its terms;

(d) the execution and delivery of and performance by the Placement Agent of this
Agreement do not and will not (or would not with the giving of notice, the lapse
of time or the happening of any other event of condition) result in a breach or
violation of or a conflict with, or allow any other person to exercise any
rights under any of the terms or provisions of the Placement Agent’s constating
documents or by-laws, if applicable, or any other contract, agreement,
instrument, undertaking or covenant to which the Placement Agent is a party or
by which it is bound;

(e) it is, and during the course of the Placement it will remain, duly
registered, and in good standing, as a broker-dealer with the United States
Securities and Exchange Commission (the “SEC”) under the Exchange Act and
applicable securities legislation in all states and other jurisdictions in the
United States in which it is carrying out activities in connection with the
Services and is, and during the course of the Placement will remain, a member in
good standing with the Financial Industry Regulatory Authority, Inc. (“FINRA”);

(f) none of the Placement Agent, any general partner or managing member, any
director or executive officer of any of the foregoing, any other officer of any
of the foregoing participating in the Placement, or any officer or other
employee of the foregoing that has been or will be paid (directly or indirectly)
remuneration for solicitation of purchasers in the Placement are subject to any
Disqualifying Event. For the purposes hereof, “Disqualifying Event” means any
conviction, order, judgment, decree, suspension, expulsion, event or other
matter set out in Rule 506(d)(1)(i) through (viii) of Regulation D that is
currently in effect or which occurred within the periods set out in Rule
506(d)(1)(i) through (viii) and, without limiting the foregoing, includes
criminal convictions, court injunctions or restraining orders, final orders of
any state or federal regulator, SEC disciplinary orders, SEC cease-and-desist
orders, SEC stop orders or orders suspending the Regulation A exemption,
suspension or expulsion from membership in, or association with a member of, a
self-regulatory organization (such as FINRA) or United States Postal Service
false representation orders;

 
 
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
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(g)
it has had and shall maintain all business and professional licenses,
registrations and permits necessary or appropriate, and agrees to obtain and
maintain any such license, registration or permit that may hereafter become
necessary or appropriate, under all applicable laws and regulations, and shall
otherwise comply with all applicable laws and regulations to complete the
Services;

(h)
it is neither an insider nor an affiliate of an insider of the Company through
ownership of 10% or more of the outstanding Common Shares, on a partially
diluted basis, and is arm’s length to the Company;

(i)
it shall make introductions only to Investors who SGRIL reasonably believes are
qualified to participate in the Placement and are

 
(i)
U.S. Purchasers that SGRIL has a reasonable basis to believe, and does
reasonably believe, are Accredited Investors and with whom SGRIL has
pre-existing business relationships, or

 
(ii)
Offshore Purchasers, who will purchase the Units in an Offshore Transaction in
accordance with Rule 903 of Regulation S and applicable local securities laws;

(j)
it shall carry out the Services in such a manner that

 

 
(i)
the exemptions from registration for the offer and sale of the securities in the
Placement to U.S. Purchasers under Rule 506(b) of Regulation D and any
applicable state securities laws (including the exemption from registration
under applicable state securities laws provided by section 18(b)(4)(E) of the
1933 Act) or any order, rule or regulation promulgated thereunder are available,

 
(ii)
the exclusions from registration for the offer and sale of the securities in the
Placement outside the United States to purchasers other than U.S. Purchasers are
available under Regulation S, and

 
(iii)
complies with all applicable United States federal and state broker-dealer
requirements and the laws of any other jurisdiction in which the Services may be
carried out;

(k)
it has not and shall not offer or sell the Units in any manner constituting a
“public offering”, as that term is used in section 4(a)(2) of the 1933 Act (a
“US Public Offering”);

(l)
it has not and shall not

 
 
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
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(i)
offer to sell, or solicit an offer to buy, Units to, or for the account or
benefit of, any U.S. Person or person in the United States, except as provided
in this Agreement, or otherwise engage in or use any “general solicitation” or
“general advertising” as such terms are used in Rule 502(c) of Regulation D
(“General Solicitation or General Advertising”) such as any advertisement,
article, notice, or other public communication mentioning the Placement, the
Company or the Company’s securities nor in any manner involving a US Public
Offering,

 
(ii)
publish in any newspaper, magazine or similar medium or on the Internet or
broadcast over television, radio or the Internet any information regarding the
Company, its securities or the Placement,

 
(iii)
host or participate in any seminar or meeting regarding the Placement whose
attendees have been invited by General Solicitation or General Advertising, or

 
(iv)
take any other action that would be reasonably expected to result in the
Placement not being exempt from registration under the 1933 Act or applicable
state securities laws;

