SUBSCRIPTION FOR FLOW-THROUGH UNITS
SUBSCRIPTION
FOR FLOW-THROUGH UNITS
TO:
APOLLO
GOLD CORPORATION
the
"Company")
The
undersigned (hereinafter referred to as the "Subscriber") hereby subscribes
for
and agrees to purchase from the Company the number of units ("Flow-Through
Units") of the Company set forth below, each Flow-Through Unit being comprised
of one common share of the capital stock of the Company ("Flow-Through Share")
and one-half of one common share purchase warrant of the Company, at a
subscription price of Cdn$0.45
per
Flow-Through Unit. Each whole common share purchase warrant (a "Flow-Through
Warrant") will entitle the holder thereof to purchase one common share in the
capital of the Corporation for each Flow-Through Warrant for a period of 24
months at a price of Cdn$1.00 per share for the first 12 months, and at a price
of Cdn$1.15 per share for the last 12 months. The Subscriber agrees to be bound
by the terms and conditions set forth in the attached "Terms and Conditions
of
Subscription and Renunciation Agreement for Units of Apollo Gold Corporation"
and acknowledges that the Corporation and its counsel are relying upon the
representations, warranties and covenants of the Subscriber set forth therein
and in the schedules thereto. The Flow-Through Shares and the Flow-Through
Warrants comprising the Flow-Through Units are "flow-through shares", as that
term is defined in subsection 66(15) of the Income
Tax Act (Canada).
The purchase and sale of the Flow-Through Units hereunder forms part of a larger
offering of Flow-Through Units (the "Offering") of up to
$1,000,000.
|
____________(Name
of Subscriber - please print)
By: _____________
Authorized
Signature
(Official
Capacity or Title - please print)
Please
print name of individual whose signature appears above if
different
than the name of the subscriber printed above.
_____________________________________________
(Subscriber's
Address)
(Telephone
Number) (E-mail
Address)
(Social Insurance Number) (Corporate
Tax Number)
|
Number
of Flow-Through Units:
|
|
|
Aggregate
Consideration: __________________
|
||
|
If
the Subscriber is signing as agent for a principal and is not a trust
Company or a trust company or an insurer or, in Alberta, Ontario
or
British Columbia, a portfolio manager, in each case, purchasing as
trustee
or agent for accounts fully managed by it, complete the
following:
Name
of Principal
Principal's address |
||
|
Register
the Flow-Through Units as set forth below:
Name ___ Account
reference, if applicable
Address |
Deliver
the Flow-Through Units as set forth below:
|
|
|
Number
of Common Shares currently held by the Subscriber
(excluding
the Flow-Through Units subscribed for hereunder)
|
ACCEPTANCE:
The
Company hereby accepts the subscription as set forth above on the terms and
conditions contained in this Subscription Agreement
APOLLO
GOLD CORPORATION October ___,
2006
Per:
Authorized
Signatory
This
is the first page of an agreement comprised of pages
(including the exhibits).
TERMS
AND CONDITIONS OF SUBSCRIPTION AND RENUNCIATION AGREEMENT
FOR
UNITS OF APOLLO
GOLD CORPORATION
Scheme
A
Definitions
"Act"
means the Income
Tax Act (Canada),
together with any and all regulations promulgated thereunder, as amended
from
time to time;
"Agreement"
means this subscription and renunciation agreement as the same may be amended,
supplemented or restated from time to time;
"Business
Day" means a day on which Canadian chartered banks are open for the transaction
of regular business in the City of Toronto, Ontario;
"Canadian
Exploration Expense(s)" or "CEE" means Canadian exploration expense described
in
paragraph (f) of the definition of "Canadian exploration expense" in subsection
66.1(6) of the Act, or would be described in paragraph (h) of that definition
if
the reference therein to paragraphs (a) to (d) and (f) to (g.1) was a reference
to paragraph (f), excluding amounts which are prescribed to constitute "Canadian
exploration and development overhead expense" for purposes of paragraph
66(12.6)(b) of the Act, Canadian exploration expenses to the extent of the
amount of any assistance described in paragraph 66(12.6)(a) of the Act, any
expenditures described in paragraph (b.1) of subsection 66(12.6) of the Act,
and
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 Act;
"Closing
Date" means October
►,
2006 or
such other date as the Company and the Subscriber
may
mutually agree upon in writing;
"Commitment
Amount" means the amount equal to Cdn$0.45
multiplied by the number of Flow-Through Units subscribed and paid for pursuant
to this Agreement;
"CRA"
means Canada Revenue Agency;
"Expenditure
Period" means the period commencing on the date of acceptance of this
Subscription Agreement and ending on the earlier of:
(i) the
date
on which the Commitment Amount has been fully expended in accordance with
the
terms hereof; and
(ii) December
31, 2007;
"Flow-Through
Mining Expenditure" means an expense which is a "flow-through mining
expenditure" as defined in subsection 127(9) of the Act and expenses described
as "eligible Ontario exploration expenditures" within the meaning of subsection
8.4.3(2) of the Income
Tax Act
(Ontario);
"Flow-Through
Shares" has the meaning given to such term in the first paragraph of this
Agreement;
"Flow-Through
Units" has the meaning given to such term in the first paragraph of this
Agreement;
"Flow-Through
Warrants" has the meaning given to such term in the first paragraph of this
Agreement;
2
"Information"
means all information regarding the Company that is, or becomes, publicly
available, together with all information prepared by the Company and provided
to
the Subscriber;
"Person"
means an individual, a firm, a corporation, a syndicate, a partnership, a
trust,
an association, an unincorporated organization, a joint venture, an investment
club, a government or an agency or political subdivision thereof and every
other
form of legal or business entity of whatsoever nature or kind;
"Prescribed
Forms" means the forms prescribed from time to time under
or
pursuant to
subsection 66(12.7) of the Act filed or to be filed by the Company within
the
prescribed times renouncing to the Subscriber the Qualifying Expenditures
incurred pursuant to this Agreement and all parts or copies of such forms
required by the CRA to be delivered to the Subscriber;
"Prescribed
Relationship" means a relationship between the Company and the Subscriber
where
the Subscriber and the Company are related or otherwise do not deal at "arm's
length" for purposes of the Act;
"principal-business
corporation" means a "principal-business corporation" as defined in subsection
66(15) of the Act;
"Proposed
Amendments" means the draft legislation to amend the Act and regulations
thereto
released by the Minister of Finance (Canada) on December 20, 2002 and July
18,
2005;
"Qualifying
Expenditures" means expenditures that are CEE, which qualify as a Flow-Through
Mining Expenditure and which are made or 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 Act and this Agreement with
an
effective date not later than December 31, 2006 and in respect of which,
but for
the renunciation, the Corporation would be entitled to a deduction from income
for income tax purposes;
"Termination
Date" means December 31, 2007.
