HAYWOOD SECURITIES, INC.
EXHIBIT
10.4
XXXXXXX
SECURITIES, INC.
December 15,
2008
PRIVATE AND
CONFIDENTIAL
Apollo
Gold Corporation
0000 X.
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx
Xxxxxxx, XX, XXX
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Attention:
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Mr. R. Xxxxx
Xxxxxxx
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President,
CEO & Director
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RE:
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Advisory Agreement |
This
letter agreement (the “Agreement”) confirms our understanding of the engagement
of Xxxxxxx Securities Inc. (“Xxxxxxx”) by Apollo Gold Corporation (“Apollo” or
the “Company”) to act as exclusive financial advisor to the Company in
connection with a financing strategy to fill a financing gap in the Company’s
capital budget for the Black Fox project in Timmins, Ontario. The
financing gap is currently estimated to be approximately
US$11.5 million. Apollo would consider raising funds or
restructuring certain obligations (the “Capital Raising”) to cover costs and
expenses relating to the retirement of the convertible debenture (the “Convert”)
currently outstanding which comes due in February 2009 as well as certain
working capital needs of the Company. The structure of such financing
solution may take place by way of one or a combination options including but not
limited to the following: (1) an equity financing by way of
flow-through shares or otherwise; (2) a restructuring of the Convert;
(3) purchase and restructuring of the Convert; (4) a short term loan;
(5) investment by a shell with cash; or (6) merger with a shell or
other Company with cash.
Advisory
Services. Xxxxxxx will provide the following financial advice
and assistance:
Proposed
Re-Financing
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(a)
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identifying
a suitable source of financing for the
Company;
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(b)
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review
the documentation in relation to the Capital Raising as
necessary;
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(c)
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provide
analysis and advice to the management of Apollo regarding the Capital
Raising; and
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(d)
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provide
assistance in negotiations of the financial terms and structure of the
Capital Raising;
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Advisory
Services Compensation. In consideration of the services
rendered by Xxxxxxx in connection with the Advisory Services, the Company agrees
to pay 1,000,000 shares such shares shall be paid by February 28,
2009.
Expenses. It
is understood and agreed that, all expenses of or incidental to the advisory
shall be borne by the Company, including the fees, disbursements and any
applicable tax payable thereon of counsel for the Agents incurred in connection
with the proposed advisor. The Company also agrees to reimburse
Xxxxxxx promptly when invoiced for all of its reasonable out-of-pocket expenses
in connection with the performance of its services hereunder, regardless of
whether a transaction occurs. Upon termination of this Agreement, the
Company agrees to pay promptly in cash any unreimbursed expenses that have
accrued as of such date.
Term. This
engagement will commence on the date of this letter and terminate on the earlier
to occur of (i) the closing of the Capital Raising and (ii) 30 days
from the date on which a party receives written notice from the other party of
termination of this engagement. Notwithstanding the foregoing, the
Company agrees that the provisions relating to the payment of fees,
reimbursement of expenses, indemnification and contribution, and confidentiality
will survive any such termination.
Indemnification. As
Xxxxxxx will be acting on your behalf, you agree to indemnify Xxxxxxx and
certain related parties identified in Annex A, in the manner set forth in
Annex A which is attached and incorporated by reference in its entirety to
this Agreement.
Independent
Contractor. The Company acknowledges that in performing its
services, Xxxxxxx is acting as an independent contractor with duties owing
solely to the Company.
Confidentiality. The
Company further acknowledges that any service, information or advice, provided
by Xxxxxxx to the Company in connection with this Agreement is for the
confidential use of senior management of the Company and, except as required by
law or judicial or regulatory process, may not be disclosed or referred to
publicly or to any third party, without Xxxxxxx’x prior written consent, which
consent will not be unreasonably withheld.
Miscellaneous. This
Agreement may not be amended or modified except in writing signed by the Company
and Xxxxxxx and may be executed in two or more counterparts, each of which will
be deemed to be an original, but all of which will constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof. This Agreement will enure to the benefit of and
become binding upon the parties hereto and their respective successors and
assigns, provided that no party may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
other.
Please
confirm our mutual understanding of this engagement by signing and returning to
us the enclosed duplicate copy of this Agreement. We are pleased that
you have engaged us to act as your financial advisor and are looking forward to
working with you on this assignment.
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Very
truly yours,
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XXXXXXX
SECURITIES INC.
