APOLLO GOLD CORPORATION Up to 20,000,000 Units, each Unit consisting of One Share of Common Stock and One-Half Common Stock Purchase Warrant AGENCY AGREEMENT October 30, 2006
APOLLO
GOLD CORPORATION
Up
to
20,000,000 Units,
each Unit consisting of
each Unit consisting of
One
Share
of Common Stock and One-Half Common Stock Purchase Warrant
AGENCY
AGREEMENT
October
30, 2006
October
30, 2006
Shoreline
Pacific, LLC
000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
as
Agent
Ladies
and Gentlemen:
Apollo
Gold Corporation, a
corporation incorporated under the laws of the Yukon Territory,
Canada
(the
“Company”), proposes, upon the terms and subject to the conditions set forth in
this Agreement (together with the exhibits attached hereto,
this “Agreement”), to offer for sale (the “Offering”) up to 20,000,000
units (individually, a “Unit” and, collectively, the “Units”), each Unit
consisting of one share (each, a “Share” and, collectively, the “Shares”) of the
Company’s common stock, no par value per share (the “Common Stock”), and a
warrant, with a three year term, to purchase one Share of the Common Stock
(the
“Warrant Shares”) at an exercise price of $0.50 per share (each, a “Warrant”
and, collectively, the “Warrants”). In connection with the Offering, the Company
desires to engage Shoreline Pacific, LLC as its exclusive agent (the “Agent”),
upon the terms and subject to the conditions set forth in this Agreement
and the
Engagement Letter (as defined below). The Units and the Offering are described
in the Prospectus that is referred to below.
The
Company has prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Act”), with the U.S. Securities and Exchange Commission (the
“Commission”) a registration statement under the Act on Form S-3 (File No.
333-119198) filed with the Commission on September 22, 2004 (such registration
statement as amended or supplemented (including the prospectus dated October
5,
2004 and the prospectus supplement dated on or about November 1, 2006, but
excluding any supplements relating to offerings of securities other than
the
Offering) from time to time, the “registration statement”). The registration
statement has been declared by the Commission to be effective under the Act.
The
Company will file with the Commission pursuant to Rule 424(b) under the Act
a final prospectus supplement to the Base Prospectus (as defined below),
describing the Units and the Offering, in such form as has been provided
to,
discussed with, and approved, by the Agent.
The
term
“Registration Statement” as used in this Agreement means the registration
statement, at the time it became effective and as supplemented (other than
supplements relating to offerings of securities other than the Offering)
or
amended, including (i) all financial schedules and exhibits thereto, and
(ii) all documents incorporated by reference or deemed to be incorporated
by reference therein, which schedules, exhibits and documents have been filed
with the Commission pursuant to its Electronic Data Gathering Analysis and
Retrieval System (“XXXXX”). The term “Base Prospectus” as used in this Agreement
means the base prospectus filed with the Commission under Rule 424(b)(2)
on
September 22, 2004 for use in connection with the offer and/or sale of the
Units
pursuant to this Agreement. “Preliminary Prospectus Supplement” shall mean any
preliminary prospectus supplement to the Base Prospectus that describes the
Units and the Offering and is used prior to filing of the Prospectus Supplement,
together with the Base Prospectus. The term “Prospectus Supplement” as used in
this Agreement means any final prospectus supplement specifically relating
to
the Units, in the form filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 under the Act. The term “Prospectus” as used in this
Agreement means the Base Prospectus as supplemented by the Prospectus Supplement
except that if such Base Prospectus is amended or supplemented (other than
supplements relating to offerings of securities other than the Offering)
on or
prior to the date on which the Prospectus Supplement was first filed pursuant
to
Rule 424, the term “Prospectus” shall refer to the Base Prospectus as so
amended or supplemented and as supplemented by the Prospectus Supplement.
Any
reference herein to the registration statement, the Registration Statement,
the
Base Prospectus, any Preliminary Prospectus Supplement, any Prospectus
Supplement or the Prospectus shall be deemed to refer to and include (i)
the
documents incorporated by reference therein pursuant to Form S-3 (the
“Incorporated Documents”) and (ii) the copy of the Registration Statement, the
Base Prospectus, the Prospectus Supplement, the Prospectus or the Incorporated
Documents filed with the Commission pursuant to XXXXX. Any reference herein
to
the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus, the Preliminary Prospectus Supplement, the
Prospectus Supplement or the Prospectus shall be deemed to refer to and include
the filing of any document under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the “Exchange
Act”) after the effective date of the Registration Statement, or the date of
the
Base Prospectus, the Preliminary Prospectus Supplement or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference.
As used herein, “business day” shall mean a day on which the American Stock
Exchange is open for trading.
The
Company hereby confirms its agreement with the Agent as follows:
1. Agreement
to Act as Agent.
Upon
the basis of the representations and warranties of the Company and subject
to
the terms and conditions set forth in this Agreement and in the letter agreement
dated September 15, 2006 between the Company and the Agent (the “Engagement
Letter”), the Company engages the Agent to act as its exclusive agent, on a
reasonable “best efforts” basis, in connection with the offer and sale by the
Company of the Units. As compensation for services rendered, at the time
of
purchase (as defined below), the Company shall pay to the Agent a fee (to
be
paid in the manner described below) of: (i) cash equal to 7.0% of the gross
proceeds received by the Company from the sale of the Units in the Offering
(exclusive of any potential proceeds from the exercise of the Warrants);
(ii)
Warrants for the purchase of a number of shares of Common Stock equal to
7% of
the number of Shares issued and sold in the Offering exercisable at a price
equal to the greater of (i) 150% of the per Unit purchase price or (ii) the
exercise price of the warrants issued to investors in the Offering; and (iii)
a
non-accountable expense allowance of $25,000, provided, that if the Offering
does not close, then the Agent shall only be entitled to its actual, accountable
expenses up to a maximum of $25,000. The Units are being offered and sold
at a
price of $0.30 per Unit.
This
Agreement shall not give rise to any commitment by the Agent or any of its
affiliates to underwrite or purchase any of the Units or otherwise provide
any
financing. Subscription for the Units shall be evidenced by, and the sale
of
such Units shall be made pursuant to, purchase agreements in substantially
the
form included as Exhibit A hereto
duly executed by each purchaser of the Units and the Company (the “Purchase
Agreements”). Persons who agree to purchase the Units pursuant to the Purchase
Agreements that are accepted by the Company are hereinafter referred to as
the
“Purchasers.”
2. Payment
and Delivery.
Subject
to the terms and conditions hereof and of the Purchase Agreements, payment
of
the purchase price for, and delivery of certificates for, the shares of Common
Stock and Warrants that comprise the Units for which the Company has received
Purchase Agreements acceptable to the Company shall be made at the office
of
Xxxxxxx Xxxxxxxxx & Xxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
XX 00000 (or at such other place as shall be agreed upon by the Agent and
the
Company), at 10:00 a.m., New York City time, on or about November 15,
2006 (unless another time shall be agreed to by the Agent and the Company).
The time at which such payment and delivery are made is hereinafter sometimes
called “the time of purchase” and the date upon which the time of purchase
occurs is hereinafter sometimes called the “Closing Date.” Subject to the terms
and conditions hereof and of the Purchase Agreements, payment of the purchase
price for the Units purchased by a Purchaser shall be made to the Company
in the
manner described below against delivery of certificates for shares of Common
Stock and Warrants that comprise the Units, for subsequent delivery to such
Purchaser, and such Shares and Warrants shall be registered in such name
or
names and shall be in such denominations, as the Purchaser thereof may request
at least one business day before the time of
purchase.
2
The
Agent
agrees to hold the purchase price delivered to it by persons who agree to
purchase the Units in escrow with Signature Bank, a New York State chartered
bank (“Signature”) as contemplated by the form of Escrow Agreement included as
Exhibit C hereto. The Agent will transmit any investor funds received by
it to
Signature by noon of the business day following the date of any such receipt.
