None of the securities distributed under the Offering may be traded on the TSX Venture Exchange or otherwise sold in Canada or to or for the benefit of a resident of Canada before March 31, 2006 unless permitted under Canadian securities legislation and the rules of the TSX Venture Exchange.
In addition, Storm Cat has entered into agreements on a new financing to further augment its October 25th U.S. private placement with a raise of an additional U.S. $2.50 million from two investors. Like the additional financing that closed effective November 30, except for an adjustment in pricing to reflect recent market activity, this new financing will be on terms substantially similar to those that applied to the October 25th US private placement. This additional private placement will consist of the sale of 992,063 common shares of the Corporation at a price of U.S. $2.52 per share, resulting in gross proceeds to the Corporation of U.S. $2.50 million. In addition to the common shares, the investors will receive common share warrants exercisable for three tenths (3/10) of a common share, for each common share purchased; each full warrant will be exercisable until October 25, 2007 at an exercise price of U.S. $2.97 per share. In connection with this new financing, the Corporation has agreed to pay placement agent fees in cash in the amount of U.S. $150,000. The closing of this new financing is subject to the acceptance of the TSX Venture Exchange and American Stock Exchange, and satisfaction of customary terms and conditions.
This private placement will be covered by a registration rights agreement substantially similar to that entered into with respect to the Company's October 25th financing, pursuant to which the Corporation will be required to file with the SEC a Registration Statement covering the common shares issued, including any common shares issued upon exercise of the warrants, by December 31, 2005. If the Registration Statement is not filed by December 31, 2005 or is not declared effective by the SEC by April 20, 2006, then the Corporation will be liable to make pro rata payments to each investor who is a party to this new financing in an amount equal to 1.0% of the aggregate amount invested by such investor for each 30-day period or pro rata for any portion thereof following such deadlines.
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