(m)
it has not made or engaged nor shall it make or engage in any Directed Selling
Efforts in the United States regarding the Company, its securities or the
Placement where “Directed Selling Efforts” means directed selling efforts as
that term is defined in Rule 902(c) of Regulation S and which, in general terms
involves, subject to the exclusions from the definition of directed selling
efforts contained in Regulation S, any activity undertaken for the purpose, or
that could reasonably be expected to have the effect, of conditioning the market
in the United States for any of the Units, Unit Shares, Warrants, Compensation
Warrants or Warrant Shares, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or on the
Internet, or broadcast over radio, television or the Internet that refers to the
Placement;

(n)
it has not made and will not make any

 
(i)
representations concerning the Company or the Placement not authorized by the
Company in writing, or

 
(ii)
untrue statement of a material fact concerning the Company nor omit to state a
material fact required to be stated or necessary to make any statement not
misleading concerning the Company;

(o)
it is both an Accredited Investor and an “accredited investor” as defined in
National Instrument 45-106 Prospectus Exemptions of the Canadian Securities
Administrators and it will be acquiring the Units the Compensation Warrants as
principal for its own account, for investment purposes only, and not for the
benefit of any other person nor with a view to distribution or transfer in
violation of the 1933 Act or applicable state securities laws; and

(p)
it will execute and return to the Company all documents which may be required by
applicable securities laws and the policies of the Exchange in connection with
the Placement or this Agreement.

 
All representations and warranties contained herein are accurate as of the date
hereof and will be accurate as of the date of the Closing.
 
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
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Company’s Representations, Warranties and Covenants

The Company represents and warrants to, and covenants with, the Placement Agent
that:

(a) it is a “domestic issuer”, as defined in Rule 902 of the 1933 Act;

(b) except with respect to offers and sales to U.S. Purchasers made in reliance
upon the exemption from registration under Rule 506(b) of Regulation D, neither
it nor, to the Company’s knowledge, any person acting on its behalf (other than
the Placement Agent or any finder, for which no representation or warranty is
made), has made or will make any

(i) offer to sell, or any solicitation of an offer to buy, any Units to a U.S.
Purchaser, or

(ii) sale of Units unless, at the time the buy order was or will have been
originated

(1) the purchaser is not a U.S. Purchaser, or; 

(2) the Company and any person acting on its behalf reasonably believes that the
purchaser is not a U.S. Purchaser;

(c) neither it nor, to the Company’s knowledge, any person acting on its behalf
(other than the Placement Agent or any finder, for which no representation or
warranty is made) has, during the period beginning six months before the
commencement of the Placement, or will, for the six months after the Closing,
offer, sell or solicit any offer to buy any of its securities in a manner that
would be integrated with the Placement and thereby cause the exemptions from
registration set forth in Rule 506(b) of Regulation D or Rule 903 of Regulation
S of the 1933 Act to become unavailable for the Placement, including engaging in
any of the following activities in connection with any offer or sale of the
Company’s securities that would be integrated with the Placement

(i) any Directed Selling Efforts,

(ii) any form of General Solicitation or General Advertising, or holding or
participating in any seminar or meeting whose attendees have been invited by
General Solicitation or General Advertising including, without limitation,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or on the Internet, or broadcast over
radio, television or the Internet or any seminar or meeting whose attendees have
been invited by General Solicitation or General Advertising, or

(iii) acting in any manner that would constitute a US Public Offering;

(d) neither the Company nor any of its predecessors or affiliates, have been
subject to any order, judgment or decree of any court of competent jurisdiction
temporarily, preliminarily or permanently enjoining such person for failing to
comply with the provisions of Rule 503 of Regulation D;

(e) to the best of the Company’s knowledge after reasonable investigation, none
of the Company (including its predecessors or affiliated issuers), any director
or executive officer, any non-executive officer participating in the Placement,
any shareholder holding or controlling 20% or more of the Common Shares, any
current promoter of the Company or any person (other than the Placement Agent,
any finder and any person set out in paragraph (f) of the Placement Agent’s
representations, warranties and covenants above, for which no representation or
warranty is made) that has been or will be paid (directly or indirectly) for the
solicitation of purchasers in the Placement (a “Compensated Solicitor”) and any
general partner or managing member of any Compensated Solicitor or any executive
officer, non-executive officer participating in the Placement, or director of
any Compensated Solicitor or general partner or managing member of such
Compensated Solicitor is subject to a Disqualifying Event;

 
 

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(f) it is not now, and as a result of the sale of Units contemplated hereby will
not be, required to be registered as an “investment company” as defined in the
Investment Company Act of 1940, as amended, of the United States; and

(g) all representations and warranties made by it in the Subscription Agreement
are incorporated by reference herein and made to and for the benefit of the
Placement Agent.

All representations and warranties contained herein are accurate as of the date
hereof and will be accurate as of the date of the Closing.

