EXHIBIT 10.26
100
THE SECURITIES ACQUIRED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS UNLESS THE SECURITIES ARE REGISTERED UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ATLAS SUBSCRIPTION AGREEMENT
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A completed and originally executed copy of this Subscription Agreement along
with the Subscription Funds must be delivered by no later than 12:00 noon two
days before the Closing to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners Inc. at either of the
following addresses:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners Inc.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ P.O. Box 10111
Toronto, Ontario ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ V7Y 1C6
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
================================================================
TO: Dakota Mining Corporation
AND TO: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Partners Inc.
Subscription. THE UNDERSIGNED (THE "PURCHASER") HEREBY TENDERS TO DAKOTA
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MINING CORPORATION (THE "COMPANY") THIS SUBSCRIPTION OFFER WHICH, UPON
ACCEPTANCE BY THE COMPANY, WILL CONSTITUTE AN AGREEMENT (THE "SUBSCRIPTION
AGREEMENT") OF THE PURCHASER TO SUBSCRIBE FOR, TAKE UP, PURCHASE AND PAY FOR,
AND, ON THE PART OF THE COMPANY, TO ISSUE AND SELL TO THE PURCHASER, THE NUMBER
OF SPECIAL WARRANTS OF THE COMPANY SET OUT ON PAGE 20 HEREOF (THE "PURCHASER'S
SPECIAL WARRANTS") AT THE PRICE (THE "PURCHASE PRICE") OF U.S. $1.24 PER
SPECIAL WARRANT , ALL ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN
THIS SUBSCRIPTION AGREEMENT.
101
Private Placement. THE PURCHASER ACKNOWLEDGES THAT THE PURCHASER'S SPECIAL
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WARRANTS WILL BE ISSUED IN CONNECTION WITH THE CREATION, ISSUE AND SALE IN
TRANCHES, FROM TIME TO TIME, OF A MINIMUM OF 4,838,710 AND A MAXIMUM OF
6,451,613 SPECIAL WARRANTS OF THE COMPANY TO BE CREATED IN TWO SERIES AND TO BE
SOLD BY THE COMPANY BY PRIVATE PLACEMENT PURSUANT TO AN AGREEMENT (THE "AGENCY
AGREEMENT") DATED AS OF FEBRUARY 10, 1995 BETWEEN THE COMPANY AND ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & PARTNERS INC. (THE "AGENT") AND THAT THE DEFINITIVE TERMS AND
CONDITIONS OF THE SPECIAL WARRANTS WILL BE SET FORTH IN THE SPECIAL WARRANT
INDENTURE REFERRED TO IN SECTION 4 BELOW.
Certain Definitions. AS USED IN THIS SUBSCRIPTION AGREEMENT, UNLESS THE
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CONTEXT OTHERWISE REQUIRES:
"APPLICABLE CLOSING DATE" has the meaning attributed to such term in
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section 5 hereto;
"APPROVAL DATE" means the day on which Shareholder Approval is
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received;
"BUSINESS DAY" means a day which is not a Saturday, a Sunday or a
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statutory holiday in the Provinces of British Columbia or
Ontario;
"CLOSING" means the completion of the issue and sale by the Company
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and the purchase by the Purchasers of any tranche of
Special Warrants pursuant to the Agency Agreement and the
Subscription Agreements on any Applicable Closing Date;
"CLOSING TIME" means 7:30 a.m. (Vancouver time) on any Applicable
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Closing Date as the Company and the Agent may agree;
"COMMON SHARES" means common shares without par value in the capital
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of the Company;
"FINAL PROSPECTUS" means a final prospectus of the Company relating to
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the distribution of the Underlying Shares and, unless the
context otherwise requires, includes any amendment or
supplement thereto;
"FIRST EXPIRY TIME" means 4:30 p.m. (Vancouver time) on the earlier of
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(i) the sixth business day after the Qualification Date and
(ii) June 30, 1995;
"INITIAL CLOSING DATE" means March 9, 1995 or such other date as the
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Company and the Agent may agree pursuant to the Agency
Agreement on which date the first tranche of Special
Warrants, which may be comprised of Series A Special
102
Warrants only or Series A Special Warrants and Series B
Special Warrants, may be issued and sold to Purchasers;
"1993 ANNUAL REPORT" means the 1993 Annual Report of the Company
------------------
mailed to its shareholders, including the consolidated
financial statements of the Company, the notes thereto and
the auditors report thereon included therein;
"1994 PROSPECTUS" means the prospectus of the Company dated June 21,
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1994 qualifying the distribution of 6,000,000 Common Shares
on exercise of 6,000,000 previously distributed Special
Warrants;
"PRELIMINARY PROSPECTUS" means a preliminary prospectus of the Company
----------------------
relating to the distribution of the Underlying Shares and,
unless the context otherwise requires, includes any
amendment or supplement thereto;
"PROSPECTUSES" means the Preliminary Prospectus and the Final
------------
Prospectus;
"QUALIFICATION DATE" means the day on which a receipt is issued for
------------------
the Final Prospectus by the last of the Securities
Commissions to issue a receipt for the Final Prospectus;
"QUALIFYING JURISDICTIONS" means the Provinces of British Columbia and
------------------------
Ontario and such other provinces of Canada in which any of
the Purchasers who enter into Subscription Agreements prior
to any Closing are resident;
"REDEMPTION DATE" means July 31, 1995;
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"REGULATION D" means Regulation D adopted by the SEC pursuant to the
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U.S Securities Act;
"REGULATION S" means Regulation S adopted by the SEC pursuant to the
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U.S Securities Act;
"SEC" means the United States Securities and Exchange Commission;
---
"SECOND EXPIRY TIME" means 4:30 p.m. (Vancouver time) on the earlier
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of (i) the sixth business day after the Qualification Date
and (ii) the Redemption Date;
"SECURITIES COMMISSIONS" means, collectively, the securities
----------------------
commission or other securities regulatory authority in each
of the Qualifying Jurisdictions;
"SERIES A SPECIAL WARRANTS" means the first series of Special Warrants
-------------------------
created and authorized for issuance under the Special
Warrant Indenture which series may comprise of no more than
5,340,027 Special Warrants;
103
"SERIES B SPECIAL WARRANTS" means the second series of Special
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Warrants created and authorized for issuance under the
Special Warrant Indenture which series may comprise of no
more than 1,111,586 Special Warrants;
"SHAREHOLDER APPROVAL" has the meaning set out in section 4(e) hereof;
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"SPECIAL WARRANTS" means up to 6,451,613 Special Warrants comprised of
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Series A Special Warrants and Series B Special Warrants of
the Company to be created and issued pursuant to the Special
Warrant Indenture and to be sold by the Company pursuant to
the Agency Agreement;
"SPECIAL WARRANT INDENTURE" has the meaning attributed thereto in
-------------------------
section 4 hereof;
"STOCK EXCHANGES" means The Toronto Stock Exchange and the American
---------------
Stock Exchange;
"SUBSCRIPTION AGREEMENTS" means the subscription agreements or
-----------------------
purchase agreements, including this Subscription Agreement,
to be entered into between the Purchasers and the Company in
respect of the purchase and sale of the Special Warrants;
"SUBSEQUENT CLOSING DATES" means the dates after the Initial Closing
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Date on which the closing of the purchase and sale of any
tranches of Special Warrants shall take place as determined
by the Agent on two business days' notice to the Company
and, in no event, shall such dates be later than March 22,
1995;
"TRUSTEE" means Montreal Trust Company of Canada, as trustee under
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the Special Warrant Indenture;
"UNDERLYING SHARES" means the Common Shares from time to time issuable
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upon the exercise or deemed exercise of the Special
Warrants;
"UNITED STATES" means the United States of America, its territories
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and possessions, any state of the United States and the
District of Columbia;
"U.S. PERSON" and "U.S. PERSON" have the meaning given to such terms
----------- -----------
in Regulation S; and
"U.S. SECURITIES ACT" means the United States Securities Act of 1933,
-------------------
as amended.
