SUBSCRIPTION AGREEMENT FOR FLOW-THROUGH SHARES APOLLO GOLD CORPORATION THE FLOW-THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE PURCHASED BY RESIDENTS OF ONTARIO, BRITISH COLUMBIA AND ALBERTA, IN EACH CASE PURSUANT TO AVAILABLE EXEMPTIONS UNDER...
EXHIBIT
4.2
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
APOLLO
GOLD CORPORATION
THE
FLOW-THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE
PURCHASED
BY RESIDENTS OF ONTARIO, BRITISH COLUMBIA AND ALBERTA,
IN
EACH CASE PURSUANT TO AVAILABLE EXEMPTIONS UNDER
APPLICABLE
SECURITIES LEGISLATION
IMPORTANT
The
following items in this Subscription Agreement have been completed (please
initial each applicable box):
| o |
Your
Taxation Account or S.I.N. on page
2.
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A
completed and originally executed copy of this Subscription Agreement, including
the items required to be completed as set out above, must be delivered, by
no
later than 1:00 p.m. (Vancouver time) on August 15, 2008, to ▇▇▇▇▇▇▇ Securities
Inc. at Suite ▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Tel: ▇▇▇-▇▇▇-▇▇▇▇, Facsimile:
604-697-7498).
Page
1
APOLLO
GOLD CORPORATION
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
TO: APOLLO
GOLD CORPORATION
AND
TO: ▇▇▇▇▇▇▇
SECURITIES INC. (THE “UNDERWRITER”)
The
undersigned (the “Subscriber”) hereby irrevocably subscribes for and offers to
purchase from Apollo Gold Corporation (the “Corporation”) that number of
Flow-Through Shares (as hereinafter defined) specified below at a price of
$0.50
per Flow-Through Share. The Subscriber agrees to be bound by the terms and
conditions set forth in the attached “Terms and Conditions of Subscription for
Flow-Through Shares” and acknowledges that the Corporation and the Underwriter,
and their respective counsel, are relying upon the representations, warranties
and covenants of the Subscriber set forth therein and in the schedules thereto.
The purchase and sale of the Flow-Through Shares hereunder forms part of a
larger offering of up to 17,000,000 Flow-Through Shares (the “Offering”)
consisting of (i) 14,000,000 Flow-Through Shares which the Underwriter has
agreed to purchase or arrange substitute purchasers for (the “Bought Deal
Offering”); and (ii) up to 3,000,000 Flow-Through Shares (the “Best Efforts
Offering”) for which the Underwriter has agreed to act as agent on a best
efforts private placement basis.
SUBSCRIPTION
AND SUBSCRIBER INFORMATION
Please
print ALL information (other than signatures),
as
applicable, in the space provided below
|
(Name
of
Subscriber):
Account
Reference (if
applicable)
By:
Authorized
Signature
|
Number
of Flow-Through Shares:_______________________________ x
$0.50
=
Aggregate
Subscription
Price:
The (“Subscription Price”)
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(Official
Capacity or Title - if the Subscriber is not an
individual)
|
If
the Subscriber is signing as agent for a principal (beneficial
purchaser)
and is not purchasing as trustee or agent for accounts fully managed
by
it, complete the following:
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(Name
of individual whose signature appears above if different than the
name of
the subscriber printed above.)
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(Name
of Principal)
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(Subscriber’s
Address, including Municipality and Province)
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(Principal’s
Address)
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S.I.N.
or Taxation Account of Subscriber
(IMPORTANT)
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||
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(Telephone
Number) (Email
Address)
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||
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Account
Registration Information:
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Delivery
Instructions as set forth below:
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(Name)
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(Name)
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(Account
Reference, if applicable)
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||
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(Address,
including Postal Code)
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(Address,
including Postal Code)
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(Account
Reference, if applicable)
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(Contact
Name) (Telephone
Number)
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Number
and kind of securities of the Corporation held, directly or indirectly,
if
any:
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1. State
whether Subscriber is an Insider (as such term is hereinafter defined)
of
the Corporation)
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Yes o No
o
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Page
2
INSTRUCTIONS
FOR SUBSCRIBERS
The
Subscriber must:
| (1) |
Read
this Subscription
Agreement;
|
| (2) |
Complete
and execute the face page of this Subscription
Agreement;
|
| (3) |
Read
and complete the Certificate set out in Schedule
“A”;
|
| (4) |
Read
and complete the Registration Rights Agreement set out in Schedule
“C”;
|
| (5) |
Make
payment for the Subscribed Shares as required by the Terms and Conditions;
and
|
| (6) |
Deliver
the signed documents as required by the Terms and Conditions.
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*
* * *
*
ACCEPTANCE:
The
Corporation hereby (i) accepts the above subscription subject to the terms
and
conditions contained in this Subscription Agreement; (ii) represents and
warrants to the Subscriber that the representations and warranties made by
the
Corporation to the Underwriter in the Underwriting/Agency Agreement (as defined
herein), which are incorporated by reference in this Subscription Agreement,
are
true and correct as of the date of the Underwriting/Agency Agreement (except
as
waived by the Underwriter); and (iii) agrees that the Subscriber is entitled
to
rely, subject to the limitations and other terms of the Underwriting/Agency
Agreement, on the representations and warranties made by the Corporation to
the
Underwriter (except as waived by the Underwriter) and on the covenants made
by
the Corporation (except as waived or modified by the Underwriter) in the
Underwriting/Agency Agreement, each of which are incorporated by reference
in
this Subscription Agreement.
APOLLO
GOLD CORPORATION
Per: Date:
Page
3
TERMS
AND CONDITIONS OF SUBSCRIPTION FOR
FLOW-THROUGH
SHARES
ARTICLE
1
INTERPRETATION
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1.1
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Definitions
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Whenever
used in this Subscription Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following words and phrases shall
have the respective meanings ascribed to them as follows:
“affiliate”
shall have the meaning ascribed to such term in the Securities Act (Ontario).
“AMEX”
means the American Stock Exchange.
“AMEX
Approval” means the approval by the AMEX of the listing of up to 17,000,000
Flow-Through Shares to be sold in the Offering.
“Best-Efforts
Offering” shall have the meaning ascribed to such term on page 2 of this
Subscription Agreement.
“Bought-Deal
Offering” shall have the meaning ascribed to such term on page 2 of this
Subscription Agreement.
“Business
Day” means a day other than a Saturday, Sunday or any other day on which the
principal chartered banks located in Toronto are not open for
business.
“Canadian
Exploration Expense” or “CEE” means a Canadian exploration expense as defined in
subsection 66.1(6) of the Tax Act.
“Closing”
shall have the meaning ascribed to such term in Section 4.1.
“Closing
Date” shall have the meaning ascribed to such term in Section 4.1.
“Closing
Time” shall have the meaning ascribed to such term in Section 4.1.
“Common
Shares” means common shares in the capital of the Corporation.
“Compensation
Options” has the meaning ascribed in Section 8.1.
“Control
Person” means a person, company or combination of persons or companies described
in clause (c) of the definition of “distribution” in subsection 1(1) of the
Securities Act (Ontario).
“Corporation”
means Apollo Gold Corporation and includes any successor corporation to or
of
the Corporation.
“CRA”
means the Canada Revenue Agency.
Page
4
“distribution”
shall have the meaning ascribed to such term in the Securities Act
(Ontario).
“Flow-Through
Shares” means Common Shares in the capital of the Corporation being issued which
qualify as “flow-through shares” as defined in subsection 66(15) of the Tax
Act.
“Insider”
shall have the meaning ascribed to such term in the Securities Act
(Ontario).
“Offering”
means the offering of up to 17,000,000 Flow-Through Shares, consisting of the
Bought Deal Offering of 14,000,000 Flow-Through Shares and the Best Efforts
Offering of up to 3,000,000 Flow-Through Shares pursuant to the
Underwriting/Agency Agreement.
“Person”
means any individual (whether acting as an executor, trustee, administrator,
legal representative or otherwise), corporation, firm, partnership, sole
proprietorship, syndicate, joint venture, trustee, trust, unincorporated
organization or association, and pronouns have a similar extended
meaning.
“Prescribed
Forms” means the forms prescribed from time to time under subsection 66(12.7) of
the Tax Act filed or to be filed by the Corporation within the prescribed times
renouncing to the Subscriber the Resource Expenses incurred pursuant to this
Subscription Agreement and all parts or copies of such forms required by the
CRA
to be delivered to the Subscriber.
“Prescribed
Relationship” means a relationship between the Corporation and the Subscriber
(including any beneficial purchaser for whom the Subscriber acts) as described
in subsection 66(12.671) of the Tax Act, or where the Subscriber and the
Corporation are related or otherwise do not deal at arm’s length for purposes of
the Tax Act.
“Public
Record” means, without limitation, the prospectuses, annual information forms,
annual and quarterly reports, offering memoranda, material change reports,
press
releases and any other documents or reports filed by the Corporation with
Securities Regulators during the 24 months preceding the date hereof and which
is available on SEDAR.
“Registration
Rights Agreement” means the Registration Rights Agreement attached hereto as
Schedule “C.”
“Registration
Statement” means the registration statement that the Corporation agrees to file
with the SEC pursuant to the Registration Rights Agreement to register the
Flow-Through Shares for resale pursuant to the terms of the Registration Rights
Agreement.
“Resource
Expense” means an expense which is CEE, which is incurred on or after the
Closing Date and on or before the Termination Date, which may be renounced
by
the Corporation as CEE pursuant to subsection 66(12.6) of the Tax Act in
accordance with subsection 66(12.66) of the Tax Act with an effective date
not
later than December 31, 2008 and in respect of which, but for the renunciation,
the Corporation would be entitled to a deduction in computing income for the
purposes of the Tax Act.
“Rights
Agreement” means the shareholders rights plan agreement dated as of the 17th day
of January, 2007 between the Corporation and CIBC Mellon Trust Company, as
rights agent.
