AGENCY
AGREEMENT
Apollo Gold Corporation
4601 DTC Blvd.
Suite 750
Denver, Colorado
Attention: R. David Russell,
CEO
Dear Sirs:
In furtherance of a letter agreement (the "
Letter Agreement ") between Apollo Gold
Corporation (the " Corporation ") and
Regent Mercantile Bancorp Inc. (" Regent " or
the " Agent ") dated as of December 16, 2004, the
Agent hereby agrees to act as sole and exclusive agent for sale by
way of a private placement, on a best efforts basis, and pursuant
to the Registration Statement, the Base Prospectus and the
Prospectus Supplement (all as defined below) in the Non-US
Jurisdictions (as defined below) of up to 10,625,000 units (the "
Units ") of the Corporation, subject to an
over-allotment option (the " Over-Allotment ") to
increase the size of the Offering (as defined below) to 12,500,000
Units at a price of US$0.75 per Unit, each Unit comprised of one
common share (a " Common
Share ") and three-quarters (3/4) of one Common
Share purchase warrant (a " Warrant "), each whole
Warrant exercisable at US$1.00 per Common Share for up to 24-months
following the Closing (as defined below) at which it was issued for
gross proceeds of up to US$9,375,000 (the "
Offering "). The Over-Allotment will be
exercisable by the Agent up to 48-hours prior to the closing time
of the Second Closing (as defined below). The Offering shall be
conducted in two tranches. The first tranche (the " First
Closing ") will be completed as of the date of this
Agreement. The second tranche (the " Second
Closing ") will be completed on or about January 25, 2005,
or such other date as the Agent and the Corporation may mutually
agree.
As further set out in Section
2 of this Agreement, as consideration for the services
of Regent as exclusive agent in connection with the Offering, the
Corporation agrees to pay Regent the Agent Fees (as defined below)
equal to 6.5% of the aggregate Gross Proceeds of the Offering,
payable on a pro rata basis on the First Closing and on
the Second Closing, by certified cheque or bank draft. Also, the
Offering will also consist of the Compensation Warrants (as defined
below) that are issuable on the Second Closing and are exercisable
for a period of 24-months following the Second Closing. The
Compensation Warrants will allow the Agent to purchase that number
of Units of the Corporation consisting of one Agent Common Share
and three-quarters (3/4) of an Agent Warrant ("
Compensation Units ") which is equal to 10% of the
aggregate Units that are placed under the Offering. The exercise
price of the Compensation Warrants will be US$0.75.
The Units, including the Common Shares and
Warrants, as well as the Compensation Warrants are known herein as
the " Offered Securities ".
It is understood that the sale of the Offered
Securities will take place (i) in the Province of Ontario (the "
Offering Provincial
Jurisdiction "); and (ii) in other jurisdictions
as may be agreed to by the Corporation, provided that the
Corporation is not required to file a prospectus or other
disclosure document or become subject to continuing obligations in
such other jurisdictions, in each case in accordance with the
provisions of this Agreement.
INTERPRETATION
Unless expressly provided otherwise, where
used in this Agreement or any schedule hereto, the following terms
shall have the following meanings, respectively:
" Affiliates " shall have the
meaning in Subsection 1(2) of the Securities Act
(Ontario).
" Agent " shall have the
meaning given on Page 1 hereof.
" Agent Common Shares "
means the Common Shares of the Corporation
issuable upon the exercise of the Compensation Warrants.
" Agent Fees " shall have the
meaning ascribed thereto in subsection 2(a)
of this Agreement.
" Agent's Personnel " has the
meaning ascribed thereto in Section 10 of
this Agreement.
" Agent Warrants " means the
Warrants issuable upon the exercise of the Compensation Warrants
that are exercisable for a period of two-years from the date of the
issuance of the Compensation Warrants from which they derived.
" Agreement " means this
agreement resulting from the acceptance hereof by the
Corporation.
" AMEX " means the American
Stock Exchange.
" Applicable Securities Laws
" means, collectively, the applicable securities laws of the
Offering Jurisdictions, the regulations, rules, rulings and orders
made thereunder, the applicable published policy statements issued
by the Securities Commissions thereunder and the securities
legislation and published policies of such other jurisdiction, the
securities laws of which are applicable to the sale of the Offered
Securities on the terms and conditions set out in this
Agreement.
