SUBSCRIPTION AGREEMENT FOR FLOW-THROUGH SHARES APOLLO GOLD CORPORATION THE FLOW-THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE PURCHASED BY RESIDENTS OF ONTARIO, BRITISH COLUMBIA AND ALBERTA, IN EACH CASE PURSUANT TO AVAILABLE EXEMPTIONS UNDER...
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
APOLLO
GOLD CORPORATION
THE
FLOW-THROUGH SHARES BEING OFFERED FOR SALE MAY ONLY BE
PURCHASED
BY RESIDENTS OF ONTARIO, BRITISH COLUMBIA AND ALBERTA,
IN
EACH CASE PURSUANT TO AVAILABLE EXEMPTIONS UNDER
APPLICABLE
SECURITIES LEGISLATION
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The
following items in this Subscription Agreement have been completed
(please
initial each applicable box):
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All
Purchasers
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o
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All
Purchaser Information in the boxes on page
2.
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o
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Certificate
(for Accredited Investors Resident in Canada) attached as Schedule
A on
pages 22-27.
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o
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Registration
Rights Agreement attached as Schedule C on pages
31-49
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A
completed and originally executed copy of this Subscription Agreement, including
the items required to be completed as set out above, must be delivered, by
no
later than 1:00 p.m. (Vancouver time) on October 24, 2007, to Xxxxxxx
Securities Inc.
at
Suite 0000 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0, Attention: Xxxx
XxXxxx (Tel: 000-000-0000, Facsimile: 604-697-7498).
APOLLO
GOLD CORPORATION
SUBSCRIPTION
AGREEMENT FOR FLOW-THROUGH SHARES
TO: APOLLO
GOLD CORPORATION
AND
TO: XXXXXXX
SECURITIES INC. (THE
"UNDERWRITER")
The
undersigned (the "Subscriber")
hereby
irrevocably subscribes for and offers to purchase from Apollo Gold Corporation
(the "Corporation")
that
number of Flow-Through Shares (as hereinafter defined) specified below at a
price of $0.55 per Flow-Through Share. The Subscriber agrees to be bound by
the
terms and conditions set forth in the attached "Terms and Conditions of
Subscription for Flow-Through Shares" and acknowledges that the Corporation
and
the Underwriter, and their respective counsel, are relying upon the
representations, warranties and covenants of the Subscriber set forth therein
and in the schedules thereto. The purchase and sale of the Flow-Through Shares
hereunder forms part of a larger offering of up to 7,454,545 Flow-Through Shares
(the "Offering")
consisting of (i) 4,600,000 Flow-Through Shares which the Underwriter has agreed
to purchase or arrange substitute purchasers for (the "Bought
Deal Offering");
and
(ii) up
to
2,854,545 Flow-Through Shares (the "Best
Efforts Offering")
for
which the Underwriter has agreed to act as agent on a best efforts private
placement basis.
SUBSCRIPTION
AND SUBSCRIBER INFORMATION
Please
print ALL
information (other than signatures), as applicable, in the space provided below
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(Name
of Subscriber): _________________________________
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Number
of Flow-Through Shares: ___________ x
$0.55
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Account
Reference (if applicable): _______________________
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=
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Aggregate
Subscription Price: _____________________
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By:
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(the
"Subscription
Price")
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Authorized
Signature
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(Official
Capacity or Title - if the Subscriber is not an
individual)
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If
the Subscriber is signing as agent for a principal (beneficial purchaser)
and is not purchasing as trustee or agent for accounts fully managed
by
it, complete the following:
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(Name
of individual whose signature appears above if different than the
name of
the subscriber printed above.)
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(Name
of Principal)
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(Subscriber’s
Address, including Municipality and Province)
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(Principal’s
Address)
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S.I.N.
or Taxation Account of Subscriber
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(Telephone
Number)
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(Email
Address)
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Account
Registration Information:
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Delivery
Instructions as set forth below:
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(Name)
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(Name)
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(Account
Reference, if applicable)
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(Address,
including Postal Code)
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(Address,
including Postal Code)
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(Account
Reference, if applicable)
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(Contact
Name) (Telephone
Number)
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Number
and kind of securities of the Corporation held, directly or indirectly,
if
any:
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1.
State whether Subscriber is an Insider (as such term is hereinafter
defined) of the Corporation:
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Yes
¨
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No ¨
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INSTRUCTIONS
FOR SUBSCRIBERS
The
Subscriber must:
(1) Read
this Subscription Agreement;
(2) Complete
and execute the face page of this Subscription
Agreement;
(3) Read
and complete the Certificate set out in Schedule
“A”;
(4) Read
and complete the Registration Rights Agreement set out in Schedule
“C”;
(5) Make
payment for the Subscribed Shares as required by the Terms and Conditions;
and
(6) Deliver
the signed documents as required by the Terms and
Conditions.
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*
* * * *
ACCEPTANCE:
The
Corporation hereby (i) accepts the above subscription subject to the terms
and
conditions contained in this Subscription Agreement; (ii) represents and
warrants to the Subscriber that the representations and warranties made by
the
Corporation to the Underwriter in the Underwriting/Agency Agreement (as defined
herein), which are incorporated by reference in this Subscription Agreement,
are
true and correct as of the date of the Underwriting/Agency Agreement (except
as
waived by the Underwriter); and (iii) agrees that the Subscriber is entitled
to
rely, subject to the limitations and other terms of the Underwriting/Agency
Agreement, on the representations and warranties made by the Corporation to
the
Underwriter (except as waived by the Underwriter) and on the covenants made
by
the Corporation (except as waived or modified by the Underwriter) in the
Underwriting/Agency Agreement, each of which are incorporated by reference
in
this Subscription Agreement.
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APOLLO
GOLD CORPORATION
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Per:
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Date:
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TERMS
AND CONDITIONS OF SUBSCRIPTION FOR
FLOW-THROUGH
SHARES
ARTICLE
1 INTERPRETATION
1.1 Definitions
Whenever
used in this Subscription Agreement, unless there is something in the subject
matter or context inconsistent therewith, the following words and phrases shall
have the respective meanings ascribed to them as follows:
"affiliate"
shall
have the meaning ascribed to such term in the Securities
Act
(Ontario).
"AMEX"
means
the American Stock Exchange.
"AMEX
Approval"
means
the approval of the listing of up to 7,454,545 Flow-Through Shares to be sold
in
the Offering.
"Best-Efforts
Offering"
shall
have the meaning ascribed to such term on the face page of this Subscription
Agreement.
"Bought-Deal
Offering"
shall
have the meaning ascribed to such term on the face page of this Subscription
Agreement.
"Business
Day"
means a
day other than a Saturday, Sunday or any other day on which the principal
chartered banks located in Toronto are not open for business.
"Canadian
Exploration Expense"
or
"CEE"
means
Canadian exploration expense as described in paragraph (f) of the definition
of
“Canadian
exploration expense”
in
subsection 66.1(6) of the Tax Act or that would be described in paragraph (h)
of
such definition if the reference therein to “paragraphs (a) to (d) and (f) to
(g.1)” were a reference to paragraph (f), excluding expenses that are
“Canadian
exploration and development overhead expenses”
(as
defined in the regulations to the Tax Act for
purposes of paragraph 66(12.6)(b) of the Tax Act) of the Corporation or amounts
which constitute specified expenses for seismic data described in paragraph
66(12.6)(b.1) of the Tax Act or
any
expenses for prepaid services or rent that do not qualify as outlays and
expenses for the period as described in the definition of “expense”
in
subsection 66(15).
"Closing"
shall
have the meaning ascribed to such term in Section 4.1.
"Closing
Date"
shall
have the meaning ascribed to such term in Section 4.1.
"Closing
Time"
shall
have the meaning ascribed to such term in Section 4.1.
"Common
Shares"
means
common shares in the capital of the Corporation.
"Compensation
Options"
has the
meaning ascribed in Section 8.1.
"Control
Person"
means a
person, company or combination of persons or companies described in clause
(c)
of the definition of "distribution" in subsection 1(1) of the Securities
Act
(Ontario).
"Corporation"
means
Apollo Gold Corporation and includes any successor corporation to or of the
Corporation.
"distribution"
shall
have the meaning ascribed to such term in the Securities
Act
(Ontario).
"Flow-Through
Shares"
means
Common Shares in the capital of the Corporation being issued which qualify
as
"flow-through shares" as defined in subsection 66(15) of the Tax
Act.
"Insider"
shall
have the meaning ascribed to such term in the Securities
Act
(Ontario).
"Offering"
means
the offering of up to 7,454,545 Flow-Through Shares, consisting of the Bought
Deal Offering of 4,600,000 Flow-Through Shares and the Best Efforts Offering
of
up to 2,854,545 Flow-Through Shares pursuant to the Underwriting/Agency
Agreement, as defined on page 1 of this Subscription Agreement.
"Person"
means
any individual (whether acting as an executor, trustee, administrator, legal
representative or otherwise), corporation, firm, partnership, sole
proprietorship, syndicate, joint venture, trustee, trust, unincorporated
organization or association, and pronouns have a similar extended
meaning.
"Prescribed
Forms"
means
the forms prescribed from time to time under subsection 66(12.7) of the Tax
Act
filed or to be filed by the Corporation within the prescribed times renouncing
to the Subscriber the Resource Expenses incurred pursuant to this Subscription
Agreement and all parts or copies of such forms required by Revenue Canada
to be
delivered to the Subscriber.
"Prescribed
Relationship"
means a
relationship between the Corporation and the Subscriber (including any
beneficial purchaser for whom the Subscriber acts) as described in subsection
66(12.671) of the Tax Act, or where the Subscriber and the Corporation are
related or otherwise do not deal at arm’s length for purposes of the Tax
Act.
