UNDERWRITING/AGENCY AGREEMENT
UNDERWRITING/AGENCY
AGREEMENT
October
31, 2007
Apollo
Gold Corporation
0000
X.
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx
X.X.X.
| Attention: |
Mr.
R. Xxxxx Xxxxxxx
|
President,
CEO and Director
Re: Issue
and Sale of Flow-Through Shares
Xxxxxxx
Securities Inc. (the “Underwriter”)
understands that Apollo Gold Corporation (the “Corporation”)
proposes to issue and sell, by way of private placement, up to 7,454,545 common
shares of the Corporation issued on a “flow-through” basis pursuant to the
Income
Tax Act
(Canada)
(the “Flow-Through
Shares”)
at a
price of C$0.55 per Flow-Through Share for aggregate gross proceeds of up to
C$4,100,000, subject to the terms and conditions as set out below (the
“Offering”).
Subject
to the terms and conditions hereof, the Underwriter agrees to (i) purchase
4,600,000 Flow-Through Shares on a “bought deal” basis with the right to
substitute purchasers (the “Bought
Deal Offering”);
and
(ii) act
as
the sole and exclusive agent of the Corporation on a “best efforts” basis to
sell up to 2,854,545 Flow-Through Shares (the “Best
Efforts Offering”).
The
Bought Deal Offering and the Best Efforts Offering shall be conducted on a
private placement basis for completion on
the
Closing Date (as defined herein) in the Selling Jurisdictions (as defined
herein) at a price of C$0.55 per Flow-Through Share. The Underwriter is
authorized to endeavour to obtain commitments from others to purchase the Flow
Through Shares to be purchased in the Bought Deal Offering directly from the
Corporation, which shall result in a corresponding reduction in the number
of
Flow Though Shares required to be purchased by the Underwriter. For greater
certainty, in the event that the Underwriter secures substitute purchaser
subscriptions for less than 4,600,000 Flow-Through Shares, the Underwriter
hereby agrees to purchase that number of Flow-Through Shares from the
Corporation as would result in a total of 4,600,000 Flow-Through Shares being
issued. However, the Underwriter shall have no obligation to purchase the Flow
Through Shares to be sold in the Best Efforts Offering as principal. The
Corporation hereby agrees to issue and sell to the Underwriter, on the Closing
Date, at a price of C$0.55 per Flow-Through Share, that number of Flow-Through
Shares sold by the Underwriter in the Bought Deal Offering and the Best Efforts
Offering up to 7,454,545 Flow-Through Shares.
The
Flow-Through Shares will be issued and sold pursuant to exemptions under
Applicable Securities Laws (as defined herein) in the Selling Jurisdictions
in
accordance with the provisions hereof.
In
connection with the offering and sale of the Flow-Through Shares, the
Underwriter shall be entitled to retain as sub-agents other registered
securities dealers, provided the Underwriter will at all times lead manage
the
Offering, and may receive (for delivery to the Corporation at the Closing Time)
subscriptions for Flow-Through Shares from other registered securities dealers.
The fee payable to such sub-agents shall be for the account of the Underwriter
and shall not exceed the fee payable to the Underwriter hereunder. The
Underwriter shall, however, be under no obligation to engage any
sub-agent.
In
consideration for its services hereunder, the Underwriter shall be entitled
to
the fee and the Compensation Options (as defined herein) provided for in Section
9. That fee shall be payable and the Compensation Options shall be
issuable at the Closing Time upon the closing of the sale of the Flow-Through
Shares. For greater certainty, the services provided by the Underwriter pursuant
to this Agreement will not be subject to the Goods and Services Tax provided
for
in the Excise
Tax Act
(Canada)
and taxable supplies will be incidental to the exempt financial services
provided.
The
following are the further terms and conditions of this Agreement:
|
Section
1
|
Definitions
|
As
used
in this Agreement, including the paragraphs prior to this definitional section
and any amendments hereto, unless the context otherwise requires:
|
(a)
|
“Agreement”
means this agreement and not any particular Article or Section or
other
portion except as may be specified, and words such as “hereto”,
“herein”
and “hereby”
refer to this Agreement as the context
requires;
|
|
(b)
|
“Applicable
Securities Laws”
includes, without limitation, all applicable securities laws, rules,
regulations, instruments, notices, blanket orders, decision documents,
statements, circulars, procedures and policies in the Selling
Jurisdictions and in the United States including, without limitation,
the
policies and by-laws of the
Exchanges;
|
|
(c)
|
“business
day”
means a day which is not Saturday, Sunday or a legal holiday in Toronto,
Ontario;
|
|
(d)
|
“Canadian
Exploration Expense(s)”
or “CEE”
means Canadian exploration expense as described in paragraph (f)
of the
definition of “Canadian
exploration expense”
in subsection 66.1(6) of the Tax Act or that would be described in
paragraph (h) of such definition if the reference therein to “paragraphs
(a) to (d) and (f) to (g.1)”
were a reference to paragraph (f), excluding expenses that are
“Canadian
exploration and development overhead expenses”
(as defined in the regulations to the Tax Act for purposes of paragraph
66(12.6)(b) of the Tax Act) of the Corporation or amounts which constitute
specified expenses for seismic data described in paragraph 66(12.6)(b.1)
of the Tax Act or any expenses for prepaid services or rent that
do not
qualify as outlays and expenses for the period as described in the
definition of “expense”
in subsection 66(15) of the Tax
Act;
|
-2-
|
(e)
|
“Closing
Date”
means October 31, 2007, or such other date or dates as the Underwriter
and
the Corporation may agree in
writing;
|
|
(f)
|
“Closing
Time”
means 9:00 a.m. (Toronto time), or such other time on the Closing
Date as
the Underwriter and the Corporation may
agree;
|
|
(g)
|
“Commitment
Amount”
means C$0.55 multiplied by the number of Flow-Through Shares subscribed
and paid for pursuant to the Offering, being an aggregate of up to
C$4,100,000;
|
|
(h)
|
“common
shares”
means the common shares in the capital of the Corporation and, where
appropriate in the context, includes the Flow-Through
Shares;
|
|
(i)
|
“Compensation
Options”
shall have the meaning set forth in section 9
hereof;
|
|
(j)
|
“Corporation”
means Apollo Gold Corporation, a corporation duly incorporated pursuant
to
the provisions of the YBCA, as defined on the first page of this
Agreement;
|
|
(k)
|
“Corporation’s
counsel”
means Fogler, Xxxxxxxx LLP, or such other legal counsel as the
Corporation, with the consent of the Underwriter, may
appoint;
|
|
(l)
|
“Directed
Selling Efforts”
means directed selling efforts as that term is defined in Regulation
S.
Without limiting the foregoing, but for greater certainty, it means,
subject to the exclusions from the definition of directed selling
efforts
contained in Regulation S, any activity undertaken for the purpose
of, or
that could reasonably be expected to have the effect of, conditioning
the
market in the United States for any of the Flow-Through Shares and
includes, without limitation, the placement of any advertisement
in a
publication with a general circulation in the United States that
refers to
the offering of Flow-Through
Shares;
|
|
(m)
|
“Due
Diligence Session”
shall have the meaning set forth in subsection 2(e)
hereof;
|
|
(n)
|
“Due
Diligence Session Responses”
means the oral and written responses, as the case may be, provided
by the
Corporation, as given by any director or senior officer of the
Corporation, at a Due Diligence
Session;
|
|
(o)
|
“Environmental
Laws”
shall have the meaning set forth in subsection 6(i)
hereof;
|
|
(p)
|
“Exchanges”
means the Toronto Stock Exchange and the American Stock Exchange,
or any
successors thereto;
|
-3-
|
(q)
|
“Expenditure
Period”
means the period commencing on the Closing Date and ending on the
earlier
of:
|
|
(i)
|
the
date on which the Commitment Amount has been fully expended in accordance
with the terms of the Subscription Agreements;
and
|
|
(ii)
|
December
31, 2008;
|
|
(r)
|
“Financial
Statements” means
the audited consolidated financial statements of the Corporation
as at and
for the years ended December 31, 2006 and 2005, together with the
report
of the Corporation's auditors thereon and the notes thereto;
|
|
(s)
|
“Flow-Through
Shares”
shall have the meaning set forth on the first page of this Agreement;
|
|
(t)
|
“Indemnified
Persons”
means the Underwriter and the directors, officers, shareholders and
employees of the Underwriter and affiliates of the
Underwriter;
|
|
(u)
|
“Public
Record”
means, without limitation, the prospectuses, annual information forms,
annual and quarterly reports, offering memoranda, material change
reports,
press releases and any other documents or reports filed by the Corporation
with Securities Commissions during the 24 months preceding the date
hereof
and which is available on SEDAR, and all filings with the
SEC;
|
|
(v)
|
“Qualifying
Expenditures”
means expenditures that are CEE on the date they are incurred to
the
extent permitted to be renounced to the Subscribers under the Subscription
Agreements;
|
|
(w)
|
“Registration
Rights Agreement”
means the registration rights agreement attached as Schedule C to
the
Subscription Agreements;
|
|
(x)
|
“Registration
Statement”
means the registration statement that the Corporation agrees to file
with
the SEC pursuant to the Registration Rights Agreement to register
the
Flow-Through Shares for resale pursuant to the terms of the Registration
Rights Agreement;
|
|
(y)
|
“Regulation
S”
means Regulation S adopted by the SEC under the U.S. Securities
Act;
|
|
(z)
|
“SEC”
means the United States Securities and Exchange
Commission;
|
|
(aa)
|
“Securities
Commissions”
means, collectively, the securities commissions or similar regulatory
authorities in each of the provinces of Canada and in the United
States of
America and “Securities
Commission”
means any of them;
|
-4-
|
(bb)
|
“SEDAR”
means the computer system for the transmission, receipt, acceptance,
review and dissemination of documents filed in electronic format
known as
the System for Electronic Document Analysis and Retrieval, which
is
available online at xxx.xxxxx.xxx;
|
|
(cc)
|
“Selling
Dealer Group”
means the investment dealers and brokers, other than the Underwriter,
who
participate in the offer and sale of the Flow-Through Shares pursuant
to
this Agreement and who are registered in any one of the Selling
Jurisdictions;
|
|
(dd)
|
“Selling
Jurisdictions”
means the Provinces of British Columbia, Alberta and Ontario and
such
other provinces of Canada as may be agreed by the Underwriter and
the
Corporation prior to the Closing Date as evidenced by the Corporation’s
acceptance of a Subscription Agreement with respect
thereto;
|
|
(ee)
|
“Subscriber”
means a person resident in the Selling Jurisdictions who subscribes
for
Flow-Through Shares;
|
|
(ff)
|
“Subscription
Agreements”
means the subscription agreements to be entered into at closing between
the Corporation and each of the Subscribers setting out the contractual
relationship between the Corporation and the Subscribers, in form
and
substance satisfactory to the Corporation and the
Underwriter;
|
|
(gg)
|
“Subsequent
Agreements”
shall have the meaning set forth in subsection 4(c)
hereof;
|
|
(hh)
|
“Subsidiary”
means a subsidiary of the Corporation within the meaning of the YBCA
and
includes, without limitation, each of Minas de Argonautas, S. de
X.X. de
C.V., Minera Sol de Oro S.A. de C.V., Apollo Gold, Inc., Mine Development
Finance, Inc. and Montana Tunnels Mining, Inc.;
|
|
(ii)
|
“Swaps”
means any transaction which is a rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity
or
equity index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency
rate swap transaction, currency option, forward sale, exchange traded
futures contract or any other similar transaction (including any
option
with respect to any of these transactions or any combination of these
transactions);
|
|
(jj)
|
“Tax
Act”
means the Income
Tax Act (Canada),
together with any and all regulations promulgated thereunder, as
amended
from time to time;
|
|
(kk)
|
“Technical
Reports”
means collectively (i) the report of Mine Development Associates
dated
August 14, 2006 relating to the Black Fox Project, (ii) the report
of SRK
Consulting dated August 13, 2007 relating to the Black Fox Project,
and
(iii) the report of Xxxxxxx Xxxxx and Xxxx Xxxxxxxxx dated March
30, 2007
relating to the Montana Tunnels Mine;
|
-5-
|
(ll)
|
“Underwriter’s
counsel”
means Blake, Xxxxxxx & Xxxxxxx LLP, or such other legal counsel as the
Underwriter, with the consent of the Corporation, may retain;
and
|
|
(mm)
|
“United
States”
means the United States of America, its territories and possessions,
and
any state of the United States of America and the District of
Columbia;
|
|
(nn)
|
“U.S.