" Base Prospectus " means the
prospectus filed with the Registration Statement.
" Business Day " shall mean
any day except Saturday, Sunday or a statutory holiday in Toronto,
Ontario and Denver, Colorado.
" Canadian Offering
Memorandum " means the Canadian offering memorandum dated
the date hereof, which includes the Base Prospectus, the Prospectus
Supplement and the Prospectus Supplement Amendment.
" Closing " means the First
Closing and/or the Second Closing, as appropriate.
" Common Shares " means the
common shares in the capital of the Corporation.
" Compensation Units " shall
have the meaning given on Page 1 hereof.
" Compensation Warrants " has
the meaning given in Section 2(c) of this
Agreement.
" Corporation " means Apollo
Gold Corporation.
" Disclosure Documents "
means, collectively, all of the documentation which has been filed
by or on behalf of the Corporation or any predecessor thereto since
December 31, 2001 with the relevant securities regulatory
authorities pursuant to the requirements of Applicable Securities
Laws, including all press releases and financial statements filed
on SEDAR and all filings with the SEC.
" Exchange " means the
Toronto Stock Exchange.
" Financial Statements "
shall have the meaning ascribed thereto in
subsection 4(aa) of this
Agreement.
" First Closing " has the
meaning given on Page 1 hereof.
" Gross Proceeds " means the
gross proceeds raised from the sale of the Offered Securities.
" Hazardous Substances "
shall have the meaning ascribed thereto in subsection
4(gg) of this Agreement.
" Indemnified Party " shall
have the meaning ascribed thereto in Section
10 of this Agreement.
" Letter Agreement " has the
meaning given on Page 1 hereof.
" Material Agreement " shall
have the meaning ascribed thereto in subsection 4(m)
of this Agreement.
" material change " means a
material change for the purposes of the Applicable Securities Laws
or any of them or where undefined under the Applicable Securities
Laws of a jurisdiction means a change in the business, operations
or capital of the Corporation that would reasonably be expected to
have a significant effect on the market price or value of any of
the Corporation's securities and includes a decision to implement
such a change made by the Corporation's board of directors or by
senior management of the Corporation who believe that confirmation
of the decision by the board of directors is probable.
" material fact " means a
material fact for the purposes of the Applicable Securities Laws or
any of them or where undefined under the Applicable Securities Laws
of a jurisdiction means a fact that significantly affects, or would
reasonably be expected to have a significant effect on, the market
price or value of the Corporation's securities.
" misrepresentation " means a
misrepresentation for the purposes of the Applicable Securities
Laws or any of them or where undefined under the Applicable
Securities Laws of a jurisdiction means (i) an untrue statement of
a material fact, or (ii) an omission to state a material fact that
is required to be stated or that is necessary to make a statement
that is not misleading in light of the circumstances in which it
was made.
" Non-US Offering
Jurisdictions " means the Offering Jurisdictions other
than the United States.
" Offered Securities " has
the meaning given on Page 1 hereof.
" Offering " has the meaning
given on Page 1 hereof.
" Offering Provincial
Jurisdiction " has the meaning given on Page 2 hereof.
" Offering Jurisdictions "
means the Offering Provincial Jurisdiction where Offered Securities
are being sold and any other jurisdiction in which Offered
Securities are sold.
" person " includes any
individual, corporation, limited partnership, general partnership,
joint stock company or association, joint venture association,
company, trust, bank, trust company, land trust, investment trust,
society or other entity, organization, syndicate, whether
incorporated or not, trustee, executor or other legal personal
representative, and governments and agencies and political
subdivisions thereof.
" Permitted Encumbrances "
means the permitted encumbrances set out in Schedule
"F" .
" Private Placement
Exemptions " means (i) in respect of Ontario, the
"accredited investor" exemption under section 2.3 of Ontario
Securities Commission Rule 45-501 - Exempt Distributions ;
(ii) in respect of British Columbia and Alberta the "accredited
investor" exemption under section 5.1 of Multilateral Instrument
45-103 - Capital Raising Exemptions ; and (iii) in respect
of the Offering Provincial Jurisdiction other than Ontario, the
threshold exemptions available under Applicable Securities Laws of
such Offering Provincial Jurisdiction.