"Proposed
Amendments"
means
the draft legislation to amend the Tax Act and regulations thereto released
by
the Minister of Finance (Canada) on December 20, 2002 and November 9,
2006.
"Public
Record"
means,
without limitation, the prospectuses, annual information forms, annual and
quarterly reports, offering memoranda, material change reports, press releases
and any other documents or reports filed by the Corporation with Securities
Commissions during the 24 months preceding the date hereof and which is
available on SEDAR.
"Registration
Rights Agreement"
means
the Registration Rights Agreement attached hereto as Schedule “C.”
"Registration
Statement"
means
the registration statement that the Corporation agrees to file with the SEC
pursuant to the Registration Rights Agreement to register the Flow-Through
Shares for resale pursuant to the terms of the Registration Rights
Agreement.
"Resource
Expense"
means
an expense which is CEE, which is incurred on or after the Closing Date and
on
or before the Termination Date, which may be renounced by the Corporation as
CEE
pursuant to subsection 66(12.6) of the Tax Act in accordance with subsection
66(12.66) of the Tax Act with an effective date not later than December 31,
2007
and in respect of which, but for the renunciation, the Corporation would be
entitled to a deduction in computing income for the purposes of the Tax
Act.
"Revenue
Canada"
means
the Canada Revenue Agency.
"Rights
Agreement"
means
the shareholders rights plan agreement dated as of the 17th
day of
January,
2007 between
the Corporation and CIBC Mellon Trust Company, as rights agent.
"SEC"
means
the United States Securities and Exchange Commission.
"Securities
Laws"
means,
in respect of the Offering, the securities laws, regulations and exchange rules
having application thereto and the rules, policies, notices and orders issued
by
the SEC and the Securities Regulators having application thereto.
"Securities
Regulators" means
the
securities commissions or other securities regulatory authorities of the United
States and all the Selling Jurisdictions or the relevant Selling Jurisdiction
as
the context requires.
"SEDAR" means
the
computer system for the transmission, receipt, acceptance, review and
dissemination of documents filed in electronic format known as the System for
Electronic Document Analysis and Retrieval, which is available online at
xxx.xxxxx.xxx
"Selling
Jurisdictions"
means
the provinces of British Columbia, Alberta and Ontario and/or in other Canadian
jurisdictions agreed to by the Corporation and the Underwriter in which the
Subscribers are resident.
"Subscriber"
means
the subscriber for Flow-Through Shares as set out on the face page of this
Subscription Agreement or, in the case of a subscription for a beneficial owner,
the beneficial owner.
"Subscribed
Shares"
means
the number of Flow-Through Shares set out on the face page of this Subscription
Agreement.
"Subscription
Agreement"
means
this subscription agreement (including any schedules hereto) and any instrument
amending this Subscription Agreement; "hereof",
"hereto",
"hereunder",
"herein"
and
similar expressions mean and refer to this Subscription Agreement and not to
a
particular Article or Section; and the expression "Article"
or
"Section"
followed by a number means and refers to the specified Article or Section of
this Subscription Agreement.
"Subscription
Price"
shall
have the meaning ascribed to such term on the face page of this Subscription
Agreement.
"Tax
Act"
means
the Income
Tax Act
(Canada), as amended, re-enacted or replaced from time to time.
"Term
Sheet"
means
the term sheet delivered to potential purchasers of Flow-Through Shares, a
copy
of which is attached hereto as Schedule "B".
"Termination
Date"
means
December 31, 2008.
"TSX"
means
the Toronto Stock Exchange.
"TSX
Approval"
means
the conditional approval of the Offering by the TSX.
"Underwriter"
means
Xxxxxxx Securities Inc.
"Underwriting/Agency
Agreement"
means
the underwriting/agency agreement to be entered into between the Underwriter
and
the Corporation in respect of the Offering.
"United
States"
means
the United States of America, its territories and possessions, any State of
the
United States and the District of Columbia.
"U.S.
Person"
shall
have the meaning ascribed to such term in Rule 902(k) of Regulation S under
the
U.S.
Securities Act.
"U.S.
Securities Act"
means
the United
States Securities Act
of 1933,
as amended.
1.2 Gender
and Number
Words
importing the singular number only shall include the plural and vice versa,
words importing the masculine gender shall include the feminine gender and
words
importing persons shall include firms and corporations and vice
versa.
1.3 Currency
Unless
otherwise specified, all dollar amounts in this Subscription Agreement,
including the symbol "$", are expressed in Canadian dollars.
1.4 Subdivisions,
Headings and Table of Contents
The
division of this Subscription Agreement into Articles, Sections, Schedules
and
other subdivisions, the inclusion of headings and the provision of a table
of
contents are for convenience of reference only and shall not affect the
construction or interpretation of this Subscription Agreement. The headings
in
this Subscription Agreement are not intended to be full or precise descriptions
of the text to which they refer. Unless something in the subject matter or
context is inconsistent therewith, references herein to an Article, Section,
Subsection, paragraph, clause or Schedule are to the applicable article,
section, subsection, paragraph, clause or schedule of this Subscription
Agreement.
ARTICLE
2 SCHEDULES
2.1 Description
of Schedules
The
following are the Schedules attached to and incorporated in this Subscription
Agreement by reference and deemed to be a part hereof:
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Schedule
"A"
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-
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Certificate
of Accredited Investor
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Schedule
"B"
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-
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Term
Sheet
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Schedule
'C"
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Registration
Rights Agreement
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ARTICLE
3 SUBSCRIPTION
AND DESCRIPTION OF FLOW-THROUGH SHARES
3.1 Subscription
for Flow-Through Shares
The
Subscriber hereby confirms its irrevocable subscription for and offer to
purchase the Subscribed Shares from the Corporation, and hereby tenders the
Subscription Price, which, upon acceptance by the Corporation, will constitute
a
binding agreement of the Subscriber with the Corporation to purchase from the
Corporation, and, on the part of the Corporation, to sell to the Subscriber,
the
Subscribed Shares, on and subject to the terms and conditions set out in this
Subscription Agreement, for the Subscription Price which is payable as described
in Article 4 hereto.
In
accordance with the Underwriting/Agency Agreement, and subject to the terms
and
conditions contained in this Subscription Agreement, upon acceptance by the
Corporation of this subscription (in whole or in part) the Subscriber will
be
obliged to purchase from the Corporation the number of Subscribed Shares in
respect of which this subscription has been accepted, which will be in
substitution of the Underwriter’s obligation to purchase such Subscribed Shares.
The Subscriber acknowledges and agrees that no consideration is being paid
hereunder in respect of any rights issuable under the Rights Plan.
3.2 Description
of Flow-Through Shares
Upon
issue, the Flow-Through Shares will be "flow-through shares" as defined in
subsection 66(15) of the Tax Act and are not and will not be "prescribed shares"
within the meaning of section 6202.1 of the regulations to the Tax Act. The
Corporation agrees to:
(a) incur
Resource Expenses in an amount equal to the Subscription Price during the period
from and after the Closing Date to and including the Termination Date;
and
(b) renounce
Resource Expenses equal to the Subscription Price to the Subscriber with an
effective date of renunciation no later than December 31, 2007.
3.3 Acceptance
and Rejection of Subscription by the Corporation
The
Corporation shall forward to the Subscriber confirmation of acceptance or
rejection (in whole or in part) of this Subscription Agreement promptly after
the acceptance or rejection of this Subscription Agreement by the Corporation.
The Subscriber acknowledges and agrees that, notwithstanding Section 3.1 above,
the Corporation reserves the right, in its absolute discretion, to reject this
subscription for Flow-Through Shares, in whole or in part, at any time prior
to
the Closing Time. If this subscription is rejected in whole, any cheques or
other forms of payment delivered to the Underwriter on account of the
Subscription Price will be promptly returned to the Subscriber without interest
or deduction. If this subscription is accepted only in part, a cheque
representing any refund of the Subscription Price for that portion of the
subscription for Flow-Through Shares which is not accepted will be promptly
delivered to the Subscriber without interest or deduction.
3.4 Payment
The
Subscriber shall deliver the aggregate amount payable in respect of the
Subscribed Shares to the Underwriter at or before the Closing Time on the
Closing Date by certified cheque or bank draft drawn on a Canadian chartered
bank or trust company in immediately available and freely transferable Canadian
funds and payable to “Xxxxxxx Securities Inc.” as agent for the
Corporation.
3.5 U.S.
Securities Matters
The
Flow-Through Shares are being offered and sold in reliance on the exemption
from
registration contained in Regulation S of the U.S. Securities Act. Following
the
Closing, the Corporation has agreed to register the resale of the Flow-Through
Shares under the U.S. Securities Act pursuant to the Registration Rights
Agreement.
ARTICLE
4 CLOSING
4.1 Closing
Delivery
and sale of the Subscribed Shares and payment of the Subscription Price will
be
completed (the "Closing")
at the
offices of the Corporation’s counsel, at 1:00 p.m. (Toronto time) (the
"Closing
Time")
on
October 31, 2007 or such other place or date or time as the Corporation and
the
Underwriter may mutually agree (the "Closing
Date").
Subject to Section 3.3, if, prior to the Closing Time, the terms and conditions
contained in this Subscription Agreement and the Underwriting/Agency Agreement
have been complied with to the satisfaction of the Underwriter, or waived by
the
Underwriter, the Underwriter shall deliver to the Corporation completed
Subscription Agreements from the Subscribers (or, if the Underwriter does not
have substituted purchasers for any portion of the Bought-Deal Offering, from
the Underwriter) and payment of the Subscription Price against delivery by
the
Corporation of a certificate representing the Subscribed Shares and such other
documentation as may be required pursuant to the Subscription Agreement and
the
Underwriting/Agency Agreement.