Person”
shall have the meaning ascribed to such term in Rule 902(k) of Regulation
S under the U.S. Securities Act;
|
|
(oo)
|
“U.S.
Securities Act”
means the United States Securities
Act of 1933,
as amended;
|
|
(pp)
|
“YBCA”
means the Business
Corporations Act
(Yukon), R.S.Y. 2002, c. 20, as amended, including the regulations
promulgated thereunder.
|
“misrepresentation”,
“material
change”
and
“material
fact”
shall
have the meanings ascribed thereto under the Applicable Securities Laws of
the
Selling Jurisdictions and the United States; “distribution”
means
“distribution” or “distribution to the public”, as the case may be, as defined
under the Applicable Securities Laws of the Selling Jurisdictions; and
“distribute”
has
a
corresponding meaning. In this Agreement, words importing the singular include
the plural and vice
versa,
and
words importing gender include all genders.
| Section 2 |
Corporation’s
Covenants as to Issuance
|
The
Corporation agrees:
|
(a)
|
that
the Flow-Through Shares will be duly and validly authorized and
issued;
|
|
(b)
|
to
comply with all covenants of the Corporation set forth in this Agreement
and the Subscription Agreements, and to duly, punctually and faithfully
perform all the obligations to be performed by it under this Agreement
and
the Subscription Agreements;
|
|
(c)
|
to
deliver to the Underwriter as many copies of the documents contained
in
the Public Record as the Underwriter may reasonably request, and
such
delivery shall constitute the Corporation’s authorization of the
Underwriter to use the documents in connection with the offering
of the
Flow-Through Shares for sale in the Selling Jurisdictions;
|
|
(d)
|
as
soon as reasonably possible, and in any event by the Closing Date,
to take
all such steps as may reasonably be necessary to enable the Flow-Through
Shares to be offered for sale and sold on a private placement basis
in the
Selling Jurisdictions through the Underwriter or any other member
of the
Selling Dealer Group by way of the exemptions under Applicable Securities
Laws of the Selling Jurisdictions and the United States as contemplated
hereby; and
|
-6-
|
(e)
|
prior
to the Closing Date, to allow the Underwriter to conduct all due
diligence
which the Underwriter may reasonably require in order to: (i) confirm
the
Public Record is accurate, current and complete in all material respects;
and (ii) fulfill the Underwriter’s obligations as agent, and will provide
to the Underwriter and its counsel and consultants reasonable access
to
the Corporation’s properties, senior management personnel and corporate,
financial and other records for the purposes of conducting such due
diligence reviews. Without limiting the generality of the foregoing,
the
Corporation shall make available its directors, senior management,
audit
committee, auditors (including of any predecessor entity or business)
and
independent engineers (including of any predecessor entity or business)
to
answer any questions which the Underwriter may have and to participate
in
one or more due diligence sessions to be held prior to the Closing
Time
(collectively, the “Due
Diligence Session”).
The Underwriter shall distribute a list of written questions to be
answered in advance of such Due Diligence Session and the Corporation
shall use its reasonable best efforts to provide written responses
to such
questions and shall use its reasonable best efforts to have its auditors
and independent engineers provide written responses to such questions
in
advance of the Due Diligence Session.
In
any event, the Corporation will provide oral responses to all such
questions in the Due Diligence
Session.
|
| Section 3 |
Corporation’s
Covenants as to Changes
|
The
Corporation agrees that:
|
(a)
|
during
the period commencing with the date hereof until completion of the
distribution of the Flow-Through Shares, the Corporation will promptly
inform the Underwriter of the full particulars
of:
|
|
(i)
|
any
material change (actual, anticipated or threatened) in the assets,
liabilities (absolute, accrued, contingent or otherwise), business,
operations, capital or condition (financial or otherwise) of the
Corporation;
|
|
(ii)
|
any
change in any material fact contained or referred to in the Public
Record;
|
|
(iii)
|
the
occurrence or discovery of a material fact or event which, in any
such
case, is, or may be, of such a nature as to: (A) render any part
of the
Public Record untrue, false or misleading in a material respect;
(B)
result in a misrepresentation in any part of the Public Record; or
(C)
result in any part of the Public Record not complying with Applicable
Securities Laws; or
|
-7-
|
(iv)
|
the
discovery by the Corporation of any misrepresentation in any part
of the
Public Record or in any information regarding the Corporation previously
provided to the Underwriter by the Corporation;
|
provided
that if there may be any reasonable doubt as to whether a material change,
change in material fact, occurrence or event of the nature referred to in this
subsection has occurred, the Corporation shall promptly inform the Underwriter
of the full particulars of the occurrence giving rise to the uncertainty and
shall consult with the Underwriter as to whether the occurrence is of such
nature;
|
(b)
|
during
the period commencing with the date hereof until the completion of
the
distribution of the Flow-Through Shares, the Corporation will promptly
inform the Underwriter of the full particulars
of:
|
|
(i)
|
any
request of any Securities Commission or other securities commission
or
similar regulatory authority for any amendment to any part of the
Public
Record or for any additional information which may be material to
the
distribution of the Flow-Through Shares;
|
|
(ii)
|
the
issuance by any Securities Commission or other securities commission
or
similar regulatory authority, either Exchange or by any other competent
authority of any order to cease or suspend trading of any securities
of
the Corporation (including the Flow-Through Shares) or of the institution
or threat of institution of any proceedings for that purpose;
or
|
|
(iii)
|
the
receipt by the Corporation of any communication from any Securities
Commission or other securities commission or similar regulatory authority,
either Exchange or any other competent authority relating to any
part of
the Public Record or the distribution of the Flow-Through
Shares;
|
and
except as otherwise agreed by the Underwriter, the Corporation will use its
best
efforts to prevent the issuance of any such cease trading order or suspension
order and, if issued, to obtain the withdrawal thereof as soon as
possible;
|
(c)
|
during
the period commencing on the date hereof until the completion of
the
distribution of the Flow-Through Shares, the Corporation will promptly
provide to the Underwriter, for review by the Underwriter and the
Underwriter’s counsel, prior to the publication, filing or issuance
thereof:
|
|
(i)
|
any
proposed document, including without limitation, any annual information
form, material change report, financial statement, business acquisition
report or information circular, which is or may be deemed to be part
of
the Public Record; or
|
-8-
|
(ii)
|
any
press release (subject to the Corporation’s obligations under Applicable
Securities Laws to make timely disclosure of material information);
and
|
|
(d)
|
the
Corporation shall promptly comply, to the reasonable satisfaction
of the
Underwriter and the Underwriter’s counsel, with all applicable filing and
other requirements under Applicable Securities Laws with respect
to any
material change, change, occurrence or event of the nature referred
to or
contemplated in Section
3(a) or Section
3(b)
and the Corporation will prepare and file promptly at the Underwriter’s
request, acting reasonably, any amendment to any part of the Public
Record
and take such other steps, which in the Underwriter’s opinion may be
necessary or advisable to comply with Applicable Securities Laws,
and the
Corporation shall consult with the Underwriter with respect to the
form
and content of any amendment to any part of the Public Record proposed
to
be filed by the Corporation and shall provide an opportunity for
the prior
review and approval thereof by the Underwriter, acting reasonably,
prior
to the filing of any such
amendment.