104
Special Warrants - Series. THE PURCHASER UNDERSTANDS AND ACKNOWLEDGES THAT
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THE SPECIAL WARRANTS WILL BE CREATED AND ISSUED IN TWO SERIES, THE FIRST SUCH
SERIES TO BE COMPRISED OF NOT MORE THAN 5,340,027 SPECIAL WARRANTS AND TO BE
DESIGNATED THE "SERIES A SPECIAL WARRANTS", AND THE SECOND SUCH SERIES TO BE
COMPRISED OF NOT MORE THAN 1,111,586 SPECIAL WARRANTS AND TO BE DESIGNATED THE
"SERIES B SPECIAL WARRANTS". THE SPECIAL WARRANTS MAY BE ISSUED IN TRANCHES OF
ANY NUMBER OF SPECIAL WARRANTS PROVIDED THAT NO SERIES B SPECIAL WARRANTS SHALL
BE ISSUED UNTIL ALL SERIES A SPECIAL WARRANTS HAVE BEEN ISSUED AND PROVIDED
FURTHER THAT THE AGGREGATE NUMBER OF SERIES A SPECIAL WARRANTS AND SERIES B
SPECIAL WARRANTS TOGETHER SHALL NOT EXCEED 6,451,613. THE PURCHASER FURTHER
UNDERSTANDS AND ACKNOWLEDGES THAT ALL SPECIAL WARRANTS WILL BE ISSUED UNDER AND
GOVERNED BY A SPECIAL WARRANT INDENTURE (THE "SPECIAL WARRANT INDENTURE") TO BE
DATED AS OF THE INITIAL CLOSING DATE AND MADE BETWEEN THE COMPANY AND THE
TRUSTEE, AS TRUSTEE THEREUNDER, AND TO CONTAIN PROVISIONS TO THE FOLLOWING
EFFECT:
RIGHT TO COMMON SHARES. Each Special Warrant will entitle the holder
----------------------
thereof, upon the exercise or deemed exercise thereof and
without payment of any additional consideration, to be
issued one Common Share.
EXERCISE. Each holder of:
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Series A Special Warrants will be entitled to exercise his Series A
Special Warrants during the period commencing on
the Applicable Closing Date and ending at the
First Expiry Time; and
Series B Special Warrants will be entitled to exercise his Series B
Special Warrants during the period commencing on
the Approval Date and ending at the Second Expiry
Time.
DEEMED EXERCISE. If:
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any Series A Special Warrants have not been exercised prior to the
First Expiry Time such Series A Special Warrants
will be deemed to have been exercised immediately
prior to the First Expiry Time;
the Approval Date occurs on or before June 30, 1995, any Series B
Special Warrants not exercised prior to the First
Expiry Time will be deemed to have been exercised
immediately prior to the First Expiry Time; and
the Approval Date occurs after June 30, 1995, any Series B Special
Warrants not exercised prior to the Second Expiry
Time will be deemed to have been exercised
immediately prior to the Second Expiry Time;
105
(without any further action on the part of the holder thereof or the
Company) whether or not the Qualification Date has occurred and
subject to applicable securities laws.
QUALIFICATION OF UNDERLYING SHARES. The Company will, as soon as
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practicable after the Initial Closing Date, file a
Preliminary Prospectus with and thereafter use its
reasonable best efforts to expeditiously obtain before June
30, 1995 receipts for a Final Prospectus from, the
Securities Commissions in the Qualifying Jurisdictions to
qualify the distribution of the Underlying Shares to
Purchasers.
SHAREHOLDER APPROVAL. If any Series B Special Warrants are issued to
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Purchasers, the Company will call a special meeting of its
shareholders and use its reasonable best efforts to obtain
the approval ("Shareholder Approval") of a majority of such
shareholders for the issuance of at least the number of
Underlying Shares relating to the Series B Special Warrants
so issued.
NOTICES. Upon the occurrence of:
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the Qualification Date the Company will forthwith, and in any event
not later than the second business day thereafter,
give written notice thereof to the Trustee and to
the holders of Special Warrants;
the Approval Date the Company will forthwith, and in any event not
later than the second business day thereafter,
give written notice thereof to the Trustee and to
holders of Series B Special Warrants.
OTHER PROVISIONS. The provisions of the Special Warrant Indenture and
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the attributes and characteristics of the Special Warrants
provided for therein shall be substantially as described
herein, with such changes as the Agent, the Purchaser and
the Company may agree to, and otherwise the Special Warrant
Indenture shall be in such form and contain such terms and
provisions as are satisfactory to the Company and the Agent,
acting reasonably.
Payment and Delivery. THE AGENT SHALL GIVE TWO DAYS' WRITTEN NOTICE OF THE
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DATE (THE "APPLICABLE CLOSING DATE") ON WHICH THE PURCHASE AND SALE OF THE
SPECIAL WARRANTS TO BE PURCHASED BY THE PURCHASER SHALL OCCUR, WHICH DATE SHALL
BE EITHER THE INITIAL CLOSING DATE OR A SUBSEQUENT CLOSING DATE. PRIOR TO 4:00
P.M. ON THE DAY BEFORE THE APPLICABLE CLOSING DATE THE PURCHASER WILL DELIVER TO
THE AGENT AT EITHER OF ITS ADDRESSES SET FORTH ON PAGE 1 (OR TO SUCH OTHER
PERSON OR AT SUCH OTHER ADDRESS AS THE AGENT MAY DIRECT BY NOTICE TO THE
PURCHASER), A CERTIFIED CHEQUE OR BANK DRAFT MADE PAYABLE ON OR BEFORE THE
APPLICABLE CLOSING DATE TO OR TO THE ORDER OF "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & PARTNERS INC."