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By:
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/s/
Xxxx XxXxxxxx
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Xxxx XxXxxxxx Director,
Investment Banking
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Agreed
to and accepted as of the above date.
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APOLLO
GOLD CORPORATION
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By:
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/s/
X X Xxxxxxx
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Mr.
R. Xxxxx Xxxxxxx
President,
CEO & Director
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ANNEX
A
INDEMNIFICATION
The
Company agrees to indemnify and hold harmless Xxxxxxx and its affiliates and
their respective present and former directors, officers, employees, agents and
controlling persons (each such person, including Xxxxxxx, an “Indemnified
Party”) to the extent fully permitted by law from and against any losses (other
than loss of profit), claims, damages and liabilities, joint or several
(collectively, the “Damages”), to which such Indemnified Party may become
subject in connection with or otherwise relating to or arising from any
transaction contemplated by this Agreement or the engagement of or performance
of services by an Indemnified Party thereunder, and will reimburse each
Indemnified Party for all fees and expenses (including the reasonable fees and
expenses of counsel) (collectively, “Expenses”) as incurred in connection with
investigating, preparing, pursuing or defending any threatened or pending claim,
action, proceeding or investigation (collectively, the “Proceedings”) arising
therefrom, whether or not such Indemnified Party is a formal party to such
Proceeding; provided, that the Company will not be liable to any such
Indemnified Party to the extent that any Damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
primarily from the fraud, gross negligence or willful misconduct of the
Indemnified Party seeking indemnification hereunder. The Company also
agrees that no Indemnified Party will have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Company or any person asserting
claims on behalf of the Company arising out of or in connection with any
transactions contemplated by this Agreement or the engagement of or performance
of services by any Indemnified Party thereunder except to the extent that any
Damages are found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from the fraud, gross negligence or
willful misconduct of the Indemnified Party.
If for
any reason other than in accordance with this Agreement, the foregoing indemnity
is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless, then the Company will contribute to the amount paid or payable
by an Indemnified Party as a result of such Damages (including all Expenses
incurred) in such proportion as is appropriate to reflect the relative benefits
to the Company and/or its stockholders on the one hand, and Xxxxxxx on the other
hand, in connection with the matters covered by this Agreement or, if the
foregoing allocation is not permitted by applicable law, not only such relative
benefits but also the relative faults of such parties as well as any relevant
equitable considerations. The Company agrees that for purposes of
this paragraph the relative benefits to the Company and/or its stockholders and
Xxxxxxx in connection with the matters covered by this Agreement will be deemed
to be in the same proportion that the total value paid or received or to be paid
or received by the Company and/or its stockholders in connection with the
transactions contemplated by this Agreement, whether or not consummated, bears
to the fees paid to Xxxxxxx under this Agreement; provided, that in no event
will the total contribution of all Indemnified Parties to all such Damages
exceed the amount of fees actually received and retained by Xxxxxxx under this
Agreement (excluding any amounts received by Xxxxxxx as reimbursement of
expenses). Relative fault shall be determined by reference to, among
other things, whether any alleged untrue statement or omission or any alleged
conduct relates to information provided by the Company or other conduct by the
Company (or its employees or other agents) on the one hand, or by Xxxxxxx, on
the other hand.
Promptly
after receipt of notice of the commencement of any Proceeding against Xxxxxxx or
any other Indemnified Party or after receipt of notice of the commencement of
any investigation which is based, directly or indirectly, upon any matter in
respect of which indemnification may be sought from the Company, Xxxxxxx or any
other Indemnified Party shall notify the Company in writing of the commencement
thereof, provided that any failure or delay in so notifying shall not relieve
the Company of any liability which it may have to Xxxxxxx or any other
Indemnified Party except and only to the extent that such failure materially
prejudices the ability to defend the Proceeding.
The
Company shall undertake, at its own expense, the settlement or defense of the
Proceeding provided that the costs of counsel shall be limited to counsel
retained by the Company. The relevant Indemnified Parties shall have
the right to participate in the settlement or defense of the Proceeding and to
retain their own counsel at their cost. Notwithstanding the
foregoing, the relevant Indemnified Parties may retain separate counsel to
represent them in the settlement or defense of the Proceeding, at the expense of
the Company, if: (i) the Company does not promptly assume the
defense of the Proceeding; (ii) the Company agrees to separate
representation; or (iii) the respective Indemnified Party is advised in
writing by counsel that there is an actual or potential conflict in the Company’
s and the Indemnified Parties’ respective interests or additional defenses are
available to the Indemnified Parties are not available to the Company, which
makes representation by the same counsel inappropriate.