Page
5
“SEC”
means the United States Securities and Exchange Commission.
“Securities
Laws” means, in respect of the Offering, the securities laws, regulations and
exchange rules having application thereto and the rules, policies, notices
and
orders issued by the SEC and the Securities Regulators having application
thereto.
“Securities
Regulators” means the securities commissions or other securities regulatory
authorities of the United States and all the Selling Jurisdictions or the
relevant Selling Jurisdiction as the context requires.
“SEDAR”
means the computer system for the transmission, receipt, acceptance, review
and
dissemination of documents filed in electronic format known as the System for
Electronic Document Analysis and Retrieval, which is available online at
▇▇▇.▇▇▇▇▇.▇▇▇
“Selling
Jurisdictions” means the provinces of British Columbia, Alberta and Ontario
and/or in other Canadian jurisdictions agreed to by the Corporation and the
Underwriter in which the Subscribers are resident.
“Subscriber”
means the subscriber for Flow-Through Shares as set out on page 2 of this
Subscription Agreement or, in the case of a subscription for a beneficial owner,
the beneficial owner.
“Subscribed
Shares” means the number of Flow-Through Shares set out on page 2 of this
Subscription Agreement.
“Subscription
Agreement” means this subscription agreement (including any schedules hereto)
and any instrument amending this Subscription Agreement; “hereof”, “hereto”,
“hereunder”, “herein” and similar expressions mean and refer to this
Subscription Agreement and not to a particular Article or Section; and the
expression “Article” or “Section” followed by a number means and refers to the
specified Article or Section of this Subscription Agreement.
“Subscription
Price” shall have the meaning ascribed to such term on page 2 of this
Subscription Agreement.
“Tax
Act”
means the Income Tax Act (Canada), as amended, re-enacted or replaced from
time
to time.
“Term
Sheet” means the term sheet delivered to potential purchasers of Flow-Through
Shares, a copy of which is attached hereto as Schedule “B”.
“Termination
Date” means December 31, 2009.
“TSX”
means the Toronto Stock Exchange.
“TSX
Approval” means the conditional approval of the Offering by the TSX.
“Underwriter”
means ▇▇▇▇▇▇▇ Securities Inc.
Page
6
“Underwriting/Agency
Agreement” means the underwriting/agency agreement to be entered into between
the Underwriter and the Corporation in respect of the Offering.
“United
States” means the United States of America, its territories and possessions, any
State of the United States and the District of Columbia.
“U.S.
Person” shall have the meaning ascribed to such term in Rule 902(k) of
Regulation S under the U.S. Securities Act.
“U.S.
Securities Act” means the United States Securities Act of 1933, as
amended.
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1.2
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Gender
and Number
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Words
importing the singular number only shall include the plural and vice versa,
words importing the masculine gender shall include the feminine gender and
words
importing persons shall include firms and corporations and vice
versa.
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1.3
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Currency
|
Unless
otherwise specified, all dollar amounts in this Subscription Agreement,
including the symbol “$”, are expressed in Canadian dollars.
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1.4
|
Subdivisions,
Headings and Table of
Contents
|
The
division of this Subscription Agreement into Articles, Sections, Schedules
and
other subdivisions, the inclusion of headings and the provision of a table
of
contents are for convenience of reference only and shall not affect the
construction or interpretation of this Subscription Agreement. The headings
in
this Subscription Agreement are not intended to be full or precise descriptions
of the text to which they refer. Unless something in the subject matter or
context is inconsistent therewith, references herein to an Article, Section,
Subsection, paragraph, clause or Schedule are to the applicable article,
section, subsection, paragraph, clause or schedule of this Subscription
Agreement.
ARTICLE
2
SCHEDULES
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2.1
|
Description
of Schedules
|
The
following are the Schedules attached to and incorporated in this Subscription
Agreement by reference and deemed to be a part hereof:
Schedule
“A” – Certificate
of Accredited Investor
Schedule
“B”– Term
Sheet
Schedule
“C” –
Registration
Rights Agreement
Page
7
ARTICLE
3
SUBSCRIPTION
AND DESCRIPTION OF FLOW-THROUGH SHARES
|
3.1
|
Subscription
for Flow-Through Shares
|
The
Subscriber hereby confirms its irrevocable subscription for and offer to
purchase the Subscribed Shares from the Corporation, and hereby tenders the
Subscription Price, which, upon acceptance by the Corporation, will constitute
a
binding agreement of the Subscriber with the Corporation to purchase from the
Corporation, and, on the part of the Corporation, to sell to the Subscriber,
the
Subscribed Shares, on and subject to the terms and conditions set out in this
Subscription Agreement, for the Subscription Price which is payable as described
in Article 4 hereto.
In
accordance with the Underwriting/Agency Agreement, and subject to the terms
and
conditions contained in this Subscription Agreement, upon acceptance by the
Corporation of this subscription (in whole or in part) the Subscriber will
be
obliged to purchase from the Corporation the number of Subscribed Shares in
respect of which this subscription has been accepted which will be in
substitution of the Underwriter's obligation to purchase such Subscribed Shares.
The Subscriber acknowledges and agrees that no consideration is being paid
hereunder in respect of any rights issuable under the Rights Plan.
|
3.2
|
Description
of Flow-Through Shares
|
Upon
issue, the Flow-Through Shares will be “flow-through shares” as defined in
subsection 66(15) of the Tax Act and are not and will not be “prescribed shares”
within the meaning of section 6202.1 of the regulations to the Tax Act. The
Corporation agrees to:
|
(a)
|
incur
Resource Expenses in an amount equal to the Subscription Price during
the
period from and after the Closing Date to and including the Termination
Date; and
|
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(b)
|
renounce
Resource Expenses equal to the Subscription Price to the Subscriber
with
an effective date of renunciation no later than December 31,
2008.
|
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3.3
|
Acceptance
and Rejection of Subscription by the
Corporation
|
The
Corporation shall forward to the Subscriber confirmation of acceptance or
rejection (in whole or in part) of this Subscription Agreement promptly after
the acceptance or rejection of this Subscription Agreement by the Corporation.
The Subscriber acknowledges and agrees that, notwithstanding Section 3.1 above,
the Corporation reserves the right, in its absolute discretion, to reject this
subscription for Flow-Through Shares, in whole or in part, at any time prior
to
the Closing Time. If this subscription is rejected in whole, any cheques or
other forms of payment delivered to the Underwriter on account of the
Subscription Price will be promptly returned to the Subscriber without interest
or deduction. If this subscription is accepted only in part, a cheque
representing any refund of the Subscription Price for that portion of the
subscription for Flow-Through Shares which is not accepted will be promptly
delivered to the Subscriber without interest or deduction.
Page
8
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3.4
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Payment
|
The
Subscriber shall deliver the aggregate amount payable in respect of the
Subscribed Shares to the Underwriter at or before the Closing Time on the
Closing Date by certified cheque or bank draft drawn on a Canadian chartered
bank or trust company in immediately available and freely transferable Canadian
funds and payable to “▇▇▇▇▇▇▇ Securities Inc.” as agent for the
Corporation.
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3.5
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U.S.
Securities Matters
|
The
Flow-Through Shares are being offered and sold in reliance on the exemption
from
registration contained in Regulation S of the U.S. Securities Act. Following
the
Closing, the Corporation has agreed to register the resale of the Flow-Through
Shares under the U.S. Securities Act pursuant to the Registration Rights
Agreement.
ARTICLE
4
CLOSING
|
4.1
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Closing
|
Delivery
and sale of the Subscribed Shares and payment of the Subscription Price will
be
completed (the “Closing”) at the offices of the Corporation’s counsel, at 1:00
p.m. (Toronto time) (the “Closing Time”) on August 21, 2008 or such other place
or date or time as the Corporation and the Underwriter may mutually agree (the
“Closing Date”). Subject to Section 3.3, if, prior to the Closing Time, the
terms and conditions contained in this Subscription Agreement and the
Underwriting/Agency Agreement have been complied with to the satisfaction of
the
Underwriter, or waived by the Underwriter, the Underwriter shall deliver to
the
Corporation completed Subscription Agreements from the Subscribers (or, if
the
Underwriter does not have substituted purchasers for any portion of the
Bought-Deal Offering, from the Underwriter) and payment of the Subscription
Price against delivery by the Corporation of a certificate representing the
Subscribed Shares and such other documentation as may be required pursuant
to
the Subscription Agreement and the Underwriting/Agency Agreement.
If,
prior
to the Closing Time, the terms and conditions contained in this Subscription
Agreement (other than delivery by the Corporation to the Subscriber of a
certificate representing the Subscribed Shares) and the Underwriting/Agency
Agreement have not been complied with to the satisfaction of the Underwriter,
or
waived by it, the Underwriter, the Corporation and the Subscriber will have
no
further obligations under this Subscription Agreement.
|
4.2
|
Conditions
of Closing
|
The
completion of the Offering is conditional upon, among other things, the
Corporation obtaining TSX Approval and AMEX Approval prior to the Closing Date
and satisfactory due diligence by the Underwriter in respect of the business
and
affairs of the Corporation.
Page
9
The
Subscriber acknowledges and agrees that as the sale of the Flow-Through Shares
will not be qualified by a prospectus in Canada, such sale and issuance is
subject to the condition that the Subscriber return to the Corporation and/or
the Underwriter all documentation required by the Securities Laws. The
Subscriber acknowledges and agrees that the Underwriter and/or the Corporation
may provide the Securities Regulators and tax authorities with a list setting
forth the identities of the beneficial purchasers of the Flow-Through Shares.
Notwithstanding that the Subscriber may be purchasing Flow-Through Shares as
agent on behalf of an undisclosed principal, the Subscriber agrees to provide,
on request, particulars as to the identity of such undisclosed principal as
may
be required by the Corporation in order to comply with the
foregoing.