106
IN AN AMOUNT EQUAL TO THE TOTAL PURCHASE PRICE FOR THE PURCHASER'S SPECIAL
WARRANTS AS SET FORTH ON PAGE 20 HEREOF (THE "SUBSCRIPTION FUNDS") OR WILL MAKE
SUCH OTHER ARRANGEMENTS FOR THE PAYMENT OF THE SUBSCRIPTION FUNDS AS MAY BE
ACCEPTABLE TO THE AGENT. THE PURCHASER ACKNOWLEDGES AND AGREES THAT THIS OFFER,
THE SUBSCRIPTION FUNDS AND ANY OTHER DOCUMENTS DELIVERED IN CONNECTION HEREWITH
WILL BE HELD BY THE AGENT UNTIL SUCH TIME AS THE CONDITIONS REFERRED TO IN
SECTION 8 HEREOF ARE SATISFIED BY THE COMPANY OR WAIVED BY THE AGENT. UPON SUCH
SATISFACTION OR WAIVER, AT THE CLOSING THE AGENT WILL, ON BEHALF OF THE
PURCHASER, DELIVER THIS OFFER AND ANY OTHER DOCUMENTS REQUIRED TO BE DELIVERED
IN CONNECTION HEREWITH TO THE COMPANY AND WILL PAY TO THE COMPANY THE
SUBSCRIPTION FUNDS AND, SUBJECT TO SECTION 9 BELOW, THE COMPANY WILL THEREUPON
ISSUE AND SELL THE PURCHASER'S SPECIAL WARRANTS TO THE PURCHASER AND CAUSE TO BE
ISSUED AND DELIVERED TO OR UPON THE DIRECTION OF THE AGENT, FOR DELIVERY TO THE
PURCHASER IN ACCORDANCE WITH ITS "DELIVERY INSTRUCTIONS" ON PAGE 20 HEREOF, A
DEFINITIVE CERTIFICATE REPRESENTING THE PURCHASER'S SPECIAL WARRANTS REGISTERED
IN THE NAME OF THE PURCHASER (OR IN SUCH OTHER NAME OR NAMES AS ARE SET FORTH
UNDER "REGISTRATION INSTRUCTIONS" ON PAGE 20 HEREOF). THE PURCHASER
ACKNOWLEDGES AND AGREES WITH AND FOR THE BENEFIT OF THE AGENT THAT, IN THE EVENT
THAT THE PURCHASER FAILS TO MAKE PAYMENT OF THE SUBSCRIPTION FUNDS TO THE AGENT
IN THE MANNER AND BY THE TIME STIPULATED ABOVE AND THE AGENT IN ITS DISCRETION
ELECTS TO PAY THE SUBSCRIPTION FUNDS ON BEHALF OF THE PURCHASER TO THE COMPANY
AT THE CLOSING, SUCH PAYMENT WILL CONSTITUTE A LOAN MADE BY THE AGENT TO THE
PURCHASER AND, IN SUCH EVENT, THE PURCHASER AGREES TO REPAY SUCH LOAN TO THE
AGENT BY DELIVERING TO THE AGENT (OR TO SUCH OTHER PERSON AS THE AGENT MAY
DIRECT BY NOTICE TO THE PURCHASER), ON THE APPLICABLE CLOSING DATE, A CERTIFIED
CHEQUE OR BANK DRAFT MADE PAYABLE ON THE APPLICABLE CLOSING DATE TO OR TO THE
ORDER OF "▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & PARTNERS INC." IN AN AMOUNT EQUAL THE SUBSCRIPTION
FUNDS OR BY MAKING SUCH OTHER ARRANGEMENTS FOR THE PAYMENT OF THE SUBSCRIPTION
FUNDS AS MAY BE ACCEPTABLE TO THE AGENT, AGAINST DELIVERY TO THE PURCHASER IN
ACCORDANCE WITH ITS "DELIVERY INSTRUCTIONS" ON PAGE 20 HEREOF OF THE CERTIFICATE
REPRESENTING THE PURCHASER'S SPECIAL WARRANTS REFERRED TO ABOVE. IN THE EVENT
THAT THIS OFFER IS NOT ACCEPTED BY THE COMPANY OR THE CONDITIONS REFERRED TO IN
SECTION 8 HEREOF ARE NOT SATISFIED BY THE COMPANY, OR WAIVED BY THE AGENT,
WITHIN THE TIME THEREIN PROVIDED, THIS OFFER, THE SUBSCRIPTION FUNDS (IF PAID TO
THE AGENT) AND ANY OTHER DOCUMENTS DELIVERED IN CONNECTION HEREWITH WILL BE
RETURNED TO THE PURCHASER AT THE ADDRESS UNDER "NAME AND ADDRESS OF PURCHASER"
SET FORTH ON PAGE 20 HEREOF.
107
Series B Escrow. THE PURCHASER ACKNOWLEDGES THAT IF ANY OF THE SPECIAL
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WARRANTS TO BE PURCHASED BY HIM HEREUNDER ARE SERIES B SPECIAL WARRANTS, THE
SUBSCRIPTION FUNDS FOR SUCH SERIES B SPECIAL WARRANTS TO BE PAID TO THE COMPANY
AT THE CLOSING ON THE APPLICABLE CLOSING DATE, LESS THE AMOUNT OF THE FEE PAID
UNDER THE AGENCY AGREEMENT TO THE AGENT AT THE CLOSING, WILL BE DEPOSITED IN
ESCROW AND INVESTED BY THE TRUSTEE IN ACCORDANCE WITH THE TERMS OF THE SPECIAL
WARRANT INDENTURE AND THAT THE SPECIAL WARRANT INDENTURE WILL CONTAIN PROVISIONS
TO THE EFFECT THAT SUCH DEPOSITED FUNDS AND INTEREST EARNED THEREON (I) IF THE
APPROVAL DATE OCCURS PRIOR TO THE REDEMPTION DATE, WILL BE RELEASED FROM ESCROW
AND PAID BY THE TRUSTEE TO THE COMPANY AS SOON AS PRACTICABLE AFTER THE COMPANY
DELIVERS A WRITTEN CERTIFICATE TO THE TRUSTEE TO THE EFFECT THAT THE APPROVAL
DATE HAS SO OCCURRED OR (II) IF THE APPROVAL DATE HAS NOT OCCURRED PRIOR TO THE
REDEMPTION DATE, THE TRUSTEE TO CANCEL ALL OUTSTANDING SERIES B SPECIAL WARRANTS
AND WILL REPAY TO EACH HOLDER THEREOF THE TOTAL PURCHASE PRICE PAID BY SUCH
HOLDER FOR THE THEN CANCELLED SERIES B SPECIAL WARRANTS PLUS SUCH HOLDER'S
PROPORTIONATE SHARE OF THE INTEREST EARNED BY THE TRUSTEE ON THE FUNDS DEPOSITED
IN ESCROW FOR THE APPLICABLE TRANCHE OF SERIES B SPECIAL WARRANTS PURCHASED BY
SUCH HOLDER FROM THE APPLICABLE CLOSING DATE TO AND INCLUDING THE DAY
IMMEDIATELY PRECEDING THE REDEMPTION DATE. THE SPECIAL WARRANT INDENTURE WILL
ALSO CONTAIN PROVISIONS WHICH REQUIRE THE COMPANY, PROMPTLY UPON REQUEST OF THE
TRUSTEE, TO PAY TO THE TRUSTEE SUCH ADDITIONAL AMOUNTS AS MAY BE NECESSARY IN
ORDER TO MAKE ANY SUCH PAYMENTS TO HOLDERS OF SERIES B SPECIAL WARRANTS IN FULL.