Terms
of the Offering
2. Each
Flow-Through Unit will consist of one Flow-Through Share and one-half of
one
Flow-Through Warrant. Of the subscription price of Cdn$0.45
per
Flow-Through Unit, the Company intends to allocate $0.449
to the
price of the Flow-Through Share comprised in each Flow-Through Unit and $0.001
to the price of the one-half of one Flow-Through Warrant comprised in each
Flow-Through Unit. Each whole Flow-Through Warrant will entitle
the holder thereof
to
purchase one common share in
the
capital of
the
Company that is not a "flow-through
share"
"Common
Share") at an
exercise price of $1.00 per Common Share, subject to adjustment in certain
events, at any time on or before 5:00 p.m. (Toronto time) on the date that
is 12
months from the date of issuance of the Flow-Through Warrant, and for any
Flow-Through Warrant not exercised during the 12 month period after the issuance
of the Flow-Through Warrant, at an exercise price of $1.15 per Common Share,
subject to adjustment in certain events, at any time on or before 5:00 p.m.
(Toronto time) on the date that is 24 months from the date of issuance of
the
Flow-Through Warrant.
The
Flow-Through Warrants shall be in such form and contain such terms as shall
be
mutually approved by the Company and the Subscriber. The Company and the
Subscriber agree that the Flow-Through Shares
and the
Flow-Through Warrants will
be
"flow-through shares" as defined in subsection 66(15) of the Act, and,
accordingly, the Company agrees to: (a) incur Qualifying Expenditures in
an
amount equal to the Commitment Amount during the period from and after the
Closing Date to and including December 31, 2007; and (b) renounce Qualifying
Expenditures equal to the Commitment Amount to the undersigned with an effective
date no later than December 31, 2006.
3
3. The
Subscriber acknowledges (on its own behalf and, if applicable, on behalf
of each
person on whose behalf the Subscriber is contracting) that this subscription
is
subject to rejection or allotment by the Company in whole or in
part.
Representations,
Flow-Through Warranties, Covenants and Acknowledgments by
Subscriber
4. By
executing this subscription, the Subscriber (and, if applicable, the others
for
whom it is contracting hereunder) represents, warrants, covenants and
acknowledges to the Company (and acknowledges that the Company and its counsel
are relying thereon) that:
(a) the
Subscriber has been independently advised as to restrictions with respect
to
trading in the Flow-Through Shares and Flow-Through Warrants comprising the
Flow-Through Units (collectively, the "Securities") imposed by applicable
securities legislation in the jurisdiction in which the Subscriber resides,
confirms that no representation has been made to the Subscriber by or on
behalf
of the Company with respect thereto, acknowledges that the Subscriber is
aware
of the characteristics of the Securities, the risks relating to an investment
therein, and that the Subscriber may not be able to resell the Securities
until
the expiration of the applicable hold period except in accordance with limited
exemptions under applicable securities legislation and regulatory policy
and the
Subscriber agrees that any certificates representing the Securities may bear
a
legend indicating that the sale of such securities is restricted. The Subscriber
further acknowledges that the Subscriber should consult its own legal counsel
in
its jurisdiction for full particulars of applicable resale
restrictions;
(b) the
Subscriber has relied solely upon publicly available information relating
to the
Company and not upon any verbal or written representation as to fact or
otherwise made by or on behalf of the Company except as expressly set forth
herein;
(c) unless
the Subscriber is purchasing under subparagraph 4(d), (A) the Subscriber
is
purchasing the Flow-Through Units as principal, the
Subscriber is resident in Ontario or otherwise subject to the applicable
securities laws of Ontario, the Subscriber is an "accredited investor" as
defined in National Instrument 45-106 entitled Prospectus
and Registration and Exemptions promulgated
under the Securities
Act (Ontario)
and has concurrently executed and delivered to the Company
a
Representation Letter in the form attached as Exhibit "1" to this Subscription
Agreement indicating
that the Subscriber fits within one of the categories of "accredited investor"
set forth in such definition or (B) the Subscriber is purchasing as principal
sufficient Flow-Through Units such that the aggregate acquisition cost of
the
Flow-Through Units is not less than $150,000 payable in cash and the Subscriber
and such disclosed principal, if applicable, is not a corporation, syndicate,
partnership or other form of incorporated or non-incorporated entity or
organization created solely to permit the purchase of the Flow-Through Units
by
a group of individuals whose individual share of the aggregate acquisition
cost
of the Flow-Through Units is less than $150,000 payable in cash;
(d) if
the
Subscriber
is not
purchasing as principal, the
Subscriber is
duly
authorized to enter into this Subscription Agreement and to execute all
documentation in
connection with the purchase on
behalf
of each beneficial purchaser and to provide and agree to all Subscriber's
representations, warranties and covenants on behalf of such beneficial
purchasers, the
Subscriber
acknowledges that the Company may be required by law to disclose to certain
regulatory authorities, the identity of each beneficial purchaser of
Flow-Through Units for whom the
Subscriber
may be
acting, the
Subscriber
and each
beneficial purchaser is resident in Ontario and the
Subscriber
is
