EXECUTION COPY
,
AGENCY AGREEMENT
October 7 th ,
2004
FRONTEER DEVELOPMENT GROUP
INC.
1066 West Hastings Street, Suite
1640
Vancouver, British
Columbia
V6E 3X1
Attention: Mark O'Dea, President and
Chief Executive Officer
Dear Sirs:
Re:
Private Placement of
Shares
We, Pacific International Securities
Inc. and Toll Cross Securities Inc. (collectively, the "Agents"),
understand that Fronteer Development Group Inc. (the "Corporation")
proposes to undertake a private placement of up to 880,000
flow-through common shares of the Corporation (the "Shares") having
the attributes specified in this agreement (the "Agreement") at a
price of $1.25 per Share to raise gross proceeds of up to
$1,100,000. Subject to the terms and conditions set forth in this
Agreement, the Corporation hereby appoints the Agents to act as the
Corporation's exclusive agents and each of the Agents accepts the
appointment and agrees to act as an agent of the Corporation and to
use its commercial best efforts to find and introduce to the
Corporation potential Purchasers (as defined herein) to purchase,
by way of private placement, the Shares. The Agents are under no
obligation to purchase any of the Shares, although each Agent may
subscribe for Shares if it so desires.
|
1.
|
|
Definitions
|
|
1.1
|
(a)
(b)
(c)
|
In this Agreement, including any Schedules forming a part of this
Agreement:
"$" means Canadian dollars;
"1933 Act" means the United States Securities Act of 1933,
as amended;
"Accredited Investor" means:
|
(i)
for Purchasers resident in British
Columbia or Alberta, a Purchaser who qualifies as an "accredited
investor" pursuant to Multilateral Instrument 45-103-Capital
Raising Exemptions;
(ii)
for Purchasers resident in Ontario, a
Purchaser who qualifies as an "accredited investor" as defined in
section 1.1 of Rule 45-501-Exempt Distributions of the Ontario
Securities Commission; or
(iii)
(iii)
for Purchasers resident in
Newfoundland and Labrador, a Purchaser who qualifies as an
"accredited investor" pursuant to Rule 45-501 of the Securities
Commission of Newfoundland and Labrador;
(d)
"Agents" means PI and Toll
Cross;
(e)
"Agents' Expenses" has the meaning
given to that term in section 10.4;
(f)
"Agents' Fee" has the meaning given to
that term in section 10.1;
(g)
"Agreement" means this agreement and
includes all Schedules and exhibits attached hereto, in each case
as they may be amended or supplemented from time to
time;
(h)
"Applicable Securities Laws" means, in
respect of each and every offer or sale of Shares, the applicable
securities legislation, rules, policies, instruments, notices and
orders of each of the Qualifying Jurisdictions;
(i)
"Canadian Applicable Securities Laws"
means the applicable securities legislation, rules, policies,
instruments, notices and orders of each of the Provinces of British
Columbia, Alberta, Newfoundland and Labrador and
Ontario;
(j)
"Closing" has the meaning given to
that term in section 9.1;
(k)
"Closing Date" has the meaning given
to that term in section 9.1;
(l)
"Commission Share" has the meaning
given to that term in section 10.1, and "Commission Shares" means
more than one Commission Share;
(m)
"Compensation Option" has the meaning
given to that term in section 10.2, and "Compensation Options"
means more than one Compensation Option;
(n)
"Compensation Option Share" has the
meaning given to that term in section 10.2, and "Compensation
Option Shares" means more than one Compensation Option
Share;
(o)
"Corporate Finance Fee" has the
meaning given to that term in section 10.3;
(p)
"Corporate Finance Fee Share" has the
meaning given to that term in section 10.3, "Corporate Finance Fee
Shares" means more than one Corporate Finance Fee
Share;
(q)
"Distribution" has the meaning given
to that term under Canadian Applicable Securities
Laws;
(r)
"Exchange" means the Toronto Stock
Exchange;
(s)
"Exchange Conditions" has the meaning
given to that term in section 3.5;
(kk)
"Toll Cross" means Toll Cross
Securities Inc.; and
(ll)
"United States" has the meaning given
to that term in Regulation S.
2.
Appointment of
Agents
2.1
The Corporation appoints the Agents as
its exclusive agents and each of the Agents accepts the appointment
and agrees to act as an agent of the Corporation to use its
commercial best efforts to find and introduce to the Corporation
potential Purchasers to purchase, by way of private placement, up
to 880,000 Shares at a price of $1.25 per Share.