Conditions of Closing

It shall be a condition precedent to the Closing, as it relates to Investors
introduced by the Placement Agent, that:

(a) the Company shall

(i) prepare forms of the Subscription Agreement, the Warrant and Compensation
Warrant certificates and any indentures and other agreements required in
connection with the Placement, in consultation with the Placement Agent and its
legal counsel, and

(ii) deliver to the Placement Agent a certificate of an executive officer of the
Company regarding various factual matters, in a form reasonably acceptable to
the Placement Agent and its legal counsel;

(b) the Placement Agent will provide a certificate, substantially in the form
attached hereto, relating to the conduct of the Placement by it in the United
States and to, and for the benefit of, the Company;

(c) the U.S. Purchasers and Offshore Purchasers will have each provided a fully
completed and duly executed Subscription Agreement and any other certificates
contemplated therein; and

(d) the Exchange shall have approved the Placement in respect of the
subscriptions from Investors introduced by the Placement Agent.

Resale Restrictions and Legend Removal

The Placement Agent acknowledges that the Unit Shares, Warrants, Compensation
Warrants and Warrant Shares will be:

(a) “restricted securities” under the 1933 Act and the certificates representing
such securities shall bear a restrictive legend to the effect that they have not
been registered under the 1933 Act or state securities laws and can only be
offered, resold or otherwise transferred (and with respect to any Warrants,
exercised) under certain conditions (“U.S. Legend”); and

 
 

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(b) subject to a four month restricted re-sale period in Canada and the
certificates representing such securities shall bear a legend to that effect as
required by National Instrument 45-102 Resale of Securities of the Canadian
Securities Administrators (the “NI 45-102 Legend”).

The Placement Agent further acknowledges that the certificates representing such
securities shall also bear the legend required by the Exchange (the “Exchange
Legend”).

Commencing after four months from the Closing, the Company will promptly approve
any requests to remove and use commercially reasonable efforts to cause the
prompt removal of the NI 45-102 Legend and Exchange Legend from certificates
evidencing the Unit Shares and Warrant Shares held by U.S. Purchasers, Offshore
Purchasers and the Placement Agent.

In the case of a sale of the Warrant Shares by the Placement Agent made pursuant
to either (A) the provisions of Rule 144 of the 1933 Act; or (B) an effective
registration statement under the 1933 Act, the Company shall, at the Company’s
own cost, use commercially reasonable efforts to cause the transfer agent to
remove the U.S. Legend and deliver unlegended share certificates to the
Placement Agent within three trading days following the delivery by the
Placement Agent to the Company or the Company’s transfer agent of a share
certificate endorsed with the U.S. Legend.  If the Company’s transfer agent
fails to deliver an unlegended share certificate within such three trading day
period, the Company will indemnify the Placement Agent (other than U.S.
Investors that are (i) brokers employed by the Placement Agent or its affiliates
or (ii) one of the Exploration Capital Limited Partnerships managed by the
Placement Agent or its affiliates) for any damages and costs incurred as a
result thereof, but: (i) such indemnity shall not extend to any lost profits of
the Placement Agent; and (ii) the aggregate amount of such indemnity in respect
of any one legend removal shall not exceed US$ 5,000. For the avoidance of
doubt, if, in the case of a sale pursuant to, and subject to satisfaction of the
conditions required by, (A) or (B) above, the Company or the Company’s transfer
agent requires a legal opinion to remove the US Legend from any certificates
representing the Warrant Shares, the Company shall use commercially reasonable
efforts to cause its legal counsel to deliver such legal opinion at the
Company’s expense.

“Piggyback” Registration Rights

If, at any time before the first anniversary of the expiry of the Compensation
Warrants, the Company determines to prepare and file with the SEC a registration
statement relating to an offering for the Company’s own account or the account
of others under the 1933 Act of any of its equity securities, other than a
registration statement on Form S-4 or Form S-8 (each as promulgated under the
1933 Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company’s stock option or other
employee benefit plans, then the Company shall deliver to the Placement Agent a
written notice of such determination and, if within 15 days after the date of
the delivery of such notice, the Placement Agent shall so request in writing,
the Company shall include in such registration statement all or any part of the
Warrant Shares issued or issuable to the Placement Agent (and any securities
issued or then issuable upon any stock split, dividend or other distribution,
capitalization or similar event with respect to the foregoing) (collectively,
the “Registrable Securities”) that the Placement Agent requests to be
registered, but the Company shall not be required to register any Registrable
Securities that (i) are eligible for resale pursuant to Rule 144 of the 1933
Act, and (ii) would continue to be eligible for resale pursuant to Rule 144 of
the 1933 Act if the Company ceased to comply with the current information
requirements of Rule 144(c).  For the avoidance of doubt, the Investors will not
receive, pursuant to the Placement, the Subscription Agreements or this
Agreement, any demand registration rights that would otherwise entitle the
Investors to require the Company to file a registration statement registering
their securities.
 