The
Subscriber acknowledges and agrees that the obligations of the Corporation
hereunder are conditional on the accuracy of the representations and warranties
of the Subscriber contained in this Subscription Agreement as of the date of
this Subscription Agreement, and as of the Closing Time as if made at and as
of
the Closing Time, and the fulfilment of the following additional conditions
as
soon as possible and in any event not later than the Closing Time:
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(a)
|
unless
other arrangements acceptable to the Underwriter have been made,
payment
by the Subscriber of the Subscription Price as set out in Section
3.4;
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(b)
|
the
Subscriber having properly completed, signed and delivered this
Subscription Agreement to:
|
▇▇▇▇▇▇▇
Securities Inc
▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇
▇▇▇
▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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(c)
|
the
Subscriber having properly completed, signed and delivered Schedule
“A”
hereto; and
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(d)
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the
Subscriber having properly completed signed and delivered the Registration
Rights Agreement attached hereto as Schedule
“C”.
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4.3
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Authorization
of the Underwriter
|
The
Subscriber irrevocably authorizes the Underwriter, in its discretion, to act
as
the Subscriber’s representative at the Closing, and hereby appoints the
Underwriter, with full power of substitution, as its true and lawful attorney
with full power and authority in the Subscriber’s place and stead:
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(a)
|
to
receive one or more certificates representing the Subscribed Shares,
to
execute in the Subscriber’s name and on its behalf all closing receipts
and required documents, to complete and correct any errors or omissions
in
any form or document provided by the Subscriber in connection with
the
subscription for the Subscribed Shares and to exercise any rights
of
termination contained in the Underwriting/Agency
Agreement;
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Page
10
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(b)
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to
extend such time periods and to waive, in whole or in part, any
representations, warranties, covenants or conditions for the Subscriber’s
benefit contained in this Subscription Agreement and the
Underwriting/Agency Agreement or any ancillary or related document;
and
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(c)
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to
terminate this Subscription Agreement if any condition precedent
is not
satisfied, in such manner and on such terms and conditions as the
Underwriter in its sole discretion may
determine.
|
The
Subscriber acknowledges and agrees that the Underwriter and the Corporation
may
vary, amend, alter or waive, in whole or in part, one or more of the terms
to be
set forth in the Underwriting/Agency Agreement in such manner and on such terms
and conditions as they may determine, and that any such variation, amendment,
alteration or waiver shall not affect in any way the obligations of the
Subscriber or such others for whom the Subscriber is contracting
hereunder.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF THE CORPORATION
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5.1
|
Representations,
Warranties and Covenants of the
Corporation
|
By
execution of this Subscription Agreement, the Corporation hereby agrees with
the
Subscriber that the Subscriber shall have the benefit of the representations
and
warranties made by the Corporation below and to the Underwriter as set forth
in
the Underwriting/Agency Agreement, and acknowledges that the Subscriber is
relying on such representations and warranties in connection with the
transactions contemplated herein. Such representations and warranties shall
be
true and accurate in all material respects and shall continue in full force
and
effect for the benefit of the Subscriber in accordance with the
Underwriting/Agency Agreement. The representations, warranties and covenants
made by the Corporation to the Underwriter in the Underwriting/Agency Agreement
are hereby incorporated by reference such that they form an integral part of
this Agreement.
The
Corporation represents and warrants to, and covenants with, the Subscriber
as
follows:
|
(a)
|
Upon
issue, the Flow-Through Shares will be “flow-through shares” as defined in
subsection 66(15) of the Tax Act and are not and will not be “prescribed
shares” within the meaning of section 6202.1 of the regulations to the Tax
Act. The Corporation does not have and will not have prior to the
Termination Date a Prescribed Relationship with the Subscriber and
if the
Subscriber is a partnership, with a partner or limited partner of
such
partnership.
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(b)
|
The
Corporation is a “principal-business corporation” as defined in subsection
66(15) of the Tax Act and will continue to be a “principal-business
corporation” until such time as all of the Resource Expenses required to
be renounced under this Subscription Agreement have been incurred
and
validly renounced pursuant to the Tax
Act.
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Page
11
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(c)
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The
Corporation has no reason to believe that it will be unable to: (i)
incur,
on or after the Closing Date and on or before the Termination Date,
or
(ii) renounce to the Subscriber effective on or before December 31,
2008,
Resource Expenses in an aggregate amount equal to the Subscription
Price,
and the Corporation has no reason to expect any reduction of such
amount
by virtue of subsection 66(12.73) of the Tax
Act.
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(d)
|
The
Corporation hereby agrees to incur Resource Expenses in an amount
equal to
the Subscription Price on or before the Termination Date in accordance
with this Subscription Agreement and agrees to renounce to the Subscriber,
on or before March 31, 2009 with an effective date no later than
December
31, 2008, pursuant to subsections 66(12.6) and in respect of Resource
Expenses incurred by the Corporation in 2009, pursuant to subsections
66(12.6) and 66(12.66) of the Tax Act, Resource Expenses incurred
or to be
incurred in an amount equal to the Subscription
Price.
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(e)
|
The
Corporation shall deliver to the Subscriber, on or before March 31,
2009,
the relevant Prescribed Forms, fully completed and executed, renouncing
to
the Subscriber, Resource Expenses in an amount equal to the Subscription
Price with an effective date of no later than December 31, 2008,
such
delivery constituting the authorization of the Corporation to the
Subscriber to file such Prescribed Forms with the relevant taxation
authorities.
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|
(f)
|
The
Resource Expenses to be renounced by the Corporation to the
Subscriber:
|
|
(i)
|
will
constitute CEE on the effective date of the
renunciation;
|
|
(ii)
|
will
not include expenses that are “Canadian exploration and development
overhead expenses” (as defined in the regulations to the Tax Act for
purposes of paragraph 66(12.6)(b) of the Tax Act) of the Corporation,
the
amount of any assistance described in paragraph 66(12.6)(a) of the
Tax
Act, amounts which constitute specified expenses for seismic data
described in paragraph 66(12.6)(b.1) of the Tax Act or any expenses
for
prepaid services or rent that do not qualify as outlays and expenses
for
the period as described in the definition of “expense” in subsection
66(15) of the Tax Act;
|
|
(iii)
|
will
not include any amount that has previously been renounced by the
Corporation to the Subscriber or to any other
Person;
|
|
(iv)
|
would
be deductible by the Corporation in computing its income for the
purposes
of Part I of the Tax Act but for the renunciation to the Subscriber;
and
|
|
(v)
|
will
not be subject to any reduction under subsection 66(12.73) of the
Tax
Act.
|
Page
12
|
(g)
|
The
Corporation shall not reduce the amount renounced to the Subscriber
pursuant to subsection 66(12.6) of the Tax
Act.
|
|
(h)
|
The
Corporation shall not be subject to the provisions of subsection
66(12.67)
of the Tax Act in a manner which impairs its ability to renounce
Resource
Expenses to the Subscriber in an amount equal to the Subscription
Price.
|
|
(i)
|
The
Corporation acknowledges that it is not now entitled to receive any
assistance, as defined in the Tax Act, in respect of the Resource
Expenses. If the Corporation receives, or becomes entitled to receive,
any
government assistance which is described in paragraph (a) of the
definition of “excluded obligation” in subsection 6202.1(5) of the
regulations made under the Tax Act and the receipt of or entitlement
to
receive such government assistance has or will have the effect of
reducing
the amount of CEE validly renounced to the Subscriber hereunder to
less
than the aggregate of the Subscription Price, the Corporation will
incur
additional Resource Expenses on or before the time it renounces the
Resource Expenses to the Subscriber pursuant to their Subscription
Agreement in an amount sufficient to allow it to renounce to the
Subscriber, the Subscription Price.
|
|
(j)
|
The
Corporation shall use the gross proceeds of the Offering for general
exploration activities on the Corporation’s properties and shall deliver
to the Subscriber, on or before March 31, 2009, a list of the provinces,
territories or other jurisdictions in Canada where the Corporation
has
incurred, or intends to incur, Resource Expenses together with the
amount
incurred in each such province, territory or other jurisdiction of
Canada.
|
|
(k)
|
The
Corporation shall file with the CRA within the time prescribed by
subsection 66(12.68) of the Tax Act (i) the forms prescribed for
the
purposes of such legislation, together with a copy of this Subscription
Agreement or any "selling instrument" contemplated by such legislation
and
shall forthwith following such filings provide to the Subscriber
a copy of
such forms; and (ii) the form prescribed for purposes of subsection
66(12.7) of the Tax Act on or before the last day of the first month
after
each month in which any renunciation is made pursuant to the terms
of this
Subscription Agreement.
|
|
(l)
|
The
Corporation will keep proper books, records and accounts in respect
of all
Resource Expenses and all transactions and events affecting the
Subscription Price, the Resource Expenses and the amounts renounced
to the
Subscriber hereunder, and upon reasonable notice, will, on a timely
basis,
make such books, records, accounts and any other relevant documents
available for inspection and audit by or on behalf of the
Subscriber.
|
|
(m)
|
Neither
the Corporation nor any corporation “associated” (as such term is defined
in the Tax Act) with the Corporation is a party to any other agreement
for
the issuance of Flow-Through Shares for which the required expenditures
have not been incurred.
|
Page
13
|
(n)
|
The
Corporation has not and will not enter into transactions or take
deductions which would otherwise reduce its cumulative CEE to an
extent
which would preclude a renunciation of Resource Expenses hereunder
in an
amount equal to the Subscription Price on or before December 31,
2008.
|
|
(o)
|
The
Corporation shall perform and carry out all acts and things to be
completed by it as provided in this Subscription
Agreement.
|
|
(p)
|
The
Corporation will file with the CRA, before March 31 of the year following
a particular year, any return required to be filed under Part XII.6
of the
Tax Act in respect of the particular year, and will pay any tax or
other
amount owing in respect of that return on a timely
basis.
|
|
(q)
|
If
the Corporation amalgamates with any one or more companies, any shares
issued to or held by the Subscriber as a replacement for the Flow-Through
Shares as a result of such amalgamation will qualify, by virtue of
subsection 87(4.4) of the Tax Act, as Flow-Through Shares and in
particular will not be “prescribed shares” as defined in section 6202.1 of
the regulations to the Tax Act.