Representations and Warranties of Company. THE COMPANY REPRESENTS AND
-----------------------------------------
WARRANTS TO THE PURCHASER, AND ACKNOWLEDGES THAT THE PURCHASER WILL BE RELYING
UPON SUCH REPRESENTATIONS AND WARRANTIES IN PURCHASING THE SPECIAL WARRANTS,
THAT:
the Company has been duly amalgamated and organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to carry on its business as it is
presently carried on and is duly qualified and authorized to carry on
business and is in good standing as a foreign corporation in each
jurisdiction in which the character of its properties or the nature of
its business makes such qualification or authorization necessary and
has all requisite power and authority to carry on its business as it
is now carried on and to own, lease and operate its properties and
assets, and to execute and deliver this Subscription Agreement and the
Special Warrant Indenture, to consummate
108
the transactions contemplated hereby and thereby and to duly observe
and perform all of its covenants and obligations herein and therein
set forth;
the Company has conducted and is conducting its business in compliance
in all material respects with all applicable laws, rules, regulations
and other lawful requirements which are applicable to it, and the
Company is not aware of any legislation, regulation, rule or lawful
requirements presently in force or proposed to be brought into force
which the Company anticipates the Company will be unable to comply
with without materially adversely affecting the financial condition,
results of operations, business or prospects of the Company;
the Company has no subsidiaries which are carrying on active business
or which hold any material assets or have any material liabilities
other than as described in the 1994 Prospectus;
the Company is a reporting issuer for the purposes of and is not in
default of any of the requirements relating thereto under the
securities legislation of the Provinces of British Columbia and
Ontario and is in compliance in all material respects with all United
States federal and state securities regulatory filing requirements;
the audited financial statements of the Company contained in the
Company's 1993 Annual Report, the audited financial statements of the
Company contained in the Company's 1993 annual report on Form 10K for
the period ended December 31, 1993, the unaudited financial statements
of the Company contained in the Company's quarterly report on Form
10-Q for the period ended September 30, 1994, the Company's 1994
Prospectus and any material change reports, reports on Form 8-K and
press releases of the Company issued since June 21, 1994, at their
respective dates, were true and correct in all material respects,
contained no misrepresentation and were prepared in accordance with
and complied with all securities laws, regulations, policy statements
and rules applicable thereto;
the audited financial statements of the Company as set forth in the
Company's 1993 Annual Report were prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods covered thereby (after giving retroactive
effect to any accounting changes described in the notes thereto) and
accurately and fairly present the assets, liabilities (contingent or
otherwise) and financial condition and position and the revenue,
earnings, results of operations and changes in financial position of
the Company as at such dates and during the periods covered thereby;
the unaudited financial statements of the Company as set forth in the
Company's quarterly report on Form 10-Q for the period ended September
30, 1994 were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
covered thereby and, subject to year end adjustments, accurately and
fairly present the assets, liabilities (contingent or
109
otherwise) and financial condition and position and the revenue,
earnings, results of operations and changes in financial position of
the Company as at such dates and during the periods covered thereby;
the authorized capital of the Company consists of an unlimited number
of Common Shares and 20,000,000 Preference Shares without par value,
of which 21,360,108 Common Shares and no Preference Shares are issued
and outstanding on the date hereof as fully paid and non-assessable
shares and such Common Shares are listed and posted for trading on the
Stock Exchanges and, except for options currently outstanding to
directors and employees of the Company to purchase Common Shares and
outstanding common share purchase warrants under which an aggregate of
6,666,737 Common Shares may be issued, no person has any right,
agreement or option, present or future, contingent or absolute, or any
right capable of becoming a right, agreement or option, for the issue
or allotment of any unissued shares in the capital of the Company or
any other security convertible into or exchangeable or exercisable for
any such shares or to require the Company to purchase, redeem or
otherwise acquire any of the issued and outstanding Common Shares;
the Company is not in breach or violation of or default under (and no
event has occurred and is continuing which with the giving of notice
or lapse of time or both would constitute an event of default under),
and neither the execution and delivery by the Company of this
Subscription Agreement or the Special Warrant Indenture, nor the
consummation of the transactions contemplated hereby or thereby nor
the due observance and performance by the Company of any of its
covenants or obligations contained herein or therein conflicts or will
conflict with, results or will result in a breach or violation of, or
constitutes or will constitute a default (or any event which with the
giving of notice or lapse of time or both would constitute an event of
default) under, any of the terms or provisions of the constating
documents of the Company or of any resolutions of the directors or
shareholders of the Company, or of any of the terms or provisions of
any agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of its properties or assets
are subject or of any judgement, decree, order, law, rule or
regulation by which the Company is bound or to which any of its
properties or assets are subject, the effect of any of which breaches,
violations, conflicts or defaults, singularly or in the aggregate,
might materially adversely affect the financial condition, results of
operations, business or prospects of the Company or would impair the
ability of the Company to consummate the transactions contemplated
hereby or to duly observe and perform any of its covenants or
obligations contained in this Subscription Agreement or the Special
Warrant Indenture;
no investigation, litigation, administrative proceeding, arbitration
or other proceeding before or of any court, tribunal, arbitrator or
regulatory or other governmental body or dispute with any regulatory
or other governmental body is presently in process, pending or to the
knowledge of the Company, threatened
110
against the Company, which, if determined adversely to the Company,
might have a material adverse effect on the financial condition,
results of operations, business or prospects of the Company or which
would impair the ability of the Company to consummate the transactions
contemplated hereby or to duly observe and perform any of its
covenants or obligations contained in this Subscription Agreement or
the Special Warrant Indenture;
there has not occurred any adverse material change and there exists no
adverse material fact, financial or otherwise, in the assets
(including information or data relating to the estimated or book value
of assets), liabilities (contingent or otherwise), business, affairs,
ownership, management, operations, financial condition, capital or
prospects of the Company since September 30, 1994 which has not been
generally disclosed by way of appropriate filings (on a non-
confidential basis) with applicable securities regulatory authorities;
since September 30, 1994, except as has been generally disclosed by
way of appropriate filings (on a non-confidential basis) with
applicable securities regulatory authorities:
there has not been any material change in the assets, liabilities
(contingent or otherwise), business, operations,
financial condition or prospects of the Company;
there has not been any material change in the capital or
indebtedness of the Company and the Company has
not received or been informed that it will receive
any demand for repayment of any such indebtedness;
the financial position of the Company as at the date hereof is at
least as good as that disclosed in the most recent
balance sheet referred to in subparagraph (g)
above, and there has not been and there is
currently not contemplated any material
revaluation of any assets or any write down or
write up (except in the ordinary course of
business and consistent with past practice) of the
value of such assets or any cancellation of any
debt or waiver or release of any rights or claims
owed to or held by the Company (except for
cancellations, waivers and releases in the
ordinary course of business which in the aggregate
are not material and the mutual limited release
relating to that certain agreement or agreement in
principle between the Company and Atlas
Corporation dated May 31, 1994);
there has not been any termination or amendment of, or any failure
in any material respect to perform any obligations
under, any material contract, lease or agreement,
including, without limitation, the U.S. $4,000,000
Royalty Purchase Agreement between the Company and
Repadre International Corporation dated on or
before the Initial Closing Date, to which the
Company is a party or by which the Company is
bound;
111
the Company has carried on its business and operated and maintained
its assets in the ordinary course of business and
consistent with past practice, has not entered
into and does not currently contemplate entering
into any material transaction not in the ordinary
course of business and has not made any material
capital expenditures or commitments for material
capital expenditures; and
the Series A Special Warrants, including the Purchaser's Special
Warrants, may be sold and issued and the Underlying Common Shares
relating thereto may be issued to Purchasers upon the exercise or
deemed exercise of the Series A Special Warrants without the approval
of the shareholders of the Company.