|
| Section 4 |
Corporation’s
Other Covenants
|
The
Corporation agrees that:
|
(a)
|
the
Corporation shall not take any action that would prevent the Corporation
and the Underwriter from relying on the exemptions from the registration
and/or prospectus requirements of Applicable Securities Laws as
contemplated by the Subscription
Agreements;
|
|
(b)
|
the
Corporation will use the proceeds from the issuance and sale of the
Flow-Through Shares to incur Qualifying Expenditures in connection
with
the Corporation’s gold exploration
program;
|
|
(c)
|
if
the amount of Qualifying Expenditure renounced to Subscribers is
reduced,
the Corporation shall, to the extent possible, make such reduction
pro
rata
by
the number of Flow-Through Shares issued or to be issued pursuant
to the
Subscription Agreements, provided that the Corporation shall not
reduce
Qualifying Expenditures renounced under the Subscription Agreements
until
it has first reduced, to the extent possible, expenditures renounced
pursuant to flow-through share agreements (the “Subsequent
Agreements”)
entered into by the Corporation subsequent to the Subscription Agreements
entered into pursuant to this
Offering;
|
|
(d)
|
the
Corporation shall renounce Qualifying Expenditures with respect to
the
Subscription Agreements made under this Offering, to the extent possible
under the Tax Act, on a pro
rata
basis by the number of Flow-Through Shares issued or to be issued
pursuant
thereto prior to or concurrently with renouncing Qualifying Expenditures
pursuant to any Subsequent
Agreements;
|
-9-
|
(e)
|
where
the Corporation renounces Qualifying Expenditures incurred during
the
Expenditure Period to subscribers of flow-through shares issued pursuant
to Subsequent Agreements, it shall, to the extent it is aware at
the time
of renunciation that it will be unable to renounce all Qualifying
Expenditures renounceable under the Subscription Agreements and the
Subsequent Agreements, refrain from effecting a renunciation of Qualifying
Expenditures under the Subsequent Agreements to the extent such
renunciation would impair its ability to effect a renunciation of
Qualifying Expenditures pursuant to the Subscription Agreements equal
to
the Commitment Amount;
|
|
(f)
|
the
Corporation will allow the Underwriter and the Underwriter’s counsel to
participate fully in the preparation of the Subscription
Agreements;
|
|
(g)
|
the
Corporation will make available its senior management persons to
meet with
potential investors if so requested by the
Underwriter;
|
|
(h)
|
the
Corporation will use its reasonable best efforts to obtain all necessary
approvals of the Exchanges for the listing and posting of the Flow-Through
Shares for trading on the Exchanges, subject only to the filing of
required documents which cannot reasonably be filed until after the
Closing Time;
|
|
(i)
|
the
Corporation shall use its reasonable best efforts to maintain its
(or any
successors’) status as a reporting issuer not in default of any Applicable
Securities Laws until 120 days after the Closing Date in the Selling
Jurisdictions in which it is or in which it becomes a reporting
issuer;
|
|
(j)
|
the
Corporation will carry on its business in a prudent manner in accordance
with industry standards and good business practice and will keep
or cause
to be kept proper books of accounts in accordance with applicable
law;
|
|
(k)
|
the
Corporation will not, from the date hereof until that date that is
120
days following the Closing Date, directly or indirectly, issue, sell,
or
offer to sell, or announce the offering of, or enter into or make
any
agreement or understanding, or announce the making or entry into
of any
agreement or understanding, to issue, sell or exchange any common
shares
or securities exchangeable or convertible into common shares without
the
prior written consent of Xxxxxxx Securities Inc., not to be unreasonably
withheld, provided that notwithstanding the foregoing the Corporation
may
issue common shares or options: (i) under existing director or employee
stock option, bonus or purchase plans, as described in the Corporation’s
most recent information circular, or under director or employee stock
options or bonuses granted subsequently in accordance with Applicable
Securities Laws; (ii) as a result of the exercise of currently outstanding
convertible debentures, share purchase warrants or options or previously
scheduled property payments to service providers or that is required
for
the acquisition of properties in the ordinary course of business;
and
|
-10-
|
(l)
|
the
Corporation hereby grants to the Underwriter a right to act as lead
or
co-lead agent/underwriter in any future equity financing for a minimum
participation of 55% for a period ending 12 months following the
Closing
Date.
|
| Section 5 |
Underwriter’s
Covenants
|
The
Underwriter covenants and agrees with the Corporation that it will:
|
(a)
|
conduct
its activities in connection with the proposed offer and sale of
the
Flow-Through Shares in compliance with this Agreement and all Applicable
Securities Laws and cause a similar covenant to be contained in any
agreement entered into with any Selling Dealer Group established
in
connection with the distribution of the Flow-Through
Shares;
|
|
(b)
|
not
solicit subscriptions for Flow-Through Shares, trade in Flow-Through
Shares or otherwise do any act in furtherance of a trade of Flow-Through
Shares outside of the Selling Jurisdictions except in any other
jurisdiction in compliance with the applicable laws thereof (but
in no
event in the United States) and provided that the Underwriter may
so
solicit, trade or act within such jurisdiction only if such solicitation,
trade or act is in compliance with Applicable Securities Laws in
such
jurisdiction and does not (except in respect of the requirement by
the
Corporation to file the Registration Statement): (i) obligate the
Corporation to take any action to qualify or register any of its
securities or any trade of any of its securities (including the
distribution of the Flow-Through Shares); (ii) obligate the Corporation
to
establish or maintain any office or director or officer in such
jurisdiction; or (iii) subject the Corporation to any reporting or
other
requirement in such jurisdiction;
|
|
(c)
|
obtain
from each Subscriber an executed Subscription Agreement and all applicable
undertakings, questionnaires and other forms required under Applicable
Securities Laws or requirements of the Exchanges, including for the
completion of the resale registration statement to be filed with
the SEC,
and supplied to the Underwriter by the Corporation for completion
in
connection with the distribution of the Flow-Through
Shares;
|
|
(d)
|
not
advertise the proposed offering or sale of the Flow-Through Shares
in
printed media of general and regular paid circulation, radio, television
or telecommunications, including electronic display, and not take
any
actions nor provide or make available to prospective purchasers of
Flow-Through Shares any document or material which would constitute
or
require the Corporation to prepare an offering memorandum as defined
under
Applicable Securities Laws in the Selling
Jurisdictions;
|
-11-
|
(e)
|
will
comply with, and ensure that it and the Selling Dealer Group and
its
respective directors, officers, employees and affiliates comply with
all
Applicalbe Securities Laws and the terms and conditions set forth
in this
Agreement;
|
|
(f)
|
certifies
to the Corporation (and acknowledges that the Corporation is relying
thereon) that the Underwriter (i) is, and will remain until the completion
of the Offering, appropriately registered under Applicable Securities
Laws
so as permit it to lawfully fulfill its obligations hereunder, (ii)
has
good and sufficient right and authority to enter into this Agreement
and
complete its obligations contemplated under this Agreement on the
terms
and conditions set out herein, and (iii) is resident or otherwise
subject
to the securities legislation of the Selling Jurisdictions and can
avail
itself of the relevant prospectus and registration exemptions available
under the Applicable Securities Laws in the Selling Jurisdictions;
and
|
|
(g)
|
offer
or sell Flow-Through Shares only in an off-shore transaction in accordance
with Rule 903 of Regulation S and that, accordingly, neither the
Underwriter, any member of the Selling Dealer Group nor any of their
respective affiliates or any other person acting on any of their
behalf,
will make (i) any offer to sell, or any solicitation of an offer
to buy,
any Flow-Through Shares to any person in the United States, (ii)
any sale
of Flow-Through Shares to any purchaser unless, at the time the buy
order
was or will have been originated, the purchaser was outside the United
States, or (iii) any Directed Selling Efforts in the United States
with
respect to the Flow-Through Shares.