acting as agent for one or more disclosed principals, each of such principals
is
purchasing as principal for its own account, and each of such principals
complies with subsection 4(c);
(e) the
Subscriber acknowledges that:
4
(i) no
securities commission or similar regulatory authority has reviewed or passed
on
the merits of the Flow-Through Units; and
(ii) there
is
no government or other insurance covering the Flow-Through Units;
and
(iii) there
are
risks associated with the purchase of the Flow-Through Units; and
(iv) there
are
restrictions on the Subscriber's ability to resell the Securities and it
is the
responsibility of the Subscriber to find out what those restrictions are
and to
comply with them before selling the Securities; and
(v) the
Company has advised the Subscriber that the Company is relying on an exemption
from the requirements to provide the Subscriber with a prospectus and to
sell
securities through a person or company registered to sell securities under
the
Securities
Act (Ontario)
and other applicable securities laws and, as a consequence of acquiring
securities pursuant to this exemption, certain protections, rights and remedies
provided by the Securities
Act (Ontario)
and other applicable securities laws, including statutory rights of rescission
or damages, will not be available to the Subscriber;
(f) if
an
individual, the Subscriber is of the full age of majority and is legally
competent to execute this Subscription Agreement and take all action pursuant
hereto;
(g) this
Agreement has been duly and validly authorized, executed and delivered by
and
constitutes a legal, valid, binding and enforceable obligation of the
Subscriber;
(h) if
a
company,
partnership, unincorporated association or other entity, the Subscriber has
the
legal capacity and competence to enter into and be bound by this Agreement
and
further certifies that all necessary approvals of directors, shareholders
or
otherwise have been given and obtained;
(i) the
Subscriber has such knowledge in financial and business affairs as to be
capable
of evaluating the merits and risks of the Subscriber's investment and the
Subscriber, or, where the Subscriber is not purchasing as principal, each
beneficial purchaser, is able to bear the economic risk of loss of its
investment;
(j) the
Subscriber does not act jointly or in concert with any other Subscriber for
the
purpose of the acquisition of the Flow-Through Units;
(k) the
Subscriber understands that the Company is relying on an exemption from the
requirements to provide the Subscriber with a prospectus and to sell securities
through a person or company registered to sell securities under the Securities
Act (Ontario)
and other applicable securities laws and, as a consequence of acquiring
securities pursuant to this exemption, certain protections, rights and remedies
provided by the Securities
Act (Ontario)
and other applicable securities laws, including statutory rights of rescission
or damages, will not be available to the Subscriber;
(l) if
required by applicable securities legislation, regulations, rules, policies
or
orders or by any securities commission, stock exchange or other regulatory
authority, the Subscriber will execute, deliver, file and otherwise assist
the
Company in filing, such reports, undertakings and other documents with respect
to the issue of the Flow-Through Units;
(m) the
entering into of this Agreement and the transactions contemplated hereby
will
not result in a violation of any of the terms or provisions of any law
applicable to the Subscriber, or if the Subscriber is not a natural person,
any
of the Subscriber's constating documents, or any agreement to which the
Subscriber is a party or by which it is bound;
5
(n) the
Subscriber acknowledges that it has been encouraged to and should obtain
independent legal, investment and tax advice with respect to its subscription
for the Flow-Through Units and accordingly, has been independently advised
as to
the meanings of all terms contained herein relevant to the Subscriber for
purposes of giving representations, warranties and covenants under this
Agreement;
(o) the
Subscriber acknowledges and confirms that no representation has been made
to the
Subscriber with respect to the future value or price of any of the Flow-Through
Shares or Flow-Through Warrants comprising the Flow-Through Units;
(p) no
securities commission, agency, governmental authority, regulatory body, stock
exchange or other regulatory body has reviewed or passed on the merits of
the
Securities;
(q) the
Subscriber acknowledges that the Company contemplates completing the Offering
and that the aggregate gross proceeds of the Offering will be up to
$1,000,000;
(r) the
Subscriber acknowledges that the Company's counsel is acting as counsel to
the
Company 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 Flow-Through
Units
shall be borne by the Subscriber;
(t) the
Subscriber is aware and has been advised that the subscription monies payable
in
respect of the Flow-Through Units represent "seed" or "risk" capital for
the
Company, which is in a speculative stage of development and without substantial
assets;
(u) the
Subscriber acknowledges that all certificates representing the Flow-Through
Shares and Flow-Through Warrants comprising the Flow-Through Units will bear
the
following
restrictive
legends required by applicable securities laws and stock exchange
rules:
"UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITY MUST NOT
TRADE THE SECURITY BEFORE [four
months and one day from the Closing Date]."
and
"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 TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT
OF
TRANSACTIONS ON TSX."