 

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July 7, 2016
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Indemnification

Except for indemnification relating to the failure to deliver an unlegended
share certificate as provided in the last paragraph under “Resale Restrictions
and Legend Removal” above, the Company shall indemnify the Placement Agent
against any liabilities arising hereunder as set out on the attached Indemnity.

Termination by the Placement Agent

Without restricting any other rights in this Agreement and in addition to any
other remedies which may be available to the Placement Agent in respect of any
default, act or failure to act, or non-compliance with the terms of this
Agreement by the Company, the Placement Agent shall be entitled to terminate and
cancel, at its option and without any liability on its part, all of its
obligations under this Agreement, by giving written notice to the Company at any
time at or prior to the Closing, if:

(a) any inquiry, investigation or other proceeding (whether formal or informal)
is commenced, announced or threatened, or any order or ruling is issued by any
exchange or market, or any other regulatory or governmental authority (other
than an inquiry, investigation or other proceeding based solely on the
activities of the Placement Agent in connection with the Placement) which, in
the opinion of the Placement Agent, would reasonably be expected to materially
and adversely affect the Company or its business, on a consolidated basis, or
its securities;

(b) any law or regulation or moratorium, inquiry, investigation, proceeding,
order, ruling, pursuant to any statute is promulgated or changed which, in the
reasonable opinion of the Placement Agent

(i) operates to prevent or materially restrict the distribution of the Units or
the trading of the Common Shares,

(ii) would reasonably be expected to materially and adversely affect the
Company, its business or its securities, including the market price or value of
the Common Shares or the Units, or

(iii) would reasonably be expected to materially impair the Company’s ability to
perform the obligations contemplated in this Agreement;

(c) in the reasonable opinion of the Placement Agent, there occurs or is
discovered a material change or a change in any material fact or a new material
fact arises that would reasonably be expected to

(i) materially and adversely affect the Company, its business or its securities,
including the market price or value of the Common Shares or the Units, or

(ii) materially impair the Company’s ability to perform the obligations
contemplated in this Agreement;

(d) there should develop, occur or come into effect or existence any event,
action, state, condition or major financial occurrence of national or
international consequence, including without limiting the generality of the
foregoing, any military conflict, civil insurrection, or any terrorist action
(whether or not in connection with such conflict or insurrection), or any law or
regulation which, in the reasonable opinion of the Placement Agent, materially
and adversely affects or involves, or will materially adversely affect or
involve, the Canadian or United States financial markets, or prevent or
materially restrict the trading of the Common Shares or the distribution of the
Units or may materially and adversely affect the Company, its business or its
securities, including the market price or value of the Common Shares, or which
could materially impair the Company’s ability to perform the obligations
contemplated in this Agreement;

 

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(e) the state of the financial markets is such that in the reasonable opinion of
the Placement Agent, it would be unprofitable to offer or continue to offer the
Units for sale;

(f) the Company is in breach of any material term, condition or covenant of this
Agreement, or any representation or warranty given by the Company in this
Agreement becomes, is discovered to be or is materially false, and such material
breach or such materially false representation

(i) is in the reasonable opinion of the Placement Agent not capable of being
cured prior to the Closing,

(ii) would result in the failure of any condition precedent set out in this
Agreement, or

(iii) has not been rectified to the reasonable satisfaction of the Placement
Agent within 48 hours of when the Placement Agent provides notice to the Company
of the same; or

(g) any order to cease trading in the Company’s securities is made or threatened
by a Canadian or United States securities regulator.

Termination by the Company

Without restricting any other rights in this Agreement and in addition to any
other remedies which may be available to the Company in respect of any default,
act or failure to act, or non-compliance with the terms of this Agreement by the
Placement Agent, the Company shall be entitled to terminate and cancel, at its
option and without any liability on its part, all of its obligations under this
Agreement, by giving written notice to the Placement Agent at any time at or
prior to the Closing, if:

(a) any inquiry, investigation or other proceeding (whether formal or informal)
is commenced or announced, or any order or ruling is issued by any exchange or
market, or any other regulatory or governmental authority based solely on the
activities of the Placement Agent in connection with the Placement;

(b) the Placement Agent is in material breach of any term, condition or covenant
of this Agreement, or any representation or warranty given by the Placement
Agent in this Agreement becomes, is discovered to be or is materially false, and
such material breach or such materially false representation

(i) is in the reasonable opinion of the Company not capable of being cured prior
to the Closing,

(ii) would result in the failure of any condition precedent set out in this
Agreement, or

(iii) has not been rectified to the reasonable satisfaction of the Company
within two business days of when the Company provides notice to the Placement
Agent of the same.

General Provisions

Survival of Representations and Warranties: The representations, warranties and
covenants of the Company and Placement Agent will survive the Closing for a
period of one year.
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
Page 12 of 19
 
 
 
 

Public Disclosure: The Company may make public disclosure of this Agreement and
the Placement, and the Placement Agent consents to the filing by the Company of
all documents and personal information concerning the Placement Agent provided
in this Agreement required by applicable securities laws and the policies of the
Exchange.