Conditions of Closing. THE OBLIGATIONS OF THE PURCHASER TO COMPLETE THE
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PURCHASE OF SPECIAL WARRANTS AS CONTEMPLATED HEREBY SHALL BE CONDITIONAL UPON
THE FULFILMENT AT OR BEFORE THE CLOSING TIME OF EACH OF THE FOLLOWING
CONDITIONS, EACH OF WHICH ARE FOR THE EXCLUSIVE BENEFIT OF AND MAY BE WAIVED IN
WHOLE OR IN PART BY THE PURCHASER.
all actions required to be taken by or on behalf of the Company,
including the passing of all requisite resolutions of directors of the
Company, shall have been taken so as to validly create, issue and sell
the Special Warrants;
the Company shall have made all necessary filings and obtained all
necessary approvals, consents and acceptances of appropriate
regulatory authorities (including the Stock Exchanges) in order to
permit the Company to issue and sell the Special Warrants to the
Purchaser as contemplated hereby, subject only to conditions as may be
required by the Stock Exchanges which the Company will satisfy
forthwith following Closing;
the Underlying Shares shall have been conditionally accepted for
listing on the Stock Exchanges, subject to the filing of usual
documentation and payment of fees;
the Special Warrant Indenture shall have been entered into by and be
in effect between the Company and the Trustee;
the Company shall have duly accepted this Subscription Agreement;
the Company shall have caused a favourable legal opinion, addressed to
the Purchaser and the Agent and dated the Closing Date, and in form
and content reasonably acceptable to the Purchaser and the Agent, to
be delivered to the Purchaser and the Agent by the Company's counsel
with respect to such matters as the Purchaser may reasonably request;
112
the Company shall have delivered to the Purchaser and the Agent a
certificate signed on behalf of the Company by any two senior officers
of the Company as are acceptable to the Purchaser, addressed to the
Purchaser and dated the Closing Date, and in a form reasonably
satisfactory to the Purchaser, certifying that, to the best of the
knowledge, information and belief of such officers, having made due
inquiry:
no order ceasing or suspending trading in any securities of the
Company or prohibiting the sale of the Special Warrants or the
issuance of the Underlying Shares is in effect (except for any
such order based upon the activities or alleged activities of the
Purchaser and not of the Company) and, to the knowledge of such
officers, no proceedings for such purpose are pending or
threatened;
the representations and warranties of the Company contained in
section 7 hereof are true and correct in all
material respects as of the Closing Time as if
such representations and warranties had been made
at and as of the Closing Time;
the Company has in all material respects complied with all of the
covenants and satisfied all of the terms and
conditions of this Subscription Agreement on its
part to be complied with or satisfied at or prior
to the Closing Time; and
the Company is a reporting issuer for the purposes of the
securities legislation of the Provinces of British
Columbia and Ontario and there is no material
change in the affairs of the Company which
presently requires disclosure under subsection
67(1) of the Securities Act (British Columbia) and
no such disclosure has been made on a confidential
basis;
each of the Company and the Purchaser shall have executed and
delivered to each other the mutual limited release in the form
attached as Exhibit III hereto; and
the Purchaser's Special Warrants shall be comprised of only Series A
Special Warrants.
Acceptance or Rejection. THE COMPANY WILL HAVE THE RIGHT TO ACCEPT THIS OFFER
-----------------------
AT ANY TIME PRIOR TO THE CLOSING TIME. NOTWITHSTANDING THE FOREGOING, THE
PURCHASER ACKNOWLEDGES AND AGREES THAT THE ACCEPTANCE OF THIS OFFER WILL BE
CONDITIONAL UPON THE SALE OF THE SPECIAL WARRANTS TO THE PURCHASER BEING EXEMPT
FROM ANY PROSPECTUS OR OFFERING MEMORANDUM REQUIREMENTS OF ALL APPLICABLE
SECURITIES LAWS. THE COMPANY WILL BE DEEMED TO HAVE ACCEPTED THIS
113
OFFER UPON THE DELIVERY AT THE CLOSING OF THE CERTIFICATE REPRESENTING THE
PURCHASER'S SPECIAL WARRANTS OR UPON THE DIRECTION OF THE PURCHASER IN
ACCORDANCE WITH THE PROVISIONS HEREOF.
Information and Documents. THE PURCHASER DELIVERS HEREWITH THREE COMPLETED
-------------------------
AND ORIGINALLY EXECUTED COPIES OF THE PRIVATE PLACEMENT QUESTIONNAIRE AND
UNDERTAKING ATTACHED AS EXHIBIT I HERETO AND THE ACCREDITED INVESTOR
CONFIRMATION ATTACHED AS EXHIBIT II HERETO AND WILL, PROMPTLY UPON REQUEST BY
THE COMPANY, PROVIDE THE COMPANY WITH SUCH INFORMATION AND EXECUTE AND DELIVER
TO THE COMPANY SUCH ADDITIONAL UNDERTAKINGS, QUESTIONNAIRES AND OTHER DOCUMENTS
AS MAY BE REQUIRED IN CONNECTION WITH THE ISSUE AND SALE OF THE SPECIAL WARRANTS
AND THE FILING OF THE PROSPECTUSES. THE PURCHASER ACKNOWLEDGES AND AGREES THAT
SUCH UNDERTAKINGS, QUESTIONNAIRES AND OTHER DOCUMENTS, WHEN EXECUTED AND
DELIVERED BY THE PURCHASER, WILL FORM PART OF AND WILL BE INCORPORATED INTO THIS
SUBSCRIPTION AGREEMENT WITH THE SAME EFFECT AS IF EACH CONSTITUTED A
REPRESENTATION AND WARRANTY OR COVENANT OF THE PURCHASER HEREUNDER IN FAVOUR OF
THE COMPANY. THE PURCHASER CONSENTS TO THE FILING OF SUCH DOCUMENTS AS MAY BE
REQUIRED TO BE FILED WITH ANY STOCK EXCHANGE OR SECURITIES REGULATORY AUTHORITY
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.
Purchaser's Representations and Warranties. THE PURCHASER REPRESENTS AND
------------------------------------------
WARRANTS TO THE COMPANY, AS REPRESENTATIONS AND WARRANTIES THAT ARE TRUE AS OF
THE DATE OF THIS OFFER AND WILL BE TRUE AS OF THE DATE OF THIS SUBSCRIPTION
AGREEMENT AND AS OF THE CLOSING DATE, THAT:
AUTHORIZATION AND EFFECTIVENESS. If the Purchaser is a corporation,
-------------------------------
the Purchaser is a valid and subsisting corporation, has the necessary
corporate capacity and authority to execute and deliver this offer and
to observe and perform its covenants and obligations hereunder and has
taken all necessary corporate action in respect thereof, or, if the
Purchaser is a partnership, syndicate or other form of unincorporated
organization, the Purchaser has the necessary legal capacity and
authority to execute and deliver this offer and to observe and perform
its covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof, and, in either case, upon acceptance by
the Company, this offer constitutes a legal, valid and binding
contract of the Purchaser enforceable against the Purchaser in
accordance with its terms.
114
RESIDENCE. The Purchaser is a resident of the jurisdiction referred
---------
to under "Name and Address of Purchaser" on page 20 hereof and is not
a Canadian resident.
PRIVATE PLACEMENT EXEMPTION. The Purchaser understands that the
---------------------------
Special Warrants and the Underlying Shares have not been and will not
be registered under the U.S. Securities Act and that the sale of the
Special Warrants to the Purchaser is being made in reliance on a
private placement exemption to accredited investors.
ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
-------------------
defined in Rule 501(a) under the U.S. Securities Act and is acquiring
the Special Warrants and the Underlying Shares in respect thereof as
principal for its own account or for the account of an "accredited
investor" as to which it exercises sole investment direction, and not
with a view to any resale, distribution or other disposition of the
Special Warrants or the Underlying Shares in respect thereof in
violation of the United States securities laws.
PURCHASING FOR OWN ACCOUNT. The Purchaser is authorized to consummate
--------------------------
the purchase of the Special Warrants and is purchasing as principal
for its own account Special Warrants having an aggregate purchase
price of at least U.S. $500,000 or for one or more accounts as to
which it exercises sole investment discretion and each such account is
purchasing Special Warrants having such a minimum aggregate purchase
price.
RESALE. The Purchaser agrees that if it decides to offer, sell, or
------
otherwise transfer any of the Special Warrants or the Underlying
Shares in respect thereof, it will not offer, sell or otherwise
transfer any of such Special Warrants or Underlying Shares, directly
or indirectly, unless:
the sale is to the Company; or
the sale is made outside the United States in compliance with the
requirements of Rule 903 or Rule 904 of Regulation
S under the U.S. Securities Act and in compliance
with applicable local laws and regulations; or
the sale is made pursuant to the exemption from registration under
the U.S. Securities Act provided by Rule 144
thereunder, if available; or
the Special Warrants or the Underlying Shares in respect thereof,
as the case may be, are sold in a transaction that
does not require registration under the U.S.
Securities Act or any applicable United States
state laws and regulations governing the offer and
sale of securities, and it has prior to such
transaction furnished to the Company an opinion of
counsel to that effect from counsel of recognized
standing.
115
LEGEND. The Purchaser understands and acknowledges that upon the
------
original issuance thereof, and until such time as the same is no
longer required under applicable requirements of the U.S. Securities
Act or applicable state laws, the certificates representing the
Special Warrants, and all certificates issued in exchange therefor or
in substitution thereof, including certificates representing the
Underlying Shares in respect thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A)
TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(C) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR
(D) IN COMPLIANCE WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO
THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
"GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES
IN CANADA. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF
WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM
MONTREAL TRUST COMPANY OF CANADA UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO MONTREAL TRUST COMPANY OF CANADA AND THE COMPANY,
TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY
IS BEING MADE IN COMPLIANCE WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT";
provided, that if the Special Warrants or the Underlying Shares in
--------
respect thereof, as the case may be, are being sold under subparagraph
(f)(ii) above, the legend may be removed by providing to the Company
an opinion of counsel of recognized standing reasonably satisfactory
to, and at the expense of, the Company to the effect that such resale
qualifies under Rule 903 or Rule 904 of Regulation S and providing a
declaration to Montreal Trust Company of Canada as registrar and
transfer agent, to the following effect (or as the Company may
prescribe from time to time):
116
"The undersigned (A) acknowledges that the sale of the
securities, to which this declaration relates is being made in
reliance on Rule 903 or Rule ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Securities Act of 1933 (the "Securities Act") and (B)
certifies that, (1) he is not an affiliate of the Company, (2)
the offer of such securities was not made to a person in the
United States and either (a) at the time the buy order was
originated, the buyer was outside the United States, or the
seller and any person acting on its behalf reasonably believed
that the buyer was outside the United States or (b) the
transaction was executed on or through the facilities of The
Toronto Stock Exchange and neither the seller nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States and (3) neither the
seller nor any person acting on its behalf engaged in any
directed selling efforts in connection with the offer and sale of
such securities. Terms used herein have the meanings given to
them by Regulation S."
and provided, that if any such Special Warrants or Underlying Shares
--------
are being sold under subparagraph (f)(iii) above, the legend may be
removed by delivery to Montreal Trust Company of Canada of an opinion
of counsel of recognized standing reasonably satisfactory to, and at
the expense of, the Company, that such legend is no longer required
under the applicable requirements of the U.S. Securities Act or state
securities laws.
NOTATION. The Purchaser consents to the Company making a notation on
--------
its records or giving instructions to any transfer agent of the
Special Warrants or the Underlying Shares in order to implement the
restrictions on transfer set forth and described herein.
ABSENCE OF OFFERING MEMORANDUM. The offering and sale of the
------------------------------
Purchaser's Special Warrants to the Purchaser were not, so far as the
Purchaser is aware, made through an advertisement of the Special
Warrants in printed media of general and regular paid circulation,
radio or television or any other form of advertisement and, except for
this Subscription Agreement, the only documents, if any, delivered or
otherwise furnished to the Purchaser in connection with such offering
and sale were the annual or interim reports and other documents the
contents of which are prescribed by statute or regulation and
generally available research reports, memoranda and other materials
concerning the Company prepared by others, which documents the
Purchaser acknowledges do not, individually or collectively,
constitute an offering memorandum or similar document (including an
offering memorandum as such term is defined in section 32(1) of the
Regulation to the Securities Act (Ontario)). The Purchaser
acknowledges and agrees that the Company and the Agent take no
responsibility for the accuracy or completeness of the information
contained in any such
117
research reports, memoranda or other materials concerning the Company
which have not been issued by the Company.
NO UNDISCLOSED INFORMATION. The Purchaser's Special Warrants are not
--------------------------
being purchased by the Purchaser as a result of any material
information concerning the Company that has not been publicly
disclosed and the Purchaser's decision to tender this offer and
acquire the Special Warrants has not been made as a result of any
verbal or written representation as to fact or otherwise made by or on
behalf of the Company or any other person and is based entirely upon
currently available public information concerning the Company.
INVESTMENT SUITABILITY. The Purchaser has such knowledge and
----------------------
experience in financial and business affairs as to be capable of
evaluating the merits and risks of the investment hereunder in the
Special Warrants (and the Underlying Shares in respect thereof) and is
able to bear the economic risk of loss of such investment.
BRITISH COLUMBIA TRADES. The Purchaser understands and acknowledges
-----------------------
that, with respect to any trade of Special Warrants or Underlying
Shares acquired pursuant to a trade which occurs in British Columbia,
if (i) the Purchaser trades any of the Special Warrants, or (ii)
exercises its right to be issued Underlying Shares pursuant to the
terms of the Special Warrants prior to the issuance of a receipt for a
Final Prospectus qualifying the Underlying Shares for issuance and
then trades any Underlying Shares so acquired, then, in either case,
the Purchaser must file a report in the form attached to British
Columbia Securities Commission Blanket Order #88/5, a copy of which
may be obtained from the Company, within 10 days of the initial trade
of such securities, but where the Purchaser has so filed such report,
the Purchaser is not required to file a further report in respect of
additional trades of Special Warrants or Underlying Shares acquired on
the same date as the security which is the subject of the initial
report.
No Investigation by Agent. THE PURCHASER ACKNOWLEDGES AND AGREES THAT THE
-------------------------
AGENT ASSUMES NO RESPONSIBILITY OR LIABILITY OF ANY AGENT WHATSOEVER FOR THE
ACCURACY OR ADEQUACY OF ANY PUBLICLY AVAILABLE INFORMATION CONCERNING THE
COMPANY OR AS TO WHETHER ALL INFORMATION CONCERNING THE COMPANY REQUIRED TO BE
DISCLOSED BY IT HAS BEEN GENERALLY DISCLOSED. THE PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THE AGENT HAS NOT ENGAGED IN OR CONDUCTED ANY
INDEPENDENT INVESTIGATION WITH RESPECT TO THE COMPANY OR ANY SUCH INFORMATION.