(v) the
funds
which will be advanced by the Subscriber to the Company hereunder will not
represent proceeds of crime for the purposes of the Proceeds
of Crime (Money Laundering) Act (Canada)
(the "PCMLA") and the Subscriber acknowledges that the Company may in the
future
be required by law to disclose the Subscriber's name and other information
relating to this Subscription Agreement and the Subscriber's subscription
hereunder, on a confidential basis, pursuant to the PCMLA. To the best of
the
knowledge of the Subscriber: (a) none of the subscription funds to be provided
by the Subscriber: (i) have been or will be derived from or related to any
activity that is deemed criminal under the law of Canada, the United States
of
America, or any other jurisdiction; or (ii) are being tendered on behalf
of a
person or entity who has not been identified to the Subscriber; and (b) it
shall
promptly notify the Company
if the
Subscriber discovers that any of such representations ceases to be true,
and
will provide the Company
with
appropriate information in connection therewith;
6
(w) the
Subscriber, and if the Subscriber is a partnership, any partner of the
partnership, does not and will not have prior to January 1, 2008 a Prescribed
Relationship with the Company;
(x) the
Subscriber will not enter into any agreement or arrangement with any person
or
partnership (other than the Company or a specified person in relation to
the
Company (as defined in regulation 6202.(5)) which will cause the Flow Through
Shares or Flow-Through Warrants to be "prescribed shares" or "prescribed
rights"
the purposes of section 6202.1 of the regulation to the Act and the Proposed
Amendments;
(y) the
Subscriber is not a non-resident of Canada for purposes of the Act;
and
(z) The
representations, warranties and covenants of the Subscriber herein are made
with
the intent that they be relied upon in determining the suitability of a
purchaser of Flow-Through Units and will be true and correct at the Closing
Time
on the Closing Date and will survive the completion of the issuance of the
Flow-Through Units. The Subscriber agrees to indemnify the Company and its
directors and officers against all losses, claims, costs, expenses and damages
or liabilities which any of them may suffer or incur caused or arising from
reliance thereon. The Subscriber undertakes to immediately notify the Company
at
▇▇▇▇
▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇- ▇▇▇▇, Attention:
President,
of any
change in any statement or other information relating to the Subscriber set
forth herein which takes place prior to the Closing Time on the Closing
Date.
Representations,
Flow-Through Warranties and Covenants of Company
5. The
Company hereby represents, warrants and covenants and agrees to and with
the
Subscriber (and acknowledges that the Subscriber is relying thereon)
that:
(a) the
Company has the full corporate right, power and authority to execute and
deliver
this Subscription Agreement, to issue the Flow-Through Shares and Flow-Through
Warrants comprising the Flow-Through Units to the Subscriber and to incur
and
renounce to the Subscriber, Qualifying Expenditures in an amount equal to
the
Commitment Amount prior to the Termination Date;
(b) upon
acceptance this Subscription Agreement constitutes a binding obligation of
the
Company enforceable in accordance with its terms;
(c) it
will
keep proper books, records and accounts of all Qualifying Expenditures and
all
transactions affecting the Commitment Amount and the Qualifying Expenditures,
and upon reasonable notice, to make such books, records and accounts available
for inspection and audit by or on behalf of the Subscriber;
(d) it
will
incur, during the Expenditure Period, Qualifying Expenditures in such amount
that enables the Company to renounce to the Subscriber, in accordance with
the
Act and this Agreement, Qualifying Expenditures in an amount equal to the
Commitment Amount;
(e) it
will
renounce, in accordance with the Act and this Agreement, to the Subscriber
with
an effective date of renunciation on or before December 31, 2006, Qualifying
Expenditures which have been incurred or will be incurred during the Expenditure
Period in an amount equal to the Commitment Amount;
7
(f) it
will
timely file all forms required under the Act and any corresponding provincial
legislation, including Prescribed Forms, necessary to effectively renounce
Qualifying Expenditures equal to the Commitment Amount to the Subscriber
as
provided herein and to provide the Subscriber with a copy of all such forms
as
are required to be provided on a timely basis;
(g) the
Company will not be subject to the provisions of subsection 66(12.67) of
the Act
in a manner which impairs its ability to renounce Qualifying Expenditures
to the
Subscriber in an amount equal to the Commitment Amount;
(h) forthwith
after the Closing Date, the Company shall issue and file a press release
announcing the placement of the Flow-Through Units with the "MineralFields
Group" ("MFG")
and
will
consult with
MFG
regarding an appropriate reference in such press release to the subscription
by
MFG. In the event a mineral discovery or other positive news is generated
in
relation to any expenditures funded hereunder, the Company shall issue and
file
a timely press release in the normal course and shall consult with MFG regarding
the inclusion in such press release of an appropriate reference to the fact
that
such expenditures were partially funded by MFG through a private
placement;
(i) the
Company has filed in a timely manner all necessary tax returns and notices
and
has paid all applicable taxes of whatsoever nature for all tax years prior
to
the date hereof to the extent that such taxes have become due or have been
alleged to be due and the Company is not aware of any tax deficiencies or
interest or penalties accrued or accruing, or alleged to be accrued or accruing,
thereon where, in any of the above cases, it might reasonably be expected