Regulatory Filings: The Company shall make all filings with respect to the
Placement required to be made by the Company with the Exchange and with all
applicable securities regulatory authorities in the United States and Canada
and, in connection with Offshore Transactions, with any other regulatory
authorities, each within the prescribed time limits and provide SGRIL with
copies of all such filings and all receipts, acknowledgments and approvals from
such regulatory authorities. SGRIL shall make all filings with respect to the
Placement required to be made by SGRIL with FINRA and the SEC within the
prescribed time limits and provide the Company with copies of all such filings
and all receipts, acknowledgments and approvals from such regulatory
authorities. The Company and the Placement Agent shall provide all information
required by the other in order to make such filings.

Notices: Any notice under this Agreement will be given in writing and must be
delivered or sent by facsimile or electronic communication (provided, if sent
electronically, confirmation of delivery is received by the sender) and
addressed to the party to which notice is to be given at the address of the
party provided on the first page of this Agreement or such other address
designated by the party in writing.

Governing Law: This Agreement shall be governed by and construed in accordance
with the laws of British Columbia and the laws of Canada applicable therein.

Effective Date: Notwithstanding the date of this Agreement or the date on which
it was executed, this Agreement shall be effective as between the parties as of
July 7, 2016.

Entire Agreement: This Agreement constitutes the entire agreement, and
supersedes any prior understandings and agreements, between the parties with
respect to its subject matter and there are no representations, warranties,
forms, conditions, undertakings or collateral agreements, express implied or
statutory between the parties other than as expressly set forth in this
Agreement.

No Assignment: This Agreement may not be assigned by either party.

Amendments: This Agreement may be amended in writing with the mutual consent of
both parties.

Time of the Essence: Time shall be of the essence of this Agreement.

Currency: Any references to “C$” means the lawful currency of Canada and to
“US$” means the lawful currency of the United States.

Execution and Delivery: This Agreement may be executed in as many counterparts
as necessary and delivered electronically, each of which will be deemed to be an
original and all of which will constitute one agreement, effective as of the
date on the first page hereof.
 

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SILVER BULL RESOURCES, INC.
July 7, 2016
Page 13 of 19
 
 
 
 
 

Acceptance

If the foregoing correctly reflects our agreement please sign below where
indicated and return this page to SGRIL.

Yours truly,

SPROTT GLOBAL RESOURCE INVESTMENTS, LTD.

Per:            /s/ Gretchen Carter
Gretchen Carter
CFO

ACKNOWLEDGED and AGREED as of the date of this Agreement

SILVER BULL RESOURCES, INC.

Per:            /s/ Sean Fallis

            Sean Fallis      Chief Financial Officer
        Name                                        Position
 
 
 

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Silver Bull Resources, Inc.
Brokered Private Placement – Term Sheet
July 5, 2016

Attention:      Mr. Tim Barry
Director, President & CEO

The following term sheet (“Term Sheet”) outlines the general terms and
conditions under which Sprott Global Resource Investments, Ltd. may act as a
placement agent in a private placement offering of Units (hereinafter defined)
by Silver Bull Resources, Inc. This Term Sheet has been prepared for information
and discussion purposes and, except for this paragraph and the paragraph below
relating to Jurisdiction (which shall be legally binding on the parties hereto),
is not intended to be legally binding or to impose any obligation to negotiate
definitive documentation or complete the Offering referred to herein or
otherwise.

Issuer:
Silver Bull Resources, Inc. (the “Corporation”)
Suite 1908, 925 West Georgia Street
Vancouver, BC V6C 3L2
   
Offering:
Brokered private placement of up to 3,340,000 Units of the Corporation
(C$ 501,000).
   
Unit Price:
C$ 0.15 per Unit.
   
Units:
Each Unit will consist of one common share in the capital of the Corporation (a
“Common Share”) and one share purchase warrant (a “Warrant”).
   
Warrants:
Each Warrant will be non-transferable and entitle the purchase of one Common
Share (a “Warrant Share”) for three years from the Closing Date at a price of
C$ 0.16, subject to the Acceleration Provision (hereinafter defined).
   
Acceleration Provision:
If, commencing on the fourth month after the Closing Date, the closing price of
the Common Shares on the TSX (as defined below) is higher than C$ 0.30 for 20
consecutive trading days then on the 20th consecutive trading day (the
“Acceleration Trigger Date”) the expiry date of the Warrants may be accelerated
to the 20th trading day after the Acceleration Trigger Date by the issuance,
within three trading days of the Acceleration Trigger Date, of a news release
announcing such acceleration.
   