" Prospectus Supplement "
means the prospectus supplement that the Corporation agrees to file
with the SEC supplementing the Base Prospectus to register the
Units and the securities underlying the Units for distribution to
the Subscribers.
" Purchasers " means,
collectively or individually, those persons or companies who are
purchasing the Offered Securities as contemplated herein.
" Registration Statement "
means the shelf registration statement filed September 22, 2004
Registration No. 333-119198 pursuant to SEC Rule 415 and declared
effective on October 5, 2004 that the Corporation filed with the
SEC allowing for the sale of up to $100,000,000 of securities of
the Corporation.
" Regulation D " means
Regulation D promulgated by the SEC pursuant to the U.S. Securities
Act.
" Regulation S " means
Regulation S promulgated by the SEC pursuant to the U.S. Securities
Act.
" SEC " means the United
States Securities and Exchange Commission.
" Second Closing " has the
meaning given on Page 1 hereof.
" Securities Commissions "
means the applicable securities regulatory authorities in the
Offering Jurisdictions.
" Significant Interest
Companies " means those companies
in which the Corporation holds 10% or more of the outstanding
voting securities.
" Subscription Agreements "
means the subscription agreements to be entered into between the
respective Purchasers and the Corporation in respect of the
Offering.
" Subsidiaries " means,
collectively, the subsidiaries of the Corporation the particulars
of which are set out in subsection 4(c)
hereof and " Subsidiary " means any one of
them.
" Time of Closing " means
time of the First Closing and/or the Second Closing, as
appropriate.
" Transfer Agent " means CIBC
Mellon Trust Company.
" Unit " has the meaning
given on Page 1 hereof.
" Unit Share " means the
Common Shares comprising part of the Units.
" Unit Warrant Share " means
the Common Shares issuable on the exercise of the Warrants.
" United States " means the
United States of America, its territories and possessions, any
state of the United States, and the District of Columbia.
" U.S. Securities Act " means
the United States Securities Act of 1933, as amended.
" Warrant " has the meaning
given on Page 1 hereof.
The division of this Agreement into sections,
subsections, paragraphs and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement. Unless
something in the subject matter or context is inconsistent
therewith, references herein to sections, subsections, paragraphs
and other subdivisions are to sections, subsections, paragraphs and
other subdivisions of this Agreement. Unless otherwise expressly
provided, all amounts expressed herein in terms of money refer to
lawful currency of Canada and all payments to be made hereunder
shall be made in such currency.
If any provision of this Agreement shall be
adjudged by a competent authority to be invalid or for any reason
unenforceable, such invalidity or unenforceability shall not affect
the validity, enforceability or operation of any other provision
herein.
The following are the schedules attached to
this Agreement, which schedules are deemed to be a part hereof and
are hereby incorporated by reference herein:
Schedule " A
" - INTENTIONALLY DELETED
Schedule " B
" - List of Options, Warrants and Other
Convertible Securities
Schedule " C
" - List of Subsidiaries
Schedule " D
" - Exceptions to Representations and
Warranties of the Corporation
Schedule " E
" - Interest of Insiders in Material
Transactions
Schedule " F
" - Permitted Encumbrances
|
(a)
|
Each Canadian Purchaser shall purchase Offered
Securities under a Private Placement Exemption. The Agent will
notify the Corporation with respect to the identity of any
Purchaser as soon as practicable and with a view to leaving
sufficient time to allow the Corporation to secure compliance with
all relevant regulatory requirements of the applicable Offering
Jurisdictions relating to the sale of the Offered Securities and,
in any event not later than 12:00 p.m. (Toronto time) on the day
before the Closing Date. The Corporation undertakes to file or
cause to be filed all forms or undertakings required to be filed by
the Corporation and to pay all filing fees in connection with the
purchase and sale of the Offered Securities so that the
distribution of such securities may lawfully occur without the
necessity of filing a prospectus or an offering memorandum (apart
from the Canadian Offering Memorandum distributed in conjunction
with the base Prospectus, the Prospectus Supplement and the
Prospectus Supplement Amendment) in Canada or comparable document
elsewhere. The Agent undertakes to use commercially reasonable
efforts to cause Purchasers to complete any forms required by
Applicable Securities Laws if so required.