|
| Section 6 |
Representations
and Warranties of the
Corporation
|
The
Corporation represents and warrants to the Underwriter, and acknowledges that
the Underwriter is relying upon such representations and warranties, as
follows:
|
(a)
|
each
of the Corporation and its Subsidiaries have been duly incorporated,
amalgamated or formed, as the case may be, and is validly existing
under
the laws of the jurisdiction of its incorporation, amalgamation or
formation, as the case may be, and has all requisite corporate capacity,
power and authority to carry on its business, as now conducted and
as
presently proposed to be conducted by it, and to own, lease and operate
its properties and assets;
|
|
(b)
|
each
of the Corporation and its Subsidiaries is qualified to carry on
business
under the laws of each jurisdiction in which it carries on a portion
of
its business;
|
|
(c)
|
each
of the Corporation and its Subsidiaries has conducted, and each of
the
Corporation and its Subsidiaries is conducting and will conduct,
its
business in compliance in all material respects with all applicable
laws,
rules and regulations and, in particular, all applicable licensing
and
environmental legislation, regulations or by-laws or other lawful
requirements of any governmental or regulatory bodies applicable
to it of
each jurisdiction in which it carries on a portion of its business,
and
holds all licences, registrations and qualifications in all jurisdictions
in which it carries on a portion of its business which are necessary
or
desirable to carry on the business of the Corporation and its
Subsidiaries, as the case may be, as now conducted and as presently
proposed to be conducted, all such licences, registrations or
qualifications are valid and existing and in good standing and none
of
such licences, registrations or qualifications contains any burdensome
term, provision, condition or limitation which has or is likely to
have
any material adverse effect on the business of the Corporation or
its
Subsidiaries (taken as a whole) as now conducted or as proposed to
be
conducted, and the Corporation is not aware of any legislation,
regulation, rule or lawful requirements presently in force or proposed
to
be brought into force which the Corporation anticipates the Corporation
or
the Subsidiaries will be unable to comply with without materially
adversely affecting the Corporation or its Subsidiaries (taken as
a
whole);
|
-12-
|
(d)
|
the
Corporation does not have any Subsidiaries other than Minas de Argonautas,
S. de X.X. de C.V., Minera Sol de Oro S.A. de C.V., Apollo Gold,
Inc.,
Mine Development Finance, Inc. and Montana Tunnels Mining, Inc.;
all of
the issued and outstanding shares of each of Subsidiary are validly
issued
as fully paid and non-assessable; the Corporation is, directly or
indirectly, the beneficial holder of all such issued and outstanding
shares and holds such shares with valid and marketable title to the
shares
free and clear of any liens, pledges, charges, encumbrances, security
interests or other adverse claims whatsoever (other than (i) the
security
interest in favour of RMB Australia Holdings Limited in the shares
held
indirectly by the Corporation in Montana Tunnels 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);
and no
person, firm, corporation or other entity holds any securities convertible
or exchangeable into shares of any Subsidiary or has any agreement,
warrant, option, right or privilege (whether pre-emptive or contractual)
being or capable of becoming an agreement, warrant, option or right
(whether or not on condition(s)) for the purchase or other acquisition
of
any unissued shares, securities (including convertible securities)
or
warrants of any Subsidiary; the Corporation is not “affiliated” with or a
“holding corporation” of any other body corporate (within the meaning of
those terms in the YBCA), nor is it a partner of any partnerships
(other
than participating in industry partnerships in the ordinary course
of
business) or limited partnerships, and the Corporation has no material
shareholdings in any other corporation or business
organization;
|
|
(e)
|
the
minute books for each of the Corporation and its Subsidiaries contain
full, true and correct copies of the constating documents of the
Corporation and its Subsidiaries, as applicable, and contain copies
of all
minutes of all meetings and all consent resolutions of the directors,
committees of directors and shareholders of the Corporation and its
Subsidiaries, respectively, and all such meetings were duly called
and
properly held and all consent resolutions were properly
adopted;
|
-13-
|
(f)
|
the
books of account and other records of each of the Corporation and
its
Subsidiaries, whether of a financial or accounting nature or otherwise,
have been maintained in accordance with prudent business
practices;
|
|
(g)
|
the
Corporation and each of its Subsidiaries has duly and on a timely
basis
filed all tax returns required to be filed by it, has paid all taxes
due
and payable by it and has paid all assessments and reassessments
and all
other taxes, governmental charges, penalties, interest and other
fines due
and payable by it and which were claimed by any governmental authority
to
be due and owing and adequate provision has been made for taxes payable
for any completed fiscal period for which tax returns are not yet
required
and there are no agreements, waivers, or other arrangements providing
for
an extension of time with respect to the filing of any tax return
or
payment of any tax, governmental charge or deficiency by the Corporation
or any of its Subsidiaries and to the best of the knowledge, information
and belief of the Corporation there are no actions, suits, proceedings,
investigations or claims threatened or pending against the Corporation
or
any of its Subsidiaries, in respect of taxes, governmental charges
or
assessments or any matters under discussion with any governmental
authority relating to taxes, governmental charges or assessments
asserted
by any such authority;
|
|
(h)
|
all
filings made by the Corporation and its Subsidiaries under which
the
Corporation or any Subsidiary has received or is entitled to government
incentives, have been made in accordance, in all material respects,
with
all applicable legislation and contain no misrepresentations of material
fact or omit to state any material fact which could cause any amount
previously paid to the Corporation or its Subsidiaries or previously
accrued on the accounts thereof to be recovered or
disallowed;
|
|
(i)
|
except
to the extent that any violation or other matter referred to in this
subparagraph does not have a material adverse effect on the business,
financial condition, assets, properties, liabilities or operations
of the
Corporation and its Subsidiaries (taken as a whole):
|
|
(i)
|
the
Corporation and each of its Subsidiaries is not in violation of any
applicable federal, provincial, state, municipal or local laws,
regulations, orders, government decrees or ordinances with respect
to
environmental, health or safety matters (collectively, “Environmental
Laws”);
|
|
(ii)
|
the
Corporation and each of its Subsidiaries has operated its business
at all
times and has received, handled, used, stored, treated, shipped and
disposed of all contaminants without violation of Environmental
Laws;
|
-14-
|
(iii)
|
there
have been no spills, releases, deposits or discharges of hazardous
or
toxic substances, contaminants or wastes into the earth, air or into
any
body of water or any municipal or other sewer or drain water systems
by
the Corporation or any of its Subsidiaries that have not been
remedied;
|
|
(iv)
|
no
orders, directions or notices have been issued and remain outstanding
pursuant to any Environmental Laws relating to the business or assets
of
the Corporation or any Subsidiary;
|
|
(v)
|
the
Corporation and each of its Subsidiaries has not failed to report
to the
proper federal, provincial, municipal or other political subdivision,
government, department, commission, board, bureau, agency or
instrumentality, domestic or foreign the occurrence of any event
which is
required to be so reported by any Environmental Law;
|
|
(vi)
|
the
Corporation and each of its Subsidiaries holds all licences, permits
and
approvals required under any Environmental Laws in connection with
the
current operation of its business and the ownership and current use
of its
assets (and the Corporation and each of its Subsidiaries previously
held
all such licences in connection with their previous operations and
uses),
all such licences, permits and approvals are in full force and effect,
and, except for notifications and conditions of general application
to
assets of the type owned by the Corporation and its Subsidiaries,
the
Corporation and each of its Subsidiaries has not received any notification
pursuant to any Environmental Laws that any work, repairs, constructions
or capital expenditures are required to be made by it as a condition
of
continued compliance with any Environmental Laws, or any licence,
permit
or approval issued pursuant thereto, or that any licence, permit
or
approval referred to above is about to be reviewed, made subject
to
limitation or conditions, revoked, withdrawn or terminated;
and
|
|
(vii)
|
neither
the Corporation nor any of its Subsidiaries has received any notice
of, or
been prosecuted for an offence alleging, material non-compliance
with any
Environmental Laws, and neither the Corporation nor any of its
Subsidiaries has settled any allegation of material non-compliance
short
of prosecution;
|
|
(j)
|
any
and all operations of the Corporation and each of its Subsidiaries,
and,
to the knowledge of the Corporation, any and all operations by third
parties, on or in respect of the assets and properties of the Corporation
and its Subsidiaries, have been conducted in accordance with good
mining
industry practices and in material compliance with applicable laws,
rules,
regulations, orders and directions of governmental and other competent
authorities;
|
|
(k)
|
in
respect of the assets and properties of each of the Corporation and
its
Subsidiaries that are operated by it, if any, each of the Corporation
and
its Subsidiaries holds all valid licences, permits and similar rights
and
privileges that are required and necessary under applicable law to
operate
the assets and properties of the Corporation and its Subsidiaries,
as the
case may be, as presently operated;
|
-15-
|
(l)
|
the
Corporation has full corporate capacity, power and authority to enter
into
this Agreement and the Subscription Agreements and to perform its
obligations set out herein and therein (including, without limitation,
to
create, issue and sell the Flow-Through Shares and renounce to the
Subscribers Qualifying Expenditures in an amount equal to the Commitment
Amount), and this Agreement has been and the Subscription Agreements
will
be, on the Closing Date, duly authorized, executed and delivered
by the
Corporation, and this Agreement is, and the Subscription Agreements
will
on the Closing Date be, legal, valid and binding obligations of the
Corporation enforceable against the Corporation in accordance with
their
terms subject to laws relating to creditors’ rights generally and general
principles of equity and except as rights to indemnity may be limited
by
applicable law;
|
|
(m)
|
at
the Closing Date the Flow-Through Shares will be duly and validly
created,
authorized, allotted and reserved for issuance and will be issued
as fully
paid and non-assessable common shares in the capital of the
Corporation;
|
|
(n)
|
the
Corporation is not in default or breach of, and the execution and
delivery
of, and the performance of and compliance with the terms of, this
Agreement or the Subscription Agreements by the Corporation or any
of the
transactions contemplated hereby or thereby, does not and will not
result
in any breach of, or constitute a default under, and does not and
will not
create a state of facts which, after notice or lapse of time or both,
would result in a breach of or constitute a default under, (i) any
term or
provision of the articles, by-laws or constating documents of the
Corporation, as applicable, (ii) any resolutions of shareholders
or
directors (or any committee thereof) of the Corporation or any Subsidiary,
(iii) any indenture, mortgage, note, contract, agreement (written
or
oral), instrument, lease or other document to which the Corporation
or any
Subsidiary is a party or by which it is bound, or (iv) any law, judgment,
decree, order, statute, rule or regulation applicable to the Corporation
or any Subsidiary, which default or breach might reasonably be expected
to
materially adversely affect the business, operations, capital, properties,
assets, liabilities (absolute, accrued, contingent or otherwise),
ownership or condition (financial or otherwise) or results of operations