|
|
5.2
|
Indemnification
|
If
the
Corporation does not incur and renounce to the Subscriber, effective on or
before December 31, 2008, Resource Expenses equal to the Subscription Price,
the
Corporation shall indemnify and hold harmless the Subscriber and each of the
partners thereof if the Subscriber is a partnership or a limited partnership
(for the purposes of this paragraph, each an “Indemnified Person”) as to, and
pay in settlement thereof to the Indemnified Person on or before the twentieth
Business Day following the Termination Date, as sole recourse to the Indemnified
Person, an amount equal to the amount of any tax (within the meaning of
paragraph (b) of the definition of “excluded obligation” in subsection 6202.1(5)
of the regulations to the Tax Act or paragraph (c) of that definition as it
is
proposed to be amended) payable under the Tax Act (and under any corresponding
provincial legislation) by any Indemnified Person as a consequence of such
failure. In the event that the CRA (or any similar provincial tax authority)
reduces the amount renounced by the Corporation to the Subscriber pursuant
to
subsection 66(12.73) of the Tax Act (or any corresponding provincial
legislation), the Corporation shall indemnify and hold harmless each Indemnified
Person as to, and pay in settlement thereof to the Indemnified Person, as sole
recourse to the Indemnified Person, an amount equal to the amount of any tax
(within the meaning of paragraph (b) of the definition of “excluded obligation”
in subsection 6202.1(5) of the regulations to the Tax Act or paragraph (c)
of
that definition as it is proposed to be amended) payable under the Tax Act
(and
under any corresponding provincial legislation) by the Indemnified Person as
a
consequence of such reduction provided that nothing in this paragraph shall
derogate from any rights or remedies the Subscriber may have at common law
with
respect to liabilities other than those payable under the Tax Act and any
corresponding provincial legislation .
To
the
extent that any Person entitled to be indemnified hereunder is not a party
to
this Subscription Agreement, the Subscriber shall obtain and hold the rights
and
benefits of this Subscription Agreement in trust for, and on behalf of, such
Person and such Person shall be entitled to enforce the provisions of this
section notwithstanding that such Person is not a party to this Subscription
Agreement.
Page
14
ARTICLE
6
ACKNOWLEDGEMENTS,
COVENANTS, REPRESENTATIONS
AND
WARRANTIES OF THE SUBSCRIBER
|
6.1
|
Representations,
Warranties and Covenants of the
Subscriber
|
The
Subscriber, on its own behalf and, if applicable, on behalf of each beneficial
purchaser for whom it is acting, hereby represents and warrants to, and
covenants with, the Corporation and the Underwriter as follows as at the date
hereof and as at the Closing Time and acknowledges that the Corporation and
the
Underwriter, and their respective counsel, are relying on such representations
and warranties in connection with the transactions contemplated
herein:
|
(a)
|
The
Subscriber and (if applicable) each beneficial purchaser for whom
it is
acting is resident or, if not an individual, has its head office,
in the
jurisdiction set out on page 2 of this Subscription Agreement. The
address
set forth on page 2 of this Subscription Agreement is the residence
or
place of business of the Subscriber, or the residence or place of
business
of any beneficial purchaser for whom the Subscriber is acting, and
such
address was not obtained or used solely for the purpose of acquiring
Flow-Through Shares and the Subscriber and any beneficial purchaser
was
solicited to purchase Flow-Through Shares solely in such jurisdiction.
The
Subscriber and, if the Subscriber is a partnership, any partner or
limited
partner of the partnership, or if the Subscriber is a corporation
or
limited liability company, any director, manager or officer, does
not have
and will not have prior to the Termination Date a Prescribed Relationship
with the Corporation.
|
|
(b)
|
The
Subscriber is not a “U.S. Person” (as that term is defined by Regulation S
under the U.S. Securities Act, which definition includes, but is
not
limited to, an individual resident in the United States, an estate
or
trust of which any executor or administrator or trustee, respectively,
is
a U.S. Person and any partnership or company organized or incorporated
under the laws of the United States (or any State thereof)) and is
not
acquiring the Flow-Through Shares for the account or benefit of a
U.S.
Person or a person in the United
States.
|
|
(c)
|
The
Flow-Through Shares have not been offered to the Subscriber in the
United
States, and the individuals making the order to purchase the Flow-Through
Shares and executing and delivering this Agreement on behalf of the
Subscriber were not in the United States when the order was placed
and
this Subscription Agreement was executed and
delivered.
|
|
(d)
|
The
Subscriber undertakes and agrees that it will not offer or sell the
Flow-Through Shares in the United States unless such shares are registered
under the U.S. Securities Act and the securities laws of all applicable
states of the United States or an exemption from such registration
requirements is available, and further that it will not resell the
Flow-Through Shares except in accordance with the provisions of applicable
securities legislation, regulations, rules, policies and orders and
stock
exchange rules.
|
Page
15
|
(e)
|
The
Subscriber will not engage in hedging transactions with regard to
the
Flow-Through Shares unless conducted in compliance with the U.S.
Securities Act.
|
|
(f)
|
The
Subscriber acknowledges that the Corporation and its transfer agent
will
refuse to register any transfer of any of the Flow-Through Shares
not made
in accordance with the provisions of Regulation S of the U.S. Securities
Act, pursuant to an available exemption from registration under the
U.S.
Securities Act or under an effective registration statement under
the U.S.
Securities Act.
|
|
(g)
|
The
Subscriber, on its own behalf and (if applicable) on behalf of each
beneficial purchaser for whom it is acting, represents, warrants
and
certifies as set out in Schedule “A” hereto and further certifies that the
Subscriber and (if applicable) each such beneficial purchaser, as
the case
may be, falls into one or more of the categories of prospectus exempt
purchasers listed in Schedule “A” hereto (as specified by the Subscriber
in such Schedule).
|
|
(h)
|
The
Subscriber has duly and properly completed, executed and delivered
to the
Corporation within applicable time periods, the certificate and form
set
forth in Schedule “A” hereto and the representations, warranties and
certifications contained therein are true and correct as at the date
hereof and will be true and correct at the Closing
Time.
|
|
(i)
|
The
execution and delivery of this Subscription Agreement, the performance
and
compliance with the terms hereof, the subscription for and purchase
of the
Subscribed Shares and the completion of the transactions described
herein
by the Subscriber will not result in any material breach of, or be
in
conflict with or constitute a material default under, or create a
state of
facts which, after notice or lapse of time, or both, would constitute
a
material default under any term or provision of the constating documents,
by-laws or resolutions of the Subscriber or any beneficial purchaser
for
whom the Subscriber is acting, the Securities Laws or any other laws
applicable to the Subscriber or any beneficial purchaser for whom
the
Subscriber is acting, any agreement to which the Subscriber or any
beneficial purchaser for whom the Subscriber is acting is a party,
or any
judgment, decree, order, statute, rule or regulation applicable to
the
Subscriber or any beneficial purchaser for whom the Subscriber is
acting.
|
|
(j)
|
The
Subscriber is subscribing for the Subscribed Shares as principal
for its
own account and not for the benefit of any other Person (within the
meaning of applicable Securities Laws) and not with a view to the
resale
or distribution of all or any of the Subscribed Shares, or if it
is not
subscribing as principal, it acknowledges that the Corporation may
be
required by law to disclose to certain regulatory authorities the
identity
of each beneficial purchaser of the Subscribed Shares for whom it
is
acting and agrees to provide such
information.
|
Page
16
|
(k)
|
In
the case of a subscription for the Subscribed Shares by the Subscriber
acting as trustee or agent (including, for greater certainty, a portfolio
manager or comparable adviser) for a principal, the Subscriber is
duly and
properly authorized to execute and deliver this Subscription Agreement
and
all other necessary documentation in connection with such subscription
on
behalf of such beneficial purchaser, who is subscribing as principal
for
its own account, not for the benefit of any other Person and not
with a
view to the resale or distribution of the Subscribed Shares, and
this
Subscription Agreement has been duly authorized, executed and delivered
by
or on behalf of and constitutes a legal, valid and binding agreement
of
such principal, enforceable in accordance with its terms against
such
principal, and the Subscriber acknowledges that the Corporation and/or
the
Underwriter may be required by law to disclose the identity of such
beneficial purchaser for whom the Subscriber is acting and agrees
to
provide information as the Corporation and/or the Underwriter may
be
required to disclose.
|
|
(l)
|
In
the case of a subscription for the Subscribed Shares by the Subscriber
acting as principal, this Subscription Agreement has been duly and
properly authorized, executed and delivered by, and constitutes a
legal,
valid and binding agreement of, the Subscriber. This Subscription
Agreement is enforceable in accordance with its terms against the
Subscriber and (if applicable) any beneficial purchaser on whose
behalf
the Subscriber is acting.
|
|
(m)
|
If
the Subscriber is:
|
|
(i)
|
a
corporation, the Subscriber is duly incorporated and is validly subsisting
under the laws of its jurisdiction of incorporation and has all requisite
legal and corporate power and authority to execute and deliver this
Subscription Agreement, to subscribe for the Subscribed Shares as
contemplated herein and to observe and perform its obligations under
the
terms of this Subscription
Agreement;
|
|
(ii)
|
a
partnership, syndicate or other form of unincorporated organization,
the
Subscriber has the necessary legal capacity and authority to execute
and
deliver this Subscription Agreement on behalf of such organization
and to
observe and perform its covenants and obligations hereunder and has
obtained all necessary approvals in respect thereof;
or
|
|
(iii)
|
an
individual, the Subscriber is of the full age of majority and is
legally
competent to execute this Subscription Agreement and to observe and
perform his or her covenants and obligations
hereunder.