|
|
(b)
|
INTENTIONALLY DELETED.
|
|
(c)
|
It is understood and agreed that the Agent may
arrange for Purchasers of the Offered Securities in jurisdictions
other than Canada, on a private placement basis, provided that the
sale of such Offered Securities in such other jurisdiction does not
contravene the Applicable Securities Laws of such other
jurisdiction or of Canada and provided that such sale does not
trigger (i) any obligation to prepare and file a prospectus or
similar disclosure document, or any other report with respect to
such purchase in such other jurisdiction, or (ii) any registration
or other obligation on the part of the Corporation in such other
jurisdictions including but not limited to any continuing
obligation in such other jurisdictions.
|
|
(d)
|
The certificate representing the Unit Shares
and the Warrants issued to a resident of Canada will bear a legend
denoting the restrictions on transfer under Applicable Securities
Laws in Canada (including Multilateral Instrument 45-102).
|
|
(e)
|
If at the date of their issue, the applicable
restriction period has not expired, the certificates representing
the Unit Warrant Shares issued to a resident of Canada will bear a
legend as prescribed by Multilateral Instrument 45-102.
|
|
(f)
|
In addition to the foregoing legends, the
certificates representing the Unit Shares and Unit Warrant Shares,
if issued prior to such time as the restrictive legends above are
no longer required under Applicable Securities Laws in Canada,
shall bear, in addition to any legend(s) required by Multilateral
Instrument 45-102, the following legend:
|
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE
SAID SECURITIES CAN NOT BE TRADED THROUGH THE FACILITIES OF SUCH
EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK
EXCHANGE."
|
(a)
|
In consideration for the performance of its
obligations hereunder, the Corporation shall, subject to the
provisions of this Agreement, pay to the Agent an agent fee (the "
Agent Fees ") equal to 6.5% of the Gross
Proceeds.
|
|
(b)
|
The Agent may retain one or more registered
securities brokers or investment dealers to act as selling agent in
connection with the sale of the Offered Securities but the
compensation payable to such selling agents shall be the sole
responsibility of the Agent, and only as permitted by and in
compliance with all Applicable Securities Laws, upon the terms and
conditions set forth in this Agreement and will require each such
selling agent to so agree.
|
|
(c)
|
As additional consideration for the
performance of their obligations hereunder, the Corporation shall
issue to the Agent compensation warrants (the "
Compensation Warrants ") (in such name or names as
the Agent may direct in writing) on the Second Closing. Each
Compensation Warrant will entitle the holder to purchase one
Compensation Unit at US$0.75 per Compensation Unit for a 24-month
period following the date of the Second Closing.
|
|
(d)
|
The certificates representing the Compensation
Warrants and any certificates issued in replacement thereof will
bear the following legend:
|
"THE WARRANTS REPRESENTED BY THIS
WARRANT CERTIFICATE HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A ADOPTED UNDER THE SECURITIES ACT); (B) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT); OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON SHARES
ISSUABLE UPON EXERCISE OF SUCH SECURITY, EXCEPT (A) TO THE ISSUER
OR A SUBSIDIARY THEREOF; (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A ADOPTED UNDER THE SECURITIES ACT (IF
AVAILABLE); (C) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 ADOPTED UNDER THE SECURITIES ACT OR ANOTHER AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE); OR (E) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY, FURNISH TO THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS MAY BE REQUIRED TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTION WITH REGARD TO THIS SECURITY."