Signature will, from time to time upon request of the Company, confirm to
the
Company the aggregate amount of funds delivered to it in escrow by persons
who
have executed and delivered a Purchase Agreement. Subject to the terms and
conditions hereof and of the Purchase Agreements, at the time of
purchase
Signature shall deliver to the Company by Federal Funds wire transfer of
same
day funds the purchase price for any such Units payable to the Company that
has
been deposited in the escrow account by the Purchasers, reduced by the amount
of
the fee payable to the Agent hereunder and the Agent’s bona fide estimate of the
amount of expense reimbursement to which they are entitled hereunder (up
to a
maximum amount of $75,000, as specified in the Engagement Letter consisting
of a
non-accountable expense allowance of $25,000 and reimbursable legal expenses
of
up to $50,000), against delivery of such Units to the Purchasers as described
above. Signature shall concurrently deliver to the Agent by Federal Funds
wire
transfer of same day funds the fee payable to the Agent hereunder and the
Agent’s bona fide estimate of the amount of expense reimbursement to which the
Agent is entitled hereunder. As soon as practicable after the Closing Date,
the
Agent will submit to the Company their final legal expense reimbursement
invoices (up to a maximum amount of $50,000, as specified in the Engagement
Letter) and the Company and/or Signature, as appropriate, will make the
necessary reconciling payment(s).
Deliveries
of the documents described in Section 5 hereof with respect to the purchase
of
the Units shall be made at the offices of Xxxxxxx Xxxxxxxxx & Xxxxx LLP in
New York City at 10:00 a.m., New York City time, on the Closing Date.
3. Representations
and Warranties of the Company.
The
Company represents and warrants to the Agent that, except as set forth in
the
Registration Statement or the Prospectus (including the Incorporated
Documents):
(a) the
Registration Statement was declared effective under the Act on October 5,
2004;
no stop order of the Commission preventing or suspending the use of the Base
Prospectus, the Preliminary Prospectus Supplement, the Prospectus Supplement
or
the Prospectus or the effectiveness of the Registration Statement has been
issued and no proceedings for such purpose have been instituted or, to the
Company’s knowledge, are threatened by the Commission; the Company is eligible
to use Form S-3 for the Offering; such Registration Statement at the date
of
this Agreement meets, and the Offering complies with, the requirements of
Rule
415 under the Act. The Registration Statement complied when it became effective,
complies, and will comply at the time of purchase, and the Prospectus conformed
as of its date, conforms, and will conform at the time of purchase, in each
case
in all material respects with the requirements of the Act; any statutes,
regulations, contracts or other documents that are required to be described
in
the Registration Statement or the Prospectus or to be filed as exhibits to
the
Registration Statement have been and will be so described or filed; there
are
no
documents required to be filed with the Commission in connection with the
transaction contemplated hereby that have not been filed as required pursuant
to
the Act or will not be filed within the requisite time period; and the
Registration Statement did not at the time of effectiveness, does not and
will
not at the time of purchase contain an untrue statement of a material fact
or
omit to state a material fact required to be stated therein or necessary
to make
the statements therein not misleading, and the Prospectus did not as of its
date, does not and will not at the time of purchase contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however,
that
the Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in reliance upon
and
in conformity with information concerning the Agent and furnished in writing
by
or on behalf of the Agent to the Company expressly for use in the Registration
Statement or the Prospectus; the Company has not distributed and will not
distribute any offering material in connection with the offering or sale
of the
Units other than the Registration Statement, the then most recent Preliminary
Prospectus Supplement or Prospectus Supplement, as applicable, the Base
Prospectus and the Prospectus; the Company has timely filed all reports required
of it to be filed pursuant to the Act and the Exchange Act and has filed
all
such reports in the manner prescribed thereby; the Incorporated Documents,
when
they were filed with the Commission (or, to the extent such documents were
amended, as amended), conformed in all material respects to the requirements
of
the Exchange Act and the applicable rules and regulations of the Commission
thereunder, and none of such documents, when they were filed with the Commission
(or, to the extent such documents were amended, as amended), contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so filed
and
incorporated by reference in the Base Prospectus or Prospectus Supplement,
when
such documents are filed with the Commission, will comply in all material
respects with the requirements of the Exchange Act and the applicable rules
and
regulations of the Commission thereunder, as applicable, and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
3
(b) as
of the
date of the Prospectus Supplement, the Company has, and as of the time of
purchase the Company shall have, an authorized capitalization as set forth
in
the Prospectus Supplement under the caption “Description of Securities”; all of
the issued and outstanding shares of capital stock of the Company have been
duly
authorized and validly issued and are fully paid and non-assessable, have
been
issued in compliance with all federal and state securities laws and were
not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right;
(c) as
of
October 30, 2006 (and including the 2,222,221 common shares and related warrants
issued on October 30, 2006 in connection with an offering conducted in Canada
by
Regent Mercantile Bancorp Inc. and Limited Market Dealer Inc.), there were
125,544,104 shares of Common Stock outstanding and the Company had reserved
an
aggregate of 42,332,545 shares of Common Stock for issuance upon exercise
of
outstanding convertible indebtedness, stock options and warrants, including
the
Warrants, in each case as described in the Prospectus; the Company has not
issued any securities other than Common Stock of the Company pursuant to
the
exercise of previously outstanding options in connection with the Company's
employee stock purchase and option plans (the “Plans”), options granted pursuant
to the Plans in the ordinary course of business consistent with past practice
and Common Stock issued pursuant to the exercise of previously outstanding
warrants, in each case as disclosed in the Prospectus (or the Inorporated
Documents); there are no authorized or outstanding options, warrants, preemptive
rights, resale rights, rights of first refusal or other rights to purchase,
or
equity or debt securities convertible into or exchangeable or exercisable
for,
any capital stock or other securities of the Company other than pursuant
to the
Purchase Agreements, this Agreement and those described in the Prospectus
(or
the Incorporated Documents); the description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options, warrants
or
other rights granted thereunder, set forth in the Registration Statement
and the
Prospectus (and the Incorporated Documents) accurately and fairly presents
the
information required by the Act to be disclosed therein with respect to such
plans, arrangements, options and rights;
4
(d) the
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the Yukon Territory, Canada, with full corporate
power and authority to own, lease and operate its properties and conduct
its
business as described in the Registration Statement and the Prospectus, to
execute and deliver this Agreement and to issue, sell and deliver the Units
(including the Shares, the Warrants and the Warrant Shares) as contemplated
herein; no governmental proceeding has been instituted in the Yukon Territory,
Canada, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority;
(e) the
Company is duly qualified to do business as a foreign corporation and is
in good
standing in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the
failure to be so qualified and in good standing would not, individually or
in
the aggregate, have a material adverse effect on the business, properties,
financial condition, operations or results of operation of the Company and
the
Subsidiaries (as hereinafter defined) taken as a whole (a “Material Adverse
Effect”); no governmental proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or
curtail, such qualification, except for such proceedings as would not,
individually or in the aggregate, have a Material Adverse Effect.
(f) The
Company has no direct or indirect subsidiaries (as defined in the Act) other
than (i) Apollo Gold, Inc., a Delaware corporation, (ii) Minera Sol de Oro
S.A.
