PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
The securities to which this agreement relate have not been registered under the United States Securities Act of 1933, as amended, or any state securities laws, and such securities may not be offered or resold in the United States of America or to U.S. Persons (as defined herein) without registration under such Act and any applicable state securities laws, unless an exemption from registration is available.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
TO: XXXXXXXX LAKE GOLD INC. (the “Company”)
Re: Purchase of securities of the Company
Details of Subscription: The undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase from the Company, on the terms and conditions set forth herein and in the attached schedules, that number of units of the Company (“Units”) set out below at a price of CDN$ 2.60 per unit. Each Unit shall consist of one common share of the Company (a “Share”) and one-half of one non-transferable share purchase warrant (each whole warrant being a “Warrant”). Each Warrant shall entitle the Subscriber to purchase one Share for a period of two years at a price of CDN$ 3.00 per Share. These securities form part of a larger private placement (the “Private Placement”) of an aggregate of up to 3,269,230 Units.
| Number of Units to be purchased: | __________________________________ Units | |
| Total Subscription Price: | CDN$ __________________________________ | |
| (CDN$ 2.60 per Unit) | ||
| Name of Subscriber: | ||
| Address: | ||
| (Street Address) | ||
| (City and Province or State) | ||
| (Country and Postal or Zip Code) | ||
| (Telephone Number) | ||
| (e-mail Address) |
| Other securities of the Company (insert the number or | shares | ||
| a zero on each line) owned by Subscriber: | |||
| warrants | |||
| (this information is required by the Exchange) | |||
| options | |||
| other (specify) |
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| Xxxxxxxxx Xxxxxxxxxxxx Instructions: If the certificate(s) representing the securities are to be registered in other than the name of the Subscriber. Name: ___________________________________________ Address: _________________________________________ (Xxxxxx Xxxxxxx) _________________________________________ _________________________________________ (City and Province / State) _________________________________________ (Country and Postal / Zip Code) |
Delivery Instructions: If the certificate(s) representing the securities are to be delivered to someone other than the Subscriber. Name: __________________________________________ Contact Name: ____________________________________ Telephone No.: ____________________________________ Address: _________________________________________ (Xxxxxx Xxxxxxx) _________________________________________ _________________________________________ (City and Province / State) _________________________________________ (Country and Postal / Zip Code) |
IN WITNESS WHEREOF the Subscriber has executed, or caused its duly authorized representative to execute, this agreement as of the ______ day of ______________________ , 2003.
| Signature of Subscriber (if an individual) | Name of Subscriber (if not an individual) | |
| Per: ________________________________________________ | ||
| Name of Subscriber (if an individual) | (signature of authorized representative) | |
| Name and Title of Authorized Representative |
Subscribers must also complete and sign
-
Schedule I (TSX Private Placement Questionnaire and Letter of Undertaking)
-
Schedule II (Foreign Portfolio Manager Additional Certification), if the Subscriber is a non-Canadian portfolio manager
-
Schedule III (Confirmation by US Subscribers), if the Subscriber is resident in, or otherwise subject to the securities laws of, the United States
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Schedule IV (BC Accredited Investor Confirmation), if the Subscriber is a domestic or foreign portfolio manager qualifying as an accredited investor resident in British Columbia
ACCEPTANCE
The foregoing is accepted and agreed to as of the __________ day of ______________________, 2003.
Per: ______________________________________
Authorized Signatory
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SCHEDULE I
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
To be completed by each proposed private placement purchaser of listed securities or securities which are convertible into listed securities.
QUESTIONNAIRE
| 1. | DESCRIPTION OF TRANSACTION | |
| (a) | Name of issuer of the securities: | |
| Xxxxxxxx Lake Gold Inc. | ||
| (b) | Number and class of securities to be purchased: | |
______________________________________
Units, each Unit consisting of one common share and one-half share purchase
warrant |
||
| (c) | Purchase Price: | |
| $___________________________ | ||
| 2. | DETAILS OF PURCHASER | |
| (a) | Name of purchaser: | |
| (b) | Address: | |
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(c) |
Names and addresses of persons having
a greater than 10% beneficial interest in the purchaser: |
|
| 3. |
RELATIONSHIP TO ISSUER |
|
(a) |
Is the purchaser (or any person named
in response to 2(c) above) an insider of the Issuer for the purposes
of the Securities Act (Ontario) (before giving effect
to this private placement)? If so, state the capacity in which
the purchaser (or person named in response to 2(c)) qualifies as an insider: |
|
(b) |
If the answer to (a) is “no”,
are the purchaser and the issuer controlled by the same person or company?
If so, give details: |
|
| 4. | DEALINGS OF
PURCHASER IN SECURITIES OF THE ISSUER |
|
Give details
of all trading by the purchaser, as principal, in the securities of the
Issuer (other than debt securities which are not convertible into
equity securities), directly or indirectly, within the 60 days
preceding the date hereof: |
||
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I - 3
UNDERTAKING
TO: TORONTO STOCK EXCHANGE
The undersigned has subscribed for and agreed to purchase, as principal, the securities described in Item 1 of this Private Placement Questionnaire and Undertaking.