"THE COMMON SHARES AND WARRANTS TO BE
ISSUED UPON EXERCISE OF THIS WARRANT WILL NOT BE INITIALLY
REGISTERED AND MAY OR MAY NOT LATER BECOME REGISTERED FOR RESALE
UNDER THE SECURITIES ACT. THE COMMON SHARES AND WARRANTS ISSUED
UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT OR, IN THE OPINION OF COUNSEL TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT."
|
(e)
|
The certificates representing the Agent
Warrants and any certificates issued in replacement thereof will
bear the following legend:
|
"THE WARRANTS REPRESENTED BY THIS
WARRANT CERTIFICATE HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A ADOPTED UNDER THE SECURITIES ACT); (B) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT); OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON SHARES
ISSUABLE UPON EXERCISE OF SUCH SECURITY, EXCEPT (A) TO THE ISSUER
OR A SUBSIDIARY THEREOF; (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A ADOPTED UNDER THE SECURITIES ACT (IF
AVAILABLE); (C) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 ADOPTED UNDER THE SECURITIES ACT OR ANOTHER AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE); OR (E) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY, FURNISH TO THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS MAY BE REQUIRED TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTION WITH REGARD TO THIS SECURITY.
"THE COMMON SHARES TO BE ISSUED UPON
EXERCISE OF THIS WARRANT WILL NOT BE INITIALLY REGISTERED AND MAY
OR MAY NOT LATER BECOME REGISTERED FOR RESALE UNDER THE SECURITIES
ACT. THE COMMON SHARES ISSUED UPON EXERCISE OF THIS WARRANT MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR, IN THE
OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT."
|
3.
|
Covenants and Certification of the
Agent
|
The Agent covenants with the Corporation that
it:
|
(a)
|
will conduct activities and shall cause the
selling agents to conduct their activities in connection with
arranging for purchasers of the Offered Securities in compliance
with the Applicable Securities Laws and will indemnify the
Corporation from all losses incurred by it as a result of a
violation by the Agent or any selling agent retained by it of such
Applicable Securities Laws;
|
|
(b)
|
will not deliver to any prospective Purchaser
any document or material which constitutes an offering memorandum
under Applicable Securities Laws except (i) the Base Prospectus,
the Prospectus Supplement and the Prospectus Supplement Amendment,
which shall be delivered to each Purchaser who is not a resident of
Canada on or prior to Closing together with the Subscription
Agreement for the Units; and (ii) the Canadian Offering Memorandum
which shall be delivered to each Purchaser resident in Canada on or
prior to Closing;
|
|
(c)
|
will not solicit offers to purchase or sell
the Offered Securities so as to require registration thereof or
filing of a prospectus with respect thereto or continuing
obligations on the part of the Corporation under the laws of any
jurisdiction including, without limitation, the United States or
any state thereof, and not solicit offers to purchase or sell the
Offered Securities in any jurisdiction outside of Canada and the
United States where the solicitation or sale of the Offered
Securities would result in any statutory ongoing disclosure
requirements in such jurisdiction or any registration requirements
in such jurisdiction on the part of the Corporation except for the
filing of a notice or report of the solicitation or sale;
|
|
(d)
|
will obtain from each Purchaser an executed
Subscription Agreement in a form reasonably acceptable to the
Corporation and to the Agent relating to the transactions herein
contemplated, together with all documentation as may be necessary
in connection with subscriptions for Offered Securities;
|
|
(e)
|
will refrain from any form of general
advertising or any form of general solicitation in connection with
the Offering including in (A) printed media of general and regular
circulation or any similar medium, (B) radio, (C) television, or
(D) electronic media or conduct any seminar or meeting concerning
the offer and sale of the Offered Securities whose attendees have
been invited by any form of general solicitation or general
advertising, and not make use of any green sheet or other internal
marketing document without the consent of the Corporation, such
consent to be promptly considered and not to be unreasonably
withheld;
|
|
(f)
|
will comply with, and ensure that it and its
selling agents and it and its respective directors, officers,
employees and affiliates comply with all Applicable Securities Laws
and the terms and conditions set forth in this Agreement; and
|
|
(g)
|
certifies to the Corporation (and acknowledges
that the Corporation is relying thereon) that the Agent, and (if
applicable) others for whom they are contracting hereunder, are
resident or otherwise subject to the securities legislation of the
Province of Ontario and can avail themselves of the relevant
Private Placement Exemptions available under the applicable
securities legislation in such province.
|
|
4.