3.
Offering Terms
3.1
The Shares will be offered for sale by
the Agents, as agents on behalf of the Corporation, to Purchasers
resident in the Qualifying Jurisdictions.
3.2
The sale of the Shares to Purchasers
is to be effected by the Agents in a manner exempt from any
prospectus or offering memorandum filing or delivery requirements
of the Applicable Securities Laws and without the necessity of
obtaining any order or ruling of the Regulatory Authorities. The
Agents will notify the Corporation with respect to the identity and
jurisdiction of residence of each Purchaser as soon as practicable
and with a view to affording sufficient time to allow the
Corporation to confirm compliance with all Applicable Securities
Laws in connection with the sale of the Shares to the
Purchasers.
3.3
The Agents will obtain from each
Purchaser a properly completed and duly executed Subscription
Agreement and a properly completed and duly executed form of
Accredited Investor questionnaire, as applicable, and a properly
completed and duly executed TSX Private Placement Questionnaire and
Undertaking, each in the form attached as a Schedule to the
Subscription Agreement, together with any additional documentation
as may be requested by the Exchange.
3.4
If, in the opinion of the Agents, it
is necessary, the Agents will form, manage and participate in a
group of sub-agents to offer and sell the Shares as provided for
hereunder. Each sub-agent shall be appropriately registered under
the Applicable Securities Laws so as to permit it to lawfully offer
and sell the Shares in such jurisdictions in which it offers and
sells the Shares. In the event that a selling group is formed, the
Agents will:
(a)
manage the selling group as and to the
extent customary in the securities industry in Canada;
and
(b)
require each member of the selling
group to offer and sell the Shares on the terms set forth in this
Agreement.
3.5
The Corporation covenants to use its
commercial best efforts to satisfy as expeditiously as possible,
each of the conditions of the Exchange (the "Exchange Conditions")
required to be satisfied prior to the Exchange's acceptance of the
Corporation's notice of the Private Placement.
3.6
The terms and conditions of the
Compensation Options and the attributes and characteristics of the
Compensation Options will be substantially as described in this
Agreement subject to the changes, if any, that the Corporation and
the Agents (each on its behalf) may agree to.
3.7
The Corporation and each of the Agents
confirms that the Private Placement has not been, and agrees that
it will not be, advertised in any way.
3.8
No selling or promotional expenses
will be paid or incurred in connection with the Private Placement,
except for professional services or for services performed by a
registered dealer.
3.9
The Agents acknowledge that the
Shares, the Commission Shares, the Corporate Finance Fee Shares,
the Compensation Options and the Compensation Option Shares have
not been, and will not be, registered under the 1933 Act or
applicable state securities laws and may not be offered or sold
except outside the United States in accordance with Regulation
S.
4.
Representations and Warranties of
the Corporation
4.1
The Corporation represents and
warrants to the Agents (each on its own behalf and on behalf of the
Purchasers), and acknowledges that the Agents are relying upon such
representations and warranties in entering into this Agreement,
that:
(a)
the Corporation has no material
subsidiaries;
(b)
the Corporation is a valid and
subsisting corporation duly incorporated and in good standing under
the Business Corporations Act (Ontario) with respect to the
filing of annual reports with the Registrar of Companies
(Ontario);
(c)
the Corporation is a reporting issuer
only in the Provinces of British Columbia, Alberta and Ontario and
the Corporation, to the best of its knowledge, is not in default of
any of the requirements of the Canadian Applicable Securities
Laws;
(d)
the authorized capital of the
Corporation consists of an unlimited number of common shares
without par value of which 31,492,277 common shares are issued and
outstanding as of the date hereof as fully paid and
non-assessable;
(e)
the common shares of the Corporation
are listed and posted for trading on the Exchange and, to the best
of its knowledge, the Corporation is not in default of any of the
listing requirements of the Exchange;
(f)
except for the Subscription
Agreements, and the securities issuable to the Agents hereunder,
and any options, warrants, agreements and convertible notes
disclosed in Schedule "A" to this Agreement, there are no, nor will
there be immediately prior to the Time of Closing, documents,
instruments or other writings of any kind whatsoever which
constitute a "security" (as that term is defined under Canadian
Applicable Securities Laws) of the Corporation;
(g)
subject to due exercise (including
payment in full of the applicable subscription price, if any) of
the instruments pursuant to which they are issued, if any, upon
their issuance, the Shares, the Commission Shares, the Corporate
Finance Fee Shares and the Compensation Option Shares will be
validly issued and outstanding as fully paid and non-assessable
common shares of the Corporation;
(h)
upon their issuance, the Compensation
Options will have been validly created and issued and will be
outstanding, registered in the names of the holders
thereof;
(i)
of the material transactions of the