The undersigned undertakes not to sell or otherwise dispose of any of the said securities so purchased or any securities derived therefrom for a period of four months from the date of closing of the transaction herein or for such period as is prescribed by applicable securities legislation, whichever is longer, without the prior consent of the Toronto Stock Exchange and any other regulatory body having jurisdiction.
| DATED at _________________________________ this | ||
| Name of Purchaser - please print | ||
| day of ______________, 2003 | ||
| Authorized Signature | ||
| Official Capacity - please print | ||
| Please print here the name of the individual | ||
| whose signature appears above, if different | ||
| from name of purchaser printed above. |
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SCHEDULE II
CERTIFICATION BY FOREIGN PORTFOLIO MANAGER
The undersigned is purchasing securities of Xxxxxxxx Lake Gold Inc. (the “Issuer”).
The undersigned hereby certifies that:
| (a) | it is purchasing securities of the Issuer
on behalf of managed accounts for which it is making the investment decision
to purchase these securities and has full discretion to purchase or sell
securities for such accounts without requiring the client’s express
consent to a transaction; |
|
| (b) | it carries on the business of managing
the investment portfolios of clients through discretionary authority granted
by those clients (a “portfolio manager” business) in [insert
name of jurisdiction], and it is permitted by law to carry on a portfolio
manager business in that jurisdiction; |
|
| (c) | it was not created solely or primarily
for the purpose of purchasing securities of the Issuer; |
|
| (d) | the total asset value of the investment
portfolios it manages on behalf of clients is not less than CDN$ 20,000,000;
and |
|
| (e) | the Issuer has provided it with the
following list of the directors, senior officers and other insiders of
the Issuer and the persons that carry on investor relations activities
for the Issuer: |
| D. Xxxxx X. Xxxxxx ........................................................... | Chairman and Director | ||
| Xxxxx X. Xxxxxxxxxxx ............................................................ | President, Chief Executive Officer and Director | ||
| Xxxxxx Xxx ............................................................................ | Secretary | ||
| A. Xxxxxx Xxxxxxxx ............................................................... | Director | ||
| Xxxxx X. Xxxxxx ..................................................................... | Director | ||
| S. Xxxx Xxxxxxx ..................................................................... | Director | ||
| W. Xxxxxx Xxxxxx .............................................................. | Director | ||
| DSK Consulting Ltd. (Xxxxx Xxxxxx)................................. | Investor Relations |
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II - 2
and it does not believe, and has no reasonable grounds
to believe, that any of those persons has a beneficial interest in any
of the managed accounts for which it is purchasing, except as follows:
|
||
(Insert name of insider(s) or person(s) carrying
on investor relations activities for the Issuer that have a beneficial
interest in an account or insert ‘N/A’, as applicable) |
The undersigned acknowledges that it is bound by the provisions of the Securities Act (British Columbia) including, without limitation, Sections 87 and 111 concerning the filing of insider reports and reports of acquisitions.
| DATED at _________________________________ this | ||
| Name of Purchaser - please print | ||
| day of ______________, 2003 | ||
| Authorized Signature | ||
| Official Capacity - please print | ||
| Please print here the name of the individual | ||
| whose signature appears above, if different | ||
| from name of purchaser printed above. |
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SCHEDULE III
CONFIRMATION BY US SUBSCRIBERS
(For Subscribers resident in the United States of America
or otherwise subject to the Securities Laws of the United States)
The Subscriber hereby represents and warrants to the Company that the Subscriber:
(initial as appropriate)
| _________ | was not offered the Units
and did not execute this Agreement in the United States of America (a
“Reg S Subscriber”); |
||
| - or - | |||
| _________ | was offered the Units or executed
this Agreement in the United States of America and is an Accredited Investor,
as defined in Rule 501(a) of Regulation D of the Securities Act of
1933 (United States), (a “Rule 506 Subscriber”) by virtue of
satisfying one or more of the categories indicated below: |
||
(initial as appropriate) |
|||
_________ |
(a) |
An organization described in section
501(c)(3) of the UnitedStates Internal Revenue Code, a corporation, a
Massachusetts or similar business trust or partnership, not formed for
the specific purpose of acquiring the Units, with total assets in excess
of US$5,000,000 |
|
_________ |
(b) |
A natural person whose individual net
worth, or joint net worth with that person’s spouse, at the date
hereof exceeds US$1,000,000 |
|
_________ |
(c) |
A natural person who had an individual
income in excess ofUS$ 200,000 in each of the two most recent years or
joint income with that person’s spouse in excess of US$300,000 in
each of those years and has a reasonable expectation of reaching the same
income level in the current year |
|
_________ |
(d) |
A trust that (a) has total assets in
excess of US$ 5,000,000, (b) was not formed for the specific purpose of
acquiring the Offered Securities, and (c) is directed in its purchase
of securities by a person who has such knowledge and experience in financial
and business matters that they are capable of evaluating the merits and
risks of an investment in the Units |
|
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III - 2