of the Corporation and its Subsidiaries (taken as a whole) or their
respective properties or assets (on a consolidated basis) or would
impair
the ability of the Corporation to consummate the transactions contemplated
hereby or to duly observe and perform any of its covenants or obligations
contained in this Agreement or the Subscription
Agreements;
|
|
(o)
|
there
has not been any material change in the capital, assets, liabilities
or
obligations (absolute, accrued, contingent or otherwise) of the
Corporation or its Subsidiaries from the position set forth in the
Financial Statements (other than as have been publicly and generally
disclosed), and there has not been any material adverse change in
the
business, operations, capital, properties, assets (including mineral
resources and reserves and information or data relating to the estimated
value of such resources and reserves), liabilities (absolute, accrued,
contingent or otherwise), condition (financial or otherwise) or results
of
operations of the Corporation or its Subsidiaries since December
31, 2006
and since that date there have been no material facts, transactions,
events or occurrences which, to the knowledge of the Corporation,
could
materially adversely affect the business, operations, capital, properties,
assets, liabilities (absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or results of the operations of
the
Corporation or its Subsidiaries (on a consolidated
basis);
|
-16-
|
(p)
|
the
Financial Statements fairly present, in accordance with generally
accepted
accounting principles in Canada, consistently applied, the consolidated
financial position and condition, the results of operations, cash
flows
and the other information purported to be shown therein of the Corporation
and its Subsidiaries (taken as a whole) as at the dates thereof and
for
the periods then ended and reflect all assets, liabilities and obligations
(absolute, accrued, contingent or otherwise) of the Corporation and
its
Subsidiaries as at the dates thereof required to be disclosed in
accordance with generally accepted accounting principles in
Canada;
|
|
(q)
|
no
authorization, approval or consent of any court or governmental authority
or agency is required to be obtained by the Corporation in connection
with
the sale and delivery of the Flow-Through Shares, except such as
may be
required by the Exchanges or under the Applicable Securities
Laws;
|
|
(r)
|
there
are no actions, suits, proceedings or inquiries in existence or,
to the
knowledge of the Corporation, pending or threatened against or affecting
the Corporation or any Subsidiary at law or in equity or before or
by any
federal provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which in any
way
materially adversely affects, or may in any way materially adversely
affect, the business, operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise), condition (financial
or
otherwise) or results of operations of the Corporation or its Subsidiaries
(on a consolidated basis) or their respective properties or assets
(taken
as a whole) or which affects or may affect the distribution of the
Flow-Through Shares or which would impair the ability of the Corporation
to consummate the transactions contemplated hereby or to duly observe
and
perform any of its covenants or obligations contained in this Agreement
or
the Subscription Agreements and the Corporation is not aware of any
existing ground on which such action, suit, proceeding or inquiry
might be
commenced with any reasonable likelihood of
success;
|
-17-
|
(s)
|
the
information and statements set forth in the Public Record were true,
correct, and complete and did not contain any misrepresentation,
as of the
date of such information or statements, and were prepared in accordance
with and complied with Applicable Securities Laws and the Corporation
has
not filed any confidential material change reports still maintained
on a
confidential basis;
|
|
(t)
|
the
authorized capital of the Corporation consists of an unlimited number
of
common shares of which 145,253,578 common shares are currently issued
and
outstanding, each of which shares is validly issued, fully paid and
non-assessable;
|
|
(u)
|
no
person, firm, corporation or other entity holds any securities convertible
or exchangeable into securities of the Corporation or has any agreement,
warrant, option, right or privilege (whether pre-emptive or contractual)
being or capable of becoming an agreement, warrant, option or right
(whether or not on condition(s)) for the purchase or other acquisition
of
any unissued securities of the Corporation except as set out in Schedule
E;
|
|
(v)
|
CIBC
Mellon Trust Company is the duly appointed registrar and transfer
agent of
the common shares;
|
|
(w)
|
no
Securities Commission, other securities commission or similar regulatory
authority, either Exchange or other exchange in Canada or the United
States has issued any order which is currently outstanding preventing
or
suspending trading in any securities of the Corporation, no such
proceeding is, to the knowledge of the Corporation, pending, contemplated
or threatened and the Corporation is not in default of any material
requirement of Applicable Securities Laws of the Selling
Jurisdictions;
|
|
(x)
|
other
than as provided for in this Agreement, the Corporation has not incurred
any obligation or liability (absolute, accrued, contingent or otherwise)
or brokerage fees, finder’s fees, agent’s commission or other similar
forms of compensation with respect to the transactions contemplated
herein;
|
|
(y)
|
the
issued and outstanding common shares are, and, subject to the conditions
set forth in the conditional acceptance letter of the Toronto Stock
Exchange dated October 30, 2007, the Flow-Through Shares will be,
listed
and posted for trading on the Toronto Stock Exchange, and the Corporation
is in material compliance with the by-laws, rules and regulations
of the
Exchanges;
|
| (z) |
the
Corporation is a “reporting issuer” and is not in default in each of the
provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,
New Brunswick, Nova Scotia, Xxxxxx Xxxxxx Island and Newfoundland
and
Labrador within the meaning of the Applicable Securities Laws in
such
provinces, has been a reporting issuer in one of such provinces for
at
least four months and is not in default of any requirement of the
Applicable Securities Laws;
|
-18-
|
(aa)
|
to
the knowledge of the Corporation, other than Jipangu Inc., no insider
of
the Corporation has a present intention to sell any securities of
the
Corporation held by it;
|
|
(bb)
|
the
form and terms of definitive certificates representing the common
shares
have been duly approved and adopted by the Corporation and comply
with all
legal requirements relating
thereto;
|
|
(cc)
|
the
Corporation has made available to authors of the Technical Reports,
prior
to the issuance of the Technical Reports, for the purpose of preparing
the
Technical Reports, all information requested by the authors, which
information did not contain any material misrepresentation at the
time
such information was provided. The Corporation has no knowledge of
a
material adverse change in any production, cost, price (except with
respect to changes in commodity prices), resources, reserves or other
relevant information provided to the authors since the date that
such
information was so provided. The Corporation believes that the Technical
Reports reasonably present the technical data attributable to the
Black
Fox Project and the Montana Tunnels Mine, and the Corporation believes
that at the date of such report it did not (and as of the date hereof,
except as may be attributable to production and/or changes in commodity
prices since
the date of such report does not) overstate the aggregate quantity
or
quality of resources and reserves;
|
|
(dd)
|
the
Corporation has no reason to believe that the Corporation or any
Subsidiary does not have title to or the right to produce and sell
minerals (for the purpose of this clause, the foregoing are referred
to as
the “Interest”),
and represents and warrants that the Interest is free and clear of
adverse
claims created by, through or under the Corporation or any Subsidiary
except as disclosed in the Public Record or those arising in the
ordinary
course of business, and that, to its knowledge, each of the Corporation
and its Subsidiaries holds its Interest under valid and subsisting
leases,
licenses, permits, concessions, concession agreements, contracts,
subleases, reservations or other agreements except where the failure
to so
hold its Interest would not have a material adverse effect on the
Corporation and its Subsidiaries (taken as a
whole);
|
|
(ee)
|
the
Corporation is not aware of any defects, failures or impairments
in the
title of any of the Corporation or any of its Subsidiaries to the
mineral
properties disclosed in the Public Record, whether or not an action,
suit,
proceeding or inquiry is pending or threatened or whether or not
discovered by any third party, which, in aggregate, could have a
material
adverse effect on: (a) the quantity or quality of the mineral resources
and reserves of any of the Corporation or any of its Subsidiaries
as shown
in the Technical Reports; (b) the current production volumes of any
of the
Corporation or any of its Subsidiaries; or (c) the current cash flow
of
any of the Corporation or any of its Subsidiaries;
|
-19-
|
(ff)
|
there
has not been any reportable disagreement (within the meaning of Section
4.11 of National Instrument 51-102 of the Canadian Securities
Administrators) with the auditors of the
Corporation;
|
|
(gg)
|
neither
the Corporation nor any of its Subsidiaries is a party to or bound
by any
agreement of guarantee, indemnification (other than an indemnification
of
directors and officers in accordance with the by-laws of the Corporation
or its Subsidiaries and applicable laws, indemnification agreements
or
covenants that are entered into arising in the ordinary course of
business, including operating and similar agreements, indemnification
and
contribution provisions in agency and underwriting agreements and
in
transfer agency agreements) or any other like commitment of the
obligations, liabilities (contingent or otherwise) or indebtedness
of any
other person (other than the Corporation and/or a Subsidiary of the
Corporation);
|
|
(hh)
|
other
than as set forth in the Public Record, neither the Corporation nor
any of
its Subsidiaries has any loans or other indebtedness outstanding
which
have been made to or from any of its shareholders, officers, directors
or
employees or any other person not dealing at arm’s length with the
Corporation or its Subsidiaries that are currently
outstanding;
|
|
(ii)
|
other
than as set forth in the Public Record, to the knowledge of the
Corporation, none of the directors, officers or employees of the
Corporation, any person who owns, directly or indirectly, more than
10% of
any class of securities of the Corporation, or any associate or affiliate
of any of the foregoing, had or has any material interest, direct
or
indirect, in any material transaction or any proposed material transaction
with the Corporation which, as the case may be, materially affects,
is
material to or will materially affect the Corporation or its Subsidiaries
(taken as a whole);
|
|
(jj)
|
each
of the Corporation and its Subsidiaries are insured by insurers of
recognized financial responsibly against such losses and risks and
in such
amounts as are prudent and customary in the businesses in which it
is
engaged; all policies of insurance insuring each of the Corporation
and
its Subsidiaries or their respective businesses, assets, employees,
offices and directors are in full force and effect, except where
the
failure to be in full force and effect would not have an adverse
material
effect on the business, operations, capital or condition (financial
or
otherwise) of the Corporation, its Subsidiaries or their respective
assets
(taken as a whole); the Corporation and its Subsidiaries are in compliance
with the terms of such policies and instruments in all material respects
and there are no material claims by the Corporation or its Subsidiaries
under any such policy or instrument as to which any insurance company
is
denying liability or defending under a reservation of rights clause;
the
Corporation has no reason to believe that it will not be able to
renew its
or its Subsidiaries existing insurance coverage as and when such
coverage
expires or to obtain similar coverage from similar insurers as may
be
necessary to continue its business at a cost that would not have
a
material adverse effect on the condition (financial or otherwise)
prospects, earnings, business or properties of the Corporation and
its
Subsidiaries (taken as a whole);
|
-20-
|
(kk)
|
to
