Document:

ex10_1.htm

EXHIBIT 10.1

 

 

 

 

 

 

MIDWAY GOLD CORP.

 

SHARE PURCHASE AGREEMENT

 

November 21, 2012

 

 

 

 

 

 

 

 

 

  

  

  

TABLE OF CONTENTS

 

 

 

	 	 	

Page

	 	 	 
	1.	Interpretation	1 
	 	 	 
	 	1.1	Definitions	1 
	 	1.2	Interpretation	2 
	 	1.3	Entire Agreement	2 
	 	1.4	Invalid Provisions	2 

 

	2.	Purchase and Sale of the Purchased Shares	2 
	 	 	 
	 	2.1	Purchase and Sale	2 
	 	2.2	Issuance of Purchased Shares	3 

  

	3.	Representations and Warranties of the Company	 3  
	 	 	 
	 	3.1	No Registration Required	3 
	 	3.2	No Integration of Offerings or General Solicitation	3 
	 	3.3	No Solicitation in Canada	3 
	 	3.4	The Purchase Agreement	3 
	 	3.5	Authorization of the Purchased Shares	3 
	 	3.6	No Material Adverse Change	3 
	 	3.7	Preparation of the Financial Statements	4 
	 	3.8	Material Subsidiaries	4 
	 	3.9	Incorporation and Good Standing of the Company and its Material Subsidiaries	4 
	 	3.10	Capitalization and Other Capital Stock Matters	4 
	 	3.11	Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required	4  
	 	3.12	No Material Actions or Proceedings	5 
	 	3.13	All Necessary Permits, Etc.	5 
	 	3.14	Properties	6 
	 	3.15	Employee Plans	6 
	 	3.16	Title to Properties	6 
	 	3.17	Tax Law Compliance	7 
	 	3.18	Company Not an “Investment Company”	7 
	 	3.19	Insurance	7 
	 	3.20	Compliance with Environmental Laws	7 
	 	3.21	Solvency	8 
	 	3.22	No Restriction on Dividends	8 
	 	3.23	Disclosure Controls and Procedures	8 
	 	3.24	Money Laundering	8 
	 	3.25	Foreign Corrupt Practices Act	9 

 

	4.	Representations and Warranties of the Purchaser	9 
	 	 	 
	 	4.1	Authorization	9 
	 	4.2	Purchase Entirely for Own Account	9 
	 	4.3	Disclosure of Information	9 
	 	4.4	Investment Experience	9 
	 	4.5	Accredited Investor - Canada	10 
	 	4.6	Accredited Investor - United States	10 
	 	4.7	No Registration	10 
	 	4.8	Restricted Securities	10 
	 	4.9	Legend 	10 

 

 

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	 	4.10	PATRIOT Act	11 
	 	4.11	Own Counsel	11 
	 	4.12	Tax Consequences	11 
	 	4.13	No General Solicitation or Advertisement	11 

 

	5.	Closing	11 
	 	 	 
	 	5.1	Time and Place of Closing	11 
	 	5.2	Delivery of the Purchased Shares and Purchase Price	11 

 

	6	Conditions of Purchaser Obligations at Closing	11 
	 	 	 
	 	6.1	Representations and Warranties	12 
	 	6.2	Performance	12 
	 	6.3	No Litigation	12 
	 	6.4	Compliance Certificate	12 
	 	6.5	Registration Rights Agreement	12 
	 	6.6	Opinions of Company Counsel and Title Reports	12 
	 	6.7	Consents	12 
	 	6.8	Constating Documents	12 

 

	7.	Conditions of the Company’s Obligations at the Initial Closing	12 
	 	 	 
	 	7.1	Representations and Warranties	12 
	 	7.2	Payment of Purchase Price	13 

 

	8.	Post-Closing Covenants	13 
	 	 	 
	 	8.1	Use of Proceeds	13 

 

	9.	Miscellaneous	13 
	 	 	 
	 	9.1	Survival	13 
	 	9.2	Successors and Assigns	13 
	 	9.3	Governing Law	13 
	 	9.4	Notices	13 
	 	9.5	Finder’s Fee	13 
	 	9.6	Expenses	14 
	 	9.7	Amendments and Waivers	14 
	 	9.8	Indemnification	14 
	 	9.9	Assignment	14 
	 	9.10	Counterparts	14 

 

 

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SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT is made on the 21st day of November, 2012, by and among Midway Gold Corp., a corporation incorporated pursuant to the laws of the Province of British Columbia, Canada (the “Company”), and [_____________] (the “Purchaser”).

 

WHEREAS, the Company desires to issue from treasury and sell to the Purchaser, and the Purchaser desire to purchase from the Company, for the consideration and on the terms and conditions hereinafter provided, a total of [_____________] Series A Preferred Shares (the “Series A Preferred Shares”) in the capital of the Company (the “Purchased Shares”).

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

 

1.             Interpretation..

 

1.1           Definitions,.

 

“Affiliate” means, with respect to the Person then being referred to, any other Person who directly or indirectly controls, is controlled by, or is directly or indirectly under common control with, such Person, and includes any Person in like relation to an Affiliate.

 

“Agreement” means this share purchase agreement and all schedules and exhibits, if any, attached to this share purchase agreement, in each case as they may be supplemented, amended, restated or replaced from time to time, and the expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this Agreement; and unless otherwise indicated, references to Articles, Sections, Schedules and Exhibits are to the specified Articles, Sections, Schedules and Exhibits, if any, of this Agreement.

 

“Business Day” means a day other than: (i) a Saturday; (ii) a Sunday; (iii) any day that it is a statutory holiday in the Province of Ontario, Canada or the State of Colorado; and (iv) any other day on which the commercial banks are not open for the regular conduct of business in Toronto, Ontario, Canada or Denver, Colorado;

 

“Canadian Securities Laws” means the securities laws, and the regulations thereunder, of, and the applicable published rules, policy statements, blanket orders, instruments, rulings and notices of the securities regulatory authorities in, any applicable Canadian province.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Exchanges” means the TSX Venture Exchange and the NYSE MKT.

 

“Gold Rock Property" means the real property described as the Subject Claims in the Gold Rock Title Report.

 

“Golden Eagle Property” means the real property described in the Golden Eagle Title Report.

 

“Knowledge” means the actual knowledge, as of the date of this Agreement, of the President and Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Vice President of Environmental Affairs and Vice President of Administration, without any duty of further inquiry.

 

“Pan Property” means the real property described as the Subject Claims in the Pan Title Report.

 

“Party” means a party hereto.

 

“Person” means any individual, corporation, partnership, limited liability company, limited partnership, limited liability partnership, firm, joint venture, association, joint-share company, 

 

  

  

  

 

unincorporated organization, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, Governmental Authority or other entity howsoever designated or constituted.

 

“Properties” means the Gold Rock Property, the Golden Eagle Property, the Pan Property, the Spring Valley Property and the Tonopah Property.

 

“Regulation D” means Regulation D under the U.S. Securities Act (as defined in this Section 1.1).

 

“Regulation S” means Regulation S under the U.S. Securities Act (as defined in this Section 1.1).

 

“Spring Valley Property” means the real property described as the Subject Claims and the Fee Property in the Spring Valley Title Report.

 

“Tonopah Property” means the real property described as the Subject Claims in the Tonopah Title Report.

 

“U.S. Securities Act” means the United States Securities Act of 1933, as amended.

 

“U.S. Person” has the meaning ascribed thereto in Rule 902(k) of Regulation S under the U.S. Securities Act.

 

1.2           Interpretation.

 

(a)           Whenever herein the singular is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

 

(b)           Unless otherwise expressly provided, the words “include”, “includes” and “including” do not limit the preceding words or terms and shall be deemed to be followed by the words “without limitation”.

 

(c)           The captions and headings used in this Agreement are for convenience only and do not in any way affect, limit, amplify or modify the provisions hereof.

 

1.3           Entire Agreement.

 

This Agreement (including any agreement entered into concurrent with or pursuant to this Agreement or attached as a schedule or an exhibit) constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

 

1.4           Invalid Provisions.

 

If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, the Parties shall negotiate in good faith to duly amend this Agreement by replacing such illegal, invalid or unenforceable provision with a legal, valid and enforceable provision, the economic effect of which comes as close as possible to that of such illegal, invalid or unenforceable provision.

 

2.             Purchase and Sale of the Purchased Shares.

 

2.1           Purchase and Sale.

 

Subject to the terms and conditions of this Agreement and on the basis of the representations, warranties, covenants and agreements herein contained, on December 13, 2012 (or such earlier or later date as mutually agreed by the Company and the Purchaser, the “Closing”), the Company agrees to 

 

 

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issue, sell and convey to the Purchaser free and clear of all Liens, and the Purchaser hereby subscribes for and agrees to purchase from the Company, for an aggregate purchase price equal to $[___________] (the “Purchase Price”), [__________] Purchased Shares. The Parties acknowledge that the Initial Purchase Price has been determined based on a price of US$1.85 per Purchased Share.

 

2.2           Issuance of Purchased Shares.

 

At the Closing, the Company shall deliver to the Purchaser a certificate, registered in the name of the Purchaser, representing ownership by the Purchaser of the Purchased Shares and the Purchaser shall pay to the Company the Purchase Price by bank draft, certified cheque or wire transfer of immediately available funds to a bank account designated by the Company.