| _________ | (e) | An investment company registered under
the Investment Corporation Act of 1940 (United States) or
a business development company as defined in section 2(a)(48) of that
Act |
|
| _________ | (f) | Small Business Investment Corporation
licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Xxxxxxxxxx Xxx xx 0000 (Xxxxxx Xxxxxx) |
|
| _________ | (g) | A private business development company
as defined in section 202(a)(22) of the Investment Advisors Acts of
1940 (United States) |
|
| _________ | (h) | An entity in which all of the equity
owners satisfy the requirements of one or more of the foregoing categories |
DATED at _________________________________ on _________________________________
| Name of Purchaser - please print | ||
| Authorized Signature | ||
| Official Capacity - please print | ||
| Please name of the individual whose signature | ||
| appears above, if different from name of purchaser | ||
| printed above. |
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SCHEDULE IV
ACCREDITED INVESTOR CONFIRMATION
(For domestic or foreign portfolio managers qualifying as accredited investors in British Columbia)
The Subscriber represents and warrants to the Company that the Subscriber has read the following definition of an “accredited investor” from Multilateral Instrument 00-000 Xxxxxxx Raising Exemptions and certifies that the Subscriber is an accredited investor by virtue of falling into one or more of the categories indicated below:
(initial as appropriate)
| _________ | (a) | a Canadian financial institution, or
an authorized foreign bank listed in Schedule III of the Bank Act (Canada); |
| _________ | (b) | the Business Development Bank of Canada
incorporated under the Business Development Bank of Canada Act (Canada); |
| _________ | (c) | an association under the Cooperative
Credit Associations Act (Canada) located in Canada or a central cooperative
credit society for which an order has been made under subsection 473(1)
of that Act; |
| _________ | (d) | a subsidiary of any person or company
referred to in paragraphs (a) to (c), if the person or company owns all
of the voting securities of the subsidiary, except the voting securities
required by law to be owned by directors of that subsidiary; |
| _________ | (e) | a person or company registered under
the securities legislation of a jurisdiction of Canada, as an adviser
or dealer, other than a limited market dealer registered under the Securities
Act (Ontario)or the Securities Act (Newfoundland and Labrador); |
| _________ | (f) | an individual registered or formerly
registered under the securities legislation of a jurisdiction of Canada,
as a representative of a person or company referred to in paragraph (e); |
| _________ | (g) | 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; |
| _________ | (h) | a municipality, public board or commission
in Canada; |
| _________ | (i) | any national, federal, state, provincial,
territorial or municipal government of or in any foreign jurisdiction,
or any agency of that government; |
| _________ | (j) | 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; |
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IV - 2
| _________ | (k) | an individual who, either
alone or jointly 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 CDN$1,000,000; |
| _________ | (l) | an individual whose net
income before taxes exceeded CDN$ 200,000 in each of the two most recent
years or whose net income before taxes combined with that of a spouse
exceeded CDN$ 300,000 in each of the two most recent years and who, in
either case, reasonably expects to exceed that net income level in the
current year; |
| _________ | (m) | a person or company, other
than a mutual fund or non-redeemable investment fund, that, either alone,
or with a spouse, had net assets of at least CDN$ 5,000,000, and unless
the person or company is an individual, that amount is shown on its most
recently prepared financial statements; |
| _________ | (n) | a mutual fund or non-redeemable
investment fund that, in the local jurisdiction, distributes its securities
only to persons or companies that are accredited investors; |
| _________ | (o) | a mutual fund or non-redeemable
investment fund that, in the local jurisdiction, is distributing or has
distributed its securities under one or more prospectuses for which the
regulator has issued a receipts; |
| _________ | (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, trading as a trustee
or agent on behalf of a fully managed account; |
| _________ | (q) | a person or company trading
as agent on behalf of a fully managed account if that person or company
is registered or authorized to carry on business under the securities
legislation of a jurisdiction of Canada or a foreign jurisdiction as a
portfolio manager or under an equivalent category of adviser or is exempt
from registration as a portfolio manager or the equivalent category of
adviser, |
| _________ | (r) | a registered charity under
the Income Tax Act (Canada)that, in regard to the trade, has obtained
advice from an eligibility adviser or other adviser registered to provide
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) through (e) and paragraph (j) in form and function;
or |
| _________ | (t) | a person or company in
respect of which all of the owners of interests, direct or indirect, legal
or beneficial, except the voting securities required by law to be owned
by directors, are persons or companies that are accredited investors. |
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IV - 3
The foregoing representations and warranties are true an accurate as of the date of this certificate and will be true and accurate as of Closing. If any such representations and warranties shall not be true and accurate prior to Closing, the Subscriber shall give immediate written notice of such fact to the Company.