|
Representations and Warranties of
the Corporation
|
The Corporation hereby represents and warrants
to and with the Agent (on its own behalf and on behalf of each of
the Purchasers) that as at the date hereof:
|
(a)
|
the Corporation and each Subsidiary has been
duly organized and is validly existing and in good standing under
the laws of its jurisdiction of organization and has all requisite
power and authority necessary to, and is qualified to, carry on its
business as now conducted, and to own or lease its properties and
assets in all jurisdictions in which it currently carries on
business and/or owns or leases its properties and assets; and the
Corporation has all required corporate power and authority to
create, issue and sell the Offered Securities and the Compensation
Warrants, to enter into this Agreement and the Subscription
Agreements and to carry out the provisions of each of such
agreements;
|
|
(b)
|
the authorized capital of the Corporation
consists of an unlimited number of Common Shares of which, as of
December 16, 2004 (being the date of the Letter Agreement)
81,958,838 Common Shares are issued and outstanding as fully paid
and non-assessable shares in the capital of the Corporation;
|
|
(c)
|
the Corporation has no subsidiaries other than
the Subsidiaries listed in Schedule "C" and the
Corporation beneficially owns, directly or indirectly, the
percentage indicated of all the issued and outstanding shares in
the capital of each Subsidiary free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances, claims
or demands of any kind whatsoever except (i) the security interest
in favour of Standard Bank London Limited in the shares held
indirectly by the Corporation in Florida Canyon Mining, Inc.; and
(ii) the security interest in favour of The Canada Trust Company in
the shares held directly by the Corporation in Apollo Gold, Inc.
and held indirectly by the Corporation in Montana Tunnels Mining,
Inc., Standard Gold Mining, Inc., Mine Development Finance, Inc.
and Apollo Gold Exploration, Inc. pursuant to that certain Trust
Indenture dated November 4, 2004, all of such shares have been duly
authorized and validly issued and are outstanding as fully-paid and
non-assessable shares and no person has any right, agreement or
option, present or future, contingent or absolute, or any right
capable of becoming a right, agreement or option, for the purchase
from the Corporation of any interest in any of such shares or for
the issue or allotment of any unissued shares in the capital of any
Subsidiary or any other security convertible into or exchangeable
for any such shares;
|
|
(d)
|
the Corporation does not have any Significant
Interest Companies other than the Subsidiaries;
|
|
(e)
|
no order prohibiting the sale of the Offered
Securities or the issuance of the Compensation Options has been
issued and no proceedings for such purpose are pending or, to the
knowledge of the Corporation, threatened;
|
|
(f)
|
no person, firm or corporation, as of the date
hereof, has any agreement or option, or any right or privilege
(whether pre-emptive or contractual) capable of becoming an
agreement or option, for the purchase, subscription or issuance of
any securities of the Corporation, other than as set out in
Schedule "D" ;
|
|
(g)
|
other than as disclosed in Schedule
"D" , each of the Corporation and the Subsidiaries has
conducted and is conducting its business in compliance in all
material respects with all applicable laws and regulations of each
jurisdiction in which it carries on business (including, without
limitation, all applicable Canadian federal, provincial, municipal
and local environmental, anti-pollution and licensing laws,
regulations and other lawful requirements of any governmental or
regulatory body, including, but not limited to relevant exploration
and exploitation permits and concessions) and 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
would have a material adverse effect on the Corporation or the
Subsidiaries;
|
|
(h)
|
except as qualified in the Disclosure
Documents, the Corporation or a Subsidiary is the beneficial owner
of the properties, business and assets or the interests in the
properties, business or assets referred to as owned by it in the
Disclosure Documents, all agreements under which the Corporation or
a Subsidiary holds an interest in a property, business or asset are
in good standing according to their terms except where the failure
to be in such good standing does not and will not have a material
adverse effect on the Corporation (on a consolidated basis) or its
properties, business or assets, and the Disclosure Documents were
as at the respective dates thereof true and correct in all material
respects concerning the Corporation and the Subsidiaries, and
contained no misrepresentations;
|
|
(i)
|
all information which has been prepared by the
Corporation relating to the Corporation and the Subsidiaries and
their business, property and liabilities and either publicly
disclosed or provided to the Agent, including all financial,
marketing and operational information provided to the Agent is, as