If,
prior
to the Closing Time, the terms and conditions contained in this Subscription
Agreement (other than delivery by the Corporation to the Subscriber of a
certificate representing the Subscribed Shares) and the Underwriting/Agency
Agreement have not been complied with to the satisfaction of the Underwriter,
or
waived by it, the Underwriter, the Corporation and the Subscriber will have
no
further obligations under this Subscription Agreement.
4.2 Conditions
of Closing
The
completion of the Offering is conditional upon, among other things, the
Corporation obtaining TSX Approval and AMEX Approval prior to the Closing Date
and satisfactory due diligence by the Underwriter in respect of the business
and
affairs of the Corporation.
The
Subscriber acknowledges and agrees that as the sale of the Flow-Through Shares
will not be qualified by a prospectus in Canada, such sale and issuance is
subject to the condition that the Subscriber return to the Corporation and/or
the Underwriter all documentation required by the Securities Laws. The
Subscriber acknowledges and agrees that the Underwriter and/or the Corporation
may provide the Securities Regulators and tax authorities with a list setting
forth the identities of the beneficial purchasers of the Flow-Through Shares.
Notwithstanding that the Subscriber may be purchasing Flow-Through Shares as
agent on behalf of an undisclosed principal, the Subscriber agrees to provide,
on request, particulars as to the identity of such undisclosed principal as
may
be required by the Corporation in order to comply with the
foregoing.
The
Subscriber acknowledges and agrees that the obligations of the Corporation
hereunder are conditional on the accuracy of the representations and warranties
of the Subscriber contained in this Subscription Agreement as of the date of
this Subscription Agreement, and as of the Closing Time as if made at and as
of
the Closing Time, and the fulfilment of the following additional conditions
as
soon as possible and in any event not later than the Closing Time:
(a) unless
other arrangements acceptable to the Underwriter have been made, payment by
the
Subscriber of the Subscription Price as set out in Section 3.4;
(b) the
Subscriber having properly completed, signed and delivered this Subscription
Agreement to:
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Xxxxxxx
Securities Inc
Brookfield
Place, 000 Xxx Xxxxxx
Xxxxx
0000, Xxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxx
XxXxxxxx
Fax:
(000) 000-0000
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(c) the
Subscriber having properly completed, signed and delivered Schedule "A" hereto;
and
(d) the
Subscriber having properly completed signed and delivered the Registration
Rights Agreement attached hereto as Schedule "C".
4.3 Authorization
of the Underwriter
The
Subscriber irrevocably authorizes the Underwriter, in its discretion, to act
as
the Subscriber’s representative at the Closing, and hereby appoints the
Underwriter, with full power of substitution, as its true and lawful attorney
with full power and authority in the Subscriber’s place and stead:
(a) to
receive one or more certificates representing the Subscribed Shares, to execute
in the Subscriber’s name and on its behalf all closing receipts and required
documents, to complete and correct any errors or omissions in any form or
document provided by the Subscriber in connection with the subscription for
the
Subscribed Shares and to exercise any rights of termination contained in the
Underwriting/Agency Agreement;
(b) to
extend
such time periods and to waive, in whole or in part, any representations,
warranties, covenants or conditions for the Subscriber’s benefit contained in
this Subscription Agreement and the Underwriting/Agency Agreement or any
ancillary or related document; and
(c) to
terminate this Subscription Agreement if any condition precedent is not
satisfied, in such manner and on such terms and conditions as the Underwriter
in
its sole discretion may determine.
The
Subscriber acknowledges and agrees that the Underwriter and the Corporation
may
vary, amend, alter or waive, in whole or in part, one or more of the terms
to be
set forth in the Underwriting/Agency Agreement in such manner and on such terms
and conditions as they may determine, and that any such variation, amendment,
alteration or waiver shall not affect in any way the obligations of the
Subscriber or such others for whom the Subscriber is contracting
hereunder.
ARTICLE
5 REPRESENTATIONS
AND WARRANTIES OF THE CORPORATION
5.1 Representations,
Warranties and Covenants of the Corporation
By
execution of this Subscription Agreement, the Corporation hereby agrees with
the
Subscriber that the Subscriber shall have the benefit of the representations
and
warranties made by the Corporation below and to the Underwriter as set forth
in
the Underwriting/Agency Agreement, and acknowledges that the Subscriber is
relying on such representations and warranties in connection with the
transactions contemplated herein. Such representations and warranties shall
continue in full force and effect for the benefit of the Subscriber in
accordance with the Underwriting/Agency Agreement.
The
Corporation represents and warrants to, and covenants with, the Subscriber
as
follows:
(a) Upon
issue, the Flow-Through Shares will be "flow-through shares" as defined in
subsection 66(15) of the Tax Act and the Proposed Amendments and are not and
will not be "prescribed shares" within the meaning of section 6202.1 of the
regulations to the Tax Act.
(b) The
Corporation is a "principal-business corporation" as defined in subsection
66(15) of the Tax Act and will continue to be a "principal-business corporation"
until such time as all of the Resource Expenses required to be renounced under
this Subscription Agreement have been incurred and validly renounced pursuant
to
the Tax Act.
(c) The
Corporation has no reason to believe that it will be unable to: (i) incur,
on or
after the Closing Date and on or before the Termination Date, or (ii) renounce
to the Subscriber effective on or before December 31, 2007, Resource Expenses
in
an aggregate amount equal to the Subscription Price, and the Corporation has
no
reason to expect any reduction of such amount by virtue of subsection 66(12.73)
of the Tax Act.
(d) The
Corporation hereby agrees to incur Resource Expenses in an amount equal to
the
Subscription Price on or before the Termination Date in accordance with this
Subscription Agreement and agrees to renounce to the Subscriber, on or before
March 31, 2008 with an effective date no later than December 31, 2007, pursuant
to subsections 66(12.6) and 66(12.66) of the Tax Act, Resource Expenses incurred
or to be incurred on or before the Termination Date in an amount equal to the
Subscription Price.
(e) The
Corporation shall deliver to the Subscriber, on or before February 15, 2008,
the
relevant Prescribed Forms, fully completed and executed, renouncing to the
Subscriber, Resource Expenses in an amount equal to the Subscription Price
with
an effective date of no later than December 31, 2007, such delivery constituting
the authorization of the Corporation to the Subscriber to file such Prescribed
Forms with the relevant taxation authorities.
(f) The
Resource Expenses to be renounced by the Corporation to the Subscriber:
(i) will
constitute CEE on the effective date of the renunciation;
(ii) will
not
include expenses that are "Canadian exploration and development overhead
expenses" (as defined in the regulations to the Tax Act for purposes of
paragraph 66(12.6)(b) of the Tax Act) of the Corporation, the amount of any
assistance described in paragraph 66(12.6)(a) of the Tax Act, amounts which
constitute specified expenses for seismic data described in paragraph
66(12.6)(b.1) of the Tax Act or any expenses for prepaid services or rent that
do not qualify as outlays and expenses for the period as described in the
definition of "expense" in subsection 66(15) of the Tax Act;
(iii) will
not
include any amount that has previously been renounced by the Corporation to
the
Subscriber or to any other Person; and
(iv) would
be
deductible by the Corporation in computing its income for the purposes of Part
I
of the Tax Act but for the renunciation to the Subscriber.
(g) The
Corporation shall not reduce the amount renounced to the Subscriber pursuant
to
subsection 66(12.6) of the Tax Act.
(h) The
Corporation shall not be subject to the provisions of subsection 66(12.67)
of
the Tax Act in a manner which impairs its ability to renounce Resource Expenses
to the Subscriber in an amount equal to the Subscription Price.
(i) The
Corporation acknowledges that it is not now entitled to receive any assistance,
as defined in the Tax Act, in respect of the Resource Expenses. If the
Corporation receives, or becomes entitled to receive, any government assistance
which is described in paragraph (a) of the definition of "excluded obligation"
in subsection 6202.1(5) of the regulations made under the Tax Act and the
receipt of or entitlement to receive such government assistance has or will
have
the effect of reducing the amount of CEE validly renounced to the Subscriber
hereunder to less than the aggregate of the Subscription Price, the Corporation
shall incur additional Resource Expenses on or before the time it renounces
the
Resource Expenses to the Subscriber pursuant to their Subscription Agreement
in
an amount sufficient to allow it to renounce to the Subscriber, the Subscription
Price.
(j) The
Corporation shall use the gross proceeds of the Offering for general exploration
activities on the Corporation’s properties and shall deliver to the Subscriber,
on or before March 31, 2008, a list of the provinces, territories or other
jurisdictions in Canada where the Corporation has incurred, or intends to incur,
Resource Expenses together with the amount incurred in each such province,
territory or other jurisdiction of Canada.
(k) The
Corporation shall file with Revenue Canada within the time prescribed by
subsection 66(12.68) of the Tax Act (i) the forms prescribed for the purposes
of
such legislation, together with a copy of this Subscription Agreement and shall
forthwith following such filings provide to the Subscriber a copy of such forms;
and (ii) the form prescribed for purposes of subsection 66(12.7) of the Tax
Act
on or before the last day of the first month after each month in which any
renunciation
is
made
pursuant to the terms of this Subscription Agreement.
(l) The
Corporation will keep proper books, records and accounts in respect of all
Resource Expenses and all transactions and events affecting the Subscription
Price, the Resource Expenses and the amounts renounced to the Subscriber
hereunder, and upon reasonable notice, will, on a timely basis, make such books,
records, accounts and any other relevant documents available for inspection
and
audit by or on behalf of the Subscriber.
(m) Neither
the Corporation nor any corporation "associated" (as such term is defined in
the
Tax Act) with the Corporation is a party to any other agreement for the issuance
of Flow-Through Shares for which the required expenditures have not been
incurred.