For the purposes hereof, the following definitions are included for convenience:
| (a) | “company” means
any corporation, incorporated association, incorporated syndicate or other
incorporated organization. |
|
| (b) | “entity” means
a company, syndicate, partnership, trust or unincorporated organization. |
|
| (c) | “financial assets”
means cash and securities. |
|
| (d) | “fully managed account”
means an account for which a person or company makes the investment
decisions if that person or company has full discretion to trade in securities
for the account without requiring the client’s express consent to
a transaction; |
|
| (e) | “mutual fund”
includes an issuer of securities that entitle the holder to receive on
demand, or within a specified period after demand, an amount computed
by reference to the value of a proportionate interest in the whole or
in a part of the net assets, including a separate fund or trust account,
of the issuer of securities. |
|
| (f) | “non-redeemable investment
fund” means an issuer: |
|
(i) |
whose primary purpose is to invest money
provided by its securityholders; |
|
(ii) |
that does not invest for the purpose
of exercising effective control, seeking to exercise effective control,
or being actively involved in the management of the issuers in which it
invests, other than other mutual funds or non-redeemable investment funds;
and |
|
(ii) |
that is not a mutual fund. |
|
| (g) | “person” means
an individual, partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, trustee, executor, administrator
or other legal representative. |
|
| (h) | “related liabilities”
means liabilities incurred or assumed for the purpose of financing the
acquisition or ownership of financial assets and liabilities that are
secured by financial assets. |
|
| (i) | “spouse” means,
in relation to an individual, another individual to whom that individual
is married, or another individual of the opposite sex or the same sex
with whom that individual is living in a conjugal relationship outside
marriage. |
|
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IV - 4
| In Multilateral Instrument 45-103 a person or company is considered to be | |||
| • | an “affiliated entity”
of another person or company if one is a subsidiary entity of the other,
or if both are subsidiary entities of the same person or company, or if
each of them is controlled by the same person or company. |
||
| • | “controlled” by
a person or company if, |
||
(a) |
in the case of a person
or company, |
||
(i) |
voting securities of the first-mentioned
person or company carrying more than 50% of the votes for the election
of directors are held, otherwise than by way of securities only, by or
for the benefit of the other person or company; and |
||
(ii) |
the votes carried by the securities
are entitled, if exercised, to elect a majority of the directors of the
first-mentioned person or company; |
||
(b) |
in the case of a partnership
that does not have directors, other than a limited partnership, the second-mentioned
person or company holds more than 50% of the interests in the partnership;
or |
||
(c) |
in the case of a limited
partnership, the general partner is the second-mentioned person or company. |
||
| • | a “subsidiary entity”
of another person or company if: |
||
(a) |
it is controlled by, |
||
(i) |
that other, or | ||
(ii) |
that other and one or more persons or companies each of which is controlled by that other, or | ||
(iii) |
two or more persons or companies, each of which is controlled by that, or | ||
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IV - 5
| (b) | it is a subsidiary entity of a person or company that is the other’s subsidiary entity. |
DATED at _________________________________ on _________________________________
| Name of Purchaser - please print | ||
| Authorized Signature | ||
| Official Capacity - please print | ||
| Please print name of the individual whose signature | ||
| appears above, if different from name of purchaser | ||
| printed above. |
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SCHEDULE V
TERMS & CONDITIONS
1. Description of Securities
The securities subscribed for hereunder shall be units (“Units”), each Unit consisting of one common share in the capital of the Company (collectively the “Shares”) and one-half of one non-transferable common share purchase warrant (each whole warrant being a “Warrant” and collectively the “Warrants”). Each Warrant shall entitle the holder thereof to purchase one common share in the capital of the Company (collectively the “Warrant Shares”), as presently constituted, during the period and for the price described on the first page of this agreement. The foregoing description of the Warrants is a summary only and is subject to the detailed provisions of the certificates representing the Warrants. The Units, Shares, Warrants and Warrant Shares are herein collectively referred to as the “Securities”.
The Securities will be subject to concurrent restricted resale (hold) periods imposed by Multilateral Instrument 45-102 Resale of Securities of the Canadian Securities Administrators (the “Resale Instrument”) and the policies of the Toronto Stock Exchange (the “Exchange) during which they may be resold only in compliance with the Resale Instrument and the Exchange’s policies. Such restricted resale periods will generally expire on the four month anniversary of the Closing Date (as defined in paragraph 4). Subscribers are advised to consult their own legal advisers in connection with any applicable resale restrictions.
2. Payment of Subscription Price
The total Subscription Price set out on the first page of this Private Placement Subscription Agreement (the “Agreement”) must be paid by money order, certified cheque or bank draft payable to the Company or to the Company’s legal counsel, X’Xxxxx & Company, on or before the Closing Date. Such Subscription Price shall be allocated to the Shares and Warrants on the basis of CDN$ 0.01 to the Warrants and the balance to the Shares.
Pending the Closing (as defined below), the Subscription Funds may be used by the Company for its corporate purposes. Any interest income from the Subscription Funds shall be for the account of the Company. Should the Closing not occur by August 29, 2003, the payment of the Subscription Funds to the Company shall become a demand loan repayable without interest.
3. Documents Required
The Subscriber must complete, sign and deliver to the Company’s legal counsel, X’Xxxxx & Company, an executed copy of this Agreement together with the following Schedules to this Agreement:
| (a) | Schedule I, a Private Placement Questionnaire
and Undertaking required by the Exchange; |
|
| (b) | Schedule II, a Certification by Foreign
Portfolio Manager required by the British Columbia Securities Commission
(the “Commission”) if the Subscriber is a non-Canadian portfolio
manager; |
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V - 2
| (c) | Schedule III, a Confirmation by US Subscribers,
if the Subscriber is resident in or otherwise subject to the securities
laws of the United States; and |
|
| (d) | Schedule IV, a BC Accredited Investor
Confirmation, if the Subscriber is a domestic or foreign portfolio manager
qualifying as an accredited investor resident in British Columbia. |
The Subscriber shall complete, sign and deliver to the Company’s legal counsel, X’Xxxxx & Company, as soon as possible such further documents, questionnaires, notices and undertakings as may be required by regulatory authorities, stock exchanges and applicable law (collectively with the foregoing documents the “Transaction Documents” and, in respect of the Company, also includes the certificates representing the Shares and Warrants). The Company will file with the Exchange the Private Placement Questionnaires and Undertakings of Subscribers whose subscriptions are accepted.