de C.V., a Mexican federal corporation, (iii) Montana Tunnels Mining, Inc.,
a
Delaware corporation, (iv) Mine Development Finance, Inc., a Delaware
corporation, and (v) Minas de Argonautas, S. de X.X. de C.V., a Mexican federal
limited partnership (each, a “Subsidiary” and, collectively, the
“Subsidiaries”); except as disclosed in the Registration Statement or the
Prospectus (or the Incorporated Documents), the Company owns approximately
100%
of the issued and outstanding capital stock of each Subsidiary; other than
Montana Tunnels Mining, Inc., no Subsidiary is a “significant subsidiary” within
the meaning of rule 1-02(w) of Regulation S-X; other than the capital stock
of
each Subsidiary and except as disclosed in the Registration Statement or
the
Prospectus (or the Incorporated Documents), the Company does not own, directly
or indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity; complete and correct
copies of the certificate of incorporation and the bylaws of the Company
and
each Subsidiary and all amendments thereto have been made available to the
Agent, and no changes therein will be made subsequent to the date hereof
and
prior to the Closing Date; each Subsidiary has been duly incorporated and
is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
own,
lease and operate its properties and to conduct its business as described
in the
Registration Statement or the Prospectus; each Subsidiary is duly qualified
to
do business as a foreign corporation and is in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct
of
its business requires such qualification, except where the failure to be
so
qualified and in good standing would not, individually or in the aggregate,
have
a Material Adverse Effect; no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit
or
curtail, such power and authority or qualification, except for any such
proceedings as would not, individually or in the aggregate, have a Material
Adverse Effect; all of the outstanding shares of capital stock of each
Subsidiary held by the Company have been duly authorized and validly issued,
are
fully paid and non-assessable and are owned by the Company (or a wholly owned
subsidiary of the Company) subject to no security interest, other encumbrance
or
adverse claims except as disclosed in the Registration Statement or the
Prospectus, and no options, warrants or other rights to purchase, agreements
or
other obligations to issue or other rights to convert any obligation into
shares
of capital stock or ownership interests in a Subsidiary are outstanding except
as disclosed in the Registration Statement or the Prospectus (or the
Incorporated Documents);
5
(g) the
Shares, the Warrants and the Warrant Shares have been duly and validly
authorized by the Company and, when the Shares, the Warrants and the Warrant
Shares are issued and delivered against payment therefor as provided herein
and
in the Warrant, each of them will be duly and validly issued, fully paid
and
non-assessable and will not be issued in violation of statutory and contractual
preemptive rights, resale rights, rights of first refusal and similar rights,
and the Company has reserved a sufficient number of shares of Common Stock
for
issuance of the Warrant Shares;
(h) the
capital stock and other equity securities of the Company conform in all material
respects to the description thereof contained in the Registration Statement
or
the Prospectus, the certificates for the Shares and the Warrants comprising
the
Units, and the certificates for the Warrant Shares are in due and proper
form
and the holders of the Shares and the Warrant will not be subject to personal
liability for the obligations of the Company under the corporate law of the
Yukon Territory, Canada, by reason of being such holders;
(i) this
Agreement has been duly authorized, executed and delivered by the
Company;
(j) except
as
disclosed in the Registration Statement or the Prospectus, neither the Company
nor the Subsidiaries is in breach or violation of or in default under (nor
has
any event occurred which with notice, lapse of time or both would result
in any
breach or violation of, constitute a default under or give the holder of
any
indebtedness (or a person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a part of such indebtedness
under) (i) its respective certificate of incorporation or bylaws, (ii) any
law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or the Subsidiaries or over their respective
properties, or (iii) any indenture, mortgage, deed of trust, bank loan or
credit
agreement or other evidence of indebtedness, or any license, lease, contract
or
other agreement or instrument to which the Company or the Subsidiaries is
a
party or by which either of them or any of their properties is bound, except
in
the case of clause (ii) and (iii) above where such breach, violation or default
would not, individually or in the aggregate, have a Material Adverse
Effect;
(k) the
execution, delivery and performance of this Agreement and the consummation
of
the transactions contemplated hereby, including the sale of the Units and
the
issuance of the Shares, the Warrants and the Warrant Shares, will not conflict
with, result in any breach or violation of or constitute a default under
(nor
constitute any event which with notice, lapse of time or both would result
in
any breach or violation of or constitute a default under or give the holder
of
any indebtedness (or a person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a part of such
indebtedness under) (i) the certificate of incorporation or bylaws of the
Company or of the Subsidiaries, (ii) any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any license,
lease, contract or other agreement or instrument to which the Company or
the
Subsidiaries is a party or by which either of them or any of their respective
properties is bound, or (iii) any federal, state, local or foreign statute,
law,
regulation or rule or any decree, judgment or order applicable to the Company
or
the Subsidiaries or any of their respect properties, except in the case of
clause (ii) and (iii) above where such breach, violation or default would
not,
individually or in the aggregate, have a Material Adverse Effect;
6
(l) the
Common Stock is registered under the Exchange Act and the outstanding shares
of
Common Stock are listed on the American Stock Exchange (“AMEX”) and the Toronto
Stock Exchange (the “TSX” and, together with AMEX, the “Exchanges”) and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock from AMEX, nor has
the
Company received any information suggesting that the Commission or AMEX is
contemplating terminating or suspending such registration or listing; all
of the
Shares and Warrant Shares were described in a Listing of Additional Shares
application filed with AMEX October ___, 2006; and the Company has complied
with
the requirements of Rule 110 of the AMEX rules in connection with the
Offering;
(m) no
approval, authorization, consent or order of or filing with any federal,
state,
local or foreign governmental or regulatory commission, board, body, authority
or agency or of or with AMEX, or approval of the stockholders of the Company,
is
required in connection with the sale of the Units and the issuance of the
Shares, the Warrants and the Warrant Shares or the consummation by the Company
of the transactions contemplated hereby other than registration under the
Act of
the offer and sale of the Units and filings with the Exchanges, each of which
has been effected or will be effected prior to the time of purchase, and
any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Units are being offered;
(n) except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), (i) no person has the right, contractual or otherwise, to cause
the Company to issue or sell to it any shares of Common Stock or shares of
any
other capital stock or other equity interests of the Company, and
(ii) except as provided herein or in the Engagement Letter, no person has
the right to act as an underwriter, placement agent or financial advisor
to the
Company in connection with the offer and sale of the Units or the underlying
Shares and Warrants, in the case of each of the foregoing clauses (i) and
(ii), whether as a result of the filing or effectiveness of the Registration
Statement or the sale of the Units as contemplated thereby or otherwise;
except
as disclosed in the Registration Statement or the Prospectus (or the
Incorporated Documents), no person has the right, contractual or otherwise,
to
cause the Company to register under the Act any shares of Common Stock or
shares
of any other capital stock or other securities of the Company, or to include
any
such shares or interests in the Registration Statement or the Offering, whether
as a result of the filing or effectiveness of the Registration Statement
or the
sale of the Units or the underlying Shares and Warrants as contemplated thereby
or otherwise;
(o) the
Company or its Subsidiaries has all necessary licenses, authorizations, consents
and approvals and has made all necessary filings required under any federal,
state, local or foreign law, regulation or rule, in order to conduct its
respective business as currently conducted and has conducted such business
in
accordance with such laws, regulations and rules, except where the failure
to
have such licenses, authorizations, consents and approvals or the failure
to
conduct business in accordance with such laws, rules and regulations would
not,
individually or in the aggregate, have a Material Adverse Effect; the Company
is
not in violation of, or in default under, nor has it received notice of any
proceedings relating to revocation or modification of, any such license,
authorization, consent or approval or any federal, state, local or foreign
law,
regulation or rule or any decree, order or judgment applicable to the Company,
except where such violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect;
7
(p) all
legal
or governmental proceedings, affiliate transactions, contracts, licenses,
agreements, leases or documents of a character required to be described in
the
Registration Statement or the Prospectus or to be filed as an exhibit to
the
Registration Statement have been so described or filed as required;
(q) except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), there are no actions, suits, claims, investigations or proceedings
pending or, to the Company’s knowledge, threatened to which the Company or the
Subsidiaries or any of their respective directors or officers is or would
be a
party or of which any of their respective properties is or would be subject
at
law or in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency, except any such
action, suit, claim, investigation or proceeding which would not result in
a
judgment, decree or order having, individually or in the aggregate, a Material
Adverse Effect or prevent consummation of the transactions contemplated
hereby;
(r) Deloitte
& Touche LLP, whose reports on the consolidated financial statements of the
Company are filed with the Commission as part of the Registration Statement
and
the Prospectus, are independent public accountants as required by the Act
and
the Exchange Act;
(s) the
consolidated financial statements included in the Registration Statement
or the
Prospectus, together with the related notes and schedules thereto, present
fairly in all material respects the consolidated financial position of the
Company and the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company and the Subsidiaries
for the
periods specified and comply in all material respects with the requirements
of
the Act and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved except
as
set forth in the notes thereto and subject, in the case of unaudited financial
statements, to normal year-end adjustments, which the Company does not
reasonably expect to be of an amount that would be material to the Company
sand
the Subsidiaries taken as a whole; any pro forma financial statements or
data
included in the Registration Statement or the Prospectus comply with the
requirements of Regulation S-X of the Act, the assumptions used in the
preparation of such pro forma financial statements and data are reasonable,
the
pro forma adjustments used therein are appropriate to give effect to the
transactions or circumstances described therein and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of
those
statements and data; the supporting exhibits and schedules in the Registration
Statement, if any, present fairly in all material respects the information