Additional Resale Restrictions. THE PURCHASER UNDERSTANDS AND ACKNOWLEDGES
------------------------------
THAT THE PURCHASER'S SPECIAL WARRANTS (AND, IF THE SPECIAL WARRANTS ARE
EXERCISED OR DEEMED TO BE EXERCISED BEFORE THE QUALIFICATION DATE, THE
UNDERLYING SHARES ISSUED UPON SUCH EXERCISE OR DEEMED EXERCISE)
118
WILL BE SUBJECT TO CERTAIN RESALE RESTRICTIONS UNDER APPLICABLE SECURITIES LAWS
AND THE PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING ATTACHED AS EXHIBIT I
HERETO, AND THE PURCHASER AGREES TO COMPLY WITH SUCH RESTRICTIONS. THE PURCHASER
ALSO ACKNOWLEDGES AND UNDERSTANDS THAT IT SHOULD CONSULT ITS OWN LEGAL ADVISORS
WITH RESPECT TO APPLICABLE RESALE RESTRICTIONS AND THAT IT IS SOLELY RESPONSIBLE
(AND THAT THE COMPANY IS NOT IN ANY MANNER RESPONSIBLE) FOR COMPLYING WITH SUCH
RESTRICTIONS.
No Revocation. THE PURCHASER AGREES THAT THIS OFFER IS MADE FOR VALUABLE
-------------
CONSIDERATION AND MAY NOT BE WITHDRAWN, CANCELLED, TERMINATED OR REVOKED BY THE
PURCHASER.
Modification. NEITHER THIS SUBSCRIPTION AGREEMENT NOR ANY PROVISION
------------
HEREOF SHALL BE MODIFIED, CHANGED, DISCHARGED OR TERMINATED EXCEPT BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM ANY WAIVER, CHANGE,
DISCHARGE OR TERMINATION IS SOUGHT.
Contractual Right of Action for Rescission. BY ITS ACCEPTANCE OF THIS
------------------------------------------
OFFER, THE COMPANY AGREES TO PROVIDE A RIGHT OF RESCISSION AS HEREINAFTER SET
FORTH, WHICH RIGHT SHALL BE EXERCISABLE BY THE PURCHASER AND ANY SUBSEQUENT
HOLDERS FROM TIME TO TIME OF THE PURCHASER'S SPECIAL WARRANTS:
In the event that any holder of Special Warrants who acquires
Underlying Shares upon the exercise or deemed exercise of his Special
Warrants is or becomes entitled under applicable securities
legislation to the remedy of rescission by reason of the Final
Prospectus or any amendment thereto containing a misrepresentation,
such holder shall be entitled to rescission not only of such holder's
exercise of such Special Warrants but also of the purchase of such
Special Warrants hereunder, and shall be entitled in connection with
such rescission to a full refund of all consideration paid to the
Company on the acquisition of such Special Warrants. In the event
such holder is a permitted assignee of the interest of the original
Purchaser of such Special Warrants, such permitted assignee shall be
entitled to exercise the rights of rescission and refund granted
hereunder as if such permitted assignee were such original Purchaser.
The foregoing is in addition to any other right or remedy available to
a holder of the Special Warrants under section 114 of the Securities
Act (British Columbia), section 130 of the Securities Act (Ontario) or
a
119
corresponding provision of other securities legislation or otherwise
at law.
Waiver of Rights of Withdrawal. THE PURCHASER EXPRESSLY WAIVES AND
------------------------------
RELEASES THE COMPANY FROM ALL RIGHTS OF WITHDRAWAL TO WHICH IT MIGHT OTHERWISE
BE ENTITLED PURSUANT TO SECTION 66(3) OF THE SECURITIES ACT (BRITISH COLUMBIA),
SECTION 71(2) OF THE SECURITIES ACT (ONTARIO) OR A CORRESPONDING PROVISION OF
OTHER SECURITIES LEGISLATION.
Authority of Agent. THE PURCHASER HEREBY IRREVOCABLY AUTHORIZES THE AGENT,
------------------
IN ITS SOLE DISCRETION:
to act as the Purchaser's representative at Closing, to receive
certificates for Special Warrants subscribed for and to execute in its
name and on its behalf all closing receipts and documents required;
and
to approve the Special Warrant Indenture in accordance with section
4(g) hereof, any related documents and any opinions, certificates and
other documents addressed to the Purchaser.
Assignment. THIS SUBSCRIPTION AGREEMENT AND ANY INTEREST HEREIN OR ANY OF
----------
THE RIGHTS ARISING HEREUNDER MAY BE ASSIGNED ONLY TOGETHER WITH A TRANSFER OF
THE SPECIAL WARRANTS PURCHASED HEREUNDER AND IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS AND THE RULES OF THE STOCK EXCHANGES, AND PROVIDED THAT IF THE
ASSIGNEE RESIDES IN CANADA THAT HE RESIDES IN ONE OF THE QUALIFYING
JURISDICTIONS AND THE ASSIGNEE AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF
THIS SUBSCRIPTION AGREEMENT BY COMPLETING AND EXECUTING THE APPLICABLE FORM OF
TRANSFER WHICH WILL BE ATTACHED TO THE CERTIFICATE REPRESENTING THE SPECIAL
WARRANTS AND DELIVERING IT TO THE COMPANY OR THE TRUSTEE.
Miscellaneous. THE AGREEMENT RESULTING FROM THE ACCEPTANCE OF THIS OFFER
-------------
BY THE COMPANY CONTAINS THE WHOLE AGREEMENT BETWEEN THE COMPANY AND THE
PURCHASER IN RESPECT OF THE SUBJECT MATTERS HEREOF AND THERE ARE NO WARRANTIES,
REPRESENTATIONS, TERMS, CONDITIONS OR COLLATERAL AGREEMENTS, EXPRESS, IMPLIED OR
STATUTORY, OTHER THAN AS EXPRESSLY PROVIDED FOR HEREIN AND IN ANY AMENDMENTS
HERETO. ALL REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS MADE OR
DEEMED TO BE MADE BY THE PURCHASER HEREIN WILL SURVIVE THE EXECUTION AND
DELIVERY, AND ACCEPTANCE, OF THIS OFFER AND THE CLOSING.
120
TIME SHALL BE OF THE ESSENCE OF THIS SUBSCRIPTION AGREEMENT. THIS SUBSCRIPTION
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE PROVINCE OF BRITISH
COLUMBIA. THIS SUBSCRIPTION AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS, EACH OF WHICH WHEN DELIVERED, EITHER IN ORIGINAL OR FACSIMILE
FORM, SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH TOGETHER SHALL
CONSTITUTE ONE AND THE SAME DOCUMENT.
Reliance on Facsimile. THE COMPANY SHALL BE ENTITLED TO RELY ON DELIVERY
---------------------
OF A FACSIMILE COPY OF THIS SUBSCRIPTION AGREEMENT, AND ACCEPTANCE BY THE
COMPANY OF A FACSIMILE COPY OF THIS SUBSCRIPTION AGREEMENT SHALL CREATE A
LEGAL, VALID AND BINDING AGREEMENT BETWEEN THE PURCHASER AND THE COMPANY IN
ACCORDANCE WITH THE TERMS HEREOF.
Language. THE PURCHASER ACKNOWLEDGES ITS CONSENT AND REQUEST AND THE
--------
PARTIES HERETO AGREE THAT ALL DOCUMENTS EVIDENCING OR RELATING IN ANY WAY TO ITS
PURCHASE OF SPECIAL WARRANTS BE DRAWN UP IN THE ENGLISH LANGUAGE ONLY. NOUS
RECONNAISSONS PAR LES PRESENTES AVOIR CONSENTI ET DEMANDE QUE TOUS LES DOCUMENTS
FAISANT FOI OU SE RAPPORTANT DE QUELQUE MANIERE A NOTRE ACHAT SOIENT REDIGES EN
ANGLAIS SEULEMENT.
IN WITNESS WHEREOF the undersigned executes and agrees to be bound by
this Subscription Agreement by executing the Signature Page and Registration and
Delivery Instructions attached as page 20 hereto on the date therein indicated.
NOTE: PURCHASER MUST EXECUTE AND COMPLETE ATTACHED SIGNATURE PAGE AND
REGISTRATION AND DELIVERY INSTRUCTIONS
A C C E P T A N C E
The foregoing is acknowledged, accepted and agreed to this ____ day of
____________, 1995.
DAKOTA MINING CORPORATION
Per:
_________________________________________
Title:
121
SIGNATURE PAGE AND
REGISTRATION AND DELIVERY INSTRUCTIONS
--------------------------------------
(PURCHASER TO COMPLETE)
ISSUER: Dakota Mining Corporation ISSUE: Special Warrants exchangeable for
Common Shares.
TOTAL PURCHASE PRICE U.S. $____________
FOR SPECIAL WARRANTS:
SIGNATURE OF PURCHASER: ________________ Dated ______, 1995
Name of Purchaser
Per:
Title:
NAME AND ADDRESS OF PURCHASER:
Name: _______________________________ Address:
________________________________ ______________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
______________
(State)
______________
(Postal Code)
REGISTRATION INSTRUCTIONS: If other
than in the name of the Purchaser:
Name: ________________________________ Address:
________________________________ ______________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
______________
(State)
______________
(Postal Code)
DELIVERY INSTRUCTIONS: If other than
to the Purchaser at its address above:
Name:
______________________________
Contact Name
_______________________________
Address
_______________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
_______________________________
(State)
_______________________________
(Postal Code)
Telephone No.: ________________________
122
EXHIBIT I
THE TORONTO STOCK EXCHANGE
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
To be completed by each proposed private placement purchaser of listed
securities or securities which are convertible into listed securities.
QUESTIONNAIRE
1. DESCRIPTION OF TRANSACTION
(a) Name of Issuer of the Securities
DAKOTA MINING CORPORATION
(b) Number and Class of Securities to be Purchased
__________ Special Warrants
(c) Purchase Price
Aggregate of U.S. $___________
2. DETAILS OF PURCHASER
(a) Name of Purchaser
(b) Address
(c) Names and addresses of persons having a greater than 10% beneficial
interest in the Purchaser
3. RELATIONSHIP TO ISSUER
(a) Is the Purchaser (or any person named in response to 2(c) above) an
insider of the Issuer for the purposes of the Ontario Securities Act
(before giving effect to this private placement)? If so, state the
capacity in which the Purchaser (or person named in response to 2(c))
qualifies as an insider.
(b) If the answer to (a) is "no", are the Purchaser and the Issuer
controlled by the same person or company? If so, give details.
4. DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER
Give details of all trading by the Purchaser, as principal, in the
securities of the Issuer (other than debt securities which are not
convertible into equity securities), directly or indirectly, within the 60
days preceding the date hereof.
123
UNDERTAKING
TO: The Toronto Stock Exchange
The undersigned has subscribed for and agreed to purchase, as principal, the
securities described in Item 1 of this Private Placement Questionnaire and
Undertaking.
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for the period that
ends on the earlier of:
(a) six months from the date of the closing of the transaction herein or
for such period as is prescribed by applicable securities legislation,
whichever is longer, and
(b) the date that a receipt for a final prospectus relating to the said
securities or securities derived therefrom has been issued by the
Ontario Securities Commission,
without the prior consent of The Toronto Stock Exchange and any other regulatory
body having jurisdiction.
Dated at ____________________, this _____ day of _____________, 1995.
(Name of Purchaser - please print)
(Authorized Signature)
(Official Capacity - please print)
(please print here name of individual whose
signature appears above, if different from name of
Purchaser printed above)
124
EXHIBIT II
ACCREDITED INVESTOR CONFIRMATION
The Purchaser hereby certifies that the Purchaser, or the investor on whose
behalf it exercises sole investment discretion, qualifies as an accredited
investor under Rule 501(a) by reason of its inclusion in one or more of the
following categories (check one or more boxes, as appropriate):
_______ any bank as defined in section 3(a)(2) of the Securities Act of 1933,
as amended (the "Act"), or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act whether acting
in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of
1934; any insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Company Act of 1940
or a business development company as defined in section 2(a)(48) of
that Act; any Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by
a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 if the investment decision is made by a
plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has
total assets in excess of $500,000,000 or, if a self-directed plan,
with investment decisions made solely by persons that are accredited
investors;
_______ any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
_______ any organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered hereby, with total assets in excess of $5,000,000;
_______ any director, executive officer or general partner of Dakota Mining
Corporation;
_______ any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
_______ any natural person who had individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a
reasonable expectations of reaching that same income level in the
current year;
_______ any trust, with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the securities offered hereby, whose
purchase is directed by a sophisticated person as described in section
506(b)(2)(ii) of Regulation D promulgated under the Act; or
_______ any entity in which all of the equity owners qualify as accredited
investors under at least one of the foregoing categories.
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EXHIBIT III
MUTUAL LIMITED RELEASE
----------------------
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Dakota Mining Corporation, a Canadian corporation
("Dakota") and Atlas Corporation, a Delaware corporation ("Atlas"), on behalf of
themselves and their respective successors, assigns, affiliates, subsidiaries,
officers, directors, employees, agents, and anyone acting on behalf of, by, or
through them, release the other, their respective successors, assigns,
affiliates, subsidiaries, officers, directors, employees, agents, and anyone
acting on behalf of, by, or through them, of and from any and all actions,
causes of actions, liability, debts, obligations, claims or demands arising out
of, or relating to, directly or indirectly, that certain agreement or agreement
in principle, dated May 31, 1994, between the parties hereto, including without
limitation their respective performance thereof and any breach or claimed breach
of said agreement previously asserted by either of them.
It is expressly agreed that nothing herein contained shall be
construed or deemed to be an admission of liability on the part of either party
to this Mutual Limited Release.
IN WITNESS WHEREOF, this Mutual Limited Release
has been executed on the dates written below.
DAKOTA MINING CORPORATION, a Canadian
corporation
Date: ___________________________ By: __________________________________
Name:
Title:
ATLAS CORPORATION, a Delaware corporation
Date: ___________________________ By: __________________________________
Name:
Title:
(seal)
126