4. Closing
| (a) | Delivery and payment for the Units (the “Closing”) will be completed at the offices of: X’Xxxxx & Company at 10:00 a.m. (Vancouver time) on the second business day (the “Closing Date”) after the later of the date the Exchange has given its approval to the Private Placement and the receipt of the last signed Agreement but no later than August 15, 2003. |
| (b) | At Closing, the Company shall deliver or cause to be delivered to the Subscriber the following: |
| (i) | certificates representing the Shares
and Warrants; |
|
| (ii) | each of the other Transaction Documents
duly executed by the Company; |
|
| (iii) | a certificate executed by the chief
executive officer or the chief financial officer of the Company, dated
the Closing Date, in form and substance reasonably satisfactory to the
Subscriber, to the effect set forth in Subsection 4(d)(i) below and as
to such other matters as may be reasonably requested by the Subscriber
or its counsel; and |
|
| (iv) | such other documents relating to the
transactions contemplated by this Agreement as the Subscriber or its counsel
may reasonably request. |
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V - 3
(c) |
The Company’s obligation
to complete the purchase and sale of the Units shall be subject to the
condition that the representations and warranties made by the Subscriber
are accurate in all material respects and those undertakings of the Subscriber
to be fulfilled before the Closing Date have been fulfilled in all material
respects on or before Closing Date. This condition may be waived by the
Company with respect to the Company’s obligation. |
||
(d) |
The Subscriber’s obligation
to accept delivery of the certificates representing the Shares and Warrants
upon the Closing Date and to pay for the Shares evidenced by the certificates
and the Warrants being purchased by the Subscriber shall be subject to
the following conditions, any one or more of which may be waived by the
Subscriber with respect to the Subscriber’s obligation: |
||
(i) |
the representations and warranties made
by the Company in this Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak
as of a specific date) and the undertakings of the Company shall have
been performed, satisfied and complied with in all material respects on
or before the Closing Date with the undertakings required by the Transaction
Documents to be performed, satisfied or complied with by the Company at
or prior to the Closing Date; |
||
(ii) |
the Company shall have delivered to
the Subscriber the items required under Section 4(b) of this Agreement;
and |
||
(iii) |
the Company shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Units, including, without limitation, written
evidence from the Exchange of its acceptance of the written notice of
the proposed private placement of the Units and the acceptance for listing
of the Common Shares and Warrant Shares on the Exchange. |
||
| 5. | Acknowledgements of
Subscriber
The Subscriber acknowledges that: |
||
(a) |
the Securities have not been registered
under the United States Securities Act of 1933, as amended (the
“1933 Act”) or under any state securities or “blue sky”
laws, and the Company has no obligation or present intention of filing
a registration statement under the 1933 Act in respect of the Securities
and therefore the Securities cannot be offered or sold in the United States
of America without registration under the 1933 Act and the securities
laws of all applicable states of the United States of America, unless
an exemption from registration is available or registration is not required
pursuant to Regulation S under the 1933 Act; |
||
(b) |
the Subscriber’s decision to execute
the Transaction Documents and acquire the Units has not been based on
any oral or written representation made by or on behalf of the Company
and the Company has not provided any offering memorandum, prospectus,
disclosure statement or registration statement to the Subscriber but such |
||
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V - 4
decision is based entirely upon the
Subscriber’s review of information which has been filed by the Company
with the various Canadian securities commissions under applicable securities
legislation and the Exchange (the “Public Record”), including
the Company’s most recent audited and unaudited financial statements
(collectively the “Financial Statements”), and the Subscriber’s
knowledge of the Company’s affairs, and the Subscriber has had the
opportunity to ask questions of the Company and its advisors regarding
the Company and its business and financial condition and, as a result
of all of the foregoing, the Subscriber believes that it has received
all the information which it considers necessary for deciding whether
to invest in the Units; |
|||
| (c) | the Company is entitled to rely on the
statements and answers of the Subscriber contained in the Transaction
Documents and the Subscriber will hold the Company harmless from any loss
or damage it may suffer as a result of the Subscriber’s failure to
correctly complete the Transaction Documents; |
||
| (d) | it has (or others for whom it is contracting
hereunder have) been advised to consult their own legal advisers with
respect to applicable resale restrictions and it is (or others for whom
it is contracting hereunder are) solely responsible (and the Company is
not in any way responsible) for compliance with applicable resale restrictions; |
||
| (e) | this Agreement is not enforceable by
the Subscriber unless it has been accepted by the Company, it has been
entered into by the Subscriber for valuable consideration and may not
be revoked or withdrawn by the Subscriber and it is not assignable by
the Subscriber without the written consent of the Company which consent
may be unreasonably withheld; |
||
| (f) | no securities commission or similar
regulatory authority has reviewed or passed on the merits of the Securities; |
||
| (g) | there is no government or other insurance
covering the Securities; |
||
| (h) | there are risks associated with the
purchase of the Securities; |
||
| (i) | there are restrictions on the Subscriber’s
ability to resell the Securities and it is the responsibility of the Subscriber
to find out what those restrictions are and to comply with them before
selling the Securities; |
||
| (j) | the Company has advised the Subscriber
that the Company is relying on exemptions from the requirements to provide
the Subscriber with a prospectus and to sell securities through a person
registered to sell securities under the Securities Act (British
Columbia) (together with the rules, policies, instruments and orders thereunder,
the “BC Act”) and, as a consequence of acquiring securities
pursuant to these exemptions, certain protections, rights and remedies
provided by the BC Act, including statutory rights of rescission or damages,
will not be available to the Subscriber; and |
||
| (k) | pursuant to the Resale Instrument, the
Securities will be subject to restrictions on transfer for a period of
four months and a concurrent period of four months pursuant |
Rest Execution Copy - July 24, 2003
V - 5
to the policies of the Exchange, in both cases from
the Closing Date and thereafter the Securities may be subject to notice
or other requirements under applicable securities legislation upon disposition.