(n) The
Corporation has not and will not enter into transactions or take deductions
which would otherwise reduce its cumulative CEE to an extent which would
preclude a renunciation of Resource Expenses hereunder in an amount equal to
the
Subscription Price on or before December 31, 2007.
5.2 Indemnification
If
the
Corporation does not incur and renounce to the Subscriber, effective on or
before December 31, 2007, Resource Expenses equal to the Subscription Price,
the
Corporation shall indemnify and hold harmless the Subscriber and each of the
partners thereof if the Subscriber is a partnership or a limited partnership
(for the purposes of this paragraph, each an "Indemnified
Person")
as to,
and pay in settlement thereof to the Indemnified Person on or before the
twentieth Business Day following the Termination Date, as sole recourse to
the
Indemnified Person, an amount equal to the amount of any tax (within the meaning
of paragraph (b) of the definition of "excluded obligation" in subsection
6202.1(5) of the regulations to the Tax Act or paragraph (c) of that definition
pursuant to the Proposed Amendments) payable under the Tax Act (and under any
corresponding provincial legislation) by any Indemnified Person as a consequence
of such failure. In the event that Revenue Canada (or any similar provincial
tax
authority) reduces the amount renounced by the Corporation to the Subscriber
pursuant to subsection 66(12.73) of the Tax Act (or any corresponding provincial
legislation), the Corporation shall indemnify and hold harmless each Indemnified
Person as to, and pay in settlement thereof to the Indemnified Person, as sole
recourse to the Indemnified Person, an amount equal to the amount of any tax
(within the meaning of paragraph (b) of the definition of "excluded obligation"
in subsection 6202.1(5) of the regulations to the Tax Act or paragraph (c)
of
that definition pursuant to the Proposed Amendments) payable under the Tax
Act
(and under any corresponding provincial legislation) by the Indemnified Person
as a consequence of such reduction.
To
the
extent that any Person entitled to be indemnified hereunder is not a party
to
this Subscription Agreement, the Subscriber shall obtain and hold the rights
and
benefits of this Subscription Agreement in trust for, and on behalf of, such
Person and such Person shall be entitled to enforce the provisions of this
section notwithstanding that such Person is not a party to this Subscription
Agreement.
ARTICLE
6 ACKNOWLEDGEMENTS,
COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
SUBSCRIBER
6.1 Representations,
Warranties and Covenants of the Subscriber
The
Subscriber, on its own behalf and, if applicable, on behalf of each beneficial
purchaser for whom it is acting, hereby represents and warrants to, and
covenants with, the Corporation and the Underwriter as follows as at the date
hereof and as at the Closing Time and acknowledges that the Corporation and
the
Underwriter, and their respective counsel, are relying on such representations
and warranties in connection with the transactions contemplated
herein:
(a) The
Subscriber and (if applicable) each beneficial purchaser for whom it is acting
is resident or, if not an individual, has its head office, in the jurisdiction
set out on the face page of this Subscription Agreement. The address set forth
on the face page of this Subscription Agreement is the residence or place of
business of the Subscriber, or the residence or place of business of any
beneficial purchaser for whom the Subscriber is acting, and such address was
not
obtained or used solely for the purpose of acquiring Flow-Through Shares and
the
Subscriber and any beneficial purchaser was solicited to purchase Flow-Through
Shares solely in such jurisdiction. The Subscriber and, if the Subscriber is
a
partnership, any partner or limited partner of the partnership, or if the
Subscriber is a corporation or limited liability company, any director, manager
or officer, does not have and will not have prior to the Termination Date a
Prescribed Relationship with the Corporation.
(b) The
Subscriber is not a “U.S. Person” (as that term is defined by Regulation S under
the U.S. Securities Act, which definition includes, but is not limited to,
an
individual resident in the United States, an estate or trust of which any
executor or administrator or trustee, respectively, is a U.S. Person and any
partnership or company organized or incorporated under the laws of the United
States (or any State thereof)) and is not acquiring the Flow-Through Shares
for
the account or benefit of a U.S. Person or a person in the United
States.
(c) The
Flow-Through Shares have not been offered to the Subscriber in the United
States, and the individuals making the order to purchase the Flow-Through Shares
and executing and delivering this Agreement on behalf of the Subscriber were
not
in the United States when the order was placed and this Subscription Agreement
was executed and delivered.
(d) The
Subscriber undertakes and agrees that it will not offer or sell the Flow-Through
Shares in the United States unless such shares are registered under the U.S.
Securities Act and the securities laws of all applicable states of the United
States or an exemption from such registration requirements is available, and
further that it will not resell the Flow-Through Shares except in accordance
with the provisions of applicable securities legislation, regulations, rules,
policies and orders and stock exchange rules.
(e) The
Subscriber will not engage in hedging transactions with regard to the
Flow-Through Shares unless conducted in compliance with the U.S. Securities
Act.
(f) The
Subscriber acknowledges that the Corporation and its transfer agent will refuse
to register any transfer of any of the Flow-Through Shares not made in
accordance with the provisions of Regulation S of the U.S. Securities Act,
pursuant to an available exemption from registration under the U.S. Securities
Act or under an effective registration statement under the U.S. Securities
Act.
(g) The
Subscriber, on its own behalf and (if applicable) on behalf of each beneficial
purchaser for whom it is acting, represents, warrants and certifies as set
out
in Schedule "A" hereto and further certifies that the Subscriber and (if
applicable) each such beneficial purchaser, as the case may be, falls into
one
or more of the categories of prospectus exempt purchasers listed in Schedule
"A"
hereto (as specified by the Subscriber in such Schedule).
(h) The
Subscriber has duly and properly completed, executed and delivered to the
Corporation within applicable time periods, the certificate and form set forth
in Schedule "A" hereto and the representations, warranties and certifications
contained therein are true and correct as at the date hereof and will be true
and correct at the Closing Time.
(i) The
execution and delivery of this Subscription Agreement, the performance and
compliance with the terms hereof, the subscription for and purchase of the
Subscribed Shares and the completion of the transactions described herein by
the
Subscriber will not result in any material breach of, or be in conflict with
or
constitute a material default under, or create a state of facts which, after
notice or lapse of time, or both, would constitute a material default under
any
term or provision of the constating documents, by-laws or resolutions of the
Subscriber or any beneficial purchaser for whom the Subscriber is acting, the
Securities Laws or any other laws applicable to the Subscriber or any beneficial
purchaser for whom the Subscriber is acting, any agreement to which the
Subscriber or any beneficial purchaser for whom the Subscriber is acting is
a
party, or any judgment, decree, order, statute, rule or regulation applicable
to
the Subscriber or any beneficial purchaser for whom the Subscriber is acting
(j) The
Subscriber is subscribing for the Subscribed Shares as principal for its own
account and not for the benefit of any other Person (within the meaning of
applicable Securities Laws) and not with a view to the resale or distribution
of
all or any of the Subscribed Shares, or if it is not subscribing as principal,
it acknowledges that the Corporation may be required by law to disclose to
certain regulatory authorities the identity of each beneficial purchaser of
the
Subscribed Shares for whom it is acting and agrees to provide such
information.
(k) In
the
case of a subscription for the Subscribed Shares by the Subscriber acting as
trustee or agent (including, for greater certainty, a portfolio manager or
comparable adviser) for a principal, the Subscriber is duly and properly
authorized to execute and deliver this Subscription Agreement and all other
necessary documentation in connection with such subscription on behalf of such
beneficial purchaser, who is subscribing as principal for its own account,
not
for the benefit of any other Person and not with a view to the resale or
distribution of the Subscribed Shares, and this Subscription Agreement has
been
duly authorized, executed and delivered by or on behalf of and constitutes
a
legal, valid and binding agreement of such principal, enforceable in accordance
with its terms against such principal, and the Subscriber acknowledges that
the
Corporation and/or the Underwriter may be required by law to disclose the
identity of such beneficial purchaser for whom the Subscriber is acting and
agrees to provide information as the Corporation and/or the Underwriter may
be
required to disclose.
(l) In
the
case of a subscription for the Subscribed Shares by the Subscriber acting as
principal, this Subscription Agreement has been duly and properly authorized,
executed and delivered by, and constitutes a legal, valid and binding agreement
of, the Subscriber. This Subscription Agreement is enforceable in accordance
with its terms against the Subscriber and (if applicable) any beneficial
purchaser on whose behalf the Subscriber is acting.
(m) If
the
Subscriber is:
(i) a
corporation, the Subscriber is duly incorporated and is validly subsisting
under
the laws of its jurisdiction of incorporation and has all requisite legal and
corporate power and authority to execute and deliver this Subscription
Agreement, to subscribe for the Subscribed Shares as contemplated herein and
to
observe and perform its obligations under the terms of this Subscription
Agreement;
(ii) a
partnership, syndicate or other form of unincorporated organization, the
Subscriber has the necessary legal capacity and authority to execute and deliver
this Subscription Agreement on behalf of such organization and to observe and
perform its covenants and obligations hereunder and has obtained all necessary
approvals in respect thereof; or
(iii) an
individual, the Subscriber is of the full age of majority and is legally
competent to execute this Subscription Agreement and to observe and perform
his
or her covenants and obligations hereunder.
(n) Other
than the Underwriter (and any group of investment dealers managed by the
Underwriter for the purposes of offering the Flow-Through Shares for sale),
there is no person acting or purporting to act in connection with the
transactions contemplated herein who is entitled to any brokerage or finder’s
fee. If any person claims that any fee or other compensation is payable by
the
Corporation or the Underwriter in connection with this subscription for the
Subscribed Shares, the Subscriber covenants to indemnify and hold harmless
the
Corporation and the Underwriter with respect thereto and with respect to all
costs reasonably incurred in the defence thereof.