Offering Basis:
Brokered private placement of Units to accredited investors (as defined in Rule
501(a) of Regulation D under the United States Securities Act of 1933, as
amended (the “1933 Act”)), in the United States pursuant to an exemption from
the registration requirements of the 1933 Act and, with the consent of the
Corporation, to eligible investors in other eligible foreign jurisdictions
(other than Canada and the United States) pursuant to applicable private
placement exemptions under applicable securities laws in such jurisdictions.
   
Placement Agent:
Sprott Global Resource Investments, Ltd.
   
Services:
Placement Agent shall use commercially reasonable efforts to locate and
introduce to the Corporation potential subscribers to the Offering.
 
The Corporation shall allow the Placement Agent and its legal counsel to
participate in the preparation of the Subscription Agreement and the Warrant and
Placement Agent Warrant certificates.
   
Closing Date:
July 13, 2016 or such other date or dates as the Corporation and the Placement
Agent may agree.
   
Use of Proceeds:
The net proceeds from the Offering will be used for exploration activities on
the Corporation’s assets and for general corporate purposes.
   
Resale Restrictions:
Pursuant to the National Instrument 45-102 Resale of Securities, all securities
issued pursuant to the Offering shall be subject to a restricted resale period
in Canada of four months commencing on the Closing Date.
 
The securities issued pursuant to the Offering are not, and will not be,
registered under the 1933 Act. Accordingly, securities acquired by United States
buyers will be subject to additional restrictions on resale under the 1933 Act.

 
 
 
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Listing:
The Common Shares are currently listed on the Toronto Stock Exchange (“TSX”) and
trade on the OTCQB Venture Marketplace (“OTCQB”) under the symbol "SVB” and
“SVBL”, respectively. The Corporation will make an application to the TSX to
list the Common Shares comprising the Units and the Warrant Shares, which
listing will be conditionally approved prior to the Closing Date.
   
Placement Agent’s Fee:
6.0% cash commission on subscriptions from new investors introduced to the
Corporation by the Placement Agent plus that number of Placement Agent’s
Warrants (as defined and set forth below) subject to the rules of the TSX.
 
The Placement Agent will not be entitled to any Placement Agent’s Fee or
Placement Agent’s Warrants in connection with a subscription from any new
investor not introduced to the Corporation by the Placement Agent. As of the
date hereof, the Corporation anticipates that one investor not introduced to the
Corporation by the Placement Agent will participate in the Offering, which
investor is an entity organized in the British Virgin Islands.
   
Placement Agent’s Warrants:
On the Closing Date, the Corporation shall issue to the Placement Agent the
number of non-transferable common share purchase warrants that equals 6.0% of
the Units placed to new investors introduced to the Corporation by the Placement
Agent. Each Placement Agent’s Warrant permits the purchase of one Warrant Share
for two years from the Closing Date at the greater of the Unit Price and the
five day VWAP preceding notice of the Offering to the TSX and is subject to the
Acceleration Provision.
   
Placement Agent Agreement:
The Corporation will enter into a definitive placement agent agreement with the
Placement Agent promptly after the execution of this Term Sheet and prior to the
Closing Date. The Placement Agent Agreement shall include, without limitation,
industry standard representations, warranties, covenants (including customary
broker-dealer representations, warranties and covenants), conditions, and
indemnities, and industry standard termination provisions including, without
limitation, a disaster out, litigation out, regulatory out, market out, due
diligence out and a material adverse change out customary for agreements of this
nature, in each case exercisable prior to the Closing Date, which clauses shall
commence upon acceptance of this Term Sheet.
 
The Placement Agent will represent that none of it, any of its general partners
or managing members, any director or executive officer of any of the foregoing,
any other officer of any of the foregoing participating in the Offering, or any
other officer or employee of any of the foregoing that has been or will be paid
(directly or indirectly) remuneration for solicitation of purchasers in the
Offering is subject to any of the "Bad Actor" disqualifications provisions
described in Rule 506(d) under the 1933 Act.
   
Subscription Agreements:
The terms and conditions governing the Offering and other matters related to the
Offering will be set out in the Placement Agent Agreement and in the respective
subscription agreements with purchasers of Units (“Subscription Agreements”). In
the event of any discrepancy between the terms described herein and a Placement
Agent Agreement and those contained in the Subscription Agreements, the
Subscription Agreements will govern.
   
U.S. Legend Removal:
The U.S. restrictive legends will not be removed from any Common Shares or
Warrant Shares held by a purchaser of the Units or the Placement Agent, except
in connection with the sale of the Common Shares or Warrant Shares by the
purchaser or the Placement Agent (as the case may be) pursuant to (A) Rule 144
under the 1933 Act; or (B) an effective registration statement under the 1933
Act with respect to the sale of the Common Shares or the Warrant Shares by the
purchaser or the Placement Agent (as the case may be). At the Corporation’s cost
and subject to the foregoing, the Corporation will use commercially reasonable
efforts to cause its transfer agent to remove the U.S. restrictive legend and
deliver unlegended share certificates to the purchaser or the Placement Agent
(as the case may be) within three business days of presentation of a legended
share certificate to it.
 