|
6. Representations, Warranties and Covenants of the Subscriber
The Subscriber hereby represents, warrants and covenants to the Company (which representations, warranties and covenants shall survive Closing) that:
| (a) | if the Subscriber is purchasing the Units as principal for its own account, the Subscriber is resident in: United States Subscribers the United States of America, or is otherwise subject to the securities laws thereof, and: |
|||
(i) |
understands the Securities
have not and will not be registered under the 1933 Act or the securities
laws of any state of the United States of America in which the Subscriber
is resident and the sale contemplated hereby is being made in reliance
on private placement exemptions to either Rule 506 Subscribers pursuant
to Rule 506 of the 1933 Act or Reg S Subscribers pursuant to Rule 903
of Regulation S of the 1933 Act; |
|||
(ii) |
if the Subscriber is a Rule
506 Subscriber the Subscriber is an Accredited Investor as set out in
the attached Schedule ‘Confirmation by US Subscribers’; |
|||
(iii) |
it is acquiring the Units
as an investment for its own account as principal and not with a view
to any resale, distribution or other disposition of the Securities; |
|||
(iv) |
has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or pledge to
such person, or anyone else, the Securities, or any part thereof, or any
interest therein and the Subscriber has no present plans to enter into
any such contract, undertaking, agreement or arrangement; |
|||
(v) |
if the Subscriber decides
to offer, sell or otherwise transfer any of the Securities, will not offer,
sell or otherwise transfer any of the Securities, directly or indirectly,
unless the sale is: |
|||
(A) |
to the Company; |
|||
(B) |
made outside the United States in a
transaction meeting the requirements of Rule 904 of Regulation S under
the 1933 Act (or such rule or regulation promulgated by the Securities
and Exchange |
|||
Rest Execution Copy - July 24, 2003
V - 6
Commission of the United States of America
as is then in effect) and in compliance with applicable local laws and
regulations; or |
||||
(C) |
made in a transaction that does not
require registration under the 1933 Act or any applicable United States
state securities laws and regulations governing the offer and sale of
securities and the Subscriber has furnished to the Company, prior to such
sale, an opinion of counsel of recognized standing reasonably satisfactory
to the Company confirming the compliance of such sale with the 1933 Act
and applicable United States state securities laws; |
|||
| (vi) | acknowledges and agrees
the Securities will be “restricted securities” under the 1933
Act inasmuch as they are being acquired from the Company in a transaction
not involving a public offering and that under the Act and applicable
regulations the Securities may be resold without registration under the
1933 Act only in certain limited circumstances; |
|||
| (vii) | understands and acknowledges that upon the issuance thereof, and unless and until such time as the same is no longer required under the applicable requirements of the 1933 Act or applicable United States state securities laws and regulations, the certificates representing any of the Shares and Warrant Shares (and all certificates issued in exchange therefor or in substitution thereof) shall bear, on the face of such certificates, the following legend: |
|||
“THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, (THE “1933 ACT”) OR ANY APPLICABLE
STATE SECURITIES LAW. NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF WITHOUT (A) AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE UNITED
STATES STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION, OR (B) AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.” |
||||
| (viii) | understands and acknowledges that the Warrants may only be exercised in circumstances where there is an exemption from the registration requirements of the 1933 Act available and applicable state securities laws and upon the original issue of the Warrants each certificate representing the Warrants and all certificates issued in exchange therefor or in substitution or transfer thereof, shall bear the following legend: “THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR ANY |
|||
Rest Execution Copy - July 24, 2003
V - 7
APPLICABLE STATE SECURITIES LAWS. THESE
WARRANTS MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON
WITHIN THE UNITED STATES UNLESS REGISTERED UNDER THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE. AS USED HEREIN, THE TERMS ‘UNITED STATES’ AND
‘U.S. PERSON’ HAVE THE MEANINGS ASSIGNED TO THEM IN REGULATION
S UNDER THE 1933 ACT.” |
|||
(ix) |
consents to the Company making a notation
on its records or giving instructions to any transfer agent of the Company
in order to implement the restrictions on transfer set forth herein; |
||
(x) |
acknowledges the Company has no obligation
or present intention to file a registration statement under the 1933 Act
in respect of the Securities and accordingly there are substantial restrictions
on transferability of the Securities and it may not be possible to liquidate
the Subscriber’s investment readily in case of any emergency; |
||
(xi) |
acknowledges the Financial Statements
have been prepared in accordance with Canadian generally accepted accounting
principles, which differ in some respects from United States generally
accepted accounting principles, and thus may not be comparable to financial
statements of United States companies; |
||
(xii) |
the Subscriber will not engage in any
‘directed selling efforts’ (as defined in Regulation S of the
1933 Act) in the United States of America in respect of the resale of