the knowledge of the Corporation, none of its directors or officers
are
now, or have ever been, subject to an order or ruling of any securities
regulatory authority or stock exchange prohibiting such individual
from
acting as a director or officer of a public company or of a company
listed
on a particular stock exchange;
|
|
(ll)
|
the
representations and warranties made by the Corporation in the Subscription
Agreements are, or will be, true and correct as of the date at which
they
are made;
|
|
(mm)
|
the
Corporation has taken or will take prior to the Closing Date all
such
steps as may be necessary to comply with such requirements of Applicable
Securities Laws such that the Flow-Through Shares may, in accordance
with
Applicable Securities Laws, be offered for sale and sold on a private
placement basis to the public in the Selling Jurisdictions through
the
Underwriter or any other member of the Selling Dealer Group complying
with
Applicable Securities Laws by way of the exemptions to the prospectus
requirements;
|
|
(nn)
|
other
than as set forth in Schedule B hereto, there are no material contracts
or
agreements to which the Corporation or any Subsidiary is a party
or by
which it is bound and each of such contracts and agreements constitute
a
legally valid and binding agreement of the Corporation or any Subsidiary,
as applicable, enforceable in accordance with their respective terms
(subject to laws relating to creditor’s rights generally and general
principles of equity and except as rights to indemnity may be limited
by
applicable law) and, to the knowledge of the Corporation, no party
thereto
is in default thereunder. For the purposes of this subparagraph,
excluding
ordinary course operational supply agreements at Montana Tunnels
and
ordinary course drilling contracts at the Black Fox Project, any
contract
or agreement pursuant to which the Corporation or any Subsidiary
will, or
may reasonably be expected to, result in a requirement to expend
more than
an aggregate of $250,000 or receive or be entitled to receive revenue
of
more than $100,000 in either case in the next 12 months, or is out
of the
ordinary course of business of the Corporation or any Subsidiary,
shall be
considered to be material;
|
|
(oo)
|
neither
the Corporation nor any Subsidiary is, and to the knowledge of the
Corporation no other party is, in default in the observance or performance
of any term or obligation to be performed by it under any contract
to
which the Corporation or any Subsidiary is a party or by which the
Corporation or any Subsidiary is bound which is material to the business
of the Corporation and its Subsidiaries, and no event has occurred
which
with notice or lapse of time or both would directly or indirectly
constitute such a default, in any such case which default or event
would
reasonably be expected to have a material adverse effect on the assets
or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Corporation or its Subsidiaries (taken
as
a whole);
|
-21-
|
(pp)
|
except
as set forth in Schedule C hereto, neither the Corporation nor its
Subsidiaries is a party to any contracts of employment which may
not be
terminated on one month’s notice or which provide for payments occurring
on a change of control of the
Corporation;
|
|
(qq)
|
Schedule
D hereto sets forth all of the Swaps that the Corporation or its
Subsidiaries currently has outstanding, together with the details
thereof;
|
|
(rr)
|
the
Corporation has in place a shareholder rights protection plan;
|
|
(ss)
|
to
its knowledge, neither the Corporation nor any of its shareholders
is a
party to any unanimous shareholders agreement, pooling agreement,
voting
trust or other similar type of arrangements in respect of outstanding
securities of the Corporation;
|
|
(tt)
|
the
Corporation is a “principal-business corporation” as defined in subsection
66(15) of the Tax Act;
|
|
(uu)
|
except
as a result of any agreement or arrangement respecting the Flow-Through
Shares to which the Corporation is not a party and of which it has
no
knowledge, upon issuance pursuant to the provisions of the Subscription
Agreements, the Flow-Through Shares will be “flow-through shares” as
defined in subsection 66(15) of the Tax Act and
will not be “prescribed shares” for the purpose of section 6202.1 of the
Regulations to the Tax Act;
|
|
(vv)
|
as
at the date hereof, the Corporation has not issued any flow-through
common
shares subsequent to December 31, 2006 and has not renounced any
Qualifying Expenditures with an effective date subsequent to December
31,
2006; and
|
|
(ww)
|
the
Due
Diligence Session Responses
will be true and correct in all material respects as at the time
such
responses are given and, to the knowledge of the Corporation, such
responses taken as a whole shall not omit any fact or information
necessary to make any of the responses not misleading in light of
the
circumstances in which such responses were given, and the Corporation
and
its directors and officers will have responded in a thorough and
complete
fashion. Where the Due Diligence Session Responses reflect the opinion
or
view of the Corporation or its directors or officers (including,
Due
Diligence Session Responses or portions of such Due Diligence Session
Responses, which are forward looking or otherwise relate to projections,
forecasts or estimates of future performance or results (operating,
financial or otherwise)) ("Forward-looking
Statements"),
such opinions or views are subject to the qualifications and provisions
set forth in the Due Diligence Session Responses and will be honestly
held
and believed to be reasonable at the time they are given; provided,
however, it shall not constitute a breach of this paragraph solely
if the
actual results vary or differ from those contained in Forward-looking
Statements.
|
-22-
Section
7 Conditions
The
obligation of the Underwriter hereunder shall be conditional upon the
Underwriter receiving at the Closing Time:
|
(a)
|
a
favourable legal opinion of the Corporation’s counsel (addressed to the
Underwriter, the Subscribers and the Underwriter’s counsel), in form and
substance satisfactory to the Underwriter, acting reasonably, relating
to
the offering, issuance and sale of the Flow-Through Shares (including,
without limitation, the matters set forth in Schedule A) and as to
all
other legal matters, including compliance with Applicable Securities
Laws
of the Selling Jurisdictions, in any way connected with the offering,
issuance, sale and delivery of the Flow-Through Shares as the Underwriter
may reasonably request;
|
|
(b)
|
a
favourable legal opinion of the Corporation’s counsel (addressed to the
Underwriter, the Subscribers and the Underwriter’s counsel), in form and
substance satisfactory to the Underwriter, acting reasonably, relating
to
the title of the Corporation in the Black Fox
Project;
|
|
(c)
|
a
favourable legal opinion of the Corporation’s U.S. counsel (addressed to
the Underwriter, the Subscribers and the Underwriter’s counsel), in form
and substance satisfactory to the Underwriter, acting reasonably,
relating
to compliance of the offer and sale of the Flow Through Shares with
the
exemptions from registration of the Offering under United States
federal
securities laws;
|
|
(d)
|
a
certificate of the Corporation dated the Closing Date, addressed
to the
Underwriter and the Subscribers and signed on the Corporation’s behalf by
two senior officers of the Corporation satisfactory to the Underwriter,
acting reasonably, certifying that:
|
|
(i)
|
the
Corporation has complied with and satisfied all terms and conditions
of
this Agreement on its part to be complied with or satisfied at or
prior to
the Closing Time, other than those which have been waived in writing
by
the Underwriter;
|
|
(ii)
|
no
event of a nature referred to in Section
12(a), (b)
or
(d)
has occurred since the date of this Agreement or to the knowledge
of such
officers is pending, contemplated or threatened (excluding in the
case of
Sections 12(b) and (d) any requirement of the Underwriter to make a
determination as to whether or not any event or change has, in the
Underwriter’s opinion, had or could have the effect specified therein);
|
|
(iii)
|
the
Corporation has made and/or obtained, on or prior to the Closing
Time, all
necessary filings, approvals, consents and acceptances under Applicable
Securities Laws, and under any applicable agreement or document to
which
the Corporation is a party or by which it is bound, required for
the
execution and delivery of this Agreement, the Subscription Agreements,
the
offering and sale of the Flow-Through Shares in the Selling Jurisdictions
and the consummation of the other transactions contemplated hereby
(subject to completion of filings with certain regulatory authorities
following the Closing Date);
|
-23-
|
(iv)
|
there
have been no material changes to the Due Diligence Session Responses;
and
|
|
(v)
|
such
other matters as may be reasonably requested by the Underwriter or
the
Underwriter’s counsel;
|
and
the
Underwriter shall have no knowledge to the contrary; and
|
(e)
|
evidence
satisfactory to the Underwriter that the Corporation has obtained
all
necessary approvals of the Exchanges for the issuance of the Flow-Through
Shares and the listing of the Flow-Through Shares, subject only to
the
filing of any documents and payment of applicable fees which may
be
required by the Exchanges.
|
The
foregoing conditions are for the sole benefit of the Underwriter and may be
waived in whole or in part by the Underwriter at any time and, without
limitation, the Underwriter shall have the right, on behalf of potential
subscribers, to withdraw all Subscription Agreements delivered and not
previously withdrawn or rescinded by such persons. If any of the foregoing
conditions are not met, the Underwriter may terminate its obligations under
this
Agreement without prejudice to any other remedies it may have.
Section
8 Closing
The
issue
and sale of the Flow-Through Shares shall be completed at the Closing Time
at
the offices of the Corporation’s counsel in Toronto, Ontario or at such other
place as the Corporation and the Underwriter may agree. Subject to the
conditions set forth in Section
7,
the
Underwriter, on the Closing Date, shall deliver to the Corporation:
|
(a)
|
all
completed Subscription Agreements (including any applicable documents
specifically referred to in the Subscription Agreements, including
the
Registration Rights Agreements), in form and substance reasonably
satisfactory to the Underwriter and the Underwriter’s counsel;
and
|
|
(b)
|
originally
executed copies of all forms required under Applicable Securities
Laws or
by the Exchanges from each of the Subscribers; and
|
|
(c)
|
a
certified cheque, bank draft or wire transfer payable to the Corporation
in an amount equal to the aggregate of all subscriptions for Flow-Through
Shares delivered to and accepted by the Corporation (unless the
Underwriter shall have elected to deduct the fee payable pursuant
to Section 9
hereof, from the subscription proceeds, in which case the amount
of such
cheque or wire transfer shall be net of such amount),
|
-24-
against
delivery by the Corporation of:
|
(a)
|
definitive
certificates representing, in the aggregate, all of the Flow-Through
Shares subscribed for or purchased registered in such name or names
as the
Underwriter shall notify the Corporation in writing of not less than
24
hours prior to the Closing Time provided such certificates registered
in
such names may, subject to receipt by the Corporation of a satisfactory
indemnity, be delivered in advance of the Closing Date to the Underwriter
or such other parties in such locations as the Underwriter may direct
and
the Underwriter and the Corporation may agree
upon;
|
|
(b)
|
a
certificate representing the Compensation
Options;
|
|
(c)
|
a
certified cheque or bank draft payable to Xxxxxxx Securities Inc.
at par
in Toronto, Ontario in the amount of the fee set forth in Section
9
(unless the Underwriter shall have elected to deduct such fee from
the
gross subscription proceeds); and
|
|
(d)
|
such
further documentation as may be contemplated by this Agreement or
that may
reasonably be requested by Underwriter’s
counsel.
|
The
Corporation may not reject any properly completed Subscription Agreement which
is in compliance with Applicable Securities Laws, unless the number of
Flow-Through Shares subscribed for or purchased pursuant to all Subscription
Agreements tendered by the Underwriter exceeds the maximum number of
Flow-Through Shares to be sold under this Agreement, in which case Subscription
Agreements representing the over-allotment shall, in consultation with the
Underwriter, be rejected or unless the acceptance of such Subscription Agreement
may breach or violate any Applicable Securities Laws or any exemption from
registration contained in any Applicable Securities Laws.
Section
9 Fees
In
consideration for its services hereunder, the Corporation agrees to pay to
the
Underwriter a fee equal to the amount of $0.03025 (5.5%) for each Flow-Through
Share subscribed for, including any Flow-Through Shares purchased by the
Underwriter as principal hereunder, and for which the subscription is accepted
by the Corporation, which aggregate fee shall be payable at the Closing Time.
The Underwriter has not received its corporate finance fee of $50,000 and,
therefore, such amount shall form part of the cash commission payable by the
Corporation.
The
foregoing fee may, at the sole option of Xxxxxxx Securities Inc., be deducted
from the aggregate gross proceeds of the sale of the Flow-Through Shares and
withheld for the account of the Underwriter.
-25-
In
addition, the Corporation agrees to issue to the Underwriter a number of
compensation options (“Compensation
Options”)
that
is equal to 5% of the number of Flow-Through Shares sold pursuant to the
Offering, each Compensation Option being exercisable at a price of $0.55 for
a
period of 18 months from the Closing Date to acquire one common share of the
Corporation.
Section
10 Expenses
Whether
or not the transactions contemplated herein shall be completed, all costs and
expenses of or incidental to the creation, issue, sale or distribution of the
Flow-Through Shares shall be borne by the Corporation, including, without
limitation, all costs and expenses of or incidental to the private placement
of
the Flow-Through Shares, the fees and expenses of the Corporation’s counsel,
agent counsel retained by the Corporation’s counsel, the Corporation’s auditors,
the Corporation’s engineers, the reasonable out-of-pocket expenses of the
Underwriter (provided that the Corporation has approved any single such expenses
in excess of C$5,000 or any such expense in excess of C$10,000 in the
aggregate), including, but not limited to, travel and road show expenses, and
the Underwriter’s reasonable legal fees and expenses and all other reasonable
costs and expenses relating to the transactions contemplated herein. All fees
and expenses incurred by the Underwriter which are reimbursable hereunder shall
be payable by the Corporation immediately upon receiving an invoice therefor
from the Underwriter and in any event, not later than the Closing
Date.
Section
11 Waiver
The
Underwriter may, in respect of the Corporation, waive in whole or in part any
breach of, default under or non-compliance with any representation, warranty,
covenant, term or condition hereof, or extend the time for compliance therewith,
without prejudice to any of its rights in respect of any other representation,
warranty, covenant, term or condition hereof or any other breach of, default
under or non-compliance with any other representation, warranty, covenant,
term
or condition hereof, provided that any such waiver or extension shall be binding
on the Underwriter only if the same is in writing.
Section
12 Termination
Events
The
Underwriter may terminate its obligations hereunder, without any liability
on
the Underwriter’s part, by written notice to the Corporation, in the event that
after the date hereof and at or prior to the Closing Time:
|
(a)
|
any
order to cease or suspend trading in any securities of the Corporation,
or
prohibiting or restricting the distribution of the Flow-Through Shares
is
made, or proceedings are announced, commenced or threatened for the
making
of any such order, by any securities commission or similar regulatory
authority, either Exchange or by any other competent authority, and
the
same has not been rescinded, revoked or
withdrawn;
|
-26-
|
(b)
|
any
inquiry, investigation (whether formal or informal) or other proceeding
in
relation to the Corporation or any of its directors or senior officers
is
announced or commenced by any securities commission or similar regulatory
authority, either Exchange or by any other competent authority, or
any
order is issued under or pursuant to any statute of Canada or of
any of
the provinces of Canada, or any other applicable law or regulatory
authority (unless based on the activities or alleged activities of
the
Underwriter or its agent), or there is any change of law, regulation
or
policy or the interpretation or administration thereof which, in
the sole
opinion of the Underwriter, acting reasonably, materially adversely
affects, or may materially adversely affect, the market price or
value or
the marketability of the Flow-Through Shares or the trading in the
common
shares or the distribution of the Flow-Through
Shares;
|
|
(c)
|
there
should develop, occur or come into effect or existence any event,
action,
state, condition (including, without limitation, terrorism or accident)
or
major financial occurrence of national or international consequence,
or
any action by government, law or regulation, enquiry or any other
occurrence of any nature whatsoever which in the sole opinion of
the
Underwriter, acting reasonably, seriously adversely affects, or involves,
or may seriously adversely affect or involve, the financial markets or the
business, operations or affairs of the Corporation and its Subsidiaries
on
a consolidated basis;
|
|
(d)
|
there
should occur or be discovered any change, event, fact or circumstance
(actual, contemplated or threatened) of the nature referred to in
Section
3(a)
hereof or any development that could result in such a change, event,
fact
or circumstance, any of which, in the opinion of the Underwriter,
as
determined by the Underwriter in its sole discretion, acting reasonably,
could reasonably be expected to have a material adverse effect on
the
business, operations or affairs of the Corporation or the market
price or
value or the marketability of the Flow-Through Shares;
|
|
(e)
|
the
Underwriter, acting reasonably, determines that the Corporation shall
be
in breach of, default under or non-compliance with any material
representation, warranty, covenant, term or condition of this Agreement
or
the Subscription Agreements;
|
|
(f)
|
the
Underwriter has become aware, as a result of its due diligence review
or
otherwise, of any adverse material fact or change (determined solely
by
the Underwriter, acting reasonably) with respect to the Corporation
which
had not been publicly disclosed or disclosed in writing to the Underwriter
prior to the date hereof or which occurred after the effective date
hereof
but prior to the Closing Time;
or
|
|
(g)
|
there
is announced any change or proposed change in the income tax laws
of
Canada or the interpretation or administration thereof and such change,
which in the sole opinion of the Underwriter, acting reasonably,
could be
expected to have a significant adverse effect on the market price
or value
or the marketability of the Flow-Through Shares or any other securities
of
the Corporation;
|
in
any of
such cases, each Underwriter shall be entitled, at its option, to terminate
and
cancel its obligations to the Corporation under this Agreement and the
obligations of any Subscriber under any Subscription Agreement.
-27-
Section
13 Termination
Right
The
Underwriter may exercise any or all of the rights provided for in Section
7, Section 11 or Section 12
notwithstanding any material change, change, event or state of facts. The
Underwriter shall only be considered to have waived or be estopped from
exercising or relying upon any of its rights under or pursuant to Section
7, Section 11 or Section 12
if such
waiver or estoppel is in writing and specifically waives or estops such exercise
or reliance.
Section
14 Exercise
of Termination Right
Any
termination pursuant to the terms of this Agreement shall be effected by notice
in writing delivered to the Corporation, provided that no termination shall
discharge or otherwise affect any obligation of the Corporation under Section
10, Section 15, Section 16, Section 17 or Section 18. The rights of the
Underwriter to terminate obligations hereunder are in addition to, and without
prejudice to, any other remedies it may have.
Section
15 Survival
All
representations, warranties, covenants, indemnities, terms and conditions herein
or contained in certificates or documents submitted pursuant to or in connection
with the transactions contemplated herein shall survive the payment by the
Underwriter for the Flow-Through Shares and shall continue in full force and
effect for the benefit of the Underwriter and the Subscribers regardless of
any
investigation by or on behalf of the Underwriter with respect
thereto.
Section
16 Indemnity
The
Corporation shall indemnify and save each of the Indemnified Persons harmless
against and from all liabilities, claims, demands, losses (other than losses
of
profit), costs, damages and expenses to which any of the Indemnified Persons
may
be subject or which any of the Indemnified Persons may suffer or incur, whether
under the provisions of any statute or otherwise, in any way caused by, or
arising directly or indirectly from or in consequence of:
|
(a)
|
any
information or statement contained in any part of the Public Record
(other
than any information or statement relating solely to one or more
of the
Underwriter and furnished to the Corporation by the Underwriter expressly
for inclusion in any part of the Public Record) or contained in this
Agreement or any certificate or other document delivered by or on
behalf
of the Corporation to the Underwriter hereunder which is or is alleged
to
be untrue or any omission or alleged omission to provide any information
or state any fact the omission of which makes or is alleged to make
any
such information or statement untrue or misleading in light of the
circumstances in which it was made;
|
-28-
|
(b)
|
any
misrepresentation or alleged misrepresentation (except a misrepresentation
which is based upon information relating solely to one or more of
the
Underwriter and furnished to the Corporation by the Underwriter expressly
for inclusion in any part of the Public Record) contained in any
part of
the Public Record;
|
|
(c)
|
any
prohibition or restriction of trading in the securities of the Corporation
or any prohibition or restriction affecting the distribution of the
Flow-Through Shares (not based upon the activities or the alleged
activities of any of the Underwriter or the Selling Dealer Group
members,
if any) imposed by any of the Securities Commissions or any other
competent authority;
|
|
(d)
|
any
order made or any inquiry, investigation (whether formal or informal)
or
other proceeding commenced or threatened by any of the Securities
Commissions or any other one or more competent authorities (not based
upon
the activities or the alleged activities of any of the Underwriter
or the
Selling Dealer Group members, if any) into the affairs of the Corporation
or any of its directors, officers or principal shareholders or relating
to
or affecting the trading or distribution of the Flow-Through Shares;
|
|
(e)
|
any
breach of, default under or non-compliance by the Corporation with
any
representation, warranty, term or condition of this Agreement, the
Subscription Agreements, or delivered pursuant thereto or any requirement
of Applicable Securities Laws; or
|
|
(f)
|
any
misrepresentation contained in the Due Diligence Session Responses
(taken
as a whole),
|
provided
that in the event and to the extent that a court of competent jurisdiction
in
the final judgement from which no appeal can be made or a regulatory authority
in a final ruling from which no appeal can be made shall determine that any
matter in respect of which indemnity may be sought hereunder resulted solely
from the negligence, fraud or wilful misconduct of an Indemnified Person, this
indemnity shall not apply.