If the transfer agent fails to deliver the unlegended share certificate within
three business days, the Corporation will indemnify any U.S. investor (other
than U.S. investors that are (i) brokers employed by the Placement Agent or
(ii) one of the Exploration Capital Limited Partnerships managed by the
Placement Agent or its affiliates) for any damages and costs incurred (other
than loss of profits) as a result thereof. The aggregate amount of such
indemnity in respect of any one legend removal shall not exceed US$ 5,000.
 
Until the first anniversary of the expiration of the Warrants, the investors
will be entitled to customary “piggyback” registration rights under the 1933 Act
on any registration statement of the Corporation. For the avoidance of doubt,
the investors will not receive demand registration rights that would otherwise
entitle investors to require the Corporation to file a registration statement
registering their securities.

 
 
 
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Cashless Exercise of Warrants:
If at the time of exercise of Warrants or Placement Agent’s Warrants (as the
case may be) the Corporation is no longer an issuer subject to the reporting
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended, then the holder of such Warrants or Placement Agent’s Warrants (as
the case may be) may exercise such warrants, in whole or in part, at such time
by means of a “cashless exercise.”
   
Due Diligence:
Prior to the Closing Date, the Corporation shall allow and assist the Placement
Agent and its legal counsel to conduct all reasonable due diligence
investigations and provide the Placement Agent with written or oral due
diligence responses (at the Placement Agent’s discretion) to formal due
diligence questions, which the Placement Agent may reasonably require to fulfil
its obligations as registrants in a private placement.
   
Jurisdiction:
This Term Sheet and all documentation associated with the Offering shall be
governed by and construed in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable therein and the parties hereto
irrevocably attorn to the non-exclusive jurisdiction of the courts of the
Province of British Columbia.
   
Press Releases:
Subject to meeting its obligations under applicable securities laws and
requirements of the TSX and OTCQB, the Corporation will use reasonable
commercial efforts to allow the Placement Agent to review and comment on all
press releases associated with the Offering, and such comments shall be
considered by the Corporation, acting reasonably. Sprott Global Resource
Investments, Ltd. shall not be referenced in the press release as a placement
agent in the Offering.
 
   
Regulatory Approvals:
The Offering and the terms thereof, including all Placement Agent’s Fees, will
be subject to all necessary regulatory and corporate approvals, including
approval of the TSX.

If the foregoing is in accordance with your understanding and is agreed to by
you, please signify your acceptance by executing this Term Sheet where indicated
below and returning the same to the Placement Agent before 4:00 pm Vancouver
time on July 6th, 2016 upon which this letter as so accepted shall constitute a
non-binding agreement between us with respect only to the matters specified in
the first paragraph hereof but not otherwise.
Yours very truly,

SPROTT GLOBAL RESOURCE INVESTMENTS, LTD.
Per:
[previously signed]
Authorized Signatory

Agreed and accepted this 6th day of July, 2016.

SILVER BULL RESOURCES, INC.
Per:
[previously signed]
Authorized Signatory

 
 
 
 
 

 
3

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INDEMNITY

The Company hereby agrees to indemnify and hold the Placement Agent and each of
the directors, officers, employees and shareholders of the Placement Agent
(together called the “Placement Agent’s Group”) harmless from and against any
and all expenses, losses (other than loss of profits), claims, actions, damages
or liabilities, whether joint or several (including amounts paid in reasonable
settlement of any actions, suits, proceedings or claims), and the reasonable
fees and expenses of their counsel that may be incurred in advising with respect
to and defending any claim that may be made against the Placement Agent’s Group
or to which the Placement Agent’s Group may become subject or otherwise involved
in any capacity insofar as such expenses, losses, claims, damages, liabilities
or actions arise out of or are based upon, directly or indirectly, any breach of
a representation, warranty or covenant of the Company in this Agreement or the
Subscription Agreement. This indemnity shall not apply to the extent that a
court of competent jurisdiction in a final judgment that has become
non-appealable shall determine that:

(a) any member of the Placement Agent’s Group has, in the course of such
performance, been negligent or dishonest, engaged in willful misconduct, acted
in bad faith or committed any fraudulent act; and

(b) the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly caused by such negligence, dishonesty,
willful misconduct, bad faith or fraud.