the Securities, which includes any activities undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning
the market in the United States for the resale of the Securities; and |
||
(xiii) |
the Subscriber has not subscribed for
the Units as a result of any form of ‘general solicitation’
or ‘general advertising’ (as those terms are used in Regulation
D under the 1933 Act), including advertisements, articles, notices or
other communications published in any newspaper, magazine or similar media
or broadcast over radio or television, or other form of telecommunications,
including electronic display, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising. |
||
- or - |
|||
Non-Canadian & Non-United
States Subscribers |
|||
(xiv) |
a jurisdiction, other than Canada or
the United States of America, as set out on the first page of this Agreement. |
||
Rest Execution Copy - July 24, 2003
V - 8
| (b) | if the Subscriber is not purchasing the Units for its own account: | |||
(i) |
the Subscriber is: |
|||
(A) |
a trust company or an insurance company
which has received a business authorization under the Financial Institutions
Act (British Columbia) or is authorized under the laws of another
province of Canada to carry on such business in such other province and
the Subscriber is purchasing such securities as an agent or trustee for
accounts that are fully managed by the Subscriber; or |
|||
(B) |
an adviser managing the investment portfolios
of clients through discretionary authority granted by one or more clients
and is registered as such an adviser under the BC Act or the laws of another
province of Canada or is exempt from such registration and the Subscriber
is purchasing securities as an agent for accounts that are fully managed
by the Subscriber; |
|||
(C) |
an adviser managing the investment portfolios
of clients through discretionary authority granted by one or more clients
and is in a jurisdiction other than Canada, has completed Schedule II
to this Agreement and is purchasing securities as an agent for accounts
that are fully managed by it; and |
|||
(ii) |
the aggregate acquisition
cost for such securities is not less than CDN$ 97,000 or the Subscriber
qualifies as an ‘accredited investor’ in British Columbia as
set out on Schedule IV; |
|||
| (c) | unless the subscriber is
a Reg S Subscriber or Rule 506 Subscriber, the subscriber is not a U.S.
Person or a person in the United States and is not acquiring the Units
for the account or benefit of a U.S. Person or a person in the United
States. A ‘U.S. Person’ is defined in Regulation S under the
1933 Act to be any person who is |
|||
(A) |
any natural person resident
in the United States, |
|||
(B) |
any partnership or corporation
organized or incorporated under the laws of the United States, |
|||
(C) |
any estate of which any
executor or administrator is a U.S. Person, |
|||
(D) |
any trust of which any trustee
is a U.S. Person, |
|||
(E) |
any agency or branch of
a foreign entity located in the United States, |
|||
(F) |
any non-discretionary account
or similar account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated or, if an individual, resident
in the United States, and |
|||
Rest Execution Copy - July 24, 2003
V - 9
(G) |
any partnership or corporation
if |
|||
(i) |
organized or incorporated under the
laws of any foreign jurisdiction, and |
|||
(ii) |
formed by a U.S. Person principally
for the purpose of investing in securities not registered under the 1933
Act, unless it is organized or incorporated, and owned, by ‘Accredited
Subscribers’ (as defined in Section 230.501(a) of the 0000 Xxx) who
are not natural persons, estates or trusts; |
|||
| (d) | the Subscriber is aware
that the Units will be distributed pursuant to certain exemptions under
the BC Act and other applicable securities legislation and the Subscriber
is not acquiring the Units as a result of any information about the material
affairs of the Company that is not generally known to the public save
knowledge of this particular transaction; |
|||
| (e) |
pursuant to the Resale Instrument
and the policies of the Exchange the Subscriber will not transfer the
Securities for a period of four months from the Closing Date except in
compliance with the Resale Instrument and the policies of the Exchange
and will comply with such notice and other requirements under applicable
securities legislation upon disposition; |
|||
| (f) | neither the Subscriber nor
any party on whose behalf it is acting has been created, established,
formed or incorporated solely, or is used primarily, to acquire securities
or to permit the purchase of the Units without a prospectus in reliance
on an exemption from the prospectus requirements of applicable securities
legislation; |
|||
| (g) | the Subscriber and any beneficial
purchaser for whom it is acting are resident in the jurisdiction set out
on the first page of this Agreement; |
|||
| (h) | the entering into of the
Transaction Documents and the transactions contemplated thereby do not
result in the violation of any of the terms and provisions of any law
applicable to, or the constating documents of, the Subscriber or of any
agreement, written or oral, to which the Subscriber may be a party or
by which the Subscriber is or may be bound; |
|||
| (i) | the Subscriber has the legal
capacity and competence to enter into and execute the Transaction Documents
and to take all actions required pursuant thereto and, if the Subscriber
is a corporation, it is duly incorporated and validly subsisting under
the laws of its jurisdiction of incorporation and all necessary approvals
by its directors, shareholders and others have been obtained to authorize
execution of the Transaction Documents on behalf of the Subscriber; |