(o) The
Subscriber is not, with respect to the Corporation or any of its affiliates,
a
Control Person and will not become a Control Person by virtue of the purchase
of
the Subscribed Shares, and does not intend to act in concert with any other
person to form a Control Person of the Corporation.
(p) The
Subscriber is not purchasing Flow-Through Shares with knowledge of any material
fact or information concerning the Corporation which has not been generally
disclosed to the public.
(q) No
person
has made to the Subscriber any written or oral representations:
(i) that
any
person will resell or repurchase any of the Flow-Through Shares;
(ii) that
any
person will refund the Subscription Price; or
(iii) as
to the
future price or value of the Flow-Through Shares.
(r) This
subscription for Flow-Through Shares has not been made through or as a result
of, and the distribution of Flow-Through Shares is not being accompanied by,
any
form of advertisement, including, without limitation, in printed public media,
radio, television, internet or telecommunications, including electronic display,
or as part of a general solicitation.
(s) None
of
the funds the Subscriber is using to purchase the Subscribed Shares is, to
the
knowledge of the Subscriber, proceeds obtained or derived, directly or directly,
as a result of illegal activities.
(t) The
Subscriber, and any beneficial purchaser for whom it is acting, deals at arm’s
length and will continue to deal at arm’s length (within the meaning of the Tax
Act and applicable Securities Laws) with the Corporation.
(u) If
the
Subscriber or a beneficial purchaser for whom it is acting, as the case may
be,
is a corporation, trust or partnership, it does not and will not have, in
respect of a renunciation of Resource Expenses hereunder, a "prohibited
relationship" with the Corporation within the meaning of subsection 66(12.671)
of the Tax Act.
(v) Neither
the Subscriber, nor any beneficial purchaser for whom it is acting, as the
case
may be, has or will knowingly enter into any agreement or arrangement which
will
cause the Flow-Through Shares to be or become "prescribed shares" for purposes
of the Tax Act.
(w) The
delivery of this subscription, the acceptance hereof by the Corporation and
the
issuance of Subscribed Shares to the Subscriber complies with all applicable
laws of the Subscriber’s jurisdiction of residence and domicile and will not
cause the Corporation or any of its officers or directors to become subject
to
or require any disclosure, prospectus or other reporting requirement to which
the Corporation is not currently subject and which is not otherwise contemplated
in this Subscription Agreement.
(x) If
the
Subscriber is a corporation, syndicate, partnership or other form of entity
(other than an investment fund, as defined in National Instrument 45-106),
the
Subscriber was not created or is not being used solely to purchase or hold
the
Subscribed Shares and has a bona fide purpose other than investing in the
Subscribed Shares.
6.2 Acknowledgments
and Agreements of the Subscriber
The
Subscriber, on its own behalf and, if applicable, on behalf of each beneficial
purchaser for whom it is acting, acknowledges and agrees as
follows:
(a) The
Subscriber has received a copy of the Term Sheet setting out the principal
terms
of the Offering.
(b) The
Subscriber acknowledges that the Corporation contemplates completing the
Offering and that the aggregate gross proceeds of the Bought Deal Offering
and
the Best-Efforts Offering will be $4,100,000 (assuming the Best Efforts Offering
is fully subscribed).
(c) No
securities commission, agency, governmental authority, regulatory body, stock
exchange or other regulatory body has reviewed or passed on the merits of the
Subscribed Shares.
(d) The
Subscribed Shares shall be subject to statutory resale restrictions under the
United States and the Securities Laws of the province or territory in which
the
Subscriber resides and under other applicable securities laws, and the
Subscriber covenants that it will not resell the Subscribed Shares except in
compliance with such laws, and the Subscriber acknowledges that it is solely
responsible (and neither the Corporation nor the Underwriter is in any way
responsible) for such compliance.
(e) The
Subscriber’s ability to transfer the Subscribed Shares is limited by, among
other things, applicable Securities Laws.
(f) In
addition, the Subscriber acknowledges that, while the Corporation has agreed
to
file the Registration Statement and cause it to be declared effective by the
SEC, there is no assurance that the Corporation will be able to cause the
Registration Statement to be declared effective by the SEC, and if the
Registration Statement is not declared effective by the SEC, the Flow-Through
Shares may not be resold by the Subscriber, except pursuant to an exemption
contained under the applicable securities laws, which may not be available,
and
if the Registration Statement is not declared effective, the Flow-Through Shares
remain “restricted” securities under the U.S. Securities Act and may only be
sold pursuant to an effective registration statement with respect to such
securities, pursuant to Regulation S or other exemption from the registration
requirements of the U.S. Securities Act or, if such Registration Statement
is
declared effective by the SEC, in the manner provided in the Registration
Statement for the resale of such Flow-Through Shares.
(g) The
certificates representing the Subscribed Shares will bear, as of the Closing
Date, the following legends as required by National Instrument 45-102 -
Resale
of Securities
and with
the necessary information inserted and the Subscriber agrees to comply with
the
terms of such legends:
"UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1)
DAY AFTER CLOSING DATE>"
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the TSX, and the
Subscriber agrees to comply with the terms of such legend:
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE ("TSX"); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT 'GOOD DELIVERY' IN
SETTLEMENT OF TRANSACTIONS ON THE TSX."
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the Rights
Plan:
"UNTIL
THE SEPARATION TIME (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW),
THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AS
SET FORTH IN A SHAREHOLDER RIGHTS PLAN AGREEMENT, DATED AS OF THE
17TH
DAY OF JANUARY,
2007 (THE
"RIGHTS AGREEMENT"), BETWEEN THE CORPORATION AND CIBC MELLON TRUST COMPANY,
AS
RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE
AND
A COPY OF WHICH MAY BE INSPECTED DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
IN THE RIGHTS AGREEMENT, SUCH RIGHTS MAY BE TERMINATED, MAY EXPIRE, MAY BECOME
VOID (IF, IN CERTAIN CASES, THEY ARE "BENEFICIALLY OWNED" BY AN "ACQUIRING
PERSON", AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT, WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR ANY SUBSEQUENT HOLDER) OR MAY BE
EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE CORPORATION WILL MAIL OR ARRANGE FOR THE MAILING OF A COPY
OF
THE RIGHTS AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT CHARGE AS SOON
AS
IS PRACTICABLE AFTER THE RECEIPT OF A WRITTEN REQUEST
THEREFORE".
In
addition, the certificates representing the Subscribed Shares will also bear
a
legend substantially in the following form as required by the U.S. Securities
Act:
"THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933,
AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER OR A SUBSIDIARY
THEREOF; (B) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES
ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE);
OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY, FURNISH
TO
THE ISSUER OR ISSUER’S COUNSEL SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED BY THE ISSUER TO CONFIRM THAT SUCH TRANSFER
IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
“OFFSHORE TRANSACTION,” “UNITED SATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER HEREOF
WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD
TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES
ACT.
"
(h) The
Underwriter and/or its counsel, directors, officers, employees, agents and
representatives assume no responsibility or liability of any nature whatsoever
for the accuracy or adequacy of the Public Record or any publicly available
information concerning the Corporation or as to whether all information
concerning the Corporation that is required to be disclosed or filed by the
Corporation under the Securities Laws has been so disclosed or
filed.
(i) The
Subscriber and each beneficial purchaser for whom it is acting shall execute
and
file, together with the prescribed fees, all documentation required by the
applicable Securities Laws or by any legislation or order in force in its
jurisdiction of residence or to which it may be subject, within the time limits
prescribed to permit the subscription for, and issuance of, the Subscribed
Shares and thereafter for any subsequent disposition thereof and agrees that
it
will furnish to the Corporation such certificates, legal opinions and other
documentation as may be required by the Corporation.
(j) If
required by applicable Securities Laws or by the Corporation, the Subscriber
and
each beneficial purchaser for whom it is acting will execute, deliver and file
or assist the Corporation in filing such reports, undertakings and other
documents with respect to the issue of the Subscribed Shares as may be required
by any securities commission, stock exchange or other regulatory
authority.
(k) The
Subscriber, and each beneficial purchaser for whom it is acting, have been
advised to consult their own legal advisors with respect to trading in the
Subscribed Shares and with respect to the resale restrictions imposed by the
Securities Laws of the United States or any province or territory in which
the
Subscriber resides and other applicable securities laws, and acknowledges that
no representation has been made respecting the applicable hold periods imposed
by the Securities Laws or other resale restrictions applicable to such
securities which restrict the ability of the Subscriber (or others for whom
it
is acting) to resell such securities that the Subscriber (or others for whom
it
is acting) is solely responsible to find out what these restrictions are and
the
Subscriber is solely responsible (and neither the Corporation nor the
Underwriter is in any way responsible) for compliance with applicable resale
restrictions and the Subscriber is aware that it (or the beneficial purchaser
for whom it is acting) may not be able to resell such securities except in
accordance with limited exemptions under the Securities Laws and other
applicable securities laws.
(l) The
Subscriber has not received or been provided with a prospectus, offering
memorandum (within the meaning of the Securities Laws) or any sales or
advertising literature in connection with the Offering and the Subscriber’s
decision to subscribe for Flow-Through Shares was not based upon, and the
Subscriber has not relied upon, any verbal or written representations as to
facts made by or on behalf of the Corporation or the Underwriter. The
Subscriber’s decision to subscribe for Flow-Through Shares was based solely upon
the Term Sheet attached hereto as Schedule "B" and information about the
Corporation which is publicly available (any such information having been
obtained by the Subscriber without independent investigation or verification
by
the Underwriter).