of the date of such information, true and correct in all material
respects, and no fact or facts have been omitted therefrom which
would make such information materially misleading;
|
|
(j)
|
the Corporation has, and to the best of the
Corporation's knowledge the directors and officers of the
Corporation have, answered every question or inquiry of the Agent
and their counsel in connection with the Agent's due diligence
investigations fully and truthfully;
|
|
(k)
|
the Corporation is not aware of any
legislation, or proposed legislation (published by a legislative
body), which it anticipates will materially and adversely affect
the business, affairs, operations, assets or liabilities
(contingent or otherwise) of the Corporation and the Subsidiaries,
considered as a whole;
|
|
(l)
|
the Corporation and each Subsidiary has
obtained all certificates, authorizations, permits or licences
necessary to conduct the business now owned or operated by it and
the Corporation has not received any notice of proceedings relating
to the revocation or modification of any material certificate,
authority, permit or license necessary which, if the subject of an
unfavourable decision, ruling or finding would materially and
adversely affect the conduct of the business, operations, financial
condition or income of the Corporation (on a consolidated
basis);
|
|
(m)
|
the execution and delivery of this Agreement
and the Subscription Agreements and the performance of the
transactions contemplated thereunder and the filing with the SEC of
the Supplemental Prospectus and the Resale Registration Statement
does not and will not:
|
|
(i)
|
require the consent, approval, authorization,
registration or qualification of or with any governmental
authority, stock exchange, securities regulatory authority or other
third party, except: (i) such as have been obtained; or (ii) such
as may be required under the applicable by-laws, policies,
regulations and prescribed forms of the Exchange and the AMEX;
|
|
(ii)
|
result in a breach of or default under, nor
create a state of facts which, after notice or lapse of time or
both, would result in a breach of or default under, nor conflict
with:
|
|
(A)
|
any of the terms, conditions or provisions of
the constating documents or resolutions of the shareholders,
directors or any committee of directors of the Corporation or any
Subsidiary or any material indenture, agreement or instrument to
which the Corporation or any Subsidiary is a party or by which it
or they are contractually bound; or
|
|
(B)
|
any statute, rule, regulation or law
applicable to the Corporation, or the Subsidiaries including,
without limitation, the Applicable Securities Laws of the Offering
Jurisdictions, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Corporation or
the Subsidiaries; or
|
|
(C)
|
any material mortgage, note, indenture,
contract, agreement (written or oral), instrument, lease or other
document to which the Corporation or any Subsidiary is a party or
by which the Corporation or any Subsidiary or a material portion of
the assets of the Corporation or any Subsidiary are bound (a "
Material Agreement "), or any judgment, decree,
order, statute, rule or regulation applicable to any of them;
and
|
|
(iii)
|
except as encumbered hereby, only, give rise
to any lien, charge or claim in or with respect to the properties
or assets now owned or hereafter acquired by the Corporation or any
Subsidiary or the acceleration of or the maturity of any debt under
any indenture, mortgage, lease, agreement or instrument binding or
affecting any of them or any of their properties;
|
|
(n)
|
the auditors of the Corporation are
independent public accountants as required by the Applicable
Securities Laws and there has never been any reportable
disagreement (within the meaning of National Instrument 51-102 -
Continuous Disclosure ) with the present or any former
auditor of the Corporation;
|
|
(o)
|
the Corporation and each Subsidiary has filed
all federal, provincial, territorial, state, local and foreign tax
returns that are required to be filed or have requested extensions
thereof (except in any case in which the failure so to file would
not have a material adverse effect on the assets and properties,
business, results of operations or condition (financial or
otherwise) of the Corporation) on a consolidated basis and has paid
all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith;
|
|
(p)
|
the Corporation and each Subsidiary has
established on its books and records reserves that are adequate for
the payment of all taxes not yet due and payable and there are no
liens for taxes on the assets of the Corporation or any Subsidiary
and there are no audits known by the Corporation's management to be
pending of the tax returns of the Corporation or any Subsidiary
(whether federal, state, provincial, territorial, local or foreign)
and there are no claims which have been or may be asserted relating
to any such tax returns, which audits and claims, if determined
adversely, would result in the assertion by any governmental agency
of any deficiency that would have a material adverse effect on the
assets or propertie
|
|