 

3.             Representations and Warranties of the Company.  The Company hereby represents and warrants to the Purchaser, as of the date hereof, that:

 

3.1           No Registration Required.  Subject to compliance by the Purchasers with the representations and warranties set forth in Section 4 hereof, it is not necessary in connection with the offer, sale and delivery of the Purchased Shares to the Purchasers in the manner contemplated by this Agreement to register the Purchased Shares under the U.S. Securities Act, to qualify, by prospectus or otherwise, the distribution of the Purchased Shares under the Canadian Securities Laws.

 

3.2           No Integration of Offerings or General Solicitation.  The Company has not, directly or indirectly, solicited any offer to buy or offered to sell, and will not, directly or indirectly, solicit any offer to buy or offer to sell, in the United States, to or for that account or benefit of any U.S. Person or any person in the United States, any security which is or would be integrated with the sale of the Purchased Shares in a manner that would require the Purchased Shares to be registered under the U.S. Securities Act.  None of the Company its respective affiliates (as such term is defined in Rule 501(b) under Regulation D (each, an “Affiliate”)), or any person acting on any of their behalf has engaged or will engage, in connection with the offering of the Purchased Shares, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the U.S. Securities Act.  With respect to those Purchased Shares sold in reliance upon Regulation S, (i) none of the Company its respective Affiliates or any person acting on their behalf has engaged or will engage in any directed selling efforts within the meaning of Rule 902(c) of Regulation S and (ii) each of the Company and its respective Affiliates and any person acting on their behalf has complied and will comply with the offering restrictions set forth in Regulation S.

 

3.3           No Solicitation in Canada.  Neither the Company, nor any person acting on its behalf, has, directly or indirectly, (i) made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the distribution of the Purchased Shares in any Canadian province or territory to be qualified by a prospectus filed in accordance with the Canadian Securities Laws or (ii) has engaged in any advertisement of the Purchased Shares in any printed media of general and regular paid circulation, radio or television or any other form of advertising in connection with the offer and sale of the Purchased Shares in such province.

 

3.4           The Purchase Agreement.  This Agreement has been duly authorized, executed and delivered by the Company.

 

3.5           Authorization of the Purchased Shares.  The Purchased Shares to be purchased by the Purchasers from the Company have been duly authorized for issuance and sale by the Company pursuant to this Agreement and, at the Closing Date, will have been duly authorized for issuance and sale; and (ii) the form of certificate representing the Purchased Shares has been duly approved and adopted by the Company and complies with the provisions of the Business Corporations Act (British Colombia) relating thereto.

 

3.6           No Material Adverse Change.  Subsequent to June 30, 2012: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or 

 

 

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prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.

 

3.7           Preparation of the Financial Statements.  The consolidated financial statements of the Company, together with the related notes, present fairly the financial position of the Company and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified.  Such financial statements of the Company have been prepared in conformity with generally accepted accounting principles as applied in the United States.

 

3.8           Material Subsidiaries.  Pan-Nevada Gold Corporation and Midway Gold US Inc. are subsidiaries material to the Company’s business, operations, cash flow and financial position (the “Material Subsidiaries”).

 

3.9           Incorporation and Good Standing of the Company and its Material Subsidiaries.  Each of the Company and its Material Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation (to the extent such concept is recognized in such jurisdiction) and has corporate power and authority to own, lease and operate its properties and to conduct its business and, in the case of the Company to enter into and perform its obligations under this Agreement.  Each of the Company and its Material Subsidiaries is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change.  All of the issued and outstanding capital stock of each Material Subsidiary of the Company has been duly authorized and validly issued, is fully paid and nonassessable and, to the extent of its ownership, directly or through subsidiaries, is owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim.  Except as otherwise disclosed in writing to the Purchaser, on the date hereof, the Company does not own or control, directly or indirectly, any corporation, association or other entity other than the Material Subsidiaries, and the Company owns 100% of each such subsidiary or entity.

 

3.10           Capitalization and Other Capital Stock Matters.  All of the outstanding common shares of the Company (the “Common Shares”) have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with applicable federal, state or provincial securities laws.  None of the outstanding Common Shares were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.  There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries except as otherwise set out in the Cap Table.  A true and correct capitalization table is attached hereto as Exhibit 3.10 (the “Cap Table”).

 

3.11           Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required.  (i) None of the Company or its Material Subsidiaries is in violation of its Notice of Articles or Articles or any law, administrative regulation or administrative or court decree applicable to the Company or any Material Subsidiary (“Violation”) or (ii) none of the Company or its subsidiaries is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument” and, collectively, the “Existing Instruments”), except for such Violations or Defaults as would not, individually or in the aggregate, result in a Material Adverse Change.  The Company’s execution, delivery and performance of this Agreement and the issuance and delivery of the Purchased Shares, and 

 

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consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and (i) will not result in any violation of the provisions of the Notice of Articles or Articles of the Company or any Material Subsidiary, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse Change or except for such consents as have been obtained and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or its subsidiaries, except for such violations as would not, individually or in the aggregate, result in a Material Adverse Change.  No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement, or the issuance and delivery of the Purchased Shares, or consummation of the transactions contemplated hereby and thereby, except (i) for filings, registrations and recordings which have been made and the filing of certain notices and the payment of filing fees required by Canadian Securities Laws, including, without limitation, the filing of a report of exempt distribution under NI 45-106 with, payment of applicable filing fees to, the Purchased Shares regulatory authority in each jurisdiction of Canada in which sales of the Purchased Shares are made.  As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company.

 

3.12           No Material Actions or Proceedings.  Except as otherwise described in and specifically set forth on Exhibit 3.12, there are no legal or governmental actions, suits or proceedings pending or, to the best of the Company’s Knowledge, (i) threatened against or affecting the Company or its subsidiaries, or (ii) which have as the subject thereof any property owned or leased by, the Company or its subsidiaries, where in any such case there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company or such subsidiary and any such action, suit or proceeding, if so determined adversely, would not, individually or in the aggregate, result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement.  The Company has not received notice of any securities commission orders or cease trade orders with respect to any securities of the Company or its subsidiaries.

 

3.13           All Necessary Permits, Etc.  Each of the Company and its Material Subsidiaries possesses such valid and current certificates, licenses, authorizations or permits issued by the appropriate regulatory agencies or bodies necessary to conduct their current businesses, including any certificates, licenses, authorizations and permits required to conduct its business, except such as would not, individually or in the aggregate, result in a Material Adverse Change.  The Company and its Material Subsidiaries are in the process of obtaining or believes (without representing or warranting) it will be able to obtain in the ordinary course any additional certificates, licenses, authorizations or permits issued by the appropriate regulatory agencies or bodies necessary to explore for, develop and mine minerals ore and metals on the Properties.  Neither the Company nor any of its Material Subsidiaries has received any notice of proceedings relating to the revocation, suspension or amendment of, or non-compliance with, any such certificate, license, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could result in a Material Adverse Change.  None of the Company or any of its Material Subsidiaries is in default or violation of any such certificate, license, authorization or permit (except where such default or violation would not, individually or in the aggregate, result in a Material Adverse Change).  The Company’s execution, delivery and performance of this Agreement, and the issuance and delivery of the Purchased Shares, and consummation of the transactions contemplated hereby and thereby do not and will not conflict with, or result in a breach of or non-compliance with any of the terms or provisions of, or constitute a default under, any of such certificate, license, authorization or permit except such as would not, individually or in the aggregate, result in a Material Adverse Change.  To the Company’s Knowledge, there is no threatened or pending change in any law, rule or regulation referred to above that would not, individually or in the aggregate, result in a Material Adverse Change.

 

 

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3.14           Properties.  The Company has provided to the Purchaser title reports dated effective as of February 21, 2012, regarding the Pan Property and Gold Rock Property (the “Pan and Gold Rock Title Reports”).  The Company has provided to the Purchaser title reports dated effective as of March 29, 2012, February 21, 2012 and February 21, 2012, respectively, regarding the Golden Eagle Property, the Spring Valley Property and the Tonopah Property (the “Golden Eagle, Spring Valley and Tonopah Title Reports,” and together with the Pan and Gold Rock Title Reports, the “Title Reports”).  All representations and warranties of the Company in this Agreement are subject to the comments, qualifications and exceptions set forth in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate, will result in a Material Adverse Change).  The Company has complied with all requirements of National Instrument 43-101, including but not limited to the preparation and filing of technical reports.  The Company or one of its wholly-owned subsidiaries is the entity that holds record title or a leasehold interest as the case may be to the mining claims and other properties that make up the Properties.  The Properties are held under valid, subsisting and enforceable title documents (except as disclosed in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate, will result in a Material Adverse Change)) sufficient to permit the Company to explore the minerals relating thereto (subject to all applicable federal, state and local permitting laws and regulations).  Except as may be disclosed in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate, will result in a Material Adverse Change), all such mining claims have been validly located and recorded in accordance with all applicable laws and, subject to the existence of a discovery of a valuable mineral on each of such claims, are valid and subsisting.  The Company has paid or caused to be paid all mining claim maintenance fees required by federal law and has timely made or will timely make all associated filings and recordings required by state and federal law.  The Company or one of its Material Subsidiaries has obtained, is in the process of obtaining, or believes (without representing or warranting) it will be able to obtain in the ordinary course all necessary surface rights, access rights and other necessary rights and interests relating to the Properties granting the Company or one of its Material Subsidiaries the right and ability to explore for minerals, ore and metals for development purposes as are appropriate in view of the rights and interest therein of the Company and its subsidiaries with only such exceptions as do not materially interfere with the use made by the Company or its subsidiaries of the rights or interests so held, subject to the comments, qualifications and exceptions set forth in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate will result in a Material Adverse Change) and subject to all applicable federal, state and local permitting laws and regulations. Subsequent to the effective date of each of the Title Reports as set out above, nothing has occurred with respect to the ownership,  status, validity or good standing of the Properties or the rights of the Company and its subsidiaries in and to the Properties that would change, or that could reasonably be expected to result in a change to, the representations and warranties given in this Section 3.14 or that has, since such effective dates, or might in the future result in a Material Adverse Change.