(m) The
Corporation and the Underwriter, and their respective counsel, are relying
on
the representations, warranties and covenants contained herein and in the
applicable Schedules attached hereto to determine the Subscriber’s eligibility
to subscribe for Flow-Through Shares under applicable Securities Laws and the
Subscriber agrees to indemnify the Corporation, the Underwriter and each of
their respective directors and officers against all losses (other than loss
of
profits), claims, costs, expenses, damages or liabilities which any of them
may
suffer or incur as a result of or arising from reliance thereon. The Subscriber
undertakes to immediately notify the Underwriter of any change in any statement
or other information relating to the Subscriber set forth in such applicable
Schedules that takes place prior to the Closing Time.
(n) The
Corporation and the Underwriter are relying on an exemption from the requirement
to provide the Subscriber with a prospectus under the Securities Laws and,
as a
consequence of acquiring Flow-Through Shares pursuant to such exemption, certain
protections, rights and remedies provided by the Securities Laws, including
statutory rights of rescission and/or damages, will not be available to the
Subscriber.
(o) The
Flow-Through Shares are being offered and sold in reliance on the exemption
from
registration contained in Regulation S of the U.S. Securities Act. Following
the
Closing, the Corporation has agreed to register the resale of the Flow-Through
Shares under the U.S. Securities Act pursuant to the Registration Rights
Agreement.
(p) The
Subscriber, and each beneficial purchaser for whom it is acting, is responsible
for obtaining such independent legal and tax advice as it considers appropriate
in connection with the execution, delivery and performance of this Subscription
Agreement and the transactions contemplated under this Subscription Agreement,
including without limitation for the proposes of giving representations,
warranties and covenants under this Subscription Agreement.
(q) There
is
no government or other insurance covering the Flow-Through Shares.
(r) The
Subscriber acknowledges that the Underwriter’s counsel and the Corporation’s
counsel are acting as counsel to the Underwriter and the Corporation,
respectively, and not as counsel to the Subscriber.
(s) The
Subscriber acknowledges that all costs and expenses incurred by the Subscriber
(including any fees and disbursements of any special counsel or other advisors
retained by the Subscriber) relating to the purchase of the Subscribed Shares
shall be borne by the Subscriber.
(t) The
Subscriber and each beneficial purchaser for whom it is acting acknowledge
that
the Flow-Through Shares are speculative in nature and that there are risks
associated with the purchase of Flow-Through Shares and the Subscriber and
each
beneficial purchaser for whom it is acting has such knowledge, sophistication
and experience in business and financial matters as to be capable of evaluating
the merits and risks of its investment in the Subscribed Shares, fully
understands the speculative nature of the Subscribed Shares and is able to
bear
the economic risk of loss of its entire investment.
6.3 Reliance
on Representations, Warranties, Covenants and
Acknowledgements
The
Subscriber acknowledges and agrees that the representations, warranties,
covenants and acknowledgements made by the Subscriber in this Subscription
Agreement are made with the intention that they may be relied upon by the
Corporation and the Underwriter in determining the Subscriber’s eligibility
(and, if applicable, the eligibility of others for whom the Subscriber is
acting) to purchase Flow-Through Shares under the Securities Laws. The
Subscriber further agrees that by accepting Flow-Through Shares, the Subscriber
shall be representing and warranting that such representations, warranties,
acknowledgements and covenants are true as at the Closing Time with the same
force and effect as if they had been made by the Subscriber at the Closing
Time
and that they shall survive the purchase by the Subscriber of Flow-Through
Shares and shall continue in full force and effect notwithstanding any
subsequent disposition by the Subscriber of any of such Flow-Through
Shares.
ARTICLE
7 SURVIVAL
OF REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Survival
of Representations, Warranties and Covenants of the
Corporation
The
representations, warranties and covenants of the Corporation contained in this
Subscription Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Subscriber with respect
thereto, shall continue in full force and effect for the benefit of the
Subscriber and the Underwriter.
7.2 Survival
of Representations, Warranties and Covenants of the
Subscriber
The
representations, warranties and covenants of the Subscriber contained in this
Subscription Agreement shall survive the Closing and, notwithstanding such
Closing or any investigation made by or on behalf of the Corporation or the
Underwriter with respect thereto, shall continue in full force and effect for
the benefit of the Corporation and the Underwriter.
ARTICLE
8 COMMISSION
8.1 Commission
to Underwriter
The
Subscriber understands that in connection with the Offering the Underwriter
will
receive from the Corporation (i) a corporate finance fee of $50,000 which will
be credited against cash commissions payable on Closing, and (ii) on Closing,
a
cash commission equal to 5.5% of the proceeds from the Offering. In addition,
the Underwriter will receive a number of compensation options ("Compensation
Options")
that
is equal to 5% of the number of Flow-Through Shares sold pursuant to the
Offering, each Compensation Option being exercisable at a price of $0.55 for
a
period of 18 months from the Closing Date to acquire one Common Share. No other
fee or commission is payable by the Corporation in connection with the
completion of the Offering; however, the Corporation will pay certain fees
and
expenses of the Underwriter in connection with the Offering, as set out in
the
Underwriting/Agency Agreement.
ARTICLE
9 COLLECTION
OF PERSONAL INFORMATION
9.1 Collection
of Personal Information
By
executing this Subscription Agreement, the Subscriber hereby consents to the
collection, use and disclosure of the personal information provided herein
and
other personal information provided by the Subscriber or collected by the
Corporation or its agents as reasonably necessary in connection with the
Subscriber’s subscription for the Subscribed Shares (collectively, “personal
information”)
as
follows: (a) the Corporation may use personal information and disclose personal
information to intermediaries such as the Corporation’s legal counsel and
withholding and/or transfer agents for the purposes of determining the
Subscriber’s eligibility to invest in the Subscribed Shares and for managing and
administering the Subscriber’s investment in the Subscribed Shares; (b) if the
Subscriber purchased securities through a registered dealer, the Corporation
may
disclose and collect such personal information relating to the Subscriber’s
holding of the Subscribed Shares to and from the dealer; (c) the Corporation
and
its agents may use the Subscriber’s social insurance number for income reporting
purposes in accordance with applicable law; (d) the Corporation, its agents
and
advisors, may each collect, use and disclose personal information for the
purposes of meeting legal, regulatory, self-regulatory, security and audit
requirements (including any applicable tax, securities, money laundering or
anti-terrorism legislation, rules or regulations) and as otherwise permitted
or
required by law, which disclosures may include disclosures to tax, securities
or
other regulatory or self-regulatory authorities in Canada and/or in foreign
jurisdictions, if applicable, in connection with the regulatory oversight
mandate of such authorities; (e) the Corporation and its agents and advisors
may
use personal information and disclose personal information to parties connected
with the proposed or actual transfer, sale, assignment, merger or amalgamation
of the Corporation or its business or assets or similar transactions, for the
purpose of permitting such parties to evaluate and/or proceed with and complete
such transaction. Purchasers, assignees and successors of the Corporation or
its
business or assets may collect, use and disclose personal information as
described in this Subscription Agreement. The Subscriber acknowledges that
the
Corporation’s agents or intermediaries may be located outside of Canada, and
personal information may be transferred and/or processed outside of Canada
for
the purposes described above, and that measures the Issuer may use to protect
personal information while handled by agents, intermediaries or other third
parties on its behalf, and personal information otherwise disclosed or
transferred outside of Canada for the purposes described above, are subject
to
legal requirements in foreign countries applicable to Issuer or such third
parties, for example lawful requirements to disclose personal information to
government authorities in those countries.
If
the
Subscriber is resident in, or otherwise subject to the applicable securities
legislation of Ontario, the Subscriber acknowledges (i) the delivery to the
Ontario Securities Commission of the Subscriber’s full name, residential address
and telephone number, the number and type of securities purchased by the
Subscriber, the total purchase price, the exemption relied on, and the date
of
distribution, (ii) that such information is being collected indirectly by the
Ontario Securities Commission under the authority granted to it in securities
legislation, (iii) that such information is being collected for the purposes
of
the administration and enforcement of the securities legislation of Ontario,
and
(iv) that the Administrative Assistant to the Director of Corporate Finance
at
the Ontario Securities Commission, Xxxxx 0000, Xxx 00, 00 Xxxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxx X0X 0X0, telephone (000) 000-0000, can be contacted to answer
questions about the Ontario Securities Commission’s indirect collection of such
information. The Subscriber hereby authorizes the indirect collection of such
information by the Ontario Securities Commission.
ARTICLE
10 MISCELLANEOUS
10.1 Further
Assurances
Each
of
the parties hereto upon the request of each of the other parties hereto, whether
before or after the Closing Time, shall do, execute, acknowledge and deliver
or
cause to be done, executed, acknowledged and delivered all such further acts,
deeds, documents, assignments, transfers, conveyances, powers of attorney and
assurances as may reasonably be necessary or desirable to complete the
transactions contemplated herein.
10.2 Notices
(a) Any
notice, direction or other instrument required or permitted to be given to
any
party hereto shall be in writing and shall be sufficiently given if delivered
personally, or transmitted by facsimile tested prior to transmission to such
party, as follows:
(i) in
the
case of the Corporation, to:
|
Apollo
Gold Corporation
0000
X. Xxxxxxxx Xxxxxx,
Xxxxx
000
Xxxxxxxxx
Xxxxxxx, XX, XXX
00000
|
|
Attention: R.
Xxxxx Xxxxxxx
Fax:
000-000-0000
|
|
with
a copy to:
|
|
Fogler,
Xxxxxxxx LLP
00
Xxxxxxxxxx Xxxxxx West
Suite
0000
Xxxxxxx-Xxxxxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxx
X0X
0X0
|
|
Attention:
G.
Xxxxxxx Xxxxxx
Fax: 000-000-0000
|
(ii) in
the
case of the Subscriber, at the address specified on the face page hereof, with
a
copy to the Underwriter at:
|
Xxxxxxx
Securities Inc
Brookfield
Place, 000 Xxx Xxxxxx
Xxxxx
0000, Xxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxx
XxXxxxxx
Fax:
(000) 000-0000
|
(b) Any
such
notice, direction or other instrument, if delivered personally, shall be deemed
to have been given and received on the day on which it was delivered, provided
that if such day is not a Business Day then the notice, direction or other
instrument shall be deemed to have been given and received on the first Business
Day next following such day and if transmitted by fax, shall be deemed to have
been given and received on the day of its transmission, provided that if such
day is not a Business Day or if it is transmitted or received after the end
of
normal business hours then the notice, direction or other instrument shall
be
deemed to have been given and received on the first Business Day next following
the day of such transmission.
(c) Any
party
hereto may change its address for service from time to time by notice given
to
each of the other parties hereto in accordance with the foregoing
provisions.
10.3 Time
of the Essence
Time
shall be of the essence of this Subscription Agreement and every part
hereof.
10.4 Costs
and Expenses
All
costs
and expenses (including, without limitation, the fees and disbursements of
legal
counsel) incurred in connection with this Subscription Agreement and the
transactions herein contemplated shall be paid and borne by the party incurring
such costs and expenses.
10.5 Applicable
Law
This
Subscription Agreement shall be construed and enforced in accordance with,
and
the rights of the parties shall be governed by, the internal laws of the
Province of Ontario and the laws of Canada applicable therein, without reference
to any conflicts of law rules that would impose a law of another jurisdiction.
Any and all disputes arising under this Subscription Agreement, whether as
to
interpretation, performance or otherwise, shall be subject to the non-exclusive
jurisdiction of the courts of the Province of Ontario and each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of such
province.
10.6 Entire
Agreement
This
Subscription Agreement, including the Schedules hereto, constitutes the entire
agreement between the parties with respect to the transactions contemplated
herein and cancels and supersedes any prior understandings, agreements,
negotiations and discussions between the parties. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements or
understandings, express or implied, between the parties hereto other than those
expressly set forth in this Subscription Agreement or in any such agreement,
certificate, affidavit, statutory declaration or other document as aforesaid.
This Subscription Agreement may not be amended or modified in any respect except
by written instrument executed by each of the parties hereto.
10.7 Counterparts
This
Subscription Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same Subscription Agreement. Counterparts may be
delivered either in original or faxed form and the parties adopt any signature
received by a receiving fax machine as original signatures of the
parties.
10.8 Assignment
This
Subscription Agreement may not be assigned by either party except with the
prior
written consent of the other parties hereto.
10.9 Enurement
This
Subscription Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, successors (including
any
successor by reason of the amalgamation or merger of any party), administrators
and permitted assigns.
10.10 Language
The
parties hereto acknowledge and confirm that they have requested that this
Subscription Agreement as well as all notices and other documents contemplated
hereby be drawn up on the English language. Les parties aux présentes
reconnaissent et conferment qu’elles ont convenu que la présente convention
ainsi que tous xxx xxxx et documents qui s’y rattachent soient rédigés dans la
langue anglaise.
SCHEDULE
"A"
CERTIFICATE
(FOR
ACCREDITED INVESTORS RESIDENT IN CANADA)
| TO: |
APOLLO
GOLD CORPORATION (the
"Corporation")
|
| AND TO: |
XXXXXXX
SECURITIES INC. (the
"Underwriter")
|
In
connection with the purchase of flow-through shares ("Flow-Through
Shares")
of the
Corporation by the undersigned subscriber or, if applicable, the principal
on
whose behalf the undersigned is purchasing as agent (the "Subscriber"
for the
purposes of this Certificate), the Subscriber hereby represents, warrants,
covenants and certifies to the Corporation and the Underwriter
that:
|
1.
|
the
Subscriber is resident in a province or territory of Canada or is
subject
to the laws of a province or territory of
Canada;
|
|
2.
|
the
Subscriber is purchasing the Flow-Through Shares as principal for
its own
account or is deemed to be purchasing as principal pursuant to National
Instrument 45-106 - Prospectus Registration Exemptions ("NI
45-106");
|
|
3.
|
the
Subscriber is an "accredited investor" within the meaning of NI 45-106
by
virtue of satisfying one or more of the indicated criterion set out
in
Appendix "A" to this Certificate;
and
|
|
4.
|
upon
execution of this Certificate by the Subscriber, this Certificate
(including Appendix "A" hereto) shall be incorporated into and form
a part
of the subscription agreement to which this Certificate is
attached.
|
Dated:
_____________________, 2007.
|
Print
name of Subscriber
|
|
|
By:
Signature
|
|
|
Print
name of Signatory (if different from Subscriber)
|
|
|
Title |
IMPORTANT:
PLEASE INITIAL ONE OR MORE OF THE ITEMS, AS APPLICABLE, IN
APPENDIX
"A" ON THE NEXT PAGE
APPENDIX
"A"
TO
CERTIFICATE OF ACCREDITED INVESTOR
The
Subscriber hereby represents, warrants and certifies to the Corporation and
the
Underwriter that the Subscriber (or its disclosed principal) is an "accredited
investor" as defined in NI 45-106 by virtue of being: [check appropriate item(s)
below]
|
_________
|
(a)
|
a
Canadian financial institution, or a Schedule III bank,
|
| _________ |
(b)
|
the
Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act
(Canada),
|
| _________ |
(c)
|
a
subsidiary of any person referred to in paragraphs (a) or (b), if
the
person owns all of the voting securities of the subsidiary, except
the
voting securities required by law to be owned by directors of that
subsidiary,
|
| _________ |
(d)
|
a
person registered under the securities legislation of a jurisdiction
of
Canada as an adviser or dealer, other than a person registered solely
as a
limited market dealer under one or both of the
Securities Act
(Ontario) or the
Securities Act
(Newfoundland and Labrador),
|
| _________ |
(e)
|
an
individual registered or formerly registered under the securities
legislation of a jurisdiction of Canada as a representative of a
person
referred to in paragraph (d),
|
| _________ |
(f)
|
the
Government of Canada or a jurisdiction of Canada, or any crown
corporation, agency or wholly owned entity of the Government of Canada
or
a jurisdiction of Canada,
|
| _________ |
(g)
|
a
municipality, public board or commission in Canada and a metropolitan
community, school board, the Comité de gestion de la taxe scolaire de
l’île de Montréal or an intermunicipal management board in
Québec,
|
| _________ |
(h)
|
any
national, federal, state, provincial, territorial or municipal government
of or in any foreign jurisdiction, or any agency of that
government,
|
| _________ |
(i)
|
a
pension fund that is regulated by either the Office of the Superintendent
of Financial Institutions (Canada) or a pension commission or similar
regulatory authority of a jurisdiction of Canada,
|
| _________ |
(j)
|
an
individual who, either alone or with a spouse, beneficially owns,
directly
or indirectly, financial assets having an aggregate realizable value
that
before taxes, but net of any related liabilities, exceeds
$1,000,000,
|
| _________ |
(k)
|
an
individual whose net income before taxes exceeded $200,000 in each
of the
2 most recent calendar years or whose net income before taxes combined
with that of a spouse exceeded $300,000 in each of the 2 most recent
calendar years and who, in either case, reasonably expects to exceed
that
net income level in the current calendar year,
|
| _________ |
(l)
|
an
individual who, either alone or with a spouse, has net assets of
at least
$5,000,000,
|
| _________ |
(m)
|
a
person, other than an individual or investment fund, that has net assets
of at least $5,000,000 as shown on its most recently prepared financial
statements,
|
| _________ |
(n)
|
an
investment fund that distributes or has distributed its securities
only
to
|
|
(i) a
person that is or was an accredited investor at the time of the
distribution,
|
||
|
(ii) a
person that acquires or acquired securities in the circumstances
referred
to in sections 2.10 [Minimum
amount investment]
and 2.19 [Additional
investment in investment funds]
of NI
45-106, or
|
||
|
(iii) a
person described in paragraph (i) or (ii) that acquires or acquired
securities under section 2.18
[Investment fund reinvestment] of
NI 45-106,
|
||
| _________ |
(o)
|
an
investment fund that distributes or has distributed securities under
a
prospectus in a jurisdiction of Canada for which the regulator or,
in
Quebec, the securities regulatory authority, has issued a
receipt,
|
| _________ |
(p)
|
a
trust company or trust corporation registered or authorized to carry
on
business under the Trust
and Loan Companies Act
(Canada) or under comparable legislation in a jurisdiction of Canada
or a
foreign jurisdiction, acting on behalf of a fully managed account
managed
by the trust company or trust corporation, as the case may
be,
|
| _________ |
(q)
|
a
person acting on behalf of a fully managed account managed by that
person,
if that person is registered or authorized to carry on business as
an
adviser or the equivalent under the securities legislation of a
jurisdiction of Canada or a foreign jurisdiction,
|
| _________ |
(r)
|
a
registered charity under the Income
Tax Act
(Canada) that, in regard to the trade, has obtained advice from an
eligibility adviser or an adviser registered under the securities
legislation of the jurisdiction of the registered charity to give
advice
on the securities being traded,
|
| _________ |
(s)
|
an
entity organized in a foreign jurisdiction that is analogous to any
of the
entities referred to in paragraphs (a) to (d) or paragraph (i) in
form and
function,
|
| _________ |
(t)
|
a
person in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by
law to be
owned by directors, are persons that are accredited
investors,
|
| _________ |
(u)
|
an
investment fund that is advised by a person registered as an adviser
or a
person that is exempt from registration as an adviser,
or
|
| _________ |
(v)
|
a
person that is recognized or designated by the securities regulatory
authority or, except in Ontario and Quebec, the regulator
as
|
|
(i) an
accredited investor, or
|
||
|
(ii) an