required to be stated therein; the other financial and statistical data set
forth in the Registration Statement or the Prospectus are accurately presented
and prepared on a basis consistent with the financial statements and books
and
records of the Company; there are no financial statements (historical or
pro
forma) or supporting schedules or exhibits that are required to be included
in
the Registration Statement or the Prospectus that are not included as required;
and the Company and the Subsidiaries do not have any material liabilities
or
obligations, direct or contingent (including any off-balance sheet obligations),
not disclosed in the Registration Statement or the Prospectus;
8
(t) except
as
set forth in the Registration Statement or the Prospectus (including the
Incorporated Documents), subsequent to the respective dates as of which
information is given in the Prospectus, there has not been (i) any material
adverse change, or any development involving a prospective material adverse
change, in the business, properties, management, financial condition, operations
or results of operation of the Company or the Subsidiaries taken as whole,
(ii)
any transaction which is material to the Company or the Subsidiaries, (iii)
any
obligation, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or the Subsidiaries, which is material to the Company
or
the Subsidiaries taken as a whole, (iv) any change in the capital stock (other
than pursuant to the exercise or conversion of outstanding stock options
or
warrants described in the Prospectus) or any material change in the outstanding
indebtedness of the Company or the Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on any class of capital stock
of
the Company or the Subsidiaries;
(u) neither
the Company nor the Subsidiaries is nor, after giving effect to the Offering
as
described in the Prospectus, will either of them be an “investment company” or
an entity “controlled” by an “investment company,” as such terms are defined in
the Investment Company Act of 1940, as amended;
(v) the
Company and any “employee benefit plan” (as defined under the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, “ERISA”)) established or
maintained by the Company or its “ERISA Affiliates” (as defined below) are in
compliance in all material respects with ERISA; “ERISA Affiliate” means, with
respect to the Company, any member of any group of organizations described
in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations thereunder (the
“Code”) of which the Company is a member; no “reportable event” (as defined
under ERISA) has occurred or is reasonably expected to occur with respect
to any
“employee benefit plan” established or maintained by the Company or any of its
ERISA Affiliates; no “employee benefit plan” established or maintained by the
Company or any of its ERISA Affiliates, if such “employee benefit plan” were
terminated, would have any “amount of unfunded benefit liabilities” (as defined
under ERISA); neither the Company nor any of its ERISA Affiliates has incurred
or reasonably expects to incur any liability under: (i) Title IV of ERISA
with
respect to termination of, or withdrawal from, any “employee benefit plan”; or
(ii) Sections 412, 4971, 4975 or 4980B of the Code; each “employee benefit plan”
established or maintained by the Company or any of its ERISA Affiliates that
is
intended to be qualified under Section 401(a) of the Code is so qualified
and
nothing has occurred, whether by action or failure to act, which would
reasonably be expected to cause the loss of such qualification;
9
(w) except
as
disclosed in the Registration Statement or the Prospectus, the Company or
its
Subsidiaries has good and marketable title to all real property described
in the
Registration Statement or in the Prospectus as being owned by the Company,
free
and clear of all liens, claims, security interests or other encumbrances
(other
than Permitted Encumbrances), except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect; all the
property (real and personal) described in the Registration Statement or the
Prospectus as being held under lease by the Company is held thereby under
valid,
subsisting and enforceable leases, except where the failure to do so would
not,
individually or in the aggregate, have a Material Adverse Effect. The
Company or the Subsidiaries own record title to those unpatented mining claims
and millsites owned by them that are material to the business of the Company
and
the Subsidiaries (collectively, “Mining
Claims”),
except where the failure to have record title would would not have a Material
Adverse Effect and subject to the paramount title of the United States and
the
rights of third parties to use the surface of those Mining Claims pursuant
to
applicable federal, state and local laws, rules and regulations, free and
clear
of any encumbrances arising by, through or under them, other than Permitted
Encumbrances. With respect to such Mining Claims located by the Company or
any
Subsidiary: (i) location notices or certificates for those Mining Claims
were
properly recorded and filed with appropriate governmental agencies;
(ii) required assessment work which was performed in accordance with
industry standards and which was reasonably sufficient to hold those Mining
Claims has been performed and all claim maintenance fees have been timely
paid
as required by law in order to maintain those Mining Claims through the current
assessment year; and (iii) all affidavits of assessment work, evidence of
payment of claim maintenance fees, and other filings required to maintain
those
Mining Claims in good standing through the current assessment year have been
properly and timely recorded or filed with appropriate governmental agencies.
With respect to any such Mining Claims not located by the Company or any
Subsidiary, from and after the date of their acquisition by the Company or
any
of the Subsidiaries, (i) required assessment work which was performed in
accordance with industry standards and which was reasonably sufficient to
hold
those Mining Claims has been performed and all claim maintenance fees have
been
timely paid as required in order to maintain those Mining Claims through
the
current assessment year; and (ii) all affidavits of assessment work,
evidence of payment of claim maintenance fees, and other filings required
to
maintain those Mining Claims in good standing through the current assessment
year have been properly and timely recorded or filed with appropriate
governmental agencies. The Company and the Subsidiaries do not make and hereby
expressly disclaim any representation or warranty as to (i) whether any of
those Mining Claims contains a discovery of valuable minerals, (ii) the
absence of any patented or unpatented mining claims in conflict with those
Mining Claims, (iii) whether or not any of those Mining Claims comprise a
contiguous group of claims or are free from interior gaps or fractions, (iv)
whether or not the Company, any of the Subsidiaries, or its
predecessors-in-title established or maintained pedis
possessio
rights
with respect to any of those Mining Claims, (v) what rights the Company or
any of the Subsidiaries has to use the surface of any of those Mining Claims
for
any purpose; or (vi) otherwise as to the validity of any of the Mining
Claims or the use of the same (except as specifically set forth above). Further,
the Company and the Subsidiaries make no and expressly disclaim any
representation or warranty with respect to priority, status, nature of permitted
beneficial use or abandonment of any water rights, whether held by the Company
or any of the Subsidiaries of record, or in which the Company or any of the
Subsidiaries has a beneficial or other interest. “Permitted
Encumbrances”
means
(i) liens or other encumbrances for Taxes and other governmental charges
and
assessments (except assessments for public improvements levied, pending or
deferred against real property) that are not yet due and payable or which
are
being contested in good faith by appropriate proceedings (provided required
payments have been made in connection with any such contest), (ii) liens
or
other encumbrances of carriers, warehousemen, mechanics’ and materialmen and
other like encumbrances, including purchase money security interests, arising
in
the ordinary course of business of the Company or any of the Subsidiaries,
(iii)
survey exceptions, easements, rights of way and restrictions, zoning ordinances
and restrictions or other limitations imposed by any Governmental Entity
and
other similar liens or encumbrances affecting real property and which do
not
unreasonably restrict the use thereof in the ordinary course of business
of the
Company or any of the Subsidiaries, (iv) statutory liens in favor of lessors
arising in connection with any real or personal property leased to the Company
or any of its Subsidiaries, (v) liens or other encumbrances recorded as
liabilities on any of the financial statements contained in the Company’s
Incorporated Documents, (vi) reservations in federal patents, (vii) liens
of
pledges or deposits under workers’ compensation laws or similar legislation,
unemployment insurance or other types of social security, (viii) rights reserved
to or vested in any Governmental Entity to control or regulate any interest
in
any real or personal property owned or held by the Company or any of the
Subsidiaries as imposed by applicable federal, provincial, state or local
laws,
rules or regulations, (ix) liens or other encumbrances that are a matter
of
public record, and (x) such other liens or encumbrances on any asset that
are
not material in amount or do not materially detract from the value of or
materially impair the existing use of such asset. “Governmental Entity” means
any federal, state, local, provincial, international or multinational entity
or
authority exercising executive, legislative, judicial, regulatory,
administrative or taxing functions of or pertaining to government. “Taxes” means
all taxes, charges, fees, levies or other assessments, including all net
income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, social security,
unemployment, excise, estimated, severance, stamp, occupation, property or
other
taxes, customs duties, fees, assessments or charges of any kind whatsoever,
including all interest and penalties thereon, and additions to tax or additional
amounts imposed by any Governmental Entity upon the Company or any of the
Subsidiaries or any of their respective assets.
10
(x) except
as
disclosed in the Registration Statement or the Prospectus, the Company or
its
Subsidiaries owns, or has obtained licenses for, or has other rights to use,
the
inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights, trade secrets and other proprietary
information described in the Registration Statement or the Prospectus as
being
owned or licensed by the Company or its Subsidiaries, except where the failure
to own, license or have such rights would not, individually or in the aggregate,
have a Material Adverse Effect; the expiration of any registered patents,
trademarks, service marks or copyrights owned by the Company or its Subsidiaries
would not result in a Material Adverse Effect that is not otherwise specifically
disclosed in the Base Prospectus and Prospectus Supplement; except as disclosed
in the Registration Statement or the Prospectus, there are no third parties
who
have or, to the Company’s knowledge, will be able to establish rights to any
material intellectual property owned by the Company or its Subsidiaries;
to the
knowledge of the Company, there is no infringement by third parties of any
material intellectual property owned by the Company; there is no pending
or, to
the knowledge of the Company, threatened action, suit, proceeding or claim
by
others challenging the Company’s rights in or to any material intellectual
property or challenging the validity or scope of any material intellectual
property owned by the Company; except as disclosed in the Registration Statement
or the Prospectus, there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others; except as disclosed in the Registration
Statement or the Prospectus, there is no patent or patent application that
contains claims that interfere with the issued or pending claims of any patent
or patent application owned by the Company; and to the knowledge of the Company,
there is no prior art that could reasonably be expected to render any patent
application owned by the Company unpatentable that has not been disclosed
to the
U.S. Patent and Trademark Office.