to
result in any material adverse change in the condition (financial or otherwise),
or in the earnings, business, affairs or prospects of the Company and there
are
no agreements, waivers or other arrangements providing for an extension of
time
with respect to the filing of any tax return by the Company or the payment
of
any material tax, governmental charge, penalty, interest or fine against
the
Company. There are no material actions, suits, proceedings, investigations
or
claims now threatened or pending against the Company which could result in
a
material liability in respect of taxes, charges or levies of any governmental
authority, penalties, interest, fines, assessments or reassessments or any
matters under discussion with any governmental authority relating to taxes,
governmental charges, penalties, interest, fines, assessments or reassessments
asserted by any such authority and the Company has withheld (where applicable)
from each payment to each of the present and former officers, directors,
employees and consultants thereof the amount of all taxes and other amounts,
including, but not limited to, income tax and other deductions, required
to be
withheld therefrom, and has paid the same or will pay the same when due to
the
proper tax or other receiving authority within the time required under
applicable tax legislation;
(j) except
as
disclosed in the Information, the Company does not owe any amount to, nor
has
the Company any present loans to, or borrowed any amount from or is otherwise
indebted to, any officer, director, employee or securityholder of either
of them
or any Person not dealing at "arm's length" (as such term is defined in the
Act)
with any of them except for usual employee reimbursements and compensation
paid
in the ordinary and normal course of the business of the Company. Except
usual
employee or consulting arrangements made in the ordinary and normal course
of
business, the Company is not a party to any contract, agreement or understanding
with any officer, director, employee or securityholder thereof or any other
Person not dealing at arm's length with the Company. No officer, director
or
employee of the Company and no Person which is an affiliate or associate
of any
of the foregoing Persons, owns, directly or indirectly, any interest (except
for
shares representing less than 5% of the outstanding shares of any class or
series of any publicly traded company) in, or is an officer, director, employee
or consultant of, any Person which is, or is engaged in, a business competitive
with the business of the Company which could materially adversely impact
on the
ability to properly perform the services to be performed by such Person for
the
Company. No officer, director, employee or securityholder of the Company
has any
cause of action or other claim whatsoever against, or owes any amount to,
the
Company except for claims in the ordinary and normal course of the business
of
the Company such as for accrued vacation pay or other amounts or matters
which
would not be material to the Company;
8
(k) upon
issue, the Flow-Through Shares and Flow-Through Warrants will
be
"flow-through shares" as defined in subsection 66(15) of the Act and are
not and
will not be "prescribed shares" or "prescribed rights" within the meaning
of
section 6202.1 of the regulations to the Act and the Proposed Amendments.
To the
best of its knowledge, the Company 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, any partner or limited partner of the
partnership;
(l) the
Company is a "principal-business corporation" as defined in subsection 66(15)
of
the Act and will continue to be a "principal-business corporation" until
such
time as all of the Qualifying Expenditures required to be renounced under
this
Agreement have been incurred and validly renounced pursuant to the
Act;
(m) the
Company has no reason to believe that it will be unable to incur, on or after
the Closing Date and on or before the Termination Date or that it will be
unable
to renounce to the Subscriber effective on or before December 31, 2006,
Qualifying Expenditures in an aggregate amount equal to the Commitment Amount
and the Company has no reason to expect any reduction of such amount by virtue
of subsection 66(12.73) of the Act;
(n) the
Company shall deliver to the Subscriber, on or before March 1, 2007, the
relevant Prescribed Forms, fully completed and executed, renouncing to the
Subscriber Qualifying Expenditures in an amount equal to the Commitment Amount
with an effective date of no later than December 31, 2006;
(o) the
Qualifying Expenditures to be renounced by the Company 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 Act for purposes of paragraph
66(12.6)(b) of
the
Act) of the Company or amounts which constitute specified expenses for seismic
data described in paragraph 66(12.6)(b.1) of the 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
Act;
(iii) will
not
include any amount that has previously been renounced by the Company to the
Subscriber or to any other Person;
(iv) would
be
deductible by the Company in computing its income for the purposes of Part
I of
the Act but for the renunciation to the Subscriber; and
(v) will
not
be subject to any reduction under subsection 66(12.73) of the Act;
(p) the
Company shall not reduce the amount renounced to the Subscriber pursuant
to
subsection 66(12.6) of
the
Act;
9
(q) if
the
Company 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 Act and the receipt
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 Commitment Amount, the Company shall remit to the Subscriber the
benefit of all amounts received or receivable in respect of such government
assistance to the extent of such reduction; and
(r) the
Company shall use the gross proceeds from the issuance of Flow-Through Units
for
the exploration program of the Company to be conducted on the projects of
the
Company located in the Province of Ontario.
Indemnity
6. If
the
Company does not incur and renounce to the Subscriber, effective on or before
December 31, 2006, and incur on or before December 31, 2007 Qualifying
Expenditures equal to the Commitment Amount, as the sole recourse to the
Subscriber for such event, the Company shall indemnify and hold harmless
the
Subscriber and each of the partners thereof if the Subscriber is a partnership
or a limited partnership (for the purposes of this paragraph each an
"Indemnified Person") as to, and pay in settlement thereof to the Indemnified
Person on or before the twentieth Business Day following the Termination
Date,
an amount equal to the amount of any tax payable under the Act (and under
any
corresponding provincial legislation) by any Indemnified Person as a consequence
of such failure. In the event that the CRA reduces the amount renounced by
the
Company to the Subscriber pursuant to subsection 66(12.73) of the Act, as
the
sole recourse to the Subscriber for such event, the Company 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 payable
under
the Act (and under any corresponding provincial legislation) by the Indemnified
Person as a consequence of such reduction.
To
the
extent that any Person entitled to be indemnified hereunder is not a party
to
this Agreement, the Subscriber shall obtain and hold the rights and benefits
of
this 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 Agreement.
Closing
7. The
Subscriber agrees to deliver to the Company at closing: (a) this duly completed
and executed Subscription Agreement; (b) if the Subscriber is an "accredited
investor" a fully executed and completed Representation Letter in the form
of
Exhibit 2; and, (c) a certified cheque or bank draft payable to the Company's
counsel in trust, for the aggregate subscription price of the Flow-Through
Units
subscribed for under this Agreement or payment of the same amount in such
other
manner as is acceptable to the Company, and such other documents as the Company
reasonably requires.
8. The
sale
of the Flow-Through Units will be completed by couriered document exchange
at
1:00 p.m. (Toronto time) (the "Closing Time") the day of closing (the "Closing
Date"), but not later than October
26
2006,
unless the Subscriber consents. The Subscriber acknowledges and agrees that
this
offering of Flow-Through Units is not subject to any minimum subscription
level.
9. The
Company shall be entitled to rely on delivery of a facsimile copy of executed
Subscription Agreements, and acceptance by the Company of such agreements
shall
be legally effective to create a valid and binding agreement between the
Subscriber and the Company in accordance with the terms hereof. Notwithstanding
the foregoing, the Subscriber shall deliver originally executed copies of
the
documents listed in section 7
hereof
to the Company within two business days of the Closing Date. In addition,
this
Subscription Agreement may be executed in counterparts, each of which shall
be
deemed an original and all of which shall constitute one and the same
document.
10
Privacy
Legislation
10. The
Subscriber acknowledges and consents to the fact that the Company is collecting
the Subscriber's (and any beneficial purchaser for which the Subscriber is
contracting hereunder) personal information (as that term is defined under
applicable privacy legislation, including, without limitation, the Personal
Information Protection and Electronic Documents Act
(Canada)
and any other applicable similar replacement or supplemental provincial or
federal legislation or laws in effect from time to time) for the purpose
of
completing the Subscriber's subscription. The Subscriber acknowledges and
consents to the Company retaining the personal information for so long as
permitted or required by applicable law or business practices. The Subscriber
further acknowledges and consents to the fact that the Company may be required
by applicable securities laws, stock exchange rules and/or Investment Dealers
Association of Canada rules to provide regulatory authorities any personal
information provided by the Subscriber respecting itself (and any beneficial
purchaser for which the Subscriber is contracting hereunder). The Subscriber
represents and warrants that it has the authority to provide the consents
and
acknowledgements set out in this paragraph on behalf of all beneficial
purchasers for which the Subscriber is contracting.
11. In
addition , the Subscriber agrees and acknowledges that:
|
(a)
|
the
Company will deliver certain personal information, including information
regarding the name, address, telephone number and amount subscribed
for,
to the securities regulatory authorities, including the Ontario
Securities
Commission and the Toronto Stock
Exchange;
|
|
(b)
|
the
information is being collected indirectly by the securities regulatory
authorities under authority granted to them in securities
legislation;
|
|
(c)
|
the
information is being collected for the purposes of the administration
and
enforcement of such securities
legislation;
|
|
(d)
|
the
Subscriber can contact the Administrative Assistant to the Director
of
Corporate Finance at the Ontario Securities Commission at Suite
1903, Box
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇ for information
regarding the collection and use of this personal information by
the
Ontario Securities Commission; and
|
|
(e)
|
the
Toronto Stock Exchange collects personal information in forms submitted
by
the Company, which will include personal information regarding
the
Subscriber.
|
General
12. The
contract arising out of this Subscription Agreement shall be governed by
and
construed in accordance with the laws of the Province of Ontario and the
laws of
Canada applicable therein and the Subscriber, the Company each irrevocably
attorn to the jurisdiction of the courts of the Province of
Ontario.
13. Time
shall be of the essence hereof.
11
14. This
Subscription Agreement represents the entire agreement of the parties hereto
relating to the subject matter hereof and there are no representations,
covenants or other agreements relating to the subject matter hereof except
as
stated or referred to herein.
15. The
Subscriber acknowledges and agrees that all costs incurred by the Subscriber
(including any fees and disbursements of any special counsel retained by
the
Subscriber) relating to the sale of the Flow-Through Units to the Subscriber
shall be borne by the Subscriber.
16. The
Company will have the right to accept or reject the Subscriber's offer to
purchase at any time at or prior to the Closing Time. Notwithstanding the
foregoing, the Subscriber acknowledges and agrees that the acceptance of
the
subscription agreement will be conditional among other things upon the sale
of
the Flow-Through Units to the Subscriber being exempt from any prospectus
requirements of all applicable securities laws. The Company will be deemed
to
have accepted this subscription agreement upon the delivery at closing of
the
certificates representing the Flow-Through Shares and Flow-Through Warrants
comprising the Flow-Through Units to or upon the direction of the Subscriber
in
accordance with the provisions hereof.
17. The
covenants, representations and warranties contained herein shall survive
the
closing of the transactions contemplated hereby for a period of one
year.
18. In
this
Subscription Agreement, references to "$" or "Cdn$" are to Canadian
dollars.
12
EXHIBIT
1
REPRESENTATION
LETTER
(FOR
ACCREDITED INVESTORS)
TO: APOLLO
GOLD CORP. (the
"Company")
In
connection with the purchase of units in the capital of the Company
("Flow-Through
Units")
by the
undersigned subscriber or, if applicable, the principal on whose behalf the
undersigned is purchasing as agent (the "Subscriber"
for the
purposes of this Exhibit 2), the Subscriber hereby represents, warrants,
covenants and certifies to the Company that:
|
1.
|
The
Subscriber is purchasing the Flow-Through Units as principal for
its own
account or is deemed to be acting as principal pursuant to National
Instrument 45-106 - Prospectus
and Registration Exemptions
("NI
45-106");
|
|
2.
|
The
Subscriber is an "accredited investor" within the meaning of NI
45-106 by
virtue of satisfying the indicated criterion as set out in Appendix
"A" to
this Representation Letter; and
|
|
3.
|
Upon
execution of this Exhibit 2 by the Subscriber, this Exhibit 2 shall
be
incorporated into and form a part of the Subscription
Agreement.
|
Dated:
October l,
2006.
| FrontierAlt - MineralFields 2004 Flow-Through Limited Partnership | ||
| Print name of Subscriber | ||
| |
|
|
| By: | ||
|
Signature |
||
| PER: ▇▇▇ ▇▇▇▇, President, FrontierAlt - MineralFields 2004 Inc (general partner for FrontierAlt - MineralFields 2004 Flow-Through Limited Partnership) | ||
| Print name of Signatory (if different from Subscriber) | ||
| |
|
|
|
Title |
||
IMPORTANT:
PLEASE INITIAL APPENDIX "A" ON THE NEXT PAGE
13
Accredited
Investor -
(defined in NI 45-106) means:
| o |
(a)
an individual who, either alone or with a spouse, beneficially
owns,
directly or indirectly, financial assets having an aggregate
realizable
value that before taxes, but net of any related liabilities,
exceeds
$1,000,000;
|
| o |
(b)
an individual whose net income before taxes exceeded $200,000
in each of
the 2 most recent calendar years or whose net income before
taxes combined
with that of a spouse exceeded $300,000 in each of the 2 most
recent
calendar years and who, in either case, reasonably expects
to exceed that
net income level in the current calendar year;
|
| o |
(c)
an individual who, either alone or with a spouse, has net assets
of at
least $5,000,000;
|
| o |
(d)
a person, other than an individual or investment fund, that
has net assets
of at least $5,000,000 as shown on its most recently prepared
financial
statements;
|
| o |
(e)
a person in respect of which all of the owners of interests,
direct,
indirect or beneficial, except the voting securities required
by law to be
owned by directors, are persons that are accredited
investors;
|
| o |
(f)
a Canadian financial institution, or a Schedule III bank;
|
| o |
(g)
the Business Development Bank of Canada incorporated under
the
Business
Development Bank of Canada Act (Canada);
|
| o |
(h)
a subsidiary of any person referred to in paragraphs (f) or
(g), if the
person owns all of the voting securities of the subsidiary,
except the
voting securities required by law to be owned by directors
of that
subsidiary;
|
| o |
(i)
a person registered under the securities legislation of a jurisdiction
of
Canada as an adviser or dealer, other than a person registered
solely as a
limited market dealer under one or both of the Securities
Act (Ontario)
or the Securities
Act (Newfoundland
and Labrador);
|
| o |
(j)
an individual registered or formerly registered under the securities
legislation of a jurisdiction of Canada as a representative
of a person
referred to in paragraph (i);
|
| o |
(k)
the Government of Canada or a jurisdiction of Canada, or any
crown
corporation, agency or wholly owned entity of the Government
of Canada or
a jurisdiction of Canada;
|
| o |
(l)
a municipality, public board or commission in Canada and a
metropolitan
community, school board, the Comité de gestion de la taxe scolaire de
l'île de Montréal or an intermunicipal management board in
Québec;
|
| o |
(m)
any national, federal, state, provincial, territorial or municipal
government of or in any foreign jurisdiction, or any agency
of that
government;
|
14
| o |
(n)
a pension fund that is regulated by either the Office of the
Superintendent of Financial Institutions (Canada) or a pension
commission
or similar regulatory authority of a jurisdiction of Canada;
|
| o |
(o)
an investment fund that distributes or has distributed its
securities only
to
|
|
(i)
|
a
person that is or was an accredited investor at the time of
the
distribution;
|
|
(ii)
|
a
person that acquires or acquired securities in the circumstances
referred
to in Sections 2.10 [Minimum
amount investment],
and 2.19 [Additional
investment in investment funds]
of NI 45-106; OR
|
|
(iii)
|
a
person described in paragraph (i) or (ii) that acquires or
acquired
securities under Section 2.18 [Investment
fund reinvestment]
of NI 45-106;
|
| o |
(p)
an investment fund that distributes or has distributed securities
under a
prospectus in a jurisdiction of Canada for which the regulator
or, in
Québec, the securities regulatory authority, has issued a
receipt;
|
| o |
(q)
a trust company or trust corporation registered or authorized
to carry on
business under the Trust
and Loan Companies Act (Canada)
or under comparable legislation in a jurisdiction of Canada
or a foreign
jurisdiction, acting on behalf of a fully managed account managed
by the
trust company or trust corporation, as the case may be;
|
| o |
(r)
a person acting on behalf of a fully managed account managed
by that
person, if that person
|
|
(i)
|
is
registered or authorized to carry on business as an adviser
or the
equivalent under the securities legislation of a jurisdiction
of Canada or
a foreign jurisdiction; and
|
|
(ii)
|
in
Ontario, is purchasing a security that is not a security of
an investment
fund;
|
| o |
(s)
a registered charity under the Income
Tax Act (Canada)
that, in regard to the trade, has obtained advice from an eligibility
adviser or an adviser registered under the securities legislation
of the
jurisdiction of the registered charity to give advice on the
securities
being traded;
|
| o |
(t)
an entity organized in a foreign jurisdiction that is analogous
to any of
the entities referred to in paragraphs (f) to (i) or paragraph
(n) in form
and function;
|
|
þ
|
(u)
an investment fund that is advised by a person registered as
an adviser or
a person that is exempt from registration as an adviser; OR
|
| o |
(v)
a person that is recognized or designated by the securities
regulatory
authority or, except in Ontario and Québec, the regulator as
|
|
(i)
|
an
accredited investor; or
|
|
(ii)
|
an
exempt purchaser in Alberta or British Columbia after NI
45-106 comes into
force;
|
15
and
for
purposes hereof, words and phrases which are used in this Accredited Investor
Certificate and which are defined in NI 45-106 shall have the meaning ascribed
thereto in NI 45-106.
For
the purposes hereof:
|
"bank"
means a bank named in Schedule I or II of the Bank
Act
(Canada).
|
|||
|
"Canadian
financial institution"
means:
|
|||
| (i) | an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of the Act, or | ||
| (ii) | a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services corporation, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction in Canada. | ||
| "control person" has the meaning ascribed to that term in securities legislation except in Manitoba, Newfoundland and Labrador the Northwest Territories, Nova Scotia, Nunavut, Ontario, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Quebec, where "control person" means any person that holds or is one of a combination of persons that holds | |||
|
a
sufficient number of any of the securities of an issuer so as
to affect
materially the control of the issuer, or
|
|||
|
more
than 20% of the outstanding voting securities of an issuer except
where
there is evidence showing that the holding of those securities
does not
affect materially the control of that issuer.
|
|||
|
"eligibility
adviser" means
|
|||
|
(i)
|
a
person that is registered as an investment dealer or equivalent
category
of registration under the securities legislation of the jurisdiction
of a
purchaser and authorized to give advice with respect to the type
of
security being distributed, and
|
||
|
in
Saskatchewan or Manitoba, also means a lawyer who is a practising
member
in good standing with a law society of a jurisdiction of Canada
or a
public accountant who is a member in good standing of an institute
or
association of chartered accountants, certified general accountants
or
certified management accountants in a jurisdiction of Canada
provided that
the lawyer or public accountant must not:
|
|||
|
(A)
|
have
a professional, business or personal relationship with the issuer,
or any
of its directors, executive officers, founders or control persons,
and
|
||
|
(B)
|
have
acted for or been retained personally or otherwise as an employee,
executive officer, director, associate or partner of a person
that has
acted for or been retained by the issuer or any of its directors,
executive officers, founders or control persons within the previous
12
months.
|
||
16
|
(e)
|
"executive
officer"
means for an issuer, an individual who is:
|
||
| (a) | a chair, vice-chair or president; | ||
| (b) | a vice-president in charge of a principal business unit, division or function including sales, finance or production; | ||
| (c) | an officer of the issuer or any of its subsidiaries and who performs a policy-making function in respect of the issuer; or | ||
| (d) | performing a policy making function in respect of the issuer. | ||
| (f) | "financial assets" means cash, securities or a contract of insurance, a deposit or an evidence of deposit that is not a security for the purposes of securities legislation. | ||
| (g) | "founder", in respect of an issuer, means a person or company who, | ||
|
(i)
|
acting
alone, in conjunction or in concert with one or more persons,
directly or
indirectly, takes the initiative in founding, organizing or substantially
reorganizing the business of the issuer, and
|
||
|
(ii)
|
at
the time of the trade is actively involved in the business of
the
issuer.
|
||
| (h) | "fully managed account" means an account of a client for which a person or company makes the investment decisions if that person or company has full discretion to trade in securities for the account without requiring the client's express consent to a transaction. | ||
| (i) | "investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure. | ||
| (j) | "jurisdiction" means a province or territory of Canada except when used in the term foreign jurisdiction. | ||
| (k) | "non-redeemable investment fund" has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure. | ||
| (l) | "person" includes | ||
| (a) | an individual; | ||
| (b) | a corporation; | ||
| (c) | a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and | ||
| (d) | an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative. | ||
| (m) | "related liabilities" means | ||
| (i) | liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or | ||
| (ii) | liabilities that are secured by financial assets. | ||
17
| (n) | "Schedule III bank" means an authorized foreign bank named in Schedule III of the Bank Act (Canada). | ||
| (o) | "subsidiary" means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of a subsidiary. | ||
18