|
|
(n)
|
Other
than the Underwriter (and any group of investment dealers managed
by the
Underwriter for the purposes of offering the Flow-Through Shares
for
sale), there is no person acting or purporting to act in connection
with
the transactions contemplated herein who is entitled to any brokerage
or
finder’s fee. If any person claims that any fee or other compensation is
payable by the Corporation or the Underwriter in connection with
this
subscription for the Subscribed Shares, the Subscriber covenants
to
indemnify and hold harmless the Corporation and the Underwriter with
respect thereto and with respect to all costs reasonably incurred
in the
defence thereof.
|
Page
17
|
(o)
|
The
Subscriber is not, with respect to the Corporation or any of its
affiliates, a Control Person and will not become a Control Person
by
virtue of the purchase of the Subscribed Shares, and does not intend
to
act in concert with any other person to form a Control Person of
the
Corporation.
|
|
(p)
|
The
Subscriber is not purchasing Flow-Through Shares with knowledge of
any
material fact or information concerning the Corporation which has
not been
generally disclosed to the public.
|
|
(q)
|
No
person has made to the Subscriber any written or oral
representations:
|
|
(i)
|
that
any person will resell or repurchase any of the Flow-Through
Shares;
|
|
(ii)
|
that
any person will refund the Subscription Price;
or
|
|
(iii)
|
as
to the future price or value of the Flow-Through
Shares.
|
|
(r)
|
This
subscription for Flow-Through Shares has not been made through or
as a
result of, and the distribution of Flow-Through Shares is not being
accompanied by, any form of advertisement, including, without limitation,
in printed public media, radio, television, internet or
telecommunications, including electronic display, or as part of a
general
solicitation.
|
|
(s)
|
None
of the funds the Subscriber is using to purchase the Subscribed Shares
is,
to the knowledge of the Subscriber, proceeds obtained or derived,
directly
or directly, as a result of illegal
activities.
|
|
(t)
|
The
Subscriber, and any beneficial purchaser for whom it is acting, deals
at
arm’s length and will continue to deal at arm’s length (within the meaning
of the Tax Act and applicable Securities Laws) with the
Corporation.
|
|
(u)
|
If
the Subscriber or a beneficial purchaser for whom it is acting, as
the
case may be, is a corporation, trust or partnership, it does not
and will
not have, in respect of a renunciation of Resource Expenses hereunder,
a
“prohibited relationship” with the Corporation within the meaning of
subsection 66(12.671) of the Tax
Act.
|
|
(v)
|
Neither
the Subscriber, nor any beneficial purchaser for whom it is acting,
as the
case may be, has or will knowingly enter into any agreement or arrangement
which will cause the Flow-Through Shares to be or become “prescribed
shares” for purposes of the Tax
Act.
|
|
(w)
|
The
delivery of this subscription, the acceptance hereof by the Corporation
and the issuance of Subscribed Shares to the Subscriber complies
with all
applicable laws of the Subscriber’s jurisdiction of residence and domicile
and will not cause the Corporation or any of its officers or directors
to
become subject to or require any disclosure, prospectus or other
reporting
requirement to which the Corporation is not currently subject and
which is
not otherwise contemplated in this Subscription
Agreement.
|
Page
18
|
(x)
|
If
the Subscriber is a corporation, syndicate, partnership or other
form of
entity (other than an investment fund, as defined in National Instrument
45-106), the Subscriber was not created or is not being used solely
to
purchase or hold the Subscribed Shares and has a bona fide purpose
other
than investing in the Subscribed
Shares.
|
|
6.2
|
Acknowledgments
and Agreements of the
Subscriber
|
The
Subscriber, on its own behalf and, if applicable, on behalf of each beneficial
purchaser for whom it is acting, acknowledges and agrees as
follows:
|
(a)
|
The
Subscriber has received a copy of the Term Sheet setting out the
principal
terms of the Offering.
|
|
(b)
|
The
Subscriber acknowledges that the Corporation contemplates completing
the
Offering and that the aggregate gross proceeds of the Bought Deal
Offering
and the Best-Efforts Offering will be $8,500,000 (assuming the Best
Efforts Offering is fully
subscribed).
|
|
(c)
|
No
securities commission, agency, governmental authority, regulatory
body,
stock exchange or other regulatory body has reviewed or passed on
the
merits of the Subscribed Shares.
|
|
(d)
|
The
Subscribed Shares shall be subject to statutory resale restrictions
under
the Securities laws United States and the province or territory in
which
the Subscriber resides and under other applicable securities laws,
and the
Subscriber covenants that it will not resell the Subscribed Shares
except
in compliance with such laws, and the Subscriber acknowledges that
it is
solely responsible (and neither the Corporation nor the Underwriter
is in
any way responsible) for such
compliance.
|
|
(e)
|
The
Subscriber’s ability to transfer the Subscribed Shares is limited by,
among other things, applicable Securities
Laws.
|
|
(f)
|
In
addition, the Subscriber acknowledges that, while the Corporation
has
agreed to file the Registration Statement and cause it to be declared
effective by the SEC, there is no assurance that the Corporation
will be
able to cause the Registration Statement to be declared effective
by the
SEC, and if the Registration Statement is not declared effective
by the
SEC, the Flow-Through Shares may not be resold by the Subscriber
in the
United States, except pursuant to an exemption contained under the
applicable U.S. Securities Laws, which may not be available, and
if the
Registration Statement is not declared effective, the Flow-Through
Shares
remain “restricted” securities under the U.S. Securities Act and may only
be sold pursuant to an effective registration statement with respect
to
such securities, pursuant to Regulation S, if available, or other
exemption from the registration requirements of the U.S. Securities
Act
or, if such Registration Statement is declared effective by the SEC,
in
the manner provided in the Registration Statement for the resale
of such
Flow-Through Shares.
|
Page
19
|
(g)
|
The
certificates representing the Subscribed Shares will bear, as of
the
Closing Date, the following legends as required by National Instrument
45-102 - Resale of Securities and with the necessary information
inserted
and the Subscriber agrees to comply with the terms of such
legends:
|
“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1)
DAY AFTER CLOSING DATE>”
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the TSX, and the
Subscriber agrees to comply with the terms of such legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT 'GOOD DELIVERY' IN
SETTLEMENT OF TRANSACTIONS ON THE TSX.”
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the Rights
Agreement:
“UNTIL
THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW),
THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AS
SET FORTH IN A SHAREHOLDER RIGHTS PLAN AGREEMENT, DATED AS OF THE 17TH DAY
OF
JANUARY, 2007 (THE “RIGHTS AGREEMENT”), BETWEEN THE CORPORATION AND CIBC MELLON
TRUST COMPANY, AS RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY INCORPORATED
HEREIN BY REFERENCE AND A COPY OF WHICH MAY BE INSPECTED DURING NORMAL BUSINESS
HOURS AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE
TERMINATED, MAY EXPIRE, MAY BECOME VOID (IF, IN CERTAIN CASES, THEY ARE
“BENEFICIALLY OWNED” BY AN “ACQUIRING PERSON”, AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR
ANY
SUBSEQUENT HOLDER) OR MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION WILL MAIL OR ARRANGE
FOR THE MAILING OF A COPY OF THE RIGHTS AGREEMENT TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE AS SOON AS IS PRACTICABLE AFTER THE RECEIPT OF A
WRITTEN REQUEST THEREFORE.”
Page
20
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the U.S. Securities
Act:
“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933,
AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER OR A SUBSIDIARY
THEREOF; (B) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES
ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE);
OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY, FURNISH
TO
THE ISSUER OR ISSUER’S COUNSEL SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED BY THE ISSUER TO CONFIRM THAT SUCH TRANSFER
IS
BEING MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED SATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER HEREOF WILL
NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.”
Page
21
|
(h)
|
The
Underwriter and/or its counsel, directors, officers, employees, agents
and
representatives assume no responsibility or liability of any nature
whatsoever for the accuracy or adequacy of the Public Record or any
publicly available information concerning the Corporation or as to
whether
all information concerning the Corporation that is required to be
disclosed or filed by the Corporation under the Securities Laws has
been
so disclosed or filed.
|
|
(i)
|
The
Subscriber and each beneficial purchaser for whom it is acting shall
execute and file, together with the prescribed fees, all documentation
required by the applicable Securities Laws or by any legislation
or order
in force in its jurisdiction of residence or to which it may be subject,
within the time limits prescribed to permit the subscription for,
and
issuance of, the Subscribed Shares and thereafter for any subsequent
disposition thereof and agrees that it will furnish to the Corporation
such certificates, legal opinions and other documentation as may
be
required by the Corporation.
|
|
(j)
|
If
required by applicable Securities Laws or by the Corporation, the
Subscriber and each beneficial purchaser for whom it is acting will
execute, deliver and file or assist the Corporation in filing such
reports, undertakings and other documents with respect to the issue
of the
Subscribed Shares as may be required by any securities commission,
stock
exchange or other regulatory
authority.
|
|
(k)
|
The
Subscriber, and each beneficial purchaser for whom it is acting,
have been
advised to consult their own legal advisors with respect to trading
in the
Subscribed Shares and with respect to the resale restrictions imposed
by
the Securities Laws of the United States or any province or territory
in
which the Subscriber resides and other applicable securities laws,
and
acknowledges that no representation has been made respecting the
applicable hold periods imposed by the Securities Laws or other resale
restrictions applicable to such securities which restrict the ability
of
the Subscriber (or others for whom it is acting) to resell such securities
that the Subscriber (or others for whom it is acting) is solely
responsible for determining what these restrictions are and the Subscriber
is solely responsible (and neither the Corporation nor the Underwriter
is
in any way responsible) for compliance with applicable resale restrictions
and the Subscriber is aware that it (or the beneficial purchaser
for whom
it is acting) may not be able to resell such securities except in
accordance with limited exemptions under the Securities Laws and
other
applicable securities laws.
|
Page
22
|
(l)
|
The
Subscriber has not received or been provided with a prospectus, offering
memorandum (within the meaning of the Securities Laws) or any sales
or
advertising literature in connection with the Offering and the
Subscriber’s decision to subscribe for Flow-Through Shares was not based
upon, and the Subscriber has not relied upon, any verbal or written
representations as to facts made by or on behalf of the Corporation
or the
Underwriter. The Subscriber’s decision to subscribe for Flow-Through
Shares was based solely upon the Term Sheet attached hereto as Schedule
“B” and information about the Corporation which is publicly available
(any
such information having been obtained by the Subscriber without
independent investigation or verification by the
Underwriter).
|
|
(m)
|
The
Corporation and the Underwriter, and their respective counsel, are
relying
on the representations, warranties and covenants contained herein
and in
the applicable Schedules attached hereto to determine the Subscriber’s
eligibility to subscribe for Flow-Through Shares under applicable
Securities Laws and the Subscriber agrees to indemnify the Corporation,
the Underwriter and each of their respective directors and officers
against all losses (other than loss of profits), claims, costs, expenses,
damages or liabilities which any of them may suffer or incur as a
result
of or arising from reliance thereon. The Subscriber undertakes to
immediately notify the Underwriter of any change in any statement
or other
information relating to the Subscriber set forth in such applicable
Schedules that takes place prior to the Closing
Time.
|
|
(n)
|
The
Corporation and the Underwriter are relying on an exemption from
the
requirement to provide the Subscriber with a prospectus under the
Securities Laws and, as a consequence of acquiring Flow-Through Shares
pursuant to such exemption, certain protections, rights and remedies
provided by the Securities Laws, including statutory rights of rescission
and/or damages, will not be available to the
Subscriber.
|
|
(o)
|
The
Flow-Through Shares are being offered and sold in reliance on the
exemption from registration contained in Regulation S of the U.S.
Securities Act. Following the Closing, the Corporation has agreed
to
register the resale of the Flow-Through Shares under the U.S. Securities
Act pursuant to the Registration Rights
Agreement.
|
|
(p)
|
The
Subscriber, and each beneficial purchaser for whom it is acting,
is
responsible for obtaining such independent legal and tax advice as
it
considers appropriate in connection with the execution, delivery
and
performance of this Subscription Agreement and the transactions
contemplated under this Subscription Agreement, including without
limitation for the proposes of giving representations, warranties
and
covenants under this Subscription
Agreement.
|
Page
23
|
(q)
|
There
is no government or other insurance covering the Flow-Through
Shares.
|
|
(r)
|
The
Subscriber acknowledges that the Underwriter’s counsel and the
Corporation’s counsel are acting as counsel to the Underwriter and the
Corporation, respectively, and not as counsel to the
Subscriber.
|
|
(s)
|
The
Subscriber acknowledges that all costs and expenses incurred by the
Subscriber (including any fees and disbursements of any special counsel
or
other advisors retained by the Subscriber) relating to the purchase
of the
Subscribed Shares shall be borne by the
Subscriber.
|
|
(t)
|
The
Subscriber and each beneficial purchaser for whom it is acting acknowledge
that the Flow-Through Shares are speculative in nature and that there
are
risks associated with the purchase of Flow-Through Shares and the
Subscriber and each beneficial purchaser for whom it is acting has
such
knowledge, sophistication and experience in business and financial
matters
as to be capable of evaluating the merits and risks of its investment
in
the Subscribed Shares, fully understands the speculative nature of
the
Subscribed Shares and is able to bear the economic risk of loss of
its
entire investment.
|
|
6.3
|
Reliance
on Representations, Warranties, Covenants and
Acknowledgements
|
The
Subscriber acknowledges and agrees that the representations, warranties,
covenants and acknowledgements made by the Subscriber in this Subscription
Agreement are made with the intention that they may be relied upon by the
Corporation and the Underwriter in determining the Subscriber’s eligibility
(and, if applicable, the eligibility of others for whom the Subscriber is
acting) to purchase Flow-Through Shares under the Securities Laws. The
Subscriber further agrees that by accepting Flow-Through Shares, the Subscriber
shall be representing and warranting that such representations, warranties,
acknowledgements and covenants are true as at the Closing Time with the same
force and effect as if they had been made by the Subscriber at the Closing
Time
and that they shall survive the purchase by the Subscriber of Flow-Through
Shares and shall continue in full force and effect notwithstanding any
subsequent disposition by the Subscriber of any of such Flow-Through
Shares.
ARTICLE
7
SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS
|
7.1
|
Survival
of Representations, Warranties and Covenants of the
Corporation
|
The
representations, warranties and covenants of the Corporation contained in this
Subscription Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Subscriber with respect
thereto, shall continue in full force and effect for the benefit of the
Subscriber and the Underwriter.
Page
24
|
7.2
|
Survival
of Representations, Warranties and Covenants of the
Subscriber
|
The
representations, warranties and covenants of the Subscriber contained in this
Subscription Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Corporation or the
Underwriter with respect thereto, shall continue in full force and effect for
the benefit of the Corporation and the Underwriter.
ARTICLE
8
COMMISSION
|
8.1
|
Commission
to Underwriter
|
The
Subscriber understands that in connection with the Offering the Underwriter
will
receive from the Corporation (i) a corporate finance fee of $50,000 which will
be credited against cash commissions payable on Closing, and (ii) on Closing,
a
cash commission equal to 6.5% of the gross proceeds from the Offering. In
addition, the Underwriter will receive a number of compensation options
(“Compensation Options”) that is equal to 6% of the number of Flow-Through
Shares sold pursuant to the Offering, each Compensation Option being exercisable
at a price of $0.50 for a period of 18 months from the Closing Date to acquire
one Common Share. No other fee or commission is payable by the Corporation
in
connection with the completion of the Offering; however, the Corporation will
pay certain fees and expenses of the Underwriter in connection with the
Offering, as set out in the Underwriting/Agency Agreement.
ARTICLE
9
COLLECTION
OF PERSONAL INFORMATION
|
9.1
|
Collection
of Personal Information
|
By
executing this Subscription Agreement, the Subscriber hereby consents to the
collection, use and disclosure of the personal information provided herein
and
other personal information provided by the Subscriber or collected by the
Corporation or its agents as reasonably necessary in connection with the
Subscriber’s subscription for the Subscribed Shares (collectively, “personal
information”) as follows: (a) the Corporation may use personal information and
disclose personal information to intermediaries such as the Corporation’s legal
counsel and withholding and/or transfer agents for the purposes of determining
the Subscriber’s eligibility to invest in the Subscribed Shares and for managing
and administering the Subscriber’s investment in the Subscribed Shares; (b) if
the Subscriber purchased securities through a registered dealer, the Corporation
may disclose and collect such personal information relating to the Subscriber’s
holding of the Subscribed Shares to and from the dealer; (c) the Corporation
and
its agents may use the Subscriber’s social insurance number for income reporting
purposes in accordance with applicable law; (d) the Corporation, its agents
and
advisors, may each collect, use and disclose personal information for the
purposes of meeting legal, regulatory, self-regulatory, security and audit
requirements (including any applicable tax, securities, money laundering or
anti-terrorism legislation, rules or regulations) and as otherwise permitted
or
required by law, which disclosures may include disclosures to tax, securities
or
other regulatory or self-regulatory authorities in Canada and/or in foreign
jurisdictions, if applicable, in connection with the regulatory oversight
mandate of such authorities; (e) the Corporation and its agents and advisors
may
use personal information and disclose personal information to parties connected
with the proposed or actual transfer, sale, assignment, merger or amalgamation
of the Corporation or its business or assets or similar transactions, for the
purpose of permitting such parties to evaluate and/or proceed with and complete
such transaction. Purchasers, assignees and successors of the Corporation or
its
business or assets may collect, use and disclose personal information as
described in this Subscription Agreement. The Subscriber acknowledges that
the
Corporation’s agents or intermediaries may be located outside of Canada, and
personal information may be transferred and/or processed outside of Canada
for
the purposes described above, and that measures the Issuer may use to protect
personal information while handled by agents, intermediaries or other third
parties on its behalf, and personal information otherwise disclosed or
transferred outside of Canada for the purposes described above, are subject
to
legal requirements in foreign countries applicable to Issuer or such third
parties, for example lawful requirements to disclose personal information to
government authorities in those countries.
Page
25
If
the
Subscriber is resident in, or otherwise subject to the applicable securities
legislation of Ontario, the Subscriber acknowledges (i) the delivery to the
Ontario Securities Commission of the Subscriber’s full name, residential address
and telephone number, the number and type of securities purchased by the
Subscriber, the total purchase price, the exemption relied on, and the date
of
distribution, (ii) that such information is being collected indirectly by the
Ontario Securities Commission under the authority granted to it in securities
legislation, (iii) that such information is being collected for the purposes
of
the administration and enforcement of the securities legislation of Ontario,
and
(iv) that the Administrative Assistant to the Director of Corporate Finance
at
the Ontario Securities Commission, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, can be contacted to answer
questions about the Ontario Securities Commission’s indirect collection of such
information. The Subscriber hereby authorizes the indirect collection of such
information by the Ontario Securities Commission.
ARTICLE
10
MISCELLANEOUS
|
10.1
|
Further
Assurances
|
Each
of
the parties hereto upon the request of each of the other parties hereto, whether
before or after the Closing Time, shall do, execute, acknowledge and deliver
or
cause to be done, executed, acknowledged and delivered all such further acts,
deeds, documents, assignments, transfers, conveyances, powers of attorney and
assurances as may reasonably be necessary or desirable to complete the
transactions contemplated herein.
|
10.2
|
Notices
|
|
(a)
|
Any
notice, direction or other instrument required or permitted to be
given to
any party hereto shall be in writing and shall be sufficiently given
if
delivered personally, or transmitted by facsimile tested prior to
transmission to such party, as
follows:
|
|
(i)
|
in
the case of the Corporation, to:
|
Apollo
Gold Corporation
▇▇▇▇
▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
Page
26
Attention:
R. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with
a
copy to:
Fogler,
▇▇▇▇▇▇▇▇ LLP
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West
Suite
▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention:
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
|
(ii)
|
in
the case of the Subscriber, at the address specified on page 2 hereof,
with a copy to the Underwriter at:
|
▇▇▇▇▇▇▇
Securities Inc
Brookfield
Place,
▇▇▇
▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
(b)
|
Any
such notice, direction or other instrument, if delivered personally,
shall
be deemed to have been given and received on the day on which it
was
delivered, provided that if such day is not a Business Day then the
notice, direction or other instrument shall be deemed to have been
given
and received on the first Business Day next following such day and
if
transmitted by fax, shall be deemed to have been given and received
on the
day of its transmission, provided that if such day is not a Business
Day
or if it is transmitted or received after the end of normal business
hours
then the notice, direction or other instrument shall be deemed to
have
been given and received on the first Business Day next following
the day
of such transmission.
|
|
(c)
|
Any
party hereto may change its address for service from time to time
by
notice given to each of the other parties hereto in accordance with
the
foregoing provisions.
|
Page
27
|
10.3
|
Time
of the Essence
|
Time
shall be of the essence of this Subscription Agreement and every part hereof.
|
10.4
|
Costs
and Expenses
|
All
costs
and expenses (including, without limitation, the fees and disbursements of
legal
counsel) incurred in connection with this Subscription Agreement and the
transactions herein contemplated shall be paid and borne by the party incurring
such costs and expenses.
|
10.5
|
Applicable
Law
|
This
Subscription Agreement shall be construed and enforced in accordance with,
and
the rights of the parties shall be governed by, the laws of the Province of
Ontario and the laws of Canada applicable therein, without reference to any
conflicts of law rules that would impose a law of another jurisdiction. Any
and
all disputes arising under this Subscription Agreement, whether as to
interpretation, performance or otherwise, shall be subject to the non-exclusive
jurisdiction of the courts of the Province of Ontario and each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of such
province.
|
10.6
|
Entire
Agreement
|
This
Subscription Agreement, including the Schedules hereto, constitutes the entire
agreement between the parties with respect to the transactions contemplated
herein and cancels and supersedes any prior understandings, agreements,
negotiations and discussions between the parties. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements or
understandings, express or implied, between the parties hereto other than those
expressly set forth in this Subscription Agreement or in any such agreement,
certificate, affidavit, statutory declaration or other document as aforesaid.
This Subscription Agreement may not be amended or modified in any respect except
by written instrument executed by each of the parties hereto.
|
10.7
|
Counterparts
|
This
Subscription Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same Subscription Agreement. Counterparts may be
delivered either in original or faxed form and the parties adopt any signature
received by a receiving fax machine as original signatures of the
parties.
|
10.8
|
Assignment
|
This
Subscription Agreement may not be assigned by either party except with the
prior
written consent of the other parties hereto.
Page
28
|
10.9
|
Enurement
|
This
Subscription Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, successors (including
any
successor by reason of the amalgamation or merger of any party), administrators
and permitted assigns.
|
10.10
|
Language
|
The
parties hereto acknowledge and confirm that they have requested that this
Subscription Agreement as well as all notices and other documents contemplated
hereby be drawn up on the English language. Les parties aux présentes
reconnaissent et conferment qu’elles ont convenu que la présente convention
ainsi que tous ▇▇▇ ▇▇▇▇ et documents qui s’y rattachent soient rédigés dans la
langue anglaise.
Page
29
SCHEDULE
“A”
CERTIFICATE
(FOR
ACCREDITED INVESTORS RESIDENT IN CANADA)
|
TO:
|
APOLLO
GOLD CORPORATION (the “Corporation”)
|
|
AND
TO:
|
▇▇▇▇▇▇▇
SECURITIES INC. (the
“Underwriter”)
|
In
connection with the purchase of flow-through shares (“Flow-Through Shares”) of
the Corporation by the undersigned subscriber or, if applicable, the principal
on whose behalf the undersigned is purchasing as agent (the “Subscriber” for the
purposes of this Certificate), the Subscriber hereby represents, warrants,
covenants and certifies to the Corporation and the Underwriter
that:
|
1.
|
the
Subscriber is resident in a province or territory of Canada or is
subject
to the laws of a province or territory of
Canada;
|
|
2.
|
the
Subscriber is purchasing the Flow-Through Shares as principal for
its own
account or is deemed to be purchasing as principal pursuant to National
Instrument 45-106 - Prospectus and Registration Exemptions (“NI
45–106”);
|
|
3.
|
the
Subscriber is an “accredited investor” within the meaning of NI 45-106 by
virtue of satisfying one or more of the indicated criterion set out
in
Appendix “A” to this Certificate;
and
|
|
4.
|
upon
execution of this Certificate by the Subscriber, this Certificate
(including Appendix “A” hereto) shall be incorporated into and form a part
of the subscription agreement to which this Certificate is
attached.
|
|
|
|
|
Print
name of Subscriber
|
|
|
By:
|
|
|
Signature
|
|
|
|
|
|
Print
name of Signatory (if different from Subscriber)
|
|
|
|
|
|
Title
|
|
IMPORTANT:
PLEASE INITIAL ONE OR MORE OF THE ITEMS,
AS
APPLICABLE, IN APPENDIX “A” ON THE NEXT PAGE
Page
30
APPENDIX
“A”
TO
CERTIFICATE OF ACCREDITED INVESTOR
The
Subscriber hereby represents, warrants and certifies to the Corporation and
the
Underwriter that the Subscriber (or its disclosed principal) is an “accredited
investor” as defined in NI 45-106 by virtue of being: [check appropriate item(s)
below]
|
(a)
|
a
Canadian financial institution, or a Schedule III bank,
|
|
|
(b)
|
the
Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada),
|
|
|
(c)
|
a
subsidiary of any person referred to in paragraphs (a) or (b), if
the
person owns all of the voting securities of the subsidiary, except
the
voting securities required by law to be owned by directors of that
subsidiary,
|
|
|
(d)
|
a
person registered under the securities legislation of a jurisdiction
of
Canada as an adviser or dealer, other than a person registered solely
as a
limited market dealer under one or both of the Securities Act (Ontario)
or
the Securities Act (Newfoundland and Labrador),
|
|
|
(e)
|
an
individual registered or formerly registered under the securities
legislation of a jurisdiction of Canada as a representative of a
person
referred to in paragraph (d),
|
|
|
(f)
|
the
Government of Canada or a jurisdiction of Canada, or any crown
corporation, agency or wholly owned entity of the Government of Canada
or
a jurisdiction of Canada,
|
|
|
(g)
|
a
municipality, public board or commission in Canada and a metropolitan
community, school board, the Comité de gestion de la taxe scolaire de
l’île de Montréal or an intermunicipal management board in
Québec,
|
|
|
(h)
|
any
national, federal, state, provincial, territorial or municipal government
of or in any foreign jurisdiction, or any agency of that
government,
|
|
|
(i)
|
a
pension fund that is regulated by either the Office of the Superintendent
of Financial Institutions (Canada) or a pension commission or similar
regulatory authority of a jurisdiction of Canada,
|
|
|
(j)
|
an
individual who, either alone or with a spouse, beneficially owns,
directly
or indirectly, financial assets having an aggregate realizable value that
before taxes, but net of any related liabilities, exceeds
$1,000,000,
|
|
|
(k)
|
an
individual whose net income before taxes exceeded $200,000 in each
of the
2 most recent calendar years or whose net income before taxes combined
with that of a spouse exceeded $300,000 in each of the 2 most recent
calendar years and who, in either case, reasonably expects to exceed
that
net income level in the current calendar
year,
|
Page
31
|
(l)
|
an
individual who, either alone or with a spouse, has net assets of
at least
$5,000,000,
|
|
|
(m)
|
a
person, other than an individual or investment fund, that has net
assets
of at least $5,000,000 as shown on its most recently prepared financial
statements,
|
|
|
(n)
|
an
investment fund that distributes or has distributed its securities
only
to
(i)
a
person that is or was an accredited investor at the time of the
distribution,
(ii)
a
person that acquires or acquired securities in the circumstances
referred
to in sections 2.10 [Minimum amount investment] and 2.19 [Additional
investment in investment funds] of NI 45-106, or
(iii)
a
person described in paragraph (i) or (ii) that acquires or acquired
securities under section 2.18 [Investment fund reinvestment] of NI
45-106,
|
|
|
(o)
|
an
investment fund that distributes or has distributed securities under
a
prospectus in a jurisdiction of Canada for which the regulator or,
in
Quebec, the securities regulatory authority, has issued a
receipt,
|
|
|
(p)
|
a
trust company or trust corporation registered or authorized to carry
on
business under the Trust and Loan Companies Act (Canada) or under
comparable legislation in a jurisdiction of Canada or a foreign
jurisdiction, acting on behalf of a fully managed account managed
by the
trust company or trust corporation, as the case may be,
|
|
|
(q)
|
a
person acting on behalf of a fully managed account managed by that
person,
if that person is registered or authorized to carry on business as
an
adviser or the equivalent under the securities legislation of a
jurisdiction of Canada or a foreign jurisdiction,
|
|
|
(r)
|
a
registered charity under the Income Tax Act (Canada) that, in regard
to
the trade, has obtained advice from an eligibility adviser or an
adviser
registered under the securities legislation of the jurisdiction of
the
registered charity to give advice on the securities being
traded,
|
|
|
(s)
|
an
entity organized in a foreign jurisdiction that is analogous to any
of the
entities referred to in paragraphs (a) to (d) or paragraph (i) in
form and
function,
|
|
|
(t)
|
a
person in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by
law to be
owned by directors, are persons that are accredited
investors,
|
Page
32
|
(u)
|
an
investment fund that is advised by a person registered as an adviser
or a
person that is exempt from registration as an adviser,
or
|
|
|
(v)
|
a
person that is recognized or designated by the securities regulatory
authority or, except in Ontario and Quebec, the regulator as
(i) an
accredited investor, or
(ii) an
exempt purchaser in Alberta or British Columbia
|
For
the
purposes hereof:
|
(a)
|
“Canadian
financial institution” means
|
|
(i)
|
an
association governed by the Cooperative Credit Associations Act (Canada)
or a central cooperative credit society for which an order has been
made
under section 473(1) of that Act,
or
|
|
(ii)
|
a
bank, loan corporation, trust company, trust corporation, insurance
company, treasury branch, credit union, caisse populaire, financial
services cooperative, or league that, in each case, is authorized
by an
enactment of Canada or a jurisdiction of Canada to carry on business
in
Canada or a jurisdiction of Canada;
|
|
(b)
|
“control
person” has the same meaning as in securities legislation except in
Manitoba, Newfoundland and Labrador, Northwest Territories, Nova
Scotia,
Nunavut, Ontario, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Quebec where control person
means any person that holds or is one of the combination of persons
that
holds:
|
|
(i)
|
a
sufficient number of any of the securities of an issuer so as to
affect
materially the control of the issuer,
or
|
|
(ii)
|
more
than 20% of the outstanding voting securities of an issuer except
where
there is evidence showing that the holding of those securities does
not
affect materially the control of the
issuer;
|
|
(c)
|
“director”
means
|
|
(i)
|
a
member of the board of directors of a company or an individual who
performs similar functions for a company,
and
|
|
(ii)
|
with
respect to a person that is not a company, an individual who performs
functions similar to those of a director of a
company;
|
|
(d)
|
“eligibility
adviser” means
|
|
(i)
|
a
person that is registered as an investment dealer or in an equivalent
category of registration under the securities legislation of the
jurisdiction of a purchaser and authorized to give advice with respect
to
the type of security being distributed,
and
|
Page
33
|
(ii)
|
in
Saskatchewan or Manitoba, also means a lawyer who is a practicing
member
in good standing with a law society of a jurisdiction of Canada or
a
public accountant who is a member in good standing of an institute
or
association of chartered accountants, certified general accountants
or
certified management accountants in a jurisdiction of Canada provided
that
the lawyer or public accountant must
not
|
|
A.
|
have
a professional, business or personal relationship with the issuer,
or any
of its directors, executive officers, founders, or control persons,
and
|
|
B.
|
have
acted for or been retained personally or otherwise as an employee,
executive officer, director, associate or partner of a person that
has
acted for or been retained by the issuer or any of its directors,
executive officers, founders or control persons within the previous
12
months;
|
|
(e)
|
“EVCC”
means an employee venture capital corporation that does not have
a
restricted constitution and is registered under Part 2 of the Employee
Investment Act (British Columbia) and whose business objective is
making
multiple investments;
|
|
(f)
|
“executive
officer” means, for an issuer, an individual who
is
|
|
(i)
|
a
chair, vice-chair or president,
|
|
(ii)
|
a
vice-president in charge of a principal business unit, division or
function including sales, finance or
production,
|
|
(iii)
|
an
officer of the issuer or any of its subsidiaries and who performs
a
policy-making function in respect of the issuer,
or
|
|
(iv)
|
performing
a policy-making function in respect of the
issuer;
|
|
(g)
|
“financial
assets” means
|
|
(i)
|
cash,
|
|
(ii)
|
securities,
or
|
|
(iii)
|
a
contract of insurance, a deposit or an evidence of a deposit that
is not a
security for the purposes of securities
legislation;
|
|
(h)
|
“foreign
jurisdiction” means a country other than Canada or a political subdivision
of a country other than Canada;
|
Page
34
|
(i)
|
“founder”
means, in respect of an issuer, a person
who,
|
|
(i)
|
acting
alone, in conjunction, or in concert with one or more persons, directly
or
indirectly, takes the initiative in founding, organizing or substantially
reorganizing the business of the issuer,
and
|
|
(ii)
|
at
the time of the trade is actively involved in the business of the
issuer;
|
|
(j)
|
“fully
managed account” means an account of a client for which a person makes the
investment decisions if that person has full discretion to trade
in
securities for the account without requiring the client’s express consent
to a transaction;
|
|
(k)
|
“jurisdiction”
means a province or territory of Canada except when used in the term
foreign jurisdiction;
|
|
(l)
|
“investment
fund” means a mutual fund or a non-redeemable investment fund, and, for
greater certainty in British Columbia, includes an EVCC and
VCC;
|
|
(m)
|
“local
jurisdiction” means the jurisdiction in which the Canadian securities
regulatory authority is situate;
|
|
(n)
|
“non-redeemable
investment fund” means an issuer,
|
|
(i)
|
whose
primary purpose is to invest money provided by its
securityholders,
|
|
(ii)
|
that
does not invest,
|
|
A.
|
for
the purpose of exercising or seeking to exercise control of an issuer,
other than an issuer that is a mutual fund or a non-redeemable investment
fund, or
|
|
B.
|
for
the purpose of being actively involved in the management of any issuer,
other than an issuer that is a mutual fund or a non-redeemable investment
fund, and
|
|
(iii)
|
that
is not a mutual fund;
|
|
(o)
|
“person”
includes
|
|
(i)
|
an
individual,
|
|
(ii)
|
a
corporation,
|
|
(iii)
|
a
partnership, trust, fund and an association, syndicate, organization
or
other organized group of persons, whether incorporated or not,
and
|
|
(iv)
|
an
individual or other person in that person’s capacity as a trustee,
executor, administrator or personal or other legal
representative;
|
Page
35
|
(p)
|
“regulator”
means, for the local jurisdiction, the Executive Director as defined
under
securities legislation of the local
jurisdiction;
|
|
(q)
|
“related
liabilities” means
|
|
(i)
|
liabilities
incurred or assumed for the purpose of financing the acquisition
or
ownership of financial assets, or
|
|
(ii)
|
liabilities
that are secured by financial
assets;
|
|
(iii)
|
|
(r)
|
“Schedule
III bank” means as authorized foreign bank named in Schedule III of the
Bank Act (Canada);
|
|
(s)
|
“spouse”
means, an individual who,
|
|
(i)
|
is
married to another individual and is not living separate and apart
within
the meaning of the Divorce Act (Canada), from the other
individual,
|
|
(ii)
|
is
living with another individual in a marriage-like relationship, including
a marriage-like relationship between individuals of the same gender,
or
|
|
(iii)
|
in
Alberta, is an individual referred to in paragraph (a) or (b), or
is an
adult interdependent partner within the meaning of the Adult
Interdependent Relationships Act
(Alberta);
|
|
(t)
|
“subsidiary”
means an issuer that is controlled directly or indirectly by another
issuer and includes a subsidiary of that
subsidiary;
|
|
(u)
|
“VCC”
means a venture capital corporation registered under Part 3 of the
Small
Business Venture Capital Act (British Columbia) whose business objective
is making multiple investments.
|
All
monetary references are in Canadian Dollars.
Page
36
SCHEDULE
“B”
APOLLO
GOLD CORPORATION
TERM
SHEET
Summary
of Principal Terms of an Offering of Flow Through Shares
|
ISSUER:
|
Apollo
Gold Corporation (“Apollo” or the “Company”).
|
|
|
AMOUNT:
|
C$7,000,000.
|
|
|
OFFERING:
|
14,000,000
flow-through shares for purposes of the Income Tax Act (Canada) (the
“Flow
Through Shares”) on a bought basis.
|
|
|
PRICE:
|
Each
Flow Through Share will be priced at C$0.50.
|
|
|
OVER-ALLOTMENT
|
At
the option of the Underwriter, the Offering may be increased by up
to
C$1,500,000 (3,000,000 Flow Through Shares), offered on a best efforts
basis on the same terms and conditions by the Underwriter giving
notice to
the Company on or before the Closing Date.
|
|
|
TRANSACTION
STRUCTURE:
|
Private
placement of Flow Through Shares.
|
|
|
QUALIFICATION:
|
The
Flow Through Shares shall be subject to the four-month hold period
set out
in National Instrument 45-102.
|
|
|
QUALIFYING
AND SELLING
JURISDICTIONS:
|
Ontario,
British Columbia, Alberta, and/or in other Canadian jurisdictions
as may
be agreed between the Company and the Underwriter (collectively,
the
"Qualifying Jurisdictions").
|
|
|
CLOSING:
|
August
21, 2008 or such other date as agreed between the Company and the
Underwriter (the "Closing Date").
|
|
|
UNDERWRITER:
|
▇▇▇▇▇▇▇
Securities Inc.
|
|
|
MINIMUM
ORDER:
|
No
minimum order to Accredited Investors in Alberta, British Columbia,
and
Ontario.
|
|
|
USE
OF PROCEEDS:
|
Gross
proceeds will be used for pre-stripping the Black Fox open pit and
to
incur Canadian Exploration Expenses.
|
|
|
FLOW-THROUGH
EXPENDITURES:
|
The
Company will use the proceeds from the sale of the Flow-Through Shares
to
incur flow-through expenditures which qualify as 100% Canadian Exploration
Expense (“CEE”), and will renounce said flow-through expenditures to the
investors for the taxation year ending December 31,
2008.
|
Page
37
|
TSX
AND AMEX LISTING:
|
The
Flow Through Shares shall be listed on the Toronto Stock Exchange
and the
American Stock Exchange which listing shall be conditionally approved
prior to the Closing Date.
|
|
|
ELIGIBILITY:
|
Eligible
under the usual statutes and for RRSPs, RRIFs , DPSPs, RESPs and
RDSPs,
provided that the shares are listed on a designated stock
exchange.
|
|
|
U.S.
NOTICE:
|
The
sale of the Flow Through Shares will not be registered under the
United
States Securities Act of 1933, as amended (the “Securities Act”).
Following the closing of the offering of the Flow Through Shares,
the
Company will register the resale of the Flow Through Shares under
the
Securities Act on Form S-3 pursuant to a registration rights
agreement.
|
Page
38