SUBSCRIPTION AGREEMENT FOR FLOW-THROUGH SHARES BRIGUS GOLD CORP. THE FLOW- THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE PURCHASED PURSUANT TO AVAILABLE EXEMPTIONS UNDER APPLICABLE SECURITIES LEGISLATION
EXHIBIT
4.2
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
BRIGUS
GOLD CORP.
THE
FLOW-THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE
PURCHASED
PURSUANT TO AVAILABLE EXEMPTIONS UNDER
APPLICABLE
SECURITIES LEGISLATION
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The
following items in this Subscription Agreement have been completed (please
initial each applicable box):
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All Purchasers
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All
Purchaser Information in the boxes on page
2.
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Certificate
(for Accredited Investors Resident in Canada) attached as Schedule A on
pages 23-28.
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Registration
Rights Agreement attached as Schedule C on pages 31-47.
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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 July 26, 2010, to ▇▇▇▇▇▇▇ Securities Inc. at
Suite ▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (Tel: ▇▇▇-▇▇▇-▇▇▇▇, Facsimile:
604-697-7498).
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
AND
TO: ▇▇▇▇▇▇▇
SECURITIES INC., CORMARK SECURITIES INC. AND ▇▇▇▇▇ SECURITIES LIMITED (THE
"AGENTS")
The
undersigned (the "Subscriber") hereby
irrevocably subscribes for and offers to purchase from Brigus Gold Corp. (the
"Corporation") that
number of Flow-Through Shares (as hereinafter defined) specified below at a
price of $1.40 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 Agents, 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 Flow-Through Shares (the "Offering") of up to
$12,000,000. The Corporation has also granted an option to the Agents
to increase the Offering by up to $2,000,000 worth of Flow-Through Shares,
offered on the same terms and conditions by the Agents giving notice of exercise
of the option to the Corporation at any time prior to the Closing Date (as
hereinafter defined).
SUBSCRIPTION
AND SUBSCRIBER INFORMATION
Please
print ALL
information (other than signatures), as applicable, in the space provided
below
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(Name
of Subscriber): ____________________________
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Number
of Flow-Through Shares: ______________ x $1.40
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Account
Reference (if applicable): _________________
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=
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Aggregate
Subscription Price: ______________________
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By:
__________________________________________
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(the
"Subscription
Price")
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Authorized
Signature
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(Official
Capacity or Title – if the Subscriber is not an
individual)
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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
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(Telephone Number) (Email
Address)
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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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(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 ¨ No ¨
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2
INSTRUCTIONS FOR
SUBSCRIBERS
The
Subscriber must:
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(1)
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Read
this Subscription Agreement;
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(2)
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Complete
and execute the face page of this Subscription
Agreement;
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(3)
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Read
and complete the Certificate set out in Schedule
"A";
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(4)
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Read
and complete the Registration Rights Agreement set out in Schedule
"C";
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(5)
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Make
payment for the Subscribed Shares as required by the Terms and Conditions;
and
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(5)
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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 Agents in the Agency Agreement (as defined herein), which are
incorporated by reference in this Subscription Agreement, are true and correct
as of the date of the Agency Agreement (except as waived by the Agents); and
(iii) agrees that the Subscriber is entitled to rely, subject to the limitations
and other terms of the Agency Agreement, on the representations and warranties
made by the Corporation to the Agents (except as waived by the Agents) and on
the covenants made by the Corporation (except as waived or modified by the
Agents) in the Agency Agreement, each of which are incorporated by reference in
this Subscription Agreement.
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Per:
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Date:
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Authorized
Signing Officer
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3
TERMS
AND CONDITIONS OF SUBSCRIPTION FOR
FLOW-THROUGH
SHARES
ARTICLE
1 INTERPRETATION
1.1 Definitions
(a) 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).
"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 Canadian
exploration expense as described in paragraphs (f) or (g) of the definition of
Canadian exploration expense in subsection 66.1(6) of the Tax Act or that would
be described in paragraph (h) of such definition if the reference therein to
"paragraphs (a) to (d) and (f) to (g.1)" were a reference to paragraphs (f) and
(g), excluding expenses that are "Canadian
exploration and development overhead expenses" (as defined in the regulations to
the Tax Act for
purposes of paragraph 66(12.6)(b) of the Tax Act) of the Corporation or amounts
which constitute specified expenses for seismic data described in paragraph
66(12.6)(b.1) of the Tax Act or any expenses for
prepaid services or rent that do not qualify as outlays and expenses for the
period as described in the definition of "expense" in subsection
66(15).
"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 Brigus Gold
Corp. and includes any successor corporation to or of the
Corporation.
"CRA" means the Canada Revenue
Agency.
"distribution" shall have the
meaning ascribed to such term in the Securities Act
(Ontario).
"▇▇▇▇▇" means the SEC's
Electronic Data, Gathering, Analysis and Retrieval System, or any successor
system thereto.
"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).
"NYSE AMEX" means NYSE Amex
Equities.
"NYSE AMEX Approval" means the
approval of the listing by the NYSE AMEX of the Flow-Through Shares sold in the
Offering and the Common Shares issuable upon exercise of the Compensation
Options.
"Offered Securities" shall have
the meaning ascribed to such term on the face page of this Subscription
Agreement.
"Offering" shall have the
meaning ascribed to such term on the face page of this Subscription
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 and
under the applicable provision of the Quebec Tax Act as described in paragraph
1.1(b) hereof 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 and under the applicable provision of the Quebec Tax Act as described in
paragraph 1.1(b) hereof 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.
"Proposed Amendments" means
all proposals to amend the Tax Act and regulations thereto released by or on
behalf of the Minister of Finance (Canada) prior to the date of this
Subscription Agreement.
"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 are available on SEDAR
or ▇▇▇▇▇.
"Quebec Tax Act" means the
Taxation Act (Québec)
and all rules and regulations made pursuant thereto, all as may be amended,
re-enacted or replaced from time to time and any proposed amendments thereto
announced publicly from time to time.
"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 sold in the Offering 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, 2010
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.
"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 Securities Regulators having application thereto, the securities laws of the
United States and the states thereof, and the respective regulations and rules
made and forms prescribed thereunder together with all applicable published
policy statements and blanket orders and rulings of the applicable securities
commissions in Canada, the SEC and all other applicable Securities Regulators
including the rules of the TSX and NYSE AMEX.
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"Securities Regulators" means the securities
commissions or other securities regulatory authorities of the United States, any
state thereof 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
each of the provinces of Canada.
"Subscriber" means the
subscriber for Flow-Through Shares as set out on the face page 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 the face page 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 the face page 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, 2011.
"TSX" means the Toronto Stock
Exchange.
"TSX Approval" means the
conditional approval of the Offering by the TSX.
"Agents" means, collectively,
▇▇▇▇▇▇▇ Securities Inc., Cormark Securities Inc. and ▇▇▇▇▇ Securities
Limited.
"Agency Agreement" means the
agency agreement to be entered into between the Agents 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.
(b) Any
reference to a word or term defined in the Tax Act shall include, for purposes
of Québec income taxation, a reference to the equivalent word or term, where
applicable, defined in the Quebec Tax Act. Any reference to the Tax
Act or a provision thereof shall include, for purposes of Québec income
taxation, a reference to the Quebec Tax Act or the equivalent provision thereof,
where applicable. Any reference to a filing or similar requirement
imposed under the Tax Act shall include, for purposes of Québec income taxation,
a reference to the equivalent filing or similar requirement, where applicable,
under the Quebec Tax Act, provided that, if no filing or similar requirement is
provided under the Quebec Tax Act, a copy of any material filed under the Tax
Act shall be filed with the Ministère du Revenu du Québec.
3
1.2 Gender
and Number
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.
1.3 Currency
Unless
otherwise specified, all dollar amounts in this Subscription Agreement,
including the symbol "$", are expressed in Canadian dollars.
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
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:
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Schedule
"A"
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Certificate
of Accredited Investor
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Schedule
"B"
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Term
Sheet
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Schedule
"C"
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Registration
Rights Agreement
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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 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
Agents' 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.
4
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
(b) renounce
Resource Expenses equal to the Subscription Price to the Subscriber with an
effective date of renunciation no later than December 31, 2010.
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 Agents
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.
3.4 Payment
The
Subscriber shall deliver the aggregate amount payable in respect of the
Subscribed Shares to the Agents 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." or by wire transfer or other
arrangements acceptable to the Agents. Such funds shall be held in escrow
(without interest) by the Agents pending the Closing.
ARTICLE
4 CLOSING
4.1 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 Canadian counsel, at 9:00 a.m. (Toronto time) (the "Closing Time") on July 29,
2010 or such other place or date or time as the Corporation and the Agents 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 Agency
Agreement have been complied with to the satisfaction of the Agents, or waived
by the Agents, the Agents shall deliver to the Corporation completed
Subscription Agreements from the Subscribers (or, if the Agents does not have
substituted purchasers for any portion of the Offering, from the Agents) and
payment of the Subscription Price against delivery by the Corporation of
certificates representing the Subscribed Shares and such other documentation as
may be required pursuant to the Subscription Agreement and the Agency
Agreement.
If, prior
to the Closing Time, the terms and conditions contained in this Subscription
Agreement and the Agency Agreement have not been complied with to the
satisfaction of the Agents, or waived by it (other than delivery by the
Corporation to the Subscriber of a certificate representing the Subscribed
Shares), the Agents, the Corporation and the Subscriber will have no further
obligations under this Subscription Agreement.
5
4.2 Conditions
of Closing
The
completion of the Offering is conditional upon, among other things, the
Corporation obtaining TSX Approval and NYSE AMEX Approval prior to the Closing
Date and satisfactory due diligence by the Agents in respect of the business and
affairs of the Corporation.
The
Subscriber acknowledges and agrees that as the sale of the Flow-Through Shares
will not be qualified by a prospectus in Canada or registered in the United
States, such sale and issuance is subject to the condition that the Subscriber
return to the Corporation and/or the Agents all documentation required by the
Securities Laws. The Subscriber acknowledges and agrees that the
Agents 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:
(a) unless
other arrangements acceptable to the Agents have been made, payment by the
Subscriber of the Subscription Price as set out in Section 3.3;
(b) the
Subscriber having properly completed, signed and delivered this Subscription
Agreement to:
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▇▇▇▇▇▇▇
Securities Inc.
▇▇▇▇▇
▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇ ▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
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(c) the
Subscriber having properly completed, signed and delivered Schedule "A"
hereto.
4.3 Authorization
of the Agents
The
Subscriber irrevocably authorizes the Agents, in their discretion, to act as the
Subscriber's representative at the Closing, and hereby appoints the Agents, with
full power of substitution, as its true and lawful attorney with full power and
authority in the Subscriber's place and stead:
(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
Agency Agreement;
(b) 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 Agency Agreement or any ancillary or related
document; and
(c) to
terminate this Subscription Agreement if any condition precedent is not
satisfied, in such manner and on such terms and conditions as the Agents in
their sole discretion may determine.
The
Subscriber acknowledges and agrees that the Agents 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 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.
6
ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION
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 Agents as set forth in the
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 continue in full
force and effect for the benefit of the Subscriber in accordance with the Agency
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 the Proposed Amendments 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.
(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.
(c) 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, 2010, 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.
(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, 2011 with an effective date no later than December 31, 2010, pursuant
to subsections 66(12.6) and 66(12.66) of the Tax Act, Resource Expenses incurred
or to be incurred on or before the Termination Date in an amount equal to the
Subscription Price.
(e) The
Corporation shall deliver to the Subscriber, on or before February 28, 2011, 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, 2010, such delivery constituting
the authorization of the Corporation to the Subscriber to file such Prescribed
Forms with the relevant taxation authorities.
(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
7
(v) will
not be subject to any reduction under subsection 66(12.73) of the Tax
Act.
(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 shall 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, 2011, 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, and, if applicable, with the appropriate
authorities in the Province of Québec, within the time prescribed by subsection
66(12.68) of the Tax Act and the applicable provisions of the Quebec Tax Act (i)
the forms prescribed for the purposes of such legislation, together with a copy
of this Subscription Agreement 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 other than as disclosed in the Public Record.
(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, 2010.
(o) 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.
(p) 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.
8
5.2 Indemnification
If the
Corporation does not incur and renounce to the Subscriber, effective on or
before December 31, 2010, 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 date the amount is determined, 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 pursuant to the Proposed
Amendments) 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 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 pursuant to the Proposed
Amendments) payable under the Tax Act (and under any corresponding provincial
legislation) by the Indemnified Person as a consequence of such
reduction. This indemnity is in addition to, and not in
derogation of, any rights of action or recourse that the Subscriber may have
against the Corporation. For certainty, the foregoing indemnity shall have no
force or effect and the Subscriber shall not have any recourse or rights of
action to the extent that such indemnity, recourse or rights of action would
otherwise cause the Flow-Through Shares to be “prescribed shares” within the
meaning of section 6202.1 of the regulations to the Tax Act.
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.
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 Agents as follows as at the date hereof
and as at the Closing Time and acknowledges that the Corporation and the Agents,
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 the face page of this Subscription Agreement. The address
set forth on the face page 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.
9
(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 another 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.
(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.
(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 Agents 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 Agents may be required to
disclose.
10
(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 Agents (and any group of investment dealers managed by the Agents 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 Agents in connection with this subscription for the Subscribed Shares,
the Subscriber covenants to indemnify and hold harmless the Corporation and the
Agents with respect thereto and with respect to all costs reasonably incurred in
the defence thereof.
(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.
11
(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.
(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 Offering will be
$12,000,000, and may be increased to $14,000,000 at the option of the
Agents.
(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
United States and the Securities Laws of 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 Agents are 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 use its commercially reasonable efforts to
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, except pursuant to an exemption contained under the applicable
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 or another exemption from the registration requirements of the U.S.
Securities Act.
12
(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
Plan:
"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".
13
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 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. "
(h) The
Agents and/or their 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, any state thereof 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 to find out what these
restrictions are and the Subscriber is solely responsible (and neither the
Corporation nor the Agents are 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.
14
(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 Agents. 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
Agents).
(m) The
Corporation and the Agents, 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 Agents 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 Agents 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 Agents 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.
(q) There
is no government or other insurance covering the Flow-Through
Shares.
(r) The
Subscriber acknowledges that the Agents' counsel and the Corporation's counsel
are acting as counsel to the Agents 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.
(u) The
Subscriber has evaluated the risks involved in investing in the Common Shares
and has determined that the Common Shares are a suitable investment for the
Subscriber. Specifically, the aggregate amount of the investments the
Subscriber has in, and the Subscriber's commitments to, all similar investments
that are illiquid is reasonable in relation to the Subscriber's net worth, both
before and after the subscription for and purchase of the Common Shares pursuant
to this Agreement.
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(v) The
Subscriber represents and warrants further that the Subscriber has no contract,
understanding, agreement or arrangement with any Person to sell or transfer or
pledge to such Person or anyone else any of the Common Shares for which the
Subscriber hereby subscribes (in whole or in part); and the Subscriber
represents and warrants that the Subscriber has no plans to enter into any such
contract, undertaking, agreement or arrangement.
(w) The
Subscriber acknowledges that it has been furnished with such documents,
materials and information as the Subscriber deems necessary or appropriate for
evaluating an investment in the Company. The Subscriber further
acknowledges that it has had the opportunity to ask questions of, and receive
answers from, the directors and officers of the Company and the Agents,
concerning the terms and conditions of the Common Shares and the
Offering.
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 Agents 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 Agents.
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
Agents with respect thereto, shall continue in full force and effect for the
benefit of the Corporation and the Agents.
ARTICLE
8 COMMISSION
8.1 Commission
to Agents
The
Subscriber understands that in connection with the Offering the Agents will
receive from the Corporation, on Closing, a cash commission equal to 6.0% of the
gross proceeds from the Offering. In addition, the Agents will
receive a number of compensation options ("Compensation Options") that is
equal to 7% of the number of Offered Securities sold pursuant to the Offering,
each Compensation Option being exercisable at a price of $1.40 for a period of
24 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 Agents in connection with the Offering, as set out in the Agency
Agreement.
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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.
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.
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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:
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention: President
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy to:
Fogler,
▇▇▇▇▇▇▇▇ LLP
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ West
Suite
▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇
▇▇▇
Attention: G.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: 416-941-8852
(ii) in
the case of the Subscriber, at the address specified on the face page hereof,
with a copy to the Agents 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.
10.3 Time
of the Essence
Time
shall be of the essence of this Subscription Agreement and every part
hereof.
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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 internal 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.
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.
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