The
Corporation hereby waives its right to recover contribution from the Underwriter
with respect to any liability of the Corporation by reason of or arising out
of
any misrepresentation in any part of the Public Record; provided, however,
that
such waiver shall not apply in respect of liability caused or incurred by reason
of or arising out of: (i) any misrepresentation which is based upon information
relating solely to the Underwriter contained in such document and furnished
to
the Corporation by the Underwriter expressly for inclusion in such document;
or
(ii) any failure by the Underwriter to provide to prospective purchasers of
Flow-Through Shares any document which the Corporation is required to provide
to
such prospective purchasers and which the Corporation has provided to the
Underwriter to forward to such prospective purchasers.
-29-
The
Corporation agrees that in case any legal proceedings or investigation shall
be
brought against or initiated against the Corporation by any governmental
commission, regulatory authority, exchange, court or other authority and an
Indemnified Person or other representative of the Underwriter shall be required
to testify or respond to procedures designed to discover information regarding,
in connection with or relating to the performance of professional services
rendered to the Corporation by the Underwriter, the Corporation shall pay the
Underwriter the reasonable costs (including an amount to reimburse the
Underwriter for the time spent by its personnel in connection therewith on
a
per
diem
basis
and out of pocket expenses) in connection therewith unless such proceedings
or
investigations shall be brought or initiated as a result of any negligence,
fraud or similar actions or inactions of the Underwriter, or any of its
affiliates or any member of the Selling Dealer Group.
Section
17 Notice
of Indemnity Claim
If
any
claim contemplated by Section 16 shall be asserted against any of the
Indemnified Persons in respect of which indemnification is or might reasonably
be considered to be provided for in such section, such Indemnified Person shall
notify the Corporation as soon as possible of the nature of such claim and
the
Corporation shall be entitled (but not required) to assume the defence of any
suit brought to enforce such claim; provided, however, that the defence shall
be
through legal counsel selected by the Corporation and acceptable to the
Indemnified Person acting reasonably and that no admission of liability or
settlement may be made by the Corporation or the Indemnified Person without
the
prior written consent of the other, such consent not to be unreasonably
withheld. The Indemnified Person shall have the right to retain its own counsel
in any proceeding relating to a claim contemplated by Section 16
if:
|
(a)
|
the
Indemnified Person has been advised in writing by counsel that there
may
be a material legal defence available to the Indemnified Person which
is
different from or additional to a defence available to the Corporation
or
that a conflict of interest exists or reasonably may exist which
makes
representation by counsel chosen by the Corporation not advisable
(in
which case the Corporation shall not have the right to assume the
defence
of such proceedings on the Indemnified Person's
behalf);
|
|
(b)
|
the
Corporation shall not have undertaken the defence of such proceedings
and
employed counsel within ten days after notice of commencement of
such
proceedings; or
|
|
(c)
|
the
employment of such counsel has been authorized by the Corporation
in
connection with the defence of such
proceeding;
|
and,
in
any such event, the reasonable fees and expenses of such Indemnified Person’s
counsel shall be paid by the Corporation; it being understood, however, that
the
Corporation shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of
the same general allegations or circumstances, be liable for the reasonable
fees
and expenses of more than one separate law firm (in addition to any local
counsel) for all Indemnified Persons.
-30-
It
is the
intention of the Corporation to constitute the Underwriter as trustee for the
Indemnified Persons for the purposes of Section
16, Section 17 and Section 18
and the
Underwriter agrees to accept such trust and to hold and enforce such covenants
on behalf of such persons.
Section
18 Right
of Contribution
In
order
to provide for just and equitable contribution in circumstances in which the
indemnification provided for in this Agreement is due in accordance with its
terms but is (in whole or in part), for any reason, held by a court to be
unavailable from the Corporation on grounds of policy or otherwise, each of
the
Corporation and the party or parties seeking indemnification shall contribute
to
the aggregate liabilities, claims, demands, losses (other than losses of
profit), costs, damages and expenses (or claims, actions, suits or proceedings
in respect thereof) to which they may be subject or which they may suffer or
incur:
|
(a)
|
in
such proportion as is appropriate to reflect the relative benefit
received
by the Corporation on the one hand and by the Underwriter on the
other
hand from the offering of the Flow-Through Shares;
or
|
|
(b)
|
if
the allocation provided by Section
18(a)
is
not permitted by applicable law, in such proportion as is appropriate
to
reflect not only the relative benefits referred to in Section
18(a)
but also to reflect the relative fault of the party or parties seeking
indemnity, on the one hand, and the parties from whom indemnity is
sought,
on the other hand, in connection with the statement, omission,
misrepresentation or alleged misrepresentation, order, inquiry,
investigation or other matter or thing which resulted in such liabilities,
claims, demands, losses, costs, damages or expenses, as well as any
other
relevant equitable considerations.
|
The
relative benefits received by the Corporation, on the one hand, and the
Underwriter, on the other hand, shall be deemed to be in the same proportion
that the total proceeds of the offering received by the Corporation (net of
fees
but before deducting expenses) bear to the fees received by the
Underwriter.
The
amount paid or payable by an Indemnified Person as a result of liabilities,
claims, demands, losses (other than losses of profit), costs, damages and
expenses (or claims, actions, suits or proceedings in respect thereof) referred
to above shall, without limitation, include any reasonable legal or other
expenses reasonably incurred by the Indemnified Person in connection with
investigating or defending such liabilities, claims, demands, losses, costs,
damages and expenses (or claims, actions, suits or proceedings in respect
thereof), whether or not resulting in any action, suit, proceeding or
claim.
The
Corporation agrees that it would not be just and equitable if contributions
pursuant to this Agreement were determined by pro
rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding sections.
The rights to contribution provided in this Section
18
shall be
in addition to, and without prejudice to, any other right to contribution which
the Underwriter may have.
-31-
Notwithstanding
the foregoing, a person guilty of fraud or fraudulent misrepresentation shall
not be entitled to contribution from the other party to the extent that the
fraud or fraudulent misrepresentation caused or contributed to the damages
in
respect of which contribution is being sought.
Any
liability of the Underwriter under this Section
18
shall be
limited to the amount payable to the Underwriter pursuant to Section
9.
Section
19 Notices
Any
notice or other communication required or permitted to be given hereunder shall,
in the case of notice to be given to the Corporation, be addressed
to:
Apollo
Gold Corporation
0000
X.
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx
X.X.X.
Attention: R.
Xxxxx
Xxxxxxx
Telecopy
No.: 000-000-0000
with
a
copy to:
Fogler,
Xxxxxxxx LLP
00
Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx
0000, Xxxxxxx-Xxxxxxxx Centre
Xxxxxxx
Xxxxxxx
X0X
0X0
Attention: G.
Xxxxxxx Xxxxxx
Telecopy
No.: 416-941-8852
and,
in
the case of notice to be given to the Underwriter, be addressed to:
Xxxxxxx
Securities Inc.
Brookfield
Place, 000 Xxx Xxxxxx
Xxxxx
0000, Xxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Xxxx
XxXxxxxx
Telecopy
No.: (000)
000-0000
-32-
with
a
copy to:
Blake,
Xxxxxxx & Xxxxxxx LLP
000
Xxx
Xxxxxx
Xxxxx
0000, Xxxxxxxx Xxxxx Xxxx
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Xxxxxx
X.
Xxxxxxxxx
Telecopy
No.: (000)
000-0000
or
to
such other address as the party may designate by notice given to the others.
Each communication shall be personally delivered to the addressee or sent by
facsimile transmission to the addressee, and:
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(a)
|
a
communication which is personally delivered shall, if delivered before
4:30 p.m. (local time in the place of delivery) on a business day,
be
deemed to be given and received on that day and, in any other case
be
deemed to be given and received on the first business day following
the
day on which it is delivered; and
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(b)
|
a
communication which is sent by facsimile transmission shall, if sent
on a
business day before 4:30 p.m. (local time in the place of receipt),
be
deemed to be given and received on that day and, in any other case,
be
deemed to be given and received on the first business day following
the
day on which it is sent.
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Section
20 Trust
It
is the
intention of the Corporation to constitute the Underwriter as trustee for the
Subscribers in respect of the benefit of the representations, warranties and
covenants of the Corporation set forth in this Agreement.
Section
21 Acknowledgement
and Consent
The
Corporation: (i) acknowledges and agrees that the Underwriter has certain
statutory obligations as a registrant under the Applicable Securities Laws
and
has fiduciary relationships with its respective clients; and (ii) consents
to
the Underwriter acting hereunder while continuing to act for its respective
clients. To the extent that the Underwriter’s statutory obligations as a
registrant under Applicable Securities Laws or fiduciary relationships with
its
clients conflicts with its obligations hereunder, the Underwriter shall be
entitled to fulfill its statutory obligations as a registrant under Applicable
Securities Laws and its duties to its clients. Nothing in this Agreement shall
be interpreted to prevent the Underwriter from fulfilling its statutory
obligations as a registrant under Applicable Securities Laws or to act as a
fiduciary of its clients.
-33-
Section
22 Severance
If
one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.
Section
23 Governing
Law
This
Agreement shall be governed by and construed in accordance with the laws of
the
Province of Ontario and the laws of Canada applicable therein.
Section
24 Time
of the Essence
Time
shall be of the essence of this Agreement.
Section
25 Entire
Agreement
It
is
understood that the terms and conditions of this Agreement supersede any
previous verbal or written agreement between the Underwriter and the Corporation
with respect to the issuance of securities by the Corporation and including,
without limitation, the agreement constituted by the acceptance of the letter
dated October 11, 2007 from Xxxxxxx Securities Inc. to the
Corporation.
Section
26 Counterpart
Execution
This
Agreement may be executed in one or more counterparts, each of which so executed
shall constitute an original and all of which together shall constitute one
and
the same agreement.
*
* * *
*
-34-
If
the
foregoing is in accordance with your understanding and is agreed to by you,
please confirm your acceptance by signing the enclosed copies of this letter
at
the place indicated and by returning the same to Xxxxxxx Securities
Inc.
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XXXXXXX
SECURITIES INC.
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| Per: | /s/ Xxxx XxXxxxxx | |
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ACCEPTED
AND AGREED
to
effective as of the 31st
day of
October, 2007.