|||
| (j) | the Subscriber has duly
executed and delivered this Agreement and it constitutes a valid and binding
agreement of the Subscriber enforceable against the Subscriber; |
|||
Rest Execution Copy - July 24, 2003
V - 10
| (k) | this subscription by the Subscriber
has not been induced by any representations or warranties by any person
whatsoever with regard to the future value of the Securities; and |
|
| (l) | the Subscriber is an investor in securities
of corporations in the development stage and acknowledges that it is able
to fend for itself, can bear the economic risk of its investment and it
has such knowledge and experience in financial or business matters such
that it is capable of evaluating the merits and risks of the investment
in the Units. |
The foregoing representations, warranties and covenants are made by the Subscriber with the intent that they be relied upon by the Company in determining its suitability as a purchaser of the Securities and the Subscriber hereby agrees to indemnify the Company against all losses, claims, costs, expenses and damages or liabilities which it may suffer or incur as a result of reliance thereon. The Subscriber undertakes to notify the Company immediately of any change in any representation, warranty or other information relating to the Subscriber set forth herein.
7. Representations, Warranties and Covenants of the Company
The Company represents and warrants to and covenants with the Subscriber that, as of the date of this Agreement and at the Closing:
| (a) | the Company and its subsidiaries, if
any, are valid and subsisting corporations duly incorporated, continued
or amalgamated and in good standing under the laws of the jurisdictions
in which they are incorporated, continued or amalgamated with respect
to all acts necessary to maintain their corporate existence; |
|
| (b) | the Company has complied and will comply
with all applicable corporate and securities laws and regulations in connection
with the offer, sale and issuance of the Units; |
|
| (c) | the Company is the beneficial owner
of the properties, business and assets or the interests in the properties,
business and assets referred to in the Public Record, except as disclosed
in the Public Record all agreements by which the Company holds an interest
in a property, business or asset are in good standing according to their
terms, and there has not been any breach of the applicable laws of the
jurisdictions in which such properties, business and assets are situated
which would have a material adverse effect on such properties, business
and assets; |
|
| (d) | the Public Record and the representations
contained in the Transaction Documents are accurate in all material respects
and omit no fact, the omission of which would make such representation
misleading in light of the circumstances in which such representation
was made; |
|
| (e) | the Financial Statements accurately
reflect the financial position of the Company as at the date thereof and
no adverse material changes in the financial position of the |
Rest Execution Copy - July 24, 2003
V - 11
Company have taken place since the date
of the latest balance sheet contained in the Financial Statements, except
as has been publicly disclosed; |
||
| (f) | the issuance and sale of the Units by
the Company does not and will not conflict with and does not and will
not result in a breach of any of the terms, conditions or provisions of
its constating documents or any agreement or instrument to which the Company
is a party; |
|
| (g) | the Transaction Documents have been
duly authorized by all necessary corporate action on the part of the Company,
duly executed and delivered by the Company and, subject to acceptance
by the Company, constitute valid obligations of the Company legally binding
upon it and enforceable in accordance with their terms; |
|
| (h) | the issuance of the Securities, at the
time of their issue, will have been approved by all requisite corporate
action and any shares comprising part of the Securities, upon issue and
delivery, will be validly issued as fully paid and non-assessable; |
|
| (i) | the Company and its subsidiaries, if
any, are duly registered or licensed to carry on business in the jurisdictions
in which they are required to be so registered or licensed to carry on
business or own property or assets; |
|
| (j) | neither the Company nor any of its subsidiaries,
if any, is a party to any actions, suits or proceedings which could materially
affect its business or financial condition, and, as at the date hereof,
no such actions, suits or proceedings have been threatened or, to the
best of the Company’s knowledge, are pending, except as disclosed
in the Public Record; |
|
| (k) | no order ceasing or suspending trading
in the Securities nor prohibiting sale of the Securities has been issued
to and is outstanding against the Company or its directors, officers or
promoters and to the best of the Company’s knowledge no investigations
or proceedings for such purposes are pending or threatened; |
|
| (l) | the Company is a reporting issuer under
the BC Act, Securities Act (Alberta) and Securities Act (Ontario),
its common shares are listed for trading on the Exchange and there shall
not be any consents, approvals, authorizations, orders or agreements of
any stock exchanges, securities commissions or similar authorities in
Canada, governmental agencies or regulators, courts or any other persons
which may be required for the issuance of the Securities and the delivery
of certificates representing the Securities to the Subscriber, not obtained
and not in effect on the date of delivery of such certificates; |
|
| (m) | the Company is a ‘qