Complete the next paragraph of this contract: Schedules: Schedule "A" - United States Compliance with Securities Laws 1. Definitions In this Agreement: (a) "Agent" and "Agents" have the respective meanings given to them above; (b) "Agents' Counsel" means Dentons Canada LLP; (c) "Agents' Fee" has the meaning given in Section 1(1)(a); (d) "Agreement" means the agreement resulting from the acceptance by the Corporation of the offer made by the Agents by this letter; (e) "Applicable Securities Laws" means all applicable securities laws, rules, regulations, notices and published policies of the Selling Jurisdictions in Canada and the United States; (f) "Business Day" means any day other than a Saturday, Sunday or statutory or civic holiday in Toronto, Ontario; (g) "Closing" means the completion of the Offering; (h) "Closing Date" means May 21, 2015 or such other date as the Corporation and the Agents may agree upon in writing, or as may be changed pursuant to this Agreement; (i) "Closing Time" means 8:00 a.m. (Toronto time) on the Closing Date; (j) "Corporation" has the meaning given to it above; (k) "Corporation's Auditors" means such firm of chartered accountants as the Corporation may have appointed or may from time to time appoint as auditors of the Corporation, including prior auditors of the Corporation, as applicable; (l) "Corporation's Counsel" means Fogler Rubinoff LLP; (m) "Compensation Options" has the meaning ascribed thereto on the face page of this Agreement; (n) "Compensation Option Certificates" shall mean the certificates representing the Compensation Options; (o) "Debt Instrument" means any loan, bond, debenture, promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability; 2
(p) "Due Diligence Session" means the due diligence question and answer session held with management of the Corporation on May 21, 2015 and July 14, 2014; (q) "Environmental Laws" means any federal, state, provincial, territorial or local law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the regulation, protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, control, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials or Conditions, and "Hazardous Materials or Conditions" means any material, substance (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) or condition that is regulated by or may give rise to liability under any Environmental Laws; (r) "Financial Statements" means the audited consolidated financial statements of the Corporation as at and for the years ended December 31, 2013 and 2014 and for the unaudited interim financial statements for the period ended March 31, 2015 together with the notes thereto; (s) "Governmental Authority (ies)" means governments, regulatory authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, Crown corporations, courts, bodies, boards, tribunals or dispute settlement panels or other law, rule or regulation-making organizations or entities: (i) having or purporting to have jurisdiction over the Corporation on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or (ii) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power over the Corporation; (t) "Indemnified Party" has the meaning given to it in Section 11(b); (u) "Lead Agent" has the meaning given to it above; (v) "Material Adverse Effect" or "Material Adverse Change" means any effect, change, event or occurrence that is, or is reasonably likely to be, materially adverse to the results of operations, condition (financial or otherwise), assets, properties, capital, liabilities (contingent or otherwise), cash flow, income or business operations of the Corporation and its subsidiaries taken as a whole; (w) "Material Agreement" means any note, indenture, mortgage or other form of indebtedness and any contract, commitment, agreement (written or oral), joint venture instrument, lease or other document to which the Corporation is a party and which is material to the Corporation on a consolidated basis; (x) "notice" has the meaning given to it in Section 21; 3
(y) "Offered Shares" has the meaning given to it above; (z) "Offering" has the meaning given to it above; (aa) "Offering Price" has the meaning given to it above; (bb) "Person" means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, limited liability company and unlimited liability company; (cc) "Public Record" means the public disclosure of the Corporation filed on SEDAR; (dd) "SEC" means the United States Securities and Exchange Commission; (ee) "SEDAR" means the System for Electronic Document Analysis and Retrieval; (ff) "Securities Commissions" means the securities commissions or similar regulatory authorities in the Selling Jurisdictions; (gg) "Selling Jurisdictions" means all of the provinces of Canada, the United States and such other jurisdictions as the Agents and the Corporation may agree; (hh) "Subscriber" means, for the purposes of this Agreement, the person who executes a Subscription Agreement or, if such person executes a Subscription Agreement as a duly authorized agent of one or more principals, the principal or principals of such person; (ii) "Subscription Agreements" means the agreements entered into by each Subscriber and the Corporation in respect of the Subscriber's subscription for Offered Shares in the form and on terms and conditions satisfactory to each of the Corporation and the Agents, each acting reasonably; (jj) "TSX-V" means the TSX Venture Exchange; (kk) "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia; and (ll) "U.S. Securities Act" means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. In this Agreement, "affiliated", "misrepresentation", "material change", "material fact" and "subsidiary" have the meanings ascribed thereto under the Applicable Securities Laws of the Selling Jurisdictions in Canada, and "distribution" means "distribution" or "distribution to the public", as the case may be, as defined under the Applicable Securities Laws of the Selling Jurisdictions in Canada, and "distribute" has a corresponding meaning. In this Agreement, unless there is something in the subject matter or context inconsistent therewith: 4
(a) words used herein importing the singular number include the plural and vice versa, words importing the use of any gender include all genders, and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations, and the rest of the sentence is construed as if the necessary grammatical and terminological changes had been made; (b) references herein to any agreement or instrument, including this Agreement, are deemed to be references to the agreement or instrument as varied, amended, modified, supplemented or replaced from time to time, and any specific references herein to any legislation or enactment are deemed to be references to such legislation or enactment as the same may be amended or replaced from time to time; and (c) all dollar amounts in this Agreement are expressed in Canadian dollars except where expressly indicated otherwise. The division of this Agreement into sections, subsections, paragraphs, subparagraphs and clauses and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement. The terms "this Agreement", "hereof', "herein", "hereunder" and similar expressions refer to this Agreement and the schedules hereto and not to any particular section, paragraph, subparagraph, clause or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. 2. Restrictions on Sale Each of the Agents severally and not jointly covenants and agrees with the Corporation that it will: (a) not solicit subscriptions for Offered Shares, trade in Offered Shares or otherwise do any act in furtherance of a trade of Offered Shares outside of the Selling Jurisdictions; (b) in connection with the offer and sale of the Offered Shares in Canada, the Agents will only offer and sell the Offered Shares to persons resident in Canada who are: (i) "accredited investors" (as defined in National Instrument 45-106 - Prospectus Exemptions or, in Ontario, Section 73.3 of the Securities Act (Ontario)), and (ii) purchasing as principals; and (c) not advertise the proposed sale of the Offered Shares in printed media of general and regular paid circulation, radio, television or the internet nor provide or make available to prospective purchasers of Offered Shares any document or material which would constitute an offering memorandum as defined in Applicable Securities Laws in Canada. 5
The parties hereto acknowledge that the Offered Shares have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and may not be offered or sold in the United States except pursuant to transactions that are exempt from the registration requirements of the U.S. Securities Act and the applicable securities laws of any U.S. state. Accordingly, the Corporation and the Agents hereby agree that offers and sales of the Offered Shares in the United States shall be made only to "accredited investors" within the meaning of Rule 501(a) of Regulation D under the U.S. Securities Act in the manner specified in Schedule A hereto, which terms and conditions are hereby incorporated by reference in and shall form a part of this Agreement. Any agreement between an Agent and the members of any sub-agent group or selling group formed in connection with the Offering shall contain the restrictions in Schedule A hereto. 3. Delivery of Subscription Agreements The Agents agree to obtain from each Subscriber executed Subscription Agreements (including the execution of applicable Schedules to such Subscription Agreements) and deliver such Subscription Agreements (including applicable Schedules) to the Corporation at or prior to the Closing Time. In addition, the Agents agree to obtain from each Subscriber such forms and other documents as may be required by the Securities Commissions and by the Corporation's registrar and provided by the Corporation to the Agents for delivery under this Agreement. The Corporation and the Agents shall agree on the allocation of the Offered Shares amongst the Subscribers. 4. Representations and Warranties of the Corporation The Corporation represents, warrants and covenants to the Agents, and acknowledges that the Agents are relying upon such representations, warranties and covenants, that: (a) the Corporation (i) is duly amalgamated under the Business Corporations Act (Ontario) (the "Act") and is up-to-date in respect of all material corporate filings and is in good standing under such Act; (ii) has all requisite corporate power, authority and capacity to carry on its business as now conducted and to own, lease and operate its properties and assets (including as described in the Public Disclosure); and (iii) has all requisite corporate power, authority and capacity to create, issue and sell the Offered Shares, to enter into this Agency Agreement and the Compensation Option Certificates, and to carry out the provisions contained in hereunder and thereunder; (b) the Corporation does not have any material subsidiaries; (c) no proceedings have been taken, instituted or, to the knowledge of the Corporation, are pending for the dissolution or liquidation of the Corporation; (d) the Corporation has conducted its business in compliance, in all material respects, with all applicable laws, rules and regulations (including all applicable federal, national, provincial, municipal, and local environmental anti-pollution and licensing laws, regulations and other lawful requirements of any governmental or regulatory body, of each jurisdiction in which its business is carried on and is licensed, registered or qualified in all jurisdictions in which it owns, leases or operates its property or carries on business to enable its business to be carried on as now conducted and its property and assets to be owned, leased and operated and all such licences, registrations and qualifications are valid, subsisting and in good standing and it has not received a notice of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such laws, regulations or permits which could reasonably be expected to have a Material Adverse Effect and all such licences, registrations and qualifications are valid, subsisting and in good standing; 6