Corporation have been promptly and properly recorded or filed in or
with the books or records of the Corporation and the minute books
of the Corporation contain all records of the meetings and
proceedings of the Corporation's directors, shareholders and other
committees, if any;
(j)
with respect to the two years
preceding the date hereof, all prospectuses, annual information
forms, material change reports, shareholder communications, press
releases, publicly filed financial statements, and other disclosure
documents of the Corporation (collectively the "Disclosure
Documents") contain no untrue statement of a Material Fact relating
to the Corporation as at the date on which such documents were
filed on SEDAR nor do they omit to state a Material Fact relating
to the Corporation which, at the date on which such documents were
filed on SEDAR, was required to have been stated or was necessary
to prevent a statement that was made from being false or misleading
in the circumstances in which it was made and were prepared in
accordance with and complied with Applicable Securities
Laws;
(k)
the Corporation holds all material
licences and permits that are required for carrying on its business
in the manner in which such business has been carried on and each
of the foregoing is in full force and effect;
(1)
the Corporation has the corporate
power and capacity to own the assets owned by it and to carry on
the business carried on by it and the Corporation is duly qualified
to carry on business in all jurisdictions in which it carries on
business;
(m)
the Corporation has good and
marketable title to its assets free and clear of all liens, charges
and encumbrances of any kind whatsoever except as detailed in the
agreements with respect to the acquisition of such assets as set
forth in Schedule "B" or in any relevant title opinions previously
obtained by it with respect to any
-7
such assets (copies of which have been
provided to the Agents) or set out in the Corporation's Disclosure
Documents;
(n)
the Corporation holds either
exploration or exploitation concessions or claims or other
conventional property, proprietary or contractual interests or
rights, recognized in the jurisdiction in which a particular
mineral property is located, in respect of the minerals located in
properties in which it has, or has a right to acquire, an interest
under valid, subsisting and enforceable title documents or other
recognized and enforceable agreements or instruments, sufficient to
permit it to explore the minerals relating thereto, all such
property, leases or claims and all property, leases or claims in
which it has any interest or right have been validly located and
recorded in accordance with all applicable laws and are valid and
subsisting, it has all necessary surface rights, access rights and
other necessary rights and interests relating to the mineral
properties in which it has an interest granting it the right and
ability to explore for minerals for development purposes as are
appropriate in view of the rights and interest therein of it, with
only such exceptions as do not materially interfere with the use
made by it of the rights or interests so held, and each of the
proprietary interests or rights and each of the documents,
agreements and instruments and obligations relating thereto
referred to above is currently in good standing in its
name;
(o)
the Corporation is current with all
material filings required to be made in all jurisdictions in which
it exists or carries on any material business and the Corporation
is not in default of any filings required to be made under
Applicable Securities Laws;
(p)
the audited consolidated financial
statements of the Corporation for its fiscal year ended December
31, 2003 and the unaudited consolidated financial statements of the
Corporation for the interim six month period ended June 30, 2004
(collectively, the "Financial Statements") are true and correct in
every material respect and present fairly and accurately the
consolidated financial position and results of the operations of
the Corporation for the periods then ended and the Financial
Statements have been prepared in accordance with Canadian generally
accepted accounting principles applied on a consistent
basis;
(q)
there are no material liabilities of
the Corporation, whether direct, indirect, absolute or, to the best
of the Corporation's knowledge, contingent or otherwise which are
not disclosed or reflected in the Corporation's Financial
Statements except those incurred in the ordinary course of business
of the Corporation since June 30, 2004 and which are recorded in
the books and records of the Corporation;
(r)
since June 30, 2004 there has not been
any adverse Material Change of any kind whatsoever in the financial
position or condition of the Corporation, or any damage, loss or
other change of any kind whatsoever in circumstances materially
affecting the business or assets of the Corporation, or the right
or capacity of the Corporation to carry on its
business;
-8
(s)
the contracts and agreements set out
in Schedule "B" hereto constitute all of the material contracts and
agreements of the Corporation presently in force, and all such
contracts and agreements are in good standing in all material
respects and not in default in any respect;
(t)
all tax returns and reports of the
Corporation required by law to have been filed have been filed and
are substantially true, complete and correct and all taxes and
other government charges of any kind whatsoever of it have been
paid or accrued in the Financial Statements;
(u)
except as disclosed in Schedule "C"
hereto, to the best of its knowledge, there are no actions, suits,
judgments, investigations or proceedings of any kind whatsoever
outstanding, pending or threatened against or affecting the
Corporation or its directors, officers or promoters at law or in
equity or before or by any federal, provincial, state, municipal or
other governmental department, commission, board, bureau or agency
of any kind whatsoever which would result in an adverse Material
Change in the financial position, business or prospects of the
Corporation and, to the best of its knowledge, there is no basis
therefor;
(v)
neither the Corporation nor, to the
best of the Corporation's knowledge, any of its directors, officers
and promoters are in breach of any law, ordinance, statute,
regulation, by-law, order or decree of any kind whatsoever which
breach would have a material adverse effect on the financial
position, business or prospects of the Corporation;
(w)
the Corporation has all requisite
power and capacity and good and sufficient right and authority to
enter into, deliver and carry out its obligations under this
Agreement and the Subscription Agreements and to complete the
transactions contemplated under this Agreement on the terms and
conditions set forth herein;
(x)
this Agreement has been authorized,
executed and delivered by the Corporation and constitutes a valid
and legally binding obligation of the Corporation enforceable
against the Corporation in accordance with the terms thereof and,
upon being executed and delivered, each of the Subscription
Agreements and the certificates representing the Compensation
Options will constitute a valid and legally binding obligation of
the Corporation enforceable against the Corporation in accordance
with the terms thereof, subject to laws of general application with
respect to bankruptcy and creditors' rights and the principles of
equity;
(y)
the execution and delivery of this
Agreement and the Subscription Agreements, the performance of its
obligations under this Agreement and the completion of the
transactions contemplated under this Agreement will not conflict
with, or result in the breach of or the acceleration of any
indebtedness under, or constitute default under, the Articles or
By-Laws of the Corporation or any indenture, mortgage, agreement,
lease, licence or other instrument of any kind whatsoever to which
the Corporation is a party or by which it or any of its properties
or assets is bound, or, to the best of its knowledge, any statute
or any judgment, decree, order, rule,
policy or regulation of any court,
governmental authority or administrative body of any kind
whatsoever applicable to the Corporation or any of its properties
or assets, which could have a material adverse effect on the
condition, business, properties or results of operations of the
Corporation; and
(z)
except as disclosed herein and in the
Disclosure Documents, to the best of its knowledge, no action has
been taken by any persons which would in any way limit, restrict or
cause interference with any mineral exploration and development
work which either the Corporation or the Subsidiary currently
proposes to carry out on its mineral properties.
4.2
The representations and warranties of
the Corporation contained in this Section 4 of the Agreement shall
be true at the applicable Time of Closing and the applicable
Closing Date as though they were made at the applicable Time of
Closing and the applicable Closing Date and they shall survive the
completion of the transactions contemplated under this Agreement
for a period of two years from the applicable Closing
Date.
5.
Representations and Warranties of
the Agents ,
5.1
Each of the Agents represents and
warrants to the Corporation, and acknowledges that the Corporation
is relying upon such representations and warranties in entering
into this Agreement, that:
(a)
the Agent is a valid and subsisting
corporation duly incorporated and in good standing under the laws
of the jurisdiction in which it is incorporated;
(b)
the Agent has not entered, and will
not enter, into any contractual arrangement with respect to the
Private Placement without the prior written consent of the
Corporation, except for this Agreement and any agreement with its
affiliates;
(c)
the Agent holds all licences and
permits that are required for carrying on its business in the
manner in which such business has been carried on;
(d)
the Agent is a member in good standing
with the Exchange;
(e)
the Agent has all requisite power and
capacity and good and sufficient right and authority to enter into,
deliver and carry out its obligations under this Agreement and to
complete the transactions contemplated under this Agreement on the
terms and conditions set forth herein;
(f)
the Agent is appropriately registered
under the Applicable Securities Laws so as to permit it to lawfully
fulfil its obligations hereunder; and
the Agent is an "accredited investor"
under Ontario Securities Commission Rule 45-501 - Exempt
Distributions and Multilateral Instrument 45-102 - Capital Raising
Exemptions by virtue of being a company registered under the
Securities
-10-
Act (Ontario) and Securities Act (British
Columbia) as an advisor or dealer, other than a limited market
dealer.
5.2
The representations and warranties of
the Agents contained in this Agreement shall be true at the
applicable Time of C