The
Company agrees not to enter into any waiver, release or settlement of any
Proceeding (whether or not Xxxxxxx or any other Indemnified Party is a formal
party to such Proceeding) in respect of which indemnification may be sought
hereunder without the prior written consent of Xxxxxxx (which consent will not
be unreasonably withheld), unless such waiver, release or settlement
(i) includes an unconditional release of Xxxxxxx and each Indemnified Party
from all liability arising out of such Proceeding and (ii) does not contain
any factual or legal admission by or with respect to any Indemnified Party or
any adverse statement with respect to the character, professionalism, expertise
or reputation of any Indemnified Party or any action or inaction of any
Indemnified Party.
An
Indemnified Party will not, without the prior written consent of the Company
(which consent will not be unreasonably withheld), enter into any waiver,
release or settlement of any Proceeding or make any admission of liability or
otherwise seek to terminate any Proceeding in respect of which indemnification
may be sought hereunder.
The
indemnity, reimbursement and contribution obligations of the Company hereunder
will be in addition to any liability which the Company may have at common law or
otherwise to any Indemnified Party and will be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company or an Indemnified Party. The provisions of this Annex will
survive the modification or termination of this Agreement.
XXXXXXX
SECURITIES, INC.
January 30,
2009
CONFIDENTIAL
APOLLO
GOLD CORPORATION
0000 Xxxxx
Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Mr. R. Xxxxx
Xxxxxxx, President, Chief Executive Officer and Director
Dear
Sir:
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Re:
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Alternative
Transaction for Private Placement of up to
US$14,000,000
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Convertible
Unsecured Debenture Units and Subscription
Receipts
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Xxxxxxx
Securities Inc. (“Xxxxxxx”) wishes to confirm the agreement between Apollo Gold
Corporation (“Apollo” or the “Company”) and Xxxxxxx in connection with the
proposed alternative transaction (the “Alternative Transaction”) to be completed
by the Company with its project lenders as a replacement for Xxxxxxx working
with the Company to collectively provide a book of investors for a private
placement of approximately US$14,000,000 Convertible Unsecured Debenture Units
and Subscription Receipts.
The
Company hereby agrees to pay Xxxxxxx certain fees as outlined below based on the
additional capital provided by the project lenders subject to a deemed deal size
of US$8.0 million (the “Alternative Transaction Size”):
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(1)
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That
number of shares of the company equal to 5.5% multiplied by the
Alternative Transaction Size divided by a deemed share price of
CAD$0.25. The exchange rate calculations will be deemed to be
0.8100 US$/CAD$.
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(2)
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Xxxxxxx
will also receive broker warrants for a period of two years following
closure for the same type of securities issued by the Company equivalent
to 6.5% of the deemed number of securities issued by the Company based on
the Alternative Transaction Size.
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(3)
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If,
except in relation to secured project debt, within twenty-four (24) months
after the closing date of the Alternative Transaction, the Company
proposes to (i) issue debt or equity securities, (ii) acquire or
dispose of any assets or securities out of the ordinary course of
business, or (iii) enter into any transaction involving the making of
a plan of arrangement or a take over bid by or for the Company, the
Company shall offer (the “Offer”) to engage Xxxxxxx as lead manager,
exclusive financial advisor or agent (with a minimum economic
participation of 100% at the option of Xxxxxxx) in connection with such
transaction. If Xxxxxxx does not accept the terms and
conditions contained in the Offer within ten days of receipt of such
offer, the Company may engage any other financial institution as lead
manager or agent (as the case may be, depending upon the nature of the
transaction) in connection with such transaction, provided that the terms
and conditions of any such engagement shall be no more favourable on the
whole to such other financial institution than the terms and conditions
offered by the Corporation to the
Xxxxxxx.
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If the
foregoing is acceptable to you, please execute this letter agreement where
provided below and return an executed duplicate of this letter agreement to the
attention of the undersigned.
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Yours
very truly,
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XXXXXXX
SECURITIES INC.
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On
Behalf of the Agents
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/s/
Xxxx XxXxxxxx
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Xxxx
XxXxxxxx
Director,
Investment Banking
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We hereby
agree to the foregoing on the terms and conditions set out herein.
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This
30th
day of January, 2009.
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APOLLO
GOLD CORPORATION
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/s/
R D Xxxxxxx
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X. Xxxxx
Xxxxxxx
President,
CEO & Director
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