exempt purchaser in Alberta or British Columbia
|
For
the purposes hereof:
|
(a)
|
"Canadian
financial institution" means
|
|
(i)
|
an
association governed by the Cooperative
Credit Associations Act
(Canada) or a central cooperative credit society for which an order
has
been made under section 473(1) of that Act,
or
|
|
(ii)
|
a
bank, loan corporation, trust company, trust corporation, insurance
company, treasury branch, credit union, caisse populaire, financial
services cooperative, or league that, in each case, is authorized
by an
enactment of Canada or a jurisdiction of Canada to carry on business
in
Canada or a jurisdiction of Canada;
|
|
(b)
|
"control
person"
has the same meaning as in securities legislation except in Manitoba,
Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut,
Ontario, Xxxxxx Xxxxxx Island and Quebec where control person means
any
person that holds or is one of the combination of persons that
holds:
|
|
(i)
|
a
sufficient number of any of the securities of an issuer so as to
affect
materially the control of the issuer,
or
|
|
(ii)
|
more
than 20% of the outstanding voting securities of an issuer except
where
there is evidence showing that the holding of those securities does
not
affect materially the control of the
issuer;
|
|
(c)
|
"director"
means
|
|
(i)
|
a
member of the board of directors of a company or an individual who
performs similar functions for a company,
and
|
|
(ii)
|
with
respect to a person that is not a company, an individual who performs
functions similar to those of a director of a
company;
|
|
(d)
|
"eligibility
adviser"
means
|
|
(i)
|
a
person that is registered as an investment dealer or in an equivalent
category of registration under the securities legislation of the
jurisdiction of a purchaser and authorized to give advice with respect
to
the type of security being distributed,
and
|
|
(ii)
|
in
Saskatchewan or Manitoba, also means a lawyer who is a practicing
member
in good standing with a law society of a jurisdiction of Canada or
a
public accountant who is a member in good standing of an institute
or
association of chartered accountants, certified general accountants
or
certified management accountants in a jurisdiction of Canada provided
that
the lawyer or public accountant must
not
|
| (1) |
have
a professional, business or personal relationship with the issuer,
or any
of its directors, executive officers, founders, or control persons,
and
|
| (2) |
have
acted for or been retained personally or otherwise as an employee,
executive officer, director, associate or partner of a person that
has
acted for or been retained by the issuer or any of its directors,
executive officers, founders or control persons within the previous
12
months;
|
|
(e)
|
"EVCC"
means
an employee venture capital corporation that does not have a restricted
constitution and is registered under Part 2 of the Employee Investment
Act
(British Columbia) and whose business objective is making multiple
investments;
|
|
(f)
|
"executive
officer" means,
for an issuer, an individual who is
|
|
(i)
|
a
chair, vice-chair or president,
|
|
(ii)
|
a
vice-president in charge of a principal business unit, division or
function including sales, finance or
production,
|
|
(iii)
|
an
officer of the issuer or any of its subsidiaries and who performs
a
policy-making function in respect of the issuer,
or
|
|
(iv)
|
performing
a policy-making function in respect of the
issuer;
|
|
(g)
|
"financial
assets"
means
|
|
(i)
|
cash,
|
|
(ii)
|
securities,
or
|
|
(iii)
|
a
contract of insurance, a deposit or an evidence of a deposit that
is not a
security for the purposes of securities
legislation;
|
|
(h)
|
"foreign
jurisdiction"
means a country other than Canada or a political subdivision of a
country
other than Canada;
|
|
(i)
|
"founder"
means, in respect of an issuer, a person
who,
|
|
(i)
|
acting
alone, in conjunction, or in concert with one or more persons, directly
or
indirectly, takes the initiative in founding, organizing or substantially
reorganizing the business of the issuer,
and
|
|
(ii)
|
at
the time of the trade is actively involved in the business of the
issuer;
|
|
(j)
|
"fully
managed account"
means an account of a client for which a person makes the investment
decisions if that person has full discretion to trade in securities
for
the account without requiring the client’s express consent to a
transaction;
|
|
(k)
|
"jurisdiction"
means a province or territory of Canada except when used in the term
foreign jurisdiction;
|
|
(l)
|
"investment
fund"
means a mutual fund or a non-redeemable investment fund, and, for
greater
certainty in British Columbia, includes an EVCC and VCC;
|
|
(m)
|
"local
jurisdiction"
means the jurisdiction in which the Canadian securities regulatory
authority is situate;
|
|
(n)
|
"non-redeemable
investment fund"
means an issuer,
|
|
(i)
|
whose
primary purpose is to invest money provided by its
securityholders,
|
|
(ii)
|
that
does not invest,
|
| (1) |
for
the purpose of exercising or seeking to exercise control of an issuer,
other than an issuer that is a mutual fund or a non-redeemable investment
fund, or
|
| (2) |
for
the purpose of being actively involved in the management of any issuer,
other than an issuer that is a mutual fund or a non-redeemable investment
fund, and
|
|
(iii)
|
that
is not a mutual fund;
|
|
(o)
|
"person"
includes
|
|
(i)
|
an
individual,
|
|
(ii)
|
a
corporation,
|
|
(iii)
|
a
partnership, trust, fund and an association, syndicate, organization
or
other organized group of persons, whether incorporated or not,
and
|
|
(iv)
|
an
individual or other person in that person’s capacity as a trustee,
executor, administrator or personal or other legal
representative;
|
|
(p)
|
"regulator"
means, for the local jurisdiction, the Executive Director as defined
under
securities legislation of the local jurisdiction;
|
|
(q)
|
"related
liabilities"
means
|
|
(i)
|
liabilities
incurred or assumed for the purpose of financing the acquisition
or
ownership of financial assets, or
|
|
(ii)
|
liabilities
that are secured by financial assets;
|
|
(iii)
|
|
(r)
|
"Schedule
III bank"
means as authorized foreign bank named in Schedule III of the Bank
Act
(Canada);
|
|
(s)
|
"spouse"
means, an individual who,
|
|
(i)
|
is
married to another individual and is not living separate and apart
within
the meaning of the Divorce
Act
(Canada), from the other
individual,
|
|
(ii)
|
is
living with another individual in a marriage-like relationship, including
a marriage-like relationship between individuals of the same gender,
or
|
|
(iii)
|
in
Alberta, is an individual referred to in paragraph (a) or (b), or
is an
adult interdependent partner within the meaning of the Adult
Interdependent Relationships Act
(Alberta);
|
|
(t)
|
"subsidiary"
means an issuer that is controlled directly or indirectly by another
issuer and includes a subsidiary of that
subsidiary;
|
|
(u)
|
"VCC"
means
a venture capital corporation registered under Part 3 of the Small
Business Venture Capital Act (British Columbia) whose business objective
is making multiple investments.
|
All
monetary references are in Canadian Dollars.
SCHEDULE
"B"
APOLLO
GOLD CORPORATION
TERM
SHEET
PRIVATE
PLACEMENT OF FLOW-THROUGH COMMON SHARES
|
Issuer:
|
Apollo
Gold Corporation (the "Corporation")
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Offering:
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Private
Placement Flow-Through Shares (the "Offering")
using prospectus exemptions that do not require the preparation of
an
offering memorandum.
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Size
of the Bought-Deal Offering:
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4,600,000
Flow-Through Shares for subscription proceeds of
$2,530,000.
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Size
of Best-Efforts Offering:
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2,854,545
Flow-Through Shares for subscription proceeds of up
$1,570,000.
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Underwriter:
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Xxxxxxx
Securities Inc. (the "Underwriter").
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Type
of Offering:
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Xxxxxxx
will act as lead Underwriter on the Bought Deal Offering, subject
to
certain conditions as set out in the underwriting agreement between
the
Underwriter and the Corporation, with the bought deal commitment
provided
by Xxxxxxx or an affiliated or related party (the "standby underwriter").
Prior to the Closing, Xxxxxxx will endeavour to arrange for substitute
purchasers to purchase Flow-Through Shares in the place and stead
of the
standby underwriter at the Closing. Xxxxxxx will also act as lead
agent in
connection with the Best Efforts Offering.
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Flow-Through
Share Price:
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$0.55
per Flow-Through Share.
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Use
of Proceeds:
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The
Corporation will use the proceeds from the sale of the Flow-Through
Shares
to incur flow-through expenditures which qualify as 100% Canadian
Exploration Expense and will renounce said flow-through expenditures
to
the investors for the taxation year ending December 31,
2007.
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Offering
Jurisdictions:
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The
Offering will be made available in Ontario, Alberta and British Columbia,
(collectively, the "Offering Jurisdictions") and such other jurisdictions
as the Underwriter and the Corporation may approve.
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Resale
Restrictions:
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The
Offering will not be qualified for sale to the public by way of a
prospectus. Accordingly, the securities in the Offering will be subject
to
a resale restriction period of four months from Closing. In addition,
the
Flow-Through Shares are being offered and sold in reliance on the
exemption from registration contained in Regulation S of the U.S.
Securities Act. Following the closing, the Corporation has agreed
to
register the resale of the Flow-Through Shares under the U.S. Securities
Act pursuant to the Registration Rights Agreement. Until such time
as the
Flow-Through Shares are so registered, they will be subject to resale
restrictions in the United States.
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Closing:
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All
subscriptions for Flow-Through Shares are anticipated to be completed
and
accepted by the Corporation on or before the close of business on
October
31, 2007 or such other date as agreed to in writing by the Underwriter
and
the Corporation. Upon Closing, funds are to be released to the Corporation
net of commission and expenses.
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