 

3.15           Employee Plans.  The Company has not, and has never had, any obligation with respect to a defined benefit pension plan or arrangement.

 

3.16           Title to Properties.  Subject to the comments, qualifications and exceptions set forth in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate will result in a Material Adverse Change), as of February 21, 2012 with respect to the Pan and Gold Rock Properties, and as of March 29, 2012, February 21, 2012 and February 21, 2012, respectively, with respect to the Golden Eagle, Spring Valley and Tonopah Properties, the Company or its subsidiaries owns or leases, as the case may be, all of the Properties and all of the assets reflected as owned or leased in the financial statements referred to in Section 3.7 above, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, other than as set forth in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate, will result in a Material Adverse 

 

 

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Change) and except for any other security interests, mortgages, liens, encumbrances, equities, claims and other defects that do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by the Company or such subsidiary.  Subject to the comments, qualifications and exceptions set forth in the Title Reports (none of the qualifications and exceptions in such Title Reports, either individually or in the aggregate will result in a Material Adverse Change), as of February 21, 2012 with respect to the Pan and Gold Rock Properties, and as of March 29, 2012, February 21, 2012 and February 21, 2012, respectively, with respect to the Golden Eagle, Spring Valley and Tonopah Properties, the real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or such subsidiary.  Any water rights used by the Company or its subsidiaries to irrigate or otherwise supply its properties: (i) have been validly applied for and maintained and are in good standing; (ii) are not subject to any claims of adverse possession or other disputes; (iii) have been used according to their terms and conditions; and (iv) have been put or will be, within the time permitted under applicable law, to beneficial use on the Properties. Subsequent to the effective date of each of the Title Reports as set out above, nothing has occurred with respect to the ownership,  status, validity or good standing of the Properties or the rights of the Company and its subsidiaries in and to the Properties that would change, or that could reasonably be expected to result in a change to, the representations and warranties given in this Section 3.16 or that has, since such effective dates, or might in the future result in a Material Adverse Change.

 

3.17           Tax Law Compliance.  The Company and its Material Subsidiaries have filed all material federal, provincial, territorial, state and foreign income and franchise tax returns or have properly requested extensions thereof and have paid all material taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate proceedings.  The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1 above in respect of all federal, provincial, territorial, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its subsidiaries has not been finally determined.

 

3.18           Company Not an “Investment Company”.  The Company has been advised of the rules and requirements under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”).  The Company is not, and is not required to be, registered under the Investment Company Act, and after receipt of payment for the Purchased Shares and the application of the proceeds therefrom will not be required to be so registered.  The Company will conduct its business in a manner so that it will not become subject to the Investment Company Act while any Purchased Shares remain outstanding.

 

3.19           Insurance.  Each of the Company and its Material Subsidiaries is insured by recognized, financially sound institutions with policies in such amounts and with such deductibles and covering such risks as are generally deemed adequate and customary for its businesses.  The Company has no reason to believe that it or any of its Material Subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.

 

3.20           Compliance with Environmental Laws.  Except as otherwise disclosed in on Schedule 3.20 or as would not, individually or in the aggregate, result in a Material Adverse Change, to the Company’s Knowledge: (i) none of the Company or its subsidiaries is in material violation of any federal, provincial, territorial, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to, non-compliance with any permits or other governmental authorizations required for the operation of the business of each of the Company and its subsidiaries under applicable Environmental Laws, or non-compliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries received any written communication, whether from 

 

 

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a governmental authority, citizens group, employee or otherwise, that alleges that the Company or any of its subsidiaries is in violation of any Environmental Law; (ii) there is no unremedied claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any of its subsidiaries, now or, if not yet remedied, in the past (collectively, “Environmental Claims”), pending or threatened against the Company, any of its subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law; and (iii) there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably could result in a violation of any Environmental Law for which the Company or its subsidiaries would be liable or form the basis of a potential Environmental Claim against the Company, any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law.

 

3.21           Solvency.  The Company is, and immediately after the Closing Date will be, Solvent.  As used herein, the term “Solvent” means, with respect to the Company on a particular date, that on such date (i) the fair market value of its assets is greater than the total amount of its liabilities (including contingent liabilities), (ii) the present fair salable value of its assets is greater than the amount that will be required to pay the probable liabilities on its debts as they become absolute and matured, (iii) it is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) immediately after the Closing Date, it does not have unreasonably small capital.

 

3.22           No Restriction on Dividends.  No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

 

3.23           Disclosure Controls and Procedures.  The Company has established and maintains disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-14 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is made known to the chief executive officer and chief financial officer of the Company by others within the Company or any of its subsidiaries, and such disclosure controls and procedures are reasonably effective to perform the functions for which they were established subject to the limitations of any such control system.  Based on the Company’s most recent evaluation of internal control over financial reporting, the Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies or material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; and since the date of the most recent evaluation of internal control over financial reporting, there have been no significant changes in internal controls or in other factors that are reasonably likely to materially affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

3.24           Money Laundering.  The operations of the Company and its subsidiaries are in compliance with applicable financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, 

 

 

8

 

 

 

authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

3.25           Foreign Corrupt Practices Act.  Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director or officer of the Company or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and the Company, its subsidiaries and, to the knowledge of the Company, its Affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith, except where such failure would not, individually or in the aggregate, result in a Material Adverse Change.

 

4.             Representations and Warranties of the Purchaser.  The Purchaser hereby represents and warrants and covenants with the Company, as to itself, as of the date hereof that:

 

4.1           Authorization.  The Purchaser has full power and authority to enter into this Agreement and this Agreement constitutes valid and legally binding obligations, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (iii) to the extent the indemnification provisions contained in this Agreement may be limited by applicable laws.

 

4.2           Purchase Entirely for Own Account.  This Agreement is made with the Purchaser in reliance upon the Purchaser’s representation to the Company, which by the Purchaser’s execution of this Agreement the Purchaser hereby confirms, that the Purchased Shares will be acquired for investment purposes only for the Purchaser, as principal for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Purchased Shares.

 

4.3           Disclosure of Information.  The Purchaser believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Purchased Shares. The Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Purchased Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 3 or the right of the Purchaser to rely thereon.

 

4.4           Investment Experience.  The Purchaser is an investor in securities and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Purchased Shares.

 

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4.5           Accredited Investor - Canada.  The Purchaser is an “accredited investor” as that phrase is defined in National Instrument 45-106 – Prospectus and Registration Exemptions of the Canadian Securities Administrators.

 

4.6           Accredited Investor - United States.  The Purchaser is an "accredited investor" as defined in Rule 501(a) of Regulation D.

 

4.7           No Registration.  The Purchaser is aware that the Purchased Shares and the common shares of the Company issuable upon conversion thereof have not been registered under the U.S. Securities Act, or any securities laws of any state of the United States and that the Purchased Shares and the common shares of the Company issuable upon conversion thereof may not be offered, sold, pledged or otherwise transferred, directly or indirectly, without registration under the U.S. Securities Act and any applicable securities laws of any state of the United States or compliance with requirements of an exemption from such registration requirements.

 

4.8           Restricted Securities.  The Purchaser understands that the Purchased Shares and the common shares of the Company issuable upon conversion thereof will be "restricted securities" as defined in Rule 144 under the U.S. Securities Act and will be subject to a "hold period" and possibly other resale restrictions under applicable securities legislation and the policies of the Securities and Exchange Commission (the "SEC") and may not be resold until the expiry of such hold period except in accordance with limited exemptions under applicable securities legislation and regulatory policies and that the Company may cause a legend to such effect, as set forth in Section 4.9 below, to be placed on the certificates representing the Purchased Shares and the common shares of the Company issuable upon conversion thereof.

 

4.9           Legend.  The Purchaser understands and acknowledges that upon the original issuance of the Purchased Shares and the common shares of the Company issuable upon conversion thereof, and until such time as it is no longer required under applicable requirements of the U.S. Securities Act or applicable securities laws of any state of the United States, all certificates representing the Purchased Shares and the common shares of the Company issuable upon conversion thereof and all certificates issued in exchange therefor or in substitution thereof, shall bear the following legend:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH ALL LOCAL LAWS AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND, IN THE CASE OF SUBPARAGRAPHS (C) OR (D), THE SELLER FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

 

provided further, that, if any of the Purchased Shares and the common shares of the Company issuable upon conversion thereof are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Company’s transfer agent of an opinion of counsel of recognized standing in form and substance satisfactory to the Company, to the effect that the legend is no longer required 

 

 

10

 

 

under applicable requirements of the U.S. Securities Act or any applicable securities laws of any state of the United States.

 

4.10           PATRIOT Act.  The funds representing the Purchase Price which will be advanced by the Purchaser to the Company hereunder will not represent proceeds of crime for the purposes of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the "PATRIOT Act") and the Purchaser acknowledges that the Company may in the future be required by law to disclose the Purchaser’s name and other information relating to the subscription agreement and the Purchaser’s subscription hereunder, on a confidential basis, pursuant to the PATRIOT Act.  No portion of the Purchase Price to be provided by the Purchaser (i) has been or will be derived from or related to any activity that is deemed criminal under the laws of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to or by the Purchaser, and it shall promptly notify the Company if the Purchaser discovers that any of such representations ceases to be true and provide the Company with appropriate information in connection therewith.

 

4.11           Own Counsel.  In connection with the purchase of the Purchased Shares, the Purchaser has not relied upon the Company for investment, legal or tax advice, and has in all cases sought or elected not to seek the advice of the Purchaser’s own personal investment advisers, legal counsel and tax advisers and the Purchaser is able, without impairing its financial condition, to hold the Purchased Shares for an indefinite period of time and it can otherwise be reasonably assumed to have the capacity to protect its own interest in connection with its investment.

 

4.12           Tax Consequences.  The Purchaser understands and agrees that there may be material tax consequences to the Purchaser of an acquisition, disposition or exercise of any of the Purchased Shares and the common shares of the Company issuable upon conversion thereof; the Company  gives no opinion and makes no representation with respect to the tax consequences to the Purchaser under United States, state, local or foreign tax law of the Purchaser’s acquisition or disposition of such Purchased Shares; in particular, no determination has been made whether the Company will be a “passive foreign investment company” within the meaning of Section 1291 of the United States Internal Revenue Code.

 

4.13           No General Solicitation or Advertisement.  The Purchaser has not purchased the Purchased Shares as a result of any form of general solicitation or general advertising (as those terms are used in Regulation D), including advertisements, articles, press releases, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or other form of telecommunications, including electronic display, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

 

5.             Closing.  

 

5.1           Time and Place of Closing.  The closing of the purchase of the Purchased Shares by the Purchaser (the “Closing”) shall be held at the offices of legal counsel to the Company, at 10:00 A.M., Toronto time on December 13, 2012 or on such other date and time agreed upon by the Purchaser and the Company.

 

5.2           Delivery of the Purchased Shares and Purchase Price.  Delivery of the Purchased Shares shall be made by the Company to the Purchaser at the Closing by delivering a certificate representing such shares registered in the name of the Purchaser. The certificates for the Purchased Shares shall bear any legends required under applicable laws and other appropriate legends, satisfactory to the Purchaser and their counsel, with respect to the terms of such shares and the limitations and restrictions thereon. Delivery of the Purchase Price shall be made by the Purchaser to the Company at the Closing by bank draft, certified cheque or wire transfer of immediately available funds to a bank account designated by the Company.

 

6.             Conditions of Purchaser Obligations at Closing.  The obligations of the Purchaser under Sections 2.1 and 2.2 of this Agreement are subject to the fulfillment or waiver by the Purchaser on or before the 

 

 

11

 

 

 

Closing of each of the following conditions; provided, however, that the consummation of the transactions contemplated by this Agreement by the Purchaser shall constitute a waiver of these conditions by the Purchaser:

 

6.1           Representations and Warranties.  The representations and warranties of the Company contained in Section 3 shall be true and correct on and as of date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

 

6.2           Performance.  The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

 

6.3           No Litigation.  No action, suit or proceeding shall be pending or threatened against the Company or the Purchaser relating to the consummation of any of the transactions contemplated by this Agreement nor any governmental action seeking to delay or enjoin any such transactions; and no order issued by a court of competent jurisdiction or governmental body shall be in effect restricting or preventing the consummation of any of the transactions contemplated by this Agreement.

 

6.4           Compliance Certificate.  The Chief Executive Officer of the Company shall deliver to the Purchaser at the Closing a certificate stating that the conditions specified in Sections 6.1 and 6.2 herein have been fulfilled.

 

6.5           Registration Rights Agreement.  The Company (other than the Purchaser) shall have entered into a Registration Rights Agreement in the form attached as Exhibit I (the “Registration Rights Agreement”).

 

6.6           Opinions of Company Counsel and Title Reports.  The Purchaser shall have received from Stikeman Elliott LLP, counsel for the Company, a customary opinion, dated as of the Closing, in such form and substance as is to be reasonably satisfactory to the Purchaser and its counsel, regarding the valid existence, good standing and other customary aspects of the Company and its Material Subsidiaries.  The Purchaser shall have received from the Company the Title Reports and copies of all maintenance fee filings submitted for the Properties for the 2012/2013 assessment year, such Title Reports and maintenance fee filings to be in such form and substance as is to be reasonably satisfactory to the Purchaser and its counsel.  The Purchaser shall have also received a commitment from the Company to provide an update of each of the Title Reports, brought current through the date of the Closing as soon as reasonably practicable but in no case later than 45 days following the Closing

 

6.7           Consents.  The Company shall have received the requisite consents (including stockholder consents and the waiver of any shareholders’ preemptive rights) necessary to consummate the transactions contemplated hereby.  The Exchanges will have conditionally approved the listing of the common shares of the Company issuable upon conversion of the Purchased Shares, subject only to compliance with the usual conditions of the Exchanges.

 

6.8           Constating Documents.  The Notice of Articles and Articles shall have been amended to include the Series A Preferred Shares in the capital of the Company with the terms and conditions attached as Exhibit II.

 

7.             Conditions of the Company’s Obligations at the Initial Closing.  

 

The obligations of the Company under Sections 2.1 and 2.2 of this Agreement are subject to the fulfillment or waiver by the Company on or before the  Closing of each of the following conditions; provided, however, that the consummation of the transactions contemplated by this Agreement by the Company shall constitute a waiver of these conditions by such Company:

 

7.1           Representations and Warranties.  The representations and warranties of the Purchaser contained in Section 4 shall be true and correct on and as of date of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

 

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7.2           Payment of Purchase Price.  The Purchaser shall have delivered the Purchase Price specified in Section 2.2 to the Company.

 

8.             Post-Closing Covenants.  

 

8.1           Use of Proceeds.  The proceeds from the issuance of the Purchased Shares will be used by the Company for working capital and general corporate purposes.

 

9.             Miscellaneous.

 

9.1           Survival.  The warranties, representations and covenants of the Company and the Purchaser contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Purchaser or the Company.

 

9.2           Successors and Assigns.  Subject to Section 9.9, except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Purchased Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

9.3           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

9.4           Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient on a Business Day, if not, then on the next Business Day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the following address or at such other address as such party may designate by ten days advance written notice to the other Parties:

 

To the Purchaser, at:

 

[______________].

 

To the Company, at:

 

Midway Gold Corp.

Suite 280 – 8310 South Valley Highway

Englewood, Colorado  80112

Facsimile:  720-979-0898

Attention:  Kenneth Brunk, Chief Execituve Officer

 

With copies for informational purposes only to:

 

Dorsey & Whitney LLP

1400 Wewatta Street, Suite 400

Denver, CO  80202

Facsimile:  303-629-3450

Attention:  Kenneth Sam, Esq.

 

9.5           Finder’s Fee.  No commission or compensation in the nature of a finders’ fee is due any Person in connection with the transactions herein.  The Purchaser agrees to indemnify and to hold 

 

 

13

 

 

 

harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Purchaser or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless the Purchaser from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

 

9.6           Expenses.  The Company shall reimburse the Purchaser or its designee(s) for all costs and expenses actually incurred by Hale in connection with the negotiating and closing of the transaction contemplated hereby (including, without limitation, all external legal fees, accounting and tax related fees, and disbursements in connection therewith, documentation and implementation of the transactions contemplated hereby, travel and due diligence fees and disbursements in connection therewith) and any costs associated with  the enforcement of the Purchaser’s rights with respect to the collection of any amounts due to the Purchaser from the Company under this Agreement (the “Expenses”).   The Expenses may be withheld by the Purchaser from its purchase price for the Purchased Shares at the closing of the Transaction.  As reasonably requested by the Company, the Purchaser shall provide such documentation, as appropriately redacted, in support of such fees and expenses for which payment is to be made.  The Company shall pay the Expenses within ten (10) business days upon the Purchaser’s request.

 

9.7           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Purchaser.

 

9.8           Indemnification.  The Company shall indemnify, defend and hold the Purchaser and its respective direct or indirect Affiliates, officers, directors, partners (including partners of partners and shareholders and members of partners), members, shareholders, employees and agents and each other person which controls any of them (each, an “Indemnified Party”) harmless from and against any and all liabilities, losses or damages, together with all reasonable costs and expenses related thereto (including legal and accounting fees and expenses), arising from, relating to, or connected with (i) any untruth, inaccuracy or breach of any representations, warranties or covenants contained in this Agreement and (ii) any claim brought against any Indemnified Party by any third party (including any other stockholder of the Company) as a result of the transactions contemplated by this Agreement.

 

9.9           Assignment.  Neither this Agreement nor any rights or obligations under this Agreement shall be assignable by operation of law, amalgamation or otherwise by any Party without the prior written consent of the other Party, except that the Purchaser may assign, without being required to obtain consent of the Company, all or part of its rights or obligations hereunder, including the rights to acquire the Purchased Shares, without reducing its own obligations hereunder, to any person provided such person delivers to the Company an instrument in writing executed by such person confirming that it is bound by and shall perform all of the obligations of the Purchaser under this Agreement as if it were an original signatory.

 

9.10           Counterparts.  This Agreement may be executed by facsimile signature or by or through such other electronic form in which a Party may place or evidence its signature hereon (including an electronic scan of same) and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

 

 

 

 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

 

	 	MIDWAY GOLD CORP.
	 	 
	 	Per:	                    
	 	 	Name:  
	 	 	Title:    

 

 

 

	 	
[______________________]

 

 

	 	 
	 	Per:	                    
	 	 	Name:  
	 	 	Title:    

 

 

  

  

  

EXHIBIT I

 

Registration Rights Agreement

 

  

  

  

EXHIBIT II

 

Terms and Conditions of Class A Preferred Shares

 

 

  

  

  

Exhibit 3.10

Capitalization Table

	
Issuance Type

	
Price per Security

	
Number of Securities Issued

	
Common Shares

	–	128,251,298
	
Options to Purchase Common Shares

	
CAD$0.56 - $3.36

	8,032,501
	
Warrants to Purchase Common Shares

	US$1.85	6,130,781

2

  

  

 

Exhibit 3.12

Material Actions or Proceedings

No applicable disclosures.

3

  

  

 

Schedule 3.20

Compliance with Environmental Laws

No applicable disclosures.

 

4ex10_2.htm

EXHIBIT 10.2

 

 

EXECUTION COPY

 

REGISTRATION RIGHTS AGREEMENT

 

 

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November 21, 2012, by and among Midway Gold Corp., a British Colombia corporation (the "Company"), and the investors listed on the Schedule of Buyers attached hereto (each, a "Buyer" and collectively, the "Buyers").

 

WHEREAS:

 

A.           In connection with the Share Purchase Agreement by and among the parties hereto of even date herewith (the "Securities Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions of the Share Purchase Agreement, to issue and sell to each Buyer Series A Preferred Stock (the "Preferred Stock"), which will, among other things, be convertible into common shares in the capital of the Company (the "Common Shares") (as converted, collectively, the "Conversion Shares").

 

B.           The Preferred Shares may be entitled to dividends, which the Company, subject to certain conditions, may pay in Common Shares (the "Dividend Shares").

 

C.           In accordance with the terms of the Share Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:

 

1.           Definitions.

 

Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

(a)           "Additional Effective Date" means the date the Additional Registration Statement is declared effective by the SEC.

 

(b)           "Additional Effectiveness Deadline" means, subject to Section 3(r), (i) in the event that the Additional Registration Statement is not subject to a full review by the SEC, the date which is five Trading Days  following the date on which the Company is notified by the SEC that the Additional Registration Statement will not be reviewed or (ii) in the event that the Additional Registration Statement is subject to a full review by the SEC, one hundred and eighty (180) calendar days after the earlier of the Additional Filing Date and the Additional Filing Deadline.

 

(c)           "Additional Filing Date" means the date on which the Additional Registration Statement is filed with the SEC.

 

(d)           "Additional Filing Deadline" means, subject to Section 3(r), if Cutback Shares are required to be included in any Additional Registration Statement, the later of (i) the date sixty (60) days after the date substantially all of the Registrable Securities registered under the immediately preceding Registration Statement are sold and (ii) the date six (6) months from the Initial Effective Date or the most recent Additional Effective Date, as applicable.

 

  

  

  

 

(e)           "Additional Registrable Securities" means, (i) any Cutback Shares not previously included on a Registration Statement and (ii) any capital stock of the Company issued or issuable with respect to the Preferred Stock, the Conversion Shares, the Dividend Shares or the Cutback Shares, as applicable, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise not previously included on a Registration Statement; provided, that such securities will cease to be Registrable Securities, when (A) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (B) such securities have been disposed of pursuant to Rule 144 (other than, for the avoidance of doubt, to Investor or an Affiliate of Investor), (C) such securities have been disposed of pursuant to Regulation S, or (D) the entire amount of the Registrable Securities held by Investor and its Affiliates may be sold in a single sale without any limitation as to volume or manner of sale requirements pursuant to Rule 144.

 

(f)           "Additional Registration Statement" means a registration statement or registration statements of the Company filed under the 1933 Act covering any Additional Registrable Securities.

 

(g)           "Additional Required Registration Amount" means (i) any Cutback Shares not previously included on a Registration Statement, all subject to adjustment as provided in Section 2(g) or (ii) such other amount as may be required by the staff of the SEC pursuant to Rule 415.

 

(h)           "Business Day" means any day other than Saturday, Sunday or any other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

 

(i)           “Canadian Prospectus” means a “preliminary prospectus” and a “prospectus” as those terms are used in Canadian Securities Laws, including all amendment and supplements thereto.

 

(j)           “Canadian Securities Commissions” means securities commission or similar regulatory authority in each of the provinces and territories of Canada or any national securities commission which may be established.

 

(k)           “Canadian Securities Laws” means all applicable securities laws in each of  the provinces and territories of Canada and the respective rules, regulations, instruments and published policies, policy statements and notices thereunder, as amended from time to time.

 

(l)           "Closing Date" shall have the meaning set forth in the Securities Purchase Agreement.

 

(m)           "Cutback Shares" means any of the Initial Required Registration Amount or the Additional Required Registration Amount (without regard to clause (ii) in the definition thereof) of Registrable Securities not included in all Registration Statements previously declared effective hereunder as a result of a limitation on the maximum number of Common Shares permitted to be registered by the staff of the SEC pursuant to Rule 415.  For the purpose of determining the Cutback Shares, in order to determine any applicable Required Registration Amount, unless an Investor gives written notice to the Company to the contrary with respect to the allocation of its Cutback Shares, first the Dividend Shares shall be excluded on a pro rata basis until all of the Dividend Shares have been excluded, and second, the Conversion Shares shall be excluded on a pro rata basis until all of the Conversion Shares have been excluded.

 

(n)           "Effective Date" means the Initial Effective Date and the Additional Effective Date, as applicable.

 

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(o)           "Effectiveness Deadline" means the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as applicable.

 

(p)           "Filing Deadline" means the Initial Filing Deadline and the Additional Filing Deadline, as applicable.

 

(q)           "Initial Effective Date" means the date that the Initial Registration Statement has been declared effective by the SEC.

 

(r)           "Initial Effectiveness Deadline" means, subject to Section 3(r), the date which is (i) in the event that the Initial Registration Statement is not subject to a full review by the SEC, five Trading Days  following the date on which the Company is notified by the SEC that the Initial Registration Statement will not be reviewed or (ii) in the event that the Initial Registration Statement is subject to a full review by the SEC, one hundred and eighty (180) calendar days after the Closing Date.

 

(s)           "Initial Filing Date" means the date on which the Initial Registration Statement is filed with the SEC.

 

(t)           "Initial Filing Deadline" means, subject to Section 3(r), the date which is ninety (90) calendar days after the Closing Date.

 

(u)           "Initial Registrable Securities" means (i) the Conversion Shares issued or issuable upon conversion of the Preferred Stock, (ii) the Dividend Shares issued or issuable with respect to the Preferred Stock and (iii) any capital stock of the Company issued or issuable with respect to the Preferred Stock, the Conversion Shares or the Dividend Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on conversion of the Preferred Stock; provided, that such securities will cease to be Registrable Securities, when (A) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (B) such securities have been disposed of pursuant to Rule 144  (other than, for the avoidance of doubt, to Investor or an Affiliate of Investor), (C) such securities have been disposed of pursuant to Regulation S, or (D) the entire amount of the Registrable Securities held by Investor and its Affiliates may be sold in a single sale without any limitation as to volume or manner of sale requirements pursuant to Rule 144.

 

(v)           "Initial Registration Statement" means a registration statement or registration statements of the Company filed under the 1933 Act covering the Initial Registrable Securities.

 

(w)           "Initial Required Registration Amount" means 100% of the sum of (i) the number of Conversion Shares issued and issuable pursuant to the Company’s Notice of Articles and (ii) the number of Common Shares issuable pursuant to the Company’s Notice of Articles to satisfy the Preferred Dividend (as defined in the Company’s Notice of Articles).

 

(x)           "Investor" means a Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

 

(y)           "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

 

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(z)           "register," "registered," and "registration" refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

 

(aa)           "Registrable Securities" means the Initial Registrable Securities and the Additional Registrable Securities.

 

(bb)           "Registration Statement" means the Initial Registration Statement and the Additional Registration Statement, as applicable.

 

(cc)           "Required Holders" means the so long as they hold Registrable Securities, [Hale Capital] and thereafter the holders of at least a majority of the Registrable Securities.

 

(dd)           "Required Registration Amount" means either the Initial Required Registration Amount or the Additional Required Registration Amount, as applicable.

 

(ee)           "Rule 415" means Rule 415 promulgated under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis.

 

(ff)           "SEC" means the United States Securities and Exchange Commission.

 

(gg)           "Trading Day" means any day on which the Common Shares is traded on the Principal Eligible Market (as defined in the Company’s Notice of Articles), or, if the Principal Market is not the principal trading market for the Common Shares, then on the principal securities exchange or securities market on which the Common Shares is then traded; provided that "Trading Day" shall not include any day on which the Common Shares is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Shares is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

2.           Registration. 

 

(a)           Initial Mandatory Registration.  The Company shall use all commercially reasonable efforts to prepare, and use all commercially reasonable efforts to, as soon as practicable but in no event later than the Initial Filing Deadline, file with the SEC the Initial Registration Statement on Form S-3 and a Canadian Prospectus covering the resale of all of the Initial Registrable Securities.  In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration on another appropriate form reasonably acceptable to the Required Holders, subject to the provisions of Section 2(f).  The Initial Registration Statement and Canadian Prospectus prepared pursuant hereto shall register for resale at least the number of Common Shares equal to the Initial Required Registration Amount determined as of the date the Initial Registration Statement is initially filed with the SEC and with the Canadian Securities Commissions, as applicable, subject to adjustment as provided in Section 2(g).  The Initial Registration Statement and Canadian Prospectus shall contain (except if otherwise directed by the Required Holders) the "Plan of Distribution" and "Selling Shareholders" sections in substantially the form attached hereto as Exhibit A and Exhibit B. The Company shall use all commercially reasonable efforts to have the Initial Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Initial Effectiveness Deadline.  By 9:30 a.m. New York time on the Business Day following the Initial Effective Date, the Company shall use all commercially reasonable efforts to file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Initial Registration Statement.

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(b)           Additional Mandatory Registrations.  The Company shall use all commercially reasonable efforts to prepare, and use all commercially reasonable efforts to, as soon as practicable but in no event later than the Additional Filing Deadline, file with the SEC an Additional Registration Statement on Form S-3 covering the resale of all of the Additional Registrable Securities not previously registered on an Additional Registration Statement hereunder.  To the extent the staff of the SEC does not permit the Additional Required Registration Amount to be registered on an Additional Registration Statement, the Company shall file Additional Registration Statements successively trying to register on each such Additional Registration Statement the maximum number of remaining Additional Registrable Securities until the Additional Required Registration Amount has been registered with the SEC.  In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration on another appropriate form reasonably acceptable to the Required Holders, subject to the provisions of Section 2(f).  Each Additional Registration Statement prepared pursuant hereto shall register for resale at least that number of Common Shares equal to the Additional Required Registration Amount determined as of the date such Additional Registration Statement is initially filed with the SEC, subject to adjustment as provided in Section 2(g).  Each Additional Registration Statement shall contain (except if otherwise directed by the Required Holders) the "Plan of Distribution" and "Selling Shareholders" sections in substantially the form attached hereto as Exhibit A and Exhibit B.  The Company shall use its best efforts to have each Additional Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Additional Effectiveness Deadline.  By 9:30 a.m. New York time on the Business Day following the Additional Effective Date, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Additional Registration Statement.

 

(c)           Underwritten Registrations. If the Required Holders intend to distribute the Registrable Securities by means of an underwriting (whether it is on a firm commitment or best efforts (i.e., registered direct) basis), they shall so advise the Company in writing and the Company shall give written notice thereof to all holders of Registrable Securities within ten (10) days of the receipt of such notice.  In such event, the right of any such holder to include such holder’s Registrable Securities in such underwriting shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the holders participating in the underwriting and such holder) to the extent provided herein.  A majority in interest of the holders of Registrable Securities participating in the underwriting, in consultation with the Company, shall select the managing underwriter or underwriters in such underwriting.  All holders proposing to distribute Registrable Securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters so selected for such underwriting by a majority in interest of such holders; provided, however, that no holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such holder’s ownership of shares and authority to enter into the underwriting agreement and to such holder’s intended method of distribution, and the liability of such holder shall be limited to an amount equal to the net proceeds from the offering received by such holder.  Notwithstanding any other provision of this Section 2(c), if the underwriter advises a holder that marketing factors require a limitation of the number of shares to be underwritten, then the holder shall so advise the Company and the Company shall so advise all holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated as follows: (i) first, among the Buyers that have elected to participate in such underwritten offering, in proportion (as nearly as practicable) to the aggregate amount of Registrable Securities held by all such Buyers, until such Buyers have included in the underwriting all shares requested by such Buyers to be included, (ii) then, among other holders of Registrable Securities that have elected to participate in such underwritten offering, in proportion (as nearly as practicable) to the aggregate amount of Registrable Securities held by all such holders, until such holders have included in the underwriting all shares requested by such holders to be included, and (iii) thereafter, among all other holders of Common Shares, if any, that have the right and have elected to participate in such underwritten offering, in proportion (as nearly as practicable) to the amount of Common Shares owned by such holders.  Without the consent of a majority in interest of the holders of Registrable Securities participating in a registration referred to in this Section 2(c), no securities other than Registrable Securities shall be covered by such registration if the inclusion of such 

 

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other securities would result in a reduction of the number of Registrable Securities covered by such registration or included in any underwriting or if, in the opinion of the managing underwriter, the inclusion of such other securities would adversely impact the marketing of such offering.  The Company shall be obligated to effect only one (1) underwritten registrations under this 2(c) (an offering which is not consummated shall not be counted for this purpose).

 

(d)           Allocation of Registrable Securities.  The initial number of Registrable Securities included in any Registration Statement and Canadian Prospectus and any increase or decrease in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable Securities held by each Investor at the time the Registration Statement covering such initial number of Registrable Securities or increase or decrease thereof is declared effective by the SEC and the Canadian Securities Commission.  In the event that an Investor sells or otherwise transfers any of such Investor's Registrable Securities, each transferee shall be allocated a pro rata portion of the then remaining number of Registrable Securities included in such Registration Statement for such transferor.  Any Common Shares included in a Registration Statement and Canadian Prospectus and which remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement and Canadian Prospectus shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which are covered by such Registration Statement and Canadian Prospectus.  In no event shall the Company include any securities other than Registrable Securities on any Registration Statement and Canadian Prospectus without the prior written consent of the Required Holders.

 

(e)           Legal Counsel.  Subject to Section 5, the Required Holders shall have the right to select one legal counsel to represent the Required Holders and to review and comment on any Registration Statement or Canadian Prospectus prepared by the Company pursuant to this Section 2 ("Legal Counsel").  The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company's and Investors' obligations under this Agreement.

 

(f)           Ineligibility for Form S-3.  In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.

 

(g)           Sufficient Number of Shares Registered.  In the event the number of shares available under a Registration Statement or Canadian Prospectus filed pursuant to Section 2(a), Section 2(b) or Section 2(c) is insufficient to cover all of the Registrable Securities required to be covered by such Registration Statement or Canadian Prospectus or an Investor's allocated portion of the Registrable Securities pursuant to Section 2(d), the Company shall amend the applicable Registration Statement or Canadian Prospectus or file a new Registration Statement (on the short form available therefor, if applicable) or Canadian Prospectus or both, so as to cover at least the Required Registration Amount as of the Trading Day immediately preceding the date of the filing of such amendment or new Registration Statement or Canadian Prospectus in each case, using all commercially reasonable efforts to do so as soon as practicable and not later than thirty (30) days after the necessity therefor arises.  The Company shall use all commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof.  For purposes of the foregoing provision, the number of shares available under a Registration Statement or Canadian Prospectus shall be deemed "insufficient to cover all of the Registrable Securities" if at any time the number of Common Shares available for resale under the Registration Statement is less than the Required Registration Amount as of such time.  The determination set forth in the foregoing sentence shall be made without regard to any limitations on the conversion of the Preferred Stock and such determination shall assume that the Preferred Stock are then convertible in full into Common Shares at the then prevailing Conversion Price (as defined in the Company’s Notice of Articles).

 

 

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(h)           No Cash Settlement.  The parties hereto agree that this Agreement does not provide for any specific cash settlement or liquidated damage payment for any failure to (i) cause the Initial Registration Statement to be declared effective on or before the Initial Effectiveness Deadline, (ii) cause the Additional Registration Statement to be declared effective on or before the Additional Effectiveness Deadline, or (iii) fulfil its obligations under Section 2(c), 2(g) or Section 3 of this Agreement.

 

3.           Related Obligations.

 

At such time as the Company is obligated to file a Registration Statement with the SEC or Canadian Prospectus with the Canadian Securities Commission pursuant to Section 2(a), 2(b), 2(c), 2(f) or 2(g), the Company will use all commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

 

(a)           The Company shall promptly prepare and file with the SEC a Registration Statement and a Canadian Prospectus with the Canadian Securities Commission with respect to the Registrable Securities and use all commercially reasonable efforts to cause such Registration Statement or Canadian Prospectus relating to the Registrable Securities to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline).  The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities covered by such Registration Statement without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the "Registration Period").  The Company shall promptly amend any Registration Statement and Canadian Prospectus as necessary to ensure that each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) does not contain any 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 (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.  The term "commercially reasonable efforts" shall mean, among other things and subject to Section 3(r), that the Company shall submit to the SEC, within two (2) Business Days after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff has no further comments on a particular Registration Statement, as the case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) a request for acceleration of effectiveness of such Registration Statement to a time and date not later than three (3) Business Days after the submission of such request.  The Company shall respond in writing to comments made by the SEC and the Canadian Securities Commission in respect of a Registration Statement or the Canadian Prospectus as the case may be, as soon as reasonably practicable after the receipt of comments by or notice from the SEC that an amendment is required in order for a Registration Statement or the Canadian Prospectus as the case may be, to be declared effective.

 

(b)           The Company shall prepare and file with the SEC and Canadian Securities Commission such amendments (including post-effective amendments) and supplements to a Registration Statement or Canadian Prospectus and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company filing a report on Form 10-Q, Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall have incorporated such report by reference into 

 

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such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement such Registration Statement.

 

(c)           The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement or Canadian Prospectus at least five (5) Business Days prior to its filing with the SEC or Canadian Securities Commission, as the case may be and (ii) all amendments and supplements to all Registration Statements or Canadian Prospectus (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and any similar or successor reports or statements) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or Canadian Prospectus or amendment or supplement thereto in a form to which Legal Counsel reasonably objects to the inclusion of information about the Investors or transactions contemplated by the Transaction Documents.  All such cost and expense for review and comment shall be subject to the limits on counsel expenses borne by the Company set forth in this Agreement.  The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or Canadian Prospectus or any amendment or supplement thereto without the prior approval of Legal Counsel, which approval shall not be unreasonably withheld.  The Company shall furnish (which may be electronically) to Legal Counsel, without charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement or Canadian Prospectus and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness of any Registration Statement or Canadian Prospectus one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto.  The Company shall and Investors shall cause Legal Counsel to reasonably cooperate with each other in performing the Company's obligations pursuant to this Section 3.

 

(d)           The Company shall furnish (which may be electronically) to each Investor whose Registrable Securities are included in any Registration Statement or Canadian Prospectus without charge,  (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement or Canadian Prospectus ten (10) copies of the prospectus included in such Registration Statement or Canadian Prospectus and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

 

(e)           The Company shall use all commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or "blue sky" laws of all applicable jurisdictions in the United States as the Investors may reasonably request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.  The Company shall promptly notify Legal Counsel and each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

 

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(f)           The Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement or Canadian Prospectus as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and, subject to Section 3(r), use all commercially reasonable efforts to promptly prepare a supplement or amendment to such Registration Statement or Canadian Prospectus to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor may reasonably request).  The Company shall also promptly notify Legal Counsel and each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or Canadian Prospectus or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.  By 9:30 a.m. New York City time on the date following the date any post-effective amendment has become effective, the Company shall file with the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to be used in connection with sales pursuant to such Registration Statement.

 

(g)           The Company shall use all commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement or Canadian Prospectus or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction in the United States or Canada and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

(h)           If any Investor is required under applicable securities laws to be described in the Registration Statement or Canadian Prospectus as an underwriter, at the reasonable request and at the cost of such Investor, the Company shall furnish to such Investor, on the date of the effectiveness of the Registration Statement or Canadian Prospectus and thereafter from time to time on such dates as an Investor may reasonably request (i) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.

 

(i)           If any Investor is required under applicable securities laws to be described in the Registration Statement or Canadian Prospectus as an underwriter, the Company shall make available for inspection by (i) such Investor, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by the Investors (collectively, the "Inspectors"), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other 

 

 

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than by disclosure in violation of this Agreement.  Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.  Nothing herein (or in any other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investors' ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

 

(j)           The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or Canadian Prospectus (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

(k)           The Company shall use all commercially reasonable efforts either to (i) cause all of the Registrable Securities covered by a Registration Statement to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or (ii) secure the inclusion for quotation of all of the Registrable Securities on the TSX Venture Exchange and NYSE MKT or (iii) if, despite the Company's reasonable best efforts, the Company is unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the inclusion for quotation on, The New York Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market, or The NASDAQ Capital Market for such Registrable Securities and, without limiting the generality of the foregoing, to use all commercially reasonable efforts to arrange for at least two market makers to register with the Financial Industry Regulatory Authority, Inc. ("FINRA") as such with respect to such Registrable Securities.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(k).

 

(l)           The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investors may reasonably request and registered in such names as the Investors may request.

 

(m)           If requested by an Investor, the Company shall as soon as practicable (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein necessary to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement or Canadian Prospectus if reasonably requested by an Investor holding any Registrable Securities.

 

(n)           The Company shall use all commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement or Canadian Prospectus to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

 

 

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(o)           The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of, and Rule 158 under, the U.S. Securities Act.

 

(p)           The Company shall otherwise use all commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

 

(q)           Within two (2) Business Days after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver to the transfer agent for such Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.

 

(r)           Notwithstanding anything to the contrary herein, at any time prior to an Initial Filing Deadline or Additional Filing Deadline, Initial Effectiveness Deadline or Additional Effectiveness Deadline (any of which deadline would be extended by any Allowable Grace Period) or after the Effective Date, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a "Grace Period"); provided, that the Company shall promptly (i) notify the Investors in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed fifteen (15) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of forty-five (45) days and the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period (each, an "Allowable Grace Period").  For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Company delivers to Investors the notice referred to in clause (i) and shall end on and include the later of the date the Company delivers to Investors the notice referred to in clause (ii) and the date referred to in such notice.  The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Common Shares to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale, prior to the Company’s delivery  of the notice of a Grace Period and for which the Investor has not yet settled.

 

(s)           Neither the Company nor any Subsidiary or affiliate thereof shall identify any Buyer as an underwriter in any public disclosure or filing with the SEC, the Principal Market (as defined in the Securities Purchase Agreement) or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the "Plan of Distribution" section attached hereto as Exhibit A in the Registration Statement.

 

(t)           The Company shall not file any other registration statements until, or grant registration rights to any Person that can be exercised prior to the time that, all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the SEC, provided that this Section 3(t) shall not prohibit the Company from filing (i) registration statements on Form S-8 for Company equity plans or (ii) amendments (pre-effective and post-effective) to registration statements filed prior to the date of this Agreement; provided that no such amendment shall increase the number of securities registered on a registration statement.  Neither the Company nor any of its 

 

 

11

  

  

Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, without the consent of the Required Holders, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.

 

(u)           If holders of a majority of the Registrable Securities being offered pursuant to a Registration Statement select underwriters (whether on a firm commitment or best efforts basis) for the offering, the Company shall enter into and perform its obligations under an underwriting (or similar) agreement, in usual and customary form, including, without limitation, by providing customary legal opinions, comfort letters and indemnification and contribution obligations.

 

(v)           In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering.

 

4.           Obligations of the Investors.

 

(a)           At least five (5) Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor's Registrable Securities included in such Registration Statement or Canadian Prospectus.  It shall be a condition precedent to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

 

(b)           Each Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement or Canadian Prospectus hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from such Registration Statement or Canadian Prospectus.

 

(c)           Each Investor agrees that, upon the Company’s delivery of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f) or Section 3(r), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) or Canadian Prospectus covering such Registrable Securities until the Company’s delivery  of copies of the supplemented or amended prospectus as contemplated by Section 3(g) or the first sentence of 3(f) or Section 3(r) or delivery of notice that no supplement or amendment is required.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Common Shares to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the delivery of a notice by the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of 3(f) or Section 3(r) and for which the Investor has not yet settled.

 

(d)           Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.

 

5.           Expenses of Registration.

 

All reasonable expenses incurred by the Company, other than underwriting discounts and commissions or expenses, incurred in connection with registrations, filings or qualifications pursuant to 

 

 

12

  

  

Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.  The Company shall also reimburse the Investors for the fees and disbursements of Legal Counsel in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000 for each such Registration Statement (including, without duplication, all filings and amendments made thereof or incorporated by reference in such Registration Statement for which no separate amount will be payable).

 

6.           Indemnification.

 

In the event any Registrable Securities are included in a Registration Statement or Canadian Prospectus under this Agreement:

 

(a)           To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the investment manager and its affiliates, the directors, officers, partners, members, employees, agents, representatives of, and each Person, if any, who controls, or is under common control with any Investor within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Person"), against any losses, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint or several (collectively, "Claims"), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon:  (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or Canadian Prospectus or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement or Canadian Prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other securities law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement or Canadian Prospectus (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations").  Subject to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a):  (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or Canadian Prospectus or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d); and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

 

(b)           In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and 

 

13

  

  

defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Investor shall reimburse the Indemnified Party for any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

 

(c)           Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for all such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, as applicable, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates.  The Indemnified Party or Indemnified Person shall cooperate reasonably with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation and such settlement shall not include any admission as to fault on the part of the Indemnified Party.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

 

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(d)           The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

 

(e)           The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

7.           Contribution.

 

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

 

8.           Reports Under the 1934 Act.

 

With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:

 

(a)           make and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

(c)           furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request and to the extent not available on the SEC’s EDGAR website, (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

 

9.           Assignment of Registration Rights.

 

The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of such Investor's Registrable Securities if:  (i) the Investor agrees in writing with the transferee or assignee to assign such rights and the transferee or assignee agrees in writing to assume in full the obligations set forth under this Agreement, including the obligations set forth under Sections 6 and 7, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at or before 

 

 

15

  

  

the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement.  Following any such transfer or assignment, the transferee or assignee, as applicable, shall be considered an Investor for purposes of this Agreement.

 

10.           Amendment and Termination of Registration Rights.

 

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders.  Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities.  No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.  Other than Sections 6 and 7, this Agreement shall terminate with respect to any Investor when such Investor is no longer a holder of Registrable Securities and shall terminate with respect to all Investors when securities issued pursuant to the Share Purchase Agreement are not Registrable Securities.

 

11.           Miscellaneous.

 

(a)           A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from such record owner of such Registrable Securities.

 

(b)           Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

	
  

	
Midway Gold Corp.

	
  

	
Suite 280 – 8310 South Valley Highway

	
  

	
Englewood, Colorado  80112

	
  

	
Facsimile:  720-979-0898

	
  

	
Attention:  Kenneth Brunk, Chief Execituve Officer

	
  

	
Email:  Kbrunk@midwaygold.com

 

 

 

16

  

  

 

With a copy (for informational purposes only) to:

 

	 	 
Dorsey & Whitney LLP

1400 Wewatta Street, Suite 400

Denver, CO  80202

	 	Facsimile:	303-629-3450
	 	Email:	sam.kenneth@dorsey.com
	 	Attention:	Kenneth Sam, Esq.

                                             

If to the Buyers:

 

	 	 
 
HCP-MID, LLC

EREF-MID II, LLC

INV-MID, LLC

c/o Hale Fund Management, LLC, Managing Member

570 Lexington Ave, 49th Floor

New York, NY 10022

Attention:  Martin M. Hale , Jr.

	 	Facsimile:	212-751-8822
	 	Email:	martin@halefunds.com

 

If to Legal Counsel:

 

	 	 
 
 
Osler, Hoskin & Harcourt LLP

Box 50, 1 First Canadian Place

Toronto, Ontario, Canada  M5X 1B8 Telephone:

	 	Facsimile:	416.862.6666
	 	Attention:	Mark Trachuk, Esq.

    

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers attached hereto, with copies to such Buyer's representatives as set forth on the Schedule of Buyers, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(c)           Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

 

(d)           All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any 

 

 

17

  

  

such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(e)           If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(f)           This Agreement, the other Transaction Documents (as defined in the Securities Purchase Agreement) and the instruments referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.  This Agreement, the other Transaction Documents and the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

 

(g)           Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

 

(h)           The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.'

 

(i)           All references in this Agreement to Sections, Subsections,  and Exhibits are references to Sections, Subsections, and Exhibits, respectively, in and to this Agreement, unless otherwise specified. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. The words “include” or “including” mean “include, without limitation” or “including, without limitation,” as the case may be, and the language following “include” or “including” shall not be deemed to set forth an exhaustive list. Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. All references to notices, or other items “written” or “in writing” may include writings in e-mail.

 

(j)           This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement and a facsimile or electronic (.pdf) signature shall constitute an original for all purposes..

 

(k)           Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

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(l)           All consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified in this Agreement, by the Required Holders.

 

(m)           The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

 

(n)           This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

(o)           The obligations of each Investor hereunder are several and not joint with the obligations of any other Investor, and no provision of this Agreement is intended to confer any obligations on any Investor vis-à-vis any other Investor.  Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

 

* * * * * *

 

[Signature Page Follows]

 

 

 

 

 

 

 

19

  

  

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

 

	 	COMPANY:
	 	 
	 	MIDWAY GOLD CORP.
	 	 
	 	By:	                    
	 	 	Name:  Kenneth Brunk
	 	 	Title:    Chief Executive Officer

 

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

  

  

  

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

 

	 	BUYER:
	 	 
	 	HCP-MID, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	

Managing Member

 

 

 

[Signature Page to Registration Rights Agreement]

  

  

  

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

 

	 	BUYER:
	 	 
	 	EREF-MID II, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	

Managing Member

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

  

  

  

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.

 

	 	BUYER:
	 	 
	 	INV-MID, LLC
	 	 
	 	By:	                    
	 	 	Name:  Martin M. Hale, Jr.
	 	 	Title:    Hale Fund Management, LLC,
	 	 	

Managing Member

 

 

 

 

[Signature Page to Registration Rights Agreement]

  

  

  

SCHEDULE OF BUYERS

	
Buyer

	
Buyer Address

	  	  
	
 HCP-MID, LLC

	
c/o Hale Fund Management, LLC, Managing Member

570 Lexington Ave, 49th Floor

New York, NY 10022

Attention:  Martin M. Hale , Jr.

	
 EREF-MID II, LLC

	
c/o Hale Fund Management, LLC, Managing Member

570 Lexington Ave, 49th Floor

New York, NY 10022

Attention:  Martin M. Hale , Jr.

	
 INV-MID, LLC

	
c/o Hale Fund Management, LLC, Managing Member

570 Lexington Ave, 49th Floor

New York, NY 10022

Attention:  Martin M. Hale , Jr.

	  	  

 

 

  

  

  

 

EXHIBIT A

SELLING SHAREHOLDERS

 

The Common Shares being offered by the selling shareholders are those issuable to the selling shareholders upon conversion of the convertible preferred stock and in payment of certain dividend requirements with respect to the preferred stock.  For additional information regarding the issuance of those convertible preferred stock, see "Private Placement of Convertible Preferred Stock " above.  We are registering the Common Shares in order to permit the selling shareholders to offer the shares for resale from time to time.  Except for the ownership of the convertible preferred stock issued pursuant to the Securities Purchase Agreement, the selling shareholders have not had any material relationship with us within the past three years.

 

The table below lists the selling shareholders and other information regarding the beneficial ownership of the Common Shares by each of the selling shareholders.  The second column lists the number of Common Shares beneficially owned by each selling shareholder, based on its ownership of the convertible preferred stock, as of ________, 2012. The third column lists the number of Common Shares being offered by this prospectus by the selling shareholders.  The fourth column lists the number of Common Shares that will be held by the selling shareholders after the sale of all Common Shares offered by this prospectus and the fifth column lists the percentage of ownership of the Company’s issued and outstanding Common Shares the selling shareholder will hold after the sale of all Common Shares offered by this prospectus. Beneficial ownership in the is determined in accordance with the rules of the SEC and includes voting or investment power with respect to securities.  The numbers in the following table assume that none of the selling shareholders sell any Common Shares not being offered in this prospectus or purchase additional common shares, and assume that all Common Shares offered are sold.

 

As of ____________, 2012, we had ____________ common shares issued and outstanding

 

In accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of at least 100% of the sum of (i) the number of Common Shares issuable upon conversion of the convertible preferred stock as of the Trading Day immediately preceding the date the registration statement is initially filed with the SEC and (ii) the number of Common Shares issuable as dividends with respect to the preferred stock as of the Trading Day immediately preceding the date the registration statement is initially filed with the SEC, subject to any limit on the number of shares issuable by the NYSE MKT or the TSX-V. Because the conversion price of the convertible preferred stock may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus.

 

The selling shareholders may sell all, some or none of their Common Shares in this offering.  The selling shreholders are not making any representation that any Common Shares covered by this prospectus will be offered for sale. The selling shareholders  reserve the right to accept or reject, in whole or in part, any proposed sale of Common Shares.  See "Plan of Distribution."

 

	  	
Exhibit A-Page 1

	  

  

  

  

 

 

	
Name of Selling shareholder

	
Number of Common 

Shares Owned Prior 

to Offering

	
Maximum Number of 

Common Shares to be 

Sold Pursuant to this 

Prospectus

	
Number of 

Common Shares 

Owned After 

Offering

	
 

Percentage of 

Common Shares 

Owned After 

Offering

	 	 	 	 	 
	
[Buyers] (1)

	  	  	
0

	  
	
 

[Other Buyers]

 

	  	  	  	  
	
TOTAL

	  	  	  	  

 

* Less than 1%

 

	
(a)

	
All percentages are based on ______________ Common Shares issued and outstanding on ____________, 2012.  Beneficial ownership is calculated by the number of Common Shares that each selling shareholder owns or controls or has the right to acquire within 60 days of the date of this prospectus.

	
(b)

	
This table assumes that each selling shareholder will sell all of its Common Shares available for resale during the effectiveness of the registration statement that includes this prospectus.  Selling shareholders are not required to sell their Common Shares.

	
(1)

	
● is a limited partnership.  ________________ the ___________of ● exercises investment and voting control over these securities.

 

 

 

	  	
Exhibit A-Page 2

	  

  

  

  

EXHIBIT B

 

PLAN OF DISTRIBUTION

 

We are registering the Common Shares issuable upon conversion of the convertible preferred stock and in payment of certain dividend requirements with respect to the preferred stock to permit the resale of these Common Shares by the holders of the convertible preferred stock from time to time after the date of this prospectus.  We will not receive any of the proceeds from the sale by the selling shareholders of the Common Shares.  We will bear all fees and expenses incident to our obligation to register the Common Shares.

 

The selling shareholders may sell all or a portion of the Common Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents.  If the Common Shares are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent's commissions.  The Common Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices.  These sales may be effected in transactions, which may involve crosses or block transactions,

 

	
  

	
●

	
on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

 

	
  

	
●

	
in the over-the-counter market;

 

	
  

	
●

	
in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

	
  

	
●

	
through the writing of options, whether such options are listed on an options exchange or otherwise;

 

	
  

	
●

	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	
  

	●	
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	
  

	
●

	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
  

	
●

	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
  

	
●

	
privately negotiated transactions;

 

	
  

	
●

	
short sales as permitted by applicable law;

 

	
  

	
●

	
sales pursuant to Rule 144;

 

	
  

	
●

	
broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;

 

	
  

	
●

	
a combination of any such methods of sale; and

 

	
  

	
●

	
any other method permitted pursuant to applicable law.

 

	  	
Exhibit B-Page 1

	  

  

  

  

 

If the selling shareholders effect such transactions by selling Common Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the Common Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).  In connection with sales of the Common Shares or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers as permitted by applicable law, which may in turn engage in short sales of the Common Shares in the course of hedging in positions they assume.  The selling shareholders may also sell Common Shares short as permitted by applicable law and deliver Common Shares covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales.  The selling shareholders may also loan or pledge Common Shares to broker-dealers that in turn may sell such shares.

 

The selling shareholders may pledge or grant a security interest in some or all of the convertible preferred stock or Common Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Common Shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.  The selling shareholders also may transfer and donate the Common Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The selling shareholders and any broker-dealer participating in the distribution of the Common Shares may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act.  At the time a particular offering of the Common Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Common Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

 

Under the securities laws of some states, the Common Shares may be sold in such states only through registered or licensed brokers or dealers.  In addition, in some states the Common Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance that any selling shareholder will sell any or all of the Common Shares registered pursuant to the registration statement, of which this prospectus forms a part.

 

The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Common Shares by the selling shareholders and any other participating person.  Regulation M may also restrict the ability of any person engaged in the distribution of the Common Shares to engage in market-making activities with respect to the Common Shares.  All of the foregoing may affect the marketability of the Common Shares and the ability of any person or entity to engage in market-making activities with respect to the Common Shares.

 

We will pay all expenses of the registration of the Common Shares pursuant to the registration rights agreement, estimated to be $[     ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or "blue sky" laws; provided, however, that a selling shareholder will pay all underwriting discounts and selling commissions, if any.  We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities 

 

 

	  	
Exhibit B-Page 2

	  

  

  

  

 

Act, in accordance with the registration rights agreements, or the selling shareholders will be entitled to contribution.  We may be indemnified by the selling shareholders against liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling shareholder specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a part, the Common Shares will be freely tradable in the hands of persons other than our affiliates.

 

 

 

 

 

 

 

	  	
Exhibit B-Page 3

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