If any claim contemplated hereby is asserted against, or any potential claim
contemplated hereby comes to the knowledge of, any member (the “Indemnified
Party”) of the Placement Agent’s Group, the Indemnified Party shall notify the
Company as soon as possible of the nature of such claim (but any failure or
delay to so notify shall not affect the Company’s liability under this indemnity
except to the extent that such failure or delay prejudices the rights of the
parties in defending such claim or results in increased liability to the
Indemnified Party or the Company) and the Company shall be entitled (but not
required) to assume the defense on behalf of the Indemnified Party of any suit
brought to enforce such claim. Any such defense shall be through legal counsel
acceptable to the Indemnified Party and no admission of liability shall be made
by the Company or the Indemnified Party without, in each case, the prior written
consent of the Indemnified Party and the Company, respectively, such consent not
to be unreasonably withheld. Any Indemnified Party shall have the right to
employ separate counsel in any such suit and participate in the defense thereof
and the fees and expenses of such counsel shall be at the expense of that
Indemnified Party unless:

(a) the Company fails to assume the defense of such suit on behalf of the
Indemnified Party within a reasonable period of receiving notice of such suit
and, in the absence of evidence to the contrary, the expiration of such period
shall be deemed to occur on the second clear business day immediately preceding
the date by which the Indemnified Party is required by law to take action (such
as the filing of an appearance, notice or other document) in connection with
defending such suit;

(b) the employment of such counsel has been authorized in writing by the
Company; or

(c) the named parties to any such suit include both the Indemnified Party and
the Company and the Indemnified Party has been advised by counsel that there may
be one or more defenses available to the Indemnified Party different from or in
addition to those available to the Company,

whereupon, in any of such cases, the Company shall not have the right to assume
the defense of such suit on behalf of the Indemnified Party and shall be liable
to pay the reasonable fees and expenses of counsel for the Indemnified Party but
the Company shall not be obligated to pay the fees and expenses of more than one
counsel for all Indemnified Parties as a group.
 
1

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No Indemnified Party will, without the Company’s prior written consent, settle,
compromise or consent to the entry of any judgment in any action, suit,
proceeding, investigation or claim in respect of which indemnification may be
sought hereunder.
If for any reason (other than the occurrence of one of the events described
above) the foregoing indemnification is unavailable to the Placement Agent’s
Group or insufficient to hold them harmless, then the Company shall contribute
to the amount paid or payable by the Placement Agent’s Group as a result of such
expense, loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Company on the one
hand and the Placement Agent on the other hand but also the relative fault of
the Company and the Placement Agent’s Group, as well as any relevant equitable
considerations provided that, in any event, the Company shall only contribute to
the amount paid or payable by the Placement Agent’s Group as a result of such
expense, loss, claim, damage or liability, any excess of such amount over the
amount of the fees received by the Placement Agent hereunder.
The indemnity and contribution obligations of the Company shall be in addition
to any liability which the Company may otherwise have, extend to the Placement
Agent’s Group on the same terms and conditions as set out herein and be binding
upon and enure to the benefit of any successors, permitted assigns, heirs and
personal representatives of any of the Placement Agent’s Group.
The foregoing provisions of this Indemnity shall survive the completion of the
Services.
 
 
 
2

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PLACEMENT AGENT’S CERTIFICATE

This certificate has been issued pursuant to that letter agreement between
Sprott Global Resource Investments, Ltd. (“SGRIL”) and Silver Bull Resources,
Inc. (the “Company”) dated July 7, 2016 (the “Placement Agent Agreement”).
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Placement Agent Agreement.

In connection with the Placement to U.S. Purchasers of the Units, SGRIL does
hereby certify as follows:

1.            SGRIL is, and was throughout the Placement, duly registered as a
broker-dealer with the SEC and with each state securities regulatory authority
in whose jurisdiction it has introduced subscribers to the Company to purchase
the Units, and is and was throughout the Placement a member in good standing
with the FINRA;

2.            All communications by SGRIL in the United States to, or for the
benefit or account of, U.S. Persons respecting subscriptions by them for Units
have been effected in accordance with all applicable United States federal and
state laws and regulations governing the registration and conduct of securities
brokers and dealers;

3.            In respect of Units offered to U.S. Purchasers, SGRIL had
reasonable grounds to believe and did believe, immediately prior to the
Placement, that each U.S. Purchaser was an Accredited Investor and, on the date
hereof, SGRIL continues to believe that each U.S. Purchaser purchasing Units is
an Accredited Investor;

4.            No form of Directed Selling Efforts, General Solicitation or
General Advertising or seminar or meeting whose attendees had been invited by
General Solicitation or General Advertising was used by SGRIL in connection with
the Placement; and

5.            SGRIL’s activities in connection with the Placement have been
conducted in accordance with the Placement Agent Agreement and, in relation to
(i) U.S. Purchasers in accordance with the requirements of Rule 506(b) of
Regulation D, and (ii) purchasers outside of the United States and Canada that
are not U.S. Purchasers, in accordance with the requirements of Regulation S.

DATED this _______ day of _____________________ , 2016

SPROTT GLOBAL RESOURCE INVESTMENTS, LTD.

By: _______________________________________
Gretchen Carter
CFO