(y) except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), the Company is not engaged in any unfair labor practice; except
for
matters which would not, individually or in the aggregate, have a Material
Adverse Effect and except as disclosed in the Registration Statement or the
Prospectus (or the Incorporated Documents), (i) there is (A) no unfair
labor practice complaint pending or, to the Company’s knowledge, threatened
against the Company before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or threatened, (B) no strike, labor dispute, slowdown
or stoppage pending or, to the Company’s knowledge, threatened against the
Company and (C) no union representation dispute currently existing
concerning the employees of the Company, and (ii) to the Company’s
knowledge, (A) no union organizing activities are currently taking place
concerning the employees of the Company and (B) there has been no violation
of any federal, state, local or foreign law relating to discrimination in
the
hiring, promotion or pay of employees, any applicable wage or hour laws or
any
provision of the ERISA concerning the employees of the Company;
11
(z) except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), the Company and its properties, assets and operations are in
compliance with, and hold all permits, authorizations and approvals required
under, Environmental Laws (as defined below), except to the extent that failure
to so comply or to hold such permits, authorizations or approvals would not,
individually or in the aggregate, have a Material Adverse Effect; except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), there are no past or present conditions, circumstances, activities,
practices, actions, omissions or plans that would reasonably be expected
to give
rise to any material costs or liabilities to the Company under, or to interfere
with or prevent compliance by the Company with, Environmental Laws; except
as
would not, individually or in the aggregate, have a Material Adverse Effect
and
except as disclosed in the Registration Statement or the Prospectus (or the
Incorporated Documents), the Company (i) is not the subject of any
investigation, (ii) has not received any notice or claim, (iii) is not a
party
to or affected by any pending or threatened action, suit or proceeding, (iv)
is
not bound by any judgment, decree or order and (v) has not entered into any
agreement, in each case relating to any violation or alleged violation of
any
Environmental Law or any actual or alleged release or threatened release
or
cleanup at any location of any Hazardous Materials (as defined below); no
property which is owned, leased or occupied by the Company has been designated
as a Superfund site pursuant to the U.S. Comprehensive Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. ss. 9601, et seq.), or
otherwise designated as a contaminated site under applicable federal, state
or
local law; in the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any capital
or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to
third parties); on the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business (as used herein, “Environmental
Law” means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license, authorization
or other binding requirement, or common law, relating to health, safety or
the
protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation, treatment,
storage, disposal, transportation, other handling or release or threatened
release of Hazardous Materials, and “Hazardous Materials” means any material
(including, without limitation, pollutants, contaminants, hazardous or toxic
substances or wastes) that is regulated by or may give rise to liability
under
any Environmental Law);
(aa) all
Tax
returns required to be filed by the Company and the Subsidiaries have been
filed, and all Taxes and other assessments of a similar nature (whether imposed
directly or through withholding) including any interest, additions to Tax
or
penalties shown as due thereon from such entities have been paid, other than
those being contested in good faith and for which adequate reserves have
been
provided, except as would not, individually or in the aggregate, have a Material
Adverse Effect;
(bb) the
Company maintains insurance policies covering its properties, operations,
personnel and businesses with recognized, financially sound and reputable
institutions in such amounts and with such deductibles and covering such
risks
as are prudent and customary in the business in which it is engaged; all
such
insurance is fully in force on the date hereof and will be fully in force
at the
time of purchase except as would not, individually or in the aggregate, have
a
Material Adverse Effect; the Company has no reason to believe that it will
not
be able: (i) to renew its existing insurance coverage as and when such policies
expire to the extent such coverage is available on commercially reasonable
terms; or (ii) to obtain comparable coverage from similar institutions as
may be
necessary or appropriate to conduct its business as now conducted and at
a cost
that would not reasonably be expected to result in a Material Adverse Effect;
the Company has not been denied any insurance coverage that it has sought
or for
which it has applied;
12
(cc) neither
the Company nor the Subsidiaries has sustained since the date of the last
audited financial statements in the Registration Statement or the Prospectus
any
loss or interference with its respective business from fire, explosion, flood
or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree except as disclosed in the
Registration Statement or the Prospectus (or the Incorporated Documents)
or as
would not, individually or in the aggregate, have a Material Adverse
Effect;
(dd) each
agreement described in or filed as an exhibit to the Registration Statement
or
the Prospectus is in full force and effect and is valid and enforceable by
the
Company in accordance with its terms, except for such agreements that have
terminated in accordance with their terms and except for such as would not,
individually or in the aggregate, have a Material Adverse Effect; neither
the
Company nor, to the Company's knowledge, any other party is in default in
the
observance or performance of any term or obligation to be performed by it
under
any such agreement, and no event has occurred that with notice or lapse of
time
or both would constitute such a default, in any such case where such default
or
event would have a Material Adverse Effect; except as disclosed in the
Registration Statement or the Prospectus (or the Incorporated Documents)
and
except as would not, individually or in the aggregate, have a Material Adverse
Effect, the Company has not sent or received any written communication regarding
termination of any of the contracts or agreements referred to or described
in,
or filed as an exhibit to, the Registration Statement, and no such termination
has been threatened by the Company or, to the Company’s knowledge, any other
party to any such contract or agreement;
(ee) except
as
disclosed in the Registration Statement or the Prospectus (or the Incorporated
Documents), each of the Company and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;
(ff) except
as
disclosed in the Registration Statement and the Prospectus (or the Incorporated
Documents), each of the Company and the Subsidiaries has established and
maintains disclosure controls and procedures (as such term is defined in
Rule
13a-15(e) and 15d-15(e) under the Exchange Act) as required by and in compliance
in all material respects with the Exchange Act; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company and the Subsidiaries have
made
all certifications required by the Xxxxxxxx-Xxxxx Act of 2002 and any related
rules and regulations promulgated by the Commission as currently in effect
(the
“Xxxxxxxx-Xxxxx Act”), and the statements contained in any such certification
are complete and correct in all material respects;
there is
and has been no failure on the part of the Company or the Subsidiaries and
any
of their respective directors or officers, in their capacities as such, to
comply with any provision of the Xxxxxxxx-Xxxxx Act, including Section 402
related to loans and Sections 302 and 906 related to
certifications;
13
(gg) the
Company has made available to the Agent (including through the public
availability of documents filed on XXXXX) true, correct, and complete copies
of
all documentation pertaining to any extension of credit in the form of a
personal loan made, directly or indirectly, by the Company to any director
or
executive officer of the Company, or, to the knowledge of the Company, any
family member or affiliate of any director or executive officer of the Company;
and since December 31, 2005, the Company has not, directly or indirectly,
including through any Subsidiaries: (i) extended credit, arranged to extend
credit, or renewed any extension of credit, in the form of a personal loan,
to
or for any director or executive officer of the Company, or, to the knowledge
of
the Company, to or for any family member or affiliate of any director or
executive officer of the Company; or (ii) made any material modification,
including any renewal thereof, to any term of any personal loan to any director
or executive officer of the Company, or, to the knowledge of the Company,
any
family member or affiliate of any director or executive officer, which loan
was
outstanding on the date of this Agreement;
(hh) neither
the Company nor, to the knowledge of the Company, any director, officer,
agent,
employee or affiliate of the Company is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons
of the
Foreign Corrupt Practice Act of 1977, as amended and the rules and regulations
thereunder (the “FCPA”) and the Company has conducted its business in compliance
with the FCPA and have instituted and maintain policies and procedures designed
to ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith;
(ii) any
statistical and market-related data included in the Registration Statement
or
the Prospectus are based on or derived from sources that the Company believes
to
be reliable and accurate;
(jj) neither
the Company nor the Subsidiaries nor, to the Company’s knowledge, any employee
or agent of the Company or the Subsidiaries (acting on behalf of the Company
or
the Subsidiaries) has made any payment of funds of the Company or the
Subsidiaries or received or retained any funds in violation of any law, rule
or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Registration Statement or the Prospectus;
and
(kk) neither
the Company nor the Subsidiaries nor, to the Company’s knowledge, any of their
respective directors, officers, affiliates or controlling persons has taken,
directly or indirectly, any action designed, or which has constituted or
would
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security
of the
Company to facilitate the sale or resale of the Units, the Shares, the Warrants
or the Warrant Shares in violation of applicable law.
In
addition, any certificate signed by any officer of the Company and delivered
to
the Agent or counsel for the Agent in connection with the Closing shall
be
deemed to be a representation and warranty by the Company as to matters
covered
thereby, to the Agent.
14
4. Certain
Covenants of the Company.
The
Company hereby agrees:
(a) to
furnish such information as may be required and otherwise to cooperate in
qualifying the Units, the Shares, the Warrants and the Warrant Shares for
offering and sale by the Company under the securities or blue sky laws of
such
states or other jurisdictions as the Agent may designate and to maintain
such
qualifications in effect so long as the Agent may request for the distribution
of the Units, provided that the Company shall not be required to qualify
as a
foreign corporation, to consent to the service of process under the laws
of any
such jurisdiction (except service of process with respect to the offering
and
sale of the Units, the Shares, the Warrants and the Warrant Shares by the
Company) or to subject itself to taxation in respect of doing business in
any
jurisdiction in which it is not otherwise subject; and to promptly advise
the
Agent of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Units, the Shares, the Warrants or
the
Warrant Shares for sale in any jurisdiction or the initiation or threatening
of
any proceeding for such purpose;
(b) to
make
available to the Agent electronic copies of the Base Prospectus, any Preliminary
Prospectus Supplement and the Prospectus (in each case as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the respective dates of such documents); to furnish the Agent,
without charge, during the period beginning on the date hereof and ending
on the
later of the time of purchase or such date, as in the opinion of counsel
for the
Agent, the Prospectus Supplement is no longer required by law to be delivered
in
connection with sales by the Agent, as many copies of the Prospectus and
any
amendments and supplements thereto (including any Incorporated Documents)
as the
Agent may reasonably request;
(c) if,
at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or any post-effective amendment thereto to be declared
effective before the Units may be sold in the Offering, the Company will
endeavor to cause the Registration Statement or such post-effective amendment
to
become effective as soon as possible and the Company will advise the Agent
promptly and, if requested by the Agent, will confirm such advice in writing
when the Registration Statement and any such post-effective amendment thereto
has become effective;
(d) to
advise
the Agent promptly, confirming such advice in writing, of any request by
the
Commission, made prior to the time of purchase, for amendments or supplements
to
the Registration Statement or the Prospectus or for additional information
with
respect thereto, or of notice of institution of proceedings for, or the entry of
a stop order, made prior to the time of purchase, suspending the effectiveness
of the Registration Statement and, if the Commission should enter a stop
order
prior to the time of purchase suspending the effectiveness of the Registration
Statement, to use its best efforts to obtain the lifting or removal of such
order as soon as possible; to advise the Agent promptly of any proposal to
amend
or supplement the Registration Statement or the Prospectus, made prior to
the
time of purchase, including by filing any documents that would be incorporated
therein by reference, to provide the Agent and their counsel copies of any
such
documents for review and comment a reasonable amount of time prior to any
proposed filing;
(e) subject
to Section 4(d) hereof, to file promptly all reports and any definitive proxy
or
information statement required to be filed by the Company with the Commission
in
order to comply with the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required to be delivered
in
connection with the Offering;
15
(f) to
advise
the Agent promptly of the happening of any event within the time during which
a
prospectus for the Offering is required to be delivered under the Act, which
requires the making of any change in the Prospectus then being used so that
the
Prospectus would not include an untrue statement of material fact or omit
to
state a material fact necessary to make the statements therein, in the light
of
the circumstances under which they are made, not misleading, and, during
such
time, subject to Section 4(d) hereof, to prepare and furnish, at the Company’s
expense, to the Agent promptly such amendments or supplements to such Prospectus
as may be necessary to reflect any such change; before amending the Registration
Statement or supplementing any Preliminary Prospectus Supplement or the
Prospectus in connection with the Offering (other than filings made by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act),
the
Company will furnish you with a copy of such proposed amendment or supplement
and will not file such amendment or supplement to which you reasonably
object;
(g) for
so
long as a prospectus is required to be delivered under the Act in connection
with the Offering, to comply with all the undertakings contained in the
Registration Statement;
(h) to
apply
the net proceeds from the sale of the Units in the manner set forth under
the
caption “Use of Proceeds” in the Prospectus;
(i) without
duplication, to reimburse the Agent for expenses in accordance with
Section 5 of the Engagement Letter and to pay all of the costs, expenses,
fees and taxes in connection with (i) the preparation and filing of the
Registration Statement, the Base Prospectus, each Preliminary Prospectus
Supplement and Prospectus Supplement, and any amendments or supplements thereto,
and the printing and furnishing of copies of each thereof to the Agent
(including costs of mailing and shipment), (ii) the registration, issue,
sale
and delivery of the Units, the Shares, the Warrants and the Warrant Shares,
including any stock or transfer taxes and stamp or similar duties payable
by the
Company upon the sale, issuance or delivery of such securities sold by the
Company in the Offering, (iii) the producing, word processing and/or
printing of this Agreement, any Purchase Agreements, any powers of attorney
and
any closing documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to the Agent and
the
Purchasers, (iv) the qualification of the Units, the Shares, the Warrants
and
the Warrant Shares for offering and sale under state laws and the determination
of their eligibility for investment under state law as aforesaid (including
the
legal fees and filing fees and other disbursements of counsel for the Agent)
and
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Agent and to dealers, (v) any qualification of
the
Shares and the Warrant Shares for listing on AMEX and any registration thereof
under the Exchange Act, (vi) the fees and disbursements of any transfer
agent or registrar for the Units, the Shares, the Warrants and the Warrant
Shares, (vii) the costs and expenses of the Company relating to any
presentations or meetings undertaken in connection with the marketing of
the
offering and sale of the Units, and (viii) the performance of the Company’s
other obligations hereunder;
(j) until
the
completion of the distribution of the Units in the Offering, not to take,
directly or indirectly, any action designed to or that would constitute or
that
would reasonably be expected to cause or result in, under the Exchange Act
or
otherwise, stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of the Units, the Shares, the Warrants
or the Warrant Shares;
(k) the
Company will timely, and in any event prior to the time of purchase, file
this
Agreement with the Commission on an appropriate form; and
16
(l)
other
than Exempt Issuances, during the period of ninety (90) days from the date
hereof, the Company will not, without the prior written consent of the Agent,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Common Stock or any securities convertible into
or
exchangeable or exercisable for the Common Stock, or file, or cause to be
filed,
any registration statement under the Act with respect to any of the foregoing
(collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Lock-Up Securities,
whether any such swap or transaction is to be settled by delivery of shares
of
the Common Stock or other securities, in cash or otherwise. An “Exempt Issuance”
means
the
issuance of (a) shares of Common Stock or options to employees, officers
or
directors of the Company pursuant to any stock or option plan duly adopted
by a
majority of the non-employee members of the Board of Directors of the Company
or
a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise or exchange of or conversion
of any Securities issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities
have
not been amended since the date of this Agreement to increase the number
of such
securities or to decrease the exercise, exchange or conversion price of any
such
securities, (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors, provided
any
such issuance shall only be to a Person which is, itself or through its
subsidiaries, an operating company in a business that the Company reasonably
believes to be synergistic with the business of the Company and in which
the
Company receives benefits in addition to the investment of funds, but shall
not
include a transaction in which the Company is issuing securities primarily
for
the purpose of raising capital or to an entity whose primary business is
investing in securities, (d) securities as compensation for services, (e)
securities in connection with Canadian flow-through financing, (f) securities
in
a firm commitment underwritten offering and (g) securities in connection
with
the severance of any employee.
5. Conditions
of Agent’s Obligations.
The
obligations of the Agent hereunder are subject to the accuracy in all material
respects of the representations and warranties of the Company contained herein
on the date hereof and at the time of purchase and the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) the
Company shall furnish to the Agent at the time of purchase an opinion of
Xxxxx
Xxxxxx & Xxxxxx LLP, U.S. securities counsel for the Company, addressed to
the Agent, and dated the time of purchase, in the form set forth on Exhibit
B
hereto;
(b) the
Company shall furnish to the Agent at the time of purchase an opinion of
Lackowicz Xxxxx & Xxxxxxx, counsel for the Company, addressed to the Agent,
and dated the time of purchase, in the form set forth on Exhibit
C
hereto;
(c) the
Agent
shall have received from Deloitte & Touche LLP letters dated, respectively,
the date of this Agreement and the time of purchase, and addressed to the
Agent
in the form and substance heretofore approved by, or otherwise satisfactory
to,
the Agent
17
(d) no
Prospectus or amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference therein,
shall have filed to which you reasonably object in writing;
(e) prior
to
the time of purchase, (i) the Prospectus Supplement shall have been duly
filed
with the Commission in accordance with Rule 424(b), (ii) no stop order with
respect to the effectiveness of the Registration Statement shall have been
issued under the Act or proceedings initiated under Section 8(d) or 8(e)
of the
Act, (iii) no order preventing or suspending the use of the Prospectus
Supplement shall have been issued and no proceeding for that purpose shall
have
been initiated or threatened by the Commission, (iv) no order having the
effect
of ceasing or suspending the distribution of the Units or any other securities
of the Company shall have been issued by the Commission or AMEX and no
proceedings for that purpose shall have been instituted or shall be pending
or,
to the knowledge of the Company, contemplated by the Commission or AMEX,
(v) the
Registration Statement and all amendments thereto shall not contain an untrue
statement of a material fact or omit to state a material fact required to
be
stated therein or necessary to make the statements therein not misleading,
and
(vi) the Prospectus and all amendments or supplements thereto shall not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light
of the circumstances under which they are made, not misleading;
(f) between
the time of execution of this Agreement and the time of purchase, no material
adverse change or any development involving a prospective material adverse
change in business, properties, management, financial condition, operations
or
results of operation of the Company and the Subsidiaries, taken as a whole,
shall occur or become known, which, in the sole judgment of the Agent, makes
it
impracticable or inadvisable to proceed with the Offering on the terms and
in
the manner contemplated by the Prospectus;
(g) the
Company shall have furnished to the Agent a certificate of the Company, signed
by the principal financial or accounting officer of the Company, dated the
date
of the time of purchase, to the effect that the signers of such certificate
have
carefully examined the Registration Statement, the Prospectus, any supplements
to the Prospectus and this Agreement and that to the knowledge of such person
after reasonable inquiry:
| (1) |
the
representations and warranties of the Company in this Agreement are
true
and correct in all material respects on and as of the time of purchase
with the same effect as if made at the time of purchase and the Company
has complied with all the agreements and satisfied all the conditions
on
its part to be performed or satisfied at or prior to the time of
purchase,
|
| (2) |
the
Registration Statement has become effective and no stop order suspending
the effectiveness of the Registration Statement has been issued and
no
proceedings for that purpose have been instituted or, to such person’s
knowledge, threatened, and
|
| (3) |
since
the date of the most recent financial statements included or incorporated
by reference in the Prospectus, except as disclosed in the Prospectus
there has been no material adverse change or any development involving
a
prospective material adverse change in business, properties, management,
financial condition, operations or results of operation of the Company
or
the Subsidiaries, taken as a whole;
|
18
(h) the
Company shall have furnished to you Lock-Up Agreements in form and substance
as
set forth on Exhibit
D
hereto,
duly executed by R. Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxx, except
as
expressly agreed to by you; and
(i) the
Company shall have furnished to you such other documents and certificates
as the
Agent may reasonably request.
6. Effective
Date of Agreement; Termination.
This
Agreement shall become effective when the parties hereto have executed and
delivered this Agreement.
The
obligations of the Agent hereunder shall be subject to termination in the
absolute discretion of the Agent if (x) any of the conditions specified in
Section 5 have not been fulfilled as of 10:00 a.m. New York City time on
the
date specified in Section 2, or (y) since the time of execution of this
Agreement, there shall have occurred: (i) a suspension or material limitation
in
trading
in securities
generally on AMEX; (ii) a suspension or material limitation in trading in
the
Company’s securities on AMEX; (iii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iv) an outbreak or escalation of hostilities
or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (v) any other calamity or crisis
or
any change in financial, political or economic conditions in the United States
or elsewhere, if the effect of any such event specified in clause (iv) or
(v) in
the Agent’ sole judgment makes it impracticable or inadvisable to proceed with
the Offering or the delivery of the Units on the terms and in the manner
contemplated in the Registration Statement and the Prospectus, or (z) since
the
time of execution of this Agreement, there shall have occurred any downgrading,
or any notice or announcement shall have been given or made of (i) any intended
or potential downgrading or (ii) any watch, review or possible change that
does
not indicate an affirmation or improvement in the rating accorded any securities
of or guaranteed by the Company or the Subsidiaries by any “nationally
recognized statistical rating organization,” as that term is defined in Rule
436(g)(2) under the Act.
If
the
Agent elects to terminate this Agreement as provided in this Section 6, the
Company shall be notified promptly in writing.
If
the
sale of the Units, as contemplated by this Agreement, is not carried out
by the
Agent for any reason permitted under this Agreement or if such sale is not
carried out because of any refusal, inability or failure on the part of the
Company to comply with any of the terms of this Agreement, the Company shall
not
be under any obligation or liability under this Agreement (except to the
extent
provided in Sections 4(j) hereof), and the Agent shall not be under any
obligation or liability to the Company or the other Agent under this Agreement.
Under such circumstances, the Engagement Letter shall remain in full force
and
effect in accordance with its terms.
7. Indemnity
and Contribution.
(a) The
Company agrees to indemnify and hold harmless the Agent, the directors,
officers, employees and agents of the Agent and each person who controls
the
Agent within the meaning of either the Act or the Exchange Act against any
and
all losses, claims, damages or liabilities, joint or several, to which they
or
any of them may become subject under the Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar
as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or in any amendment
thereof, or in the Base Prospectus, any Preliminary Prospectus Supplement
or the
Prospectus, or in any amendment thereof or supplement thereto, arise out
of or
are based upon the omission or alleged omission to state therein a material
fact
required to be stated therein or necessary to make the statements therein
not
misleading, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection
with
investigating or defending any such loss, claim, damage, liability or action;
provided,
however,
that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information furnished to
the
Company by the Agent specifically for inclusion therein; provided,
further,
that
with respect to any Preliminary Prospectus Supplement, the foregoing indemnity
agreement shall not inure to the benefit of any indemnified party if the
Company
identified the untrue statement or omission to the Agent and copies of the
corrected Prospectus were timely delivered by the Company. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
19
(b) The
Agent
agrees to indemnify and hold harmless the Company, as well as the respective
directors, officers, employees and agents of the Company and each person
who
controls the Company within the meaning of either the Act or the Exchange
Act,
to the same extent as the foregoing indemnity from the Company to the Agent,
but
only with reference to information furnished to the Company by the Agent
specifically for inclusion in the documents referred to in the foregoing
indemnity and agrees to reimburse each such indemnified party, as incurred,
for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which the Agent
may otherwise have.
(c) Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 7,
notify the indemnifying party in writing of the commencement thereof; but
the
failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph “(a)” or “(b)” above unless and to the extent such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph “(a)” or “(b)” above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party’s choice at the indemnifying party’s expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except
as
set forth below); provided,
however,
that
such counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party’s election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall
have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of
such
separate counsel if (i) the use of counsel chosen by the indemnifying party
to
represent the indemnified party would present such counsel with an actual
or
reasonably likely conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnified party and
the
indemnifying party and the indemnified party shall have reasonably concluded
based upon the advice of counsel that there may be legal defenses available
to
it which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within
a reasonable time after notice of the institution of such action or (iv)
the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party; provided that the indemnifying
party shall not, in connection with any one action or separate but substantially
similar or related actions arising out of the same allegations be liable
for the
reasonable fees and expenses of more than one separate firm of attorneys
at any
time for all indemnified parties (in addition to any local counsel), which
firm
shall be designated in writing by the Agent or the Company, as applicable,
if
more than one indemnified party seeks indemnification under paragraph (a)
above.
An indemnifying party will not, without the prior written consent of the
indemnified parties covered thereby, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may
be
sought hereunder by the indemnified parties covered thereby (whether or not
the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each such indemnified party from all liability arising out of such claim,
action, suit or proceeding. No indemnifying party shall be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the
indemnifying party agrees to indemnify each indemnified party from and against
any loss or liability by reason of such settlement or judgment if it would
be
otherwise obligated to do so hereunder.
20
(d) In
the
event that the indemnity provided in paragraph “(a)” or “(b)” of this Section 7
is unavailable to or insufficient to hold harmless an indemnified party for
any
reason, the Company and the Agent severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively “Losses”) to which the Company and the Agent may be subject in
such proportion as is appropriate to reflect the relative benefits received
by
the Company on the one hand and by the Agent on the other from the offering
of
the Units. If the allocation provided by the immediately preceding sentence
is
unavailable for any reason, the Company and the Agent severally shall contribute
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and of the Agent
on
the other in connection with the statements or omissions which resulted in
such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from
the
offering (before deducting expenses) received by it, and benefits received
by
the Agent shall be deemed to be equal to the total compensation of Agent
as set
forth in this Agreement. Relative fault shall be determined by reference
to,
among other things, whether any untrue or any alleged untrue statement of
a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the Agent
on
the other, the intent of the parties and their relative knowledge, access
to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Agent agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph “(d),” (i)
the Agent shall not be required to contribute any amount in excess of the
amount
of the placement agent fees actually received by Agent pursuant to this
Agreement and (ii) no person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation. For purposes
of
this Section 7, each person who controls the Agent within the meaning of
either
the Act or the Exchange Act and each director, officer, employee and agent
of
the Agent shall have the same rights to contribution as the Agent, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms
and
conditions of this paragraph (d).
(e) The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Agent set forth in or
made
in a certificate delivered pursuant to this Agreement will remain in full
force
and effect, regardless of any investigation made by or on behalf of the Agent
or
the Company or any of the officers, directors or controlling persons referred
to
in Section 7 hereof, and will survive delivery of and payment for the Units.
The
provisions of Sections 4(j) and 7 hereof shall survive the termination or
cancellation of this Agreement.
21
8. Information
Furnished by the Agent.
The
statements set forth in the last paragraph relating to stabilization under
the
caption “Plan of Distribution” in the Prospectus Supplement constitute the only
information furnished by or on behalf of the Agent as such information is
referred to in Sections 3 and 7 hereof.
9. Notices.
Except
as otherwise herein provided, all statements, requests, notices and agreements
shall be in writing and shall be delivered or sent by courier, hand delivery,
mail, facsimile transmission or telegram and, if to the Agent, shall be
sufficient in all respects if delivered or sent to Shoreline Pacific, LLC,
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, Facsimile number
(000)
000-0000, Attention: Xxxxxx Xxxxxxx; and, if to the Company, shall be sufficient
in all respects if delivered or sent to the Company at the offices of the
Company at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx
00000-0000, facsimile number (000) 000-0000, Attention: R. Xxxxx
Xxxxxxx.
10. Governing
Law; Construction.
This
Agreement and any claim, counterclaim or dispute of any kind or nature
whatsoever arising out of or in any way relating to this Agreement (“Claim”),
directly or indirectly, shall be governed by, and construed in accordance
with,
the laws of the State of California. The section headings in this Agreement
have
been inserted as a matter of convenience of reference and are not a part
of this
Agreement.
11. Submission
to Jurisdiction.
Except
as set forth below, no Claim may be commenced, prosecuted or continued in
any
court other than the courts of the State of California located in the City
and
County of San Francisco or in the United States District Court for the Northern
District of California located in the City and County of San Francisco, which
courts shall have jurisdiction over the adjudication of such matters, and
each
of the Agent and the Company hereby consents to the jurisdiction of such
courts
and personal service with respect thereto. Each of the Agent and the Company
hereby consents to personal jurisdiction, service and venue in any court
in
which any Claim is brought by any third party against the Agent or any
indemnified party. Each of the Agent and the Company (on its behalf and,
to the
extent permitted by applicable law, on behalf of its shareholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way
arising
out of or relating to this Agreement. Each of Agent and the Company agrees
that
a final judgment in any such action, proceeding or counterclaim brought in
any
such court shall be conclusive and binding upon the Company and the Agent
and
may be enforced in any other courts to the jurisdiction of which either the
Company or the Agent is or may be subject, by suit upon such
judgment.
12. Parties
at Interest.
The
Agreement herein set forth has been and is made solely for the benefit of
the
Agent and the Company and to the extent provided in Section 7 hereof the
controlling persons, partners, directors and officers referred to in such
section, and their respective successors, assigns, heirs, personal
representatives and executors and administrators. No other person, partnership,
association or corporation (including a Purchaser) shall acquire or have
any
right under or by virtue of this Agreement.
13. Counterparts.
This
Agreement may be signed by the parties in one or more counterparts which
together shall constitute one and the same agreement among the
parties.
14. Successors
and Assigns.
This
Agreement shall be binding upon the Agent and the Company and their successors
and assigns and any successor or assign of the Company’s and the Agent’s
business and/or assets.
15. Engagement
Letter.
Except
to the extent specifically stated herein, the Engagement Letter shall remain
in
full force and effect in accordance with its terms; provided,
however,
that to
the extent any provision of this Agreement conflicts with, or addresses
representations, warranties, rights or obligations also addressed by, the
Engagement Letter (including without limitation, the separate letter agreement
signed concurrently with the Engagement Letter and dated September 15, 2006
between the parties regarding indemnification), the provisions of this Agreement
shall supersede the conflicting or duplicative provisions of the Engagement
Letter solely with respect to the Offering. Except as provided in this Section
15, this Agreement constitutes the entire agreement of the parties hereto
and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof.
In
this Agreement, the masculine, feminine and neuter genders and the singular
and
the plural include one another. The section headings in this Agreement are
for
the convenience of the parties only and will not affect the construction
or
interpretation of this Agreement. This Agreement may be amended or modified,
and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and the Agent.
22
If
the
foregoing correctly sets forth the understanding between the Company and
the
Agent, please so indicate in the space provided below for that purpose,
whereupon this agreement and your acceptance shall constitute a binding
agreement between the Company and the Agent.
| Very truly yours, | ||
| APOLLO GOLD CORPORATION | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxx | |
|
Name: |
||
| Title: | ||
Accepted
and agreed to as of the
date
first above written
Shoreline
Pacific, LLC
By:
/s/ Xxxxxx X. Xxxxxxx
Name:
Title:
Title:
Exhibit A
FORM
OF PURCHASE AGREEMENT
Exhibit
B
FORM
OF OPINION OF XXXXX XXXXXX & XXXXXX LLP
Exhibit
C
FORM
OF OPINION OF LACKOWICZ XXXXX & XXXXXXX
Exhibit
D
FORM
OF LOCK-UP AGREEMENT
November
__, 2006
Shoreline
Pacific, LLC
000
Xxxxxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Re: Proposed
Public Offering by Apollo Gold Corporation
Dear
Sirs:
The
undersigned, a stockholder of Apollo Gold Corporation, a corporation
incorporated under the laws of the Yukon Territory, Canada (the “Company”),
understands that Shoreline Pacific, LLC (the “Agent”) propose to enter into an
Agency Agreement (the “Agency Agreement”) with the Company relating to the
proposed public offering by the Company (the “Offering”) of up to20,000,000
Units, each consisting of one share of the Company’s common stock, $0.001 par
value per share (the “Common Stock”), and a warrant to purchase one share of the
Common Stock at an exercise price of $0.50 per share.
In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
undersigned agrees with the Agent that, during a period of 90 days from the
date
of the Agency Agreement, the undersigned will not, without the prior written
consent of the Agent, directly or indirectly, (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company’s Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect
to
which the undersigned has or hereafter acquires the power of disposition,
or
file, or cause to be filed, any registration statement under the Securities
Act
of 1933, as amended, with respect to any of the foregoing (collectively,
the
“Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
the
economic consequence of ownership of the Lock-Up Securities, whether any
such
swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer
the Lock-Up Securities without the prior written consent of the Agent, (x)
as a
bona fide gift or gifts or (y) to any trust for the direct or indirect benefit
of the undersigned or the immediate family of the undersigned, in each case
provided that (1) the Agent receive a signed lock-up agreement for the balance
of the lockup period from each donee, trustee, distributee, or transferee,
as
the case may be, (2) any such transfer shall not involve a disposition for
value, (3) such transfers are not required to be reported in any public report
or filing with the Securities Exchange Commission, or otherwise and (4) the
undersigned does not otherwise voluntarily effect any public filing or report
regarding such transfers. For purposes of this lock-up agreement, “immediate
family” shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
Notwithstanding
the foregoing, if: (1) during the last 17 days of the 90-day lock-up period
the
Company issues an earnings release or material news or a material event relating
to the Company occurs; or (2) prior to the expiration of the 90-day lock-up
period, the Company announces that it will release earnings results during
the
16-day period beginning on the last day of the 90-day lock-up period, the
restrictions imposed by this letter shall continue to apply until the expiration
of the 18-day period beginning on the issuance of the earnings release or
the
occurrence of the material news or material event.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
Lock-Up Securities except in compliance with the foregoing
restrictions.
| Very truly yours, | ||
| Entity Name, if applicable | ||
| Signature | ||
| Print Name | ||
| Title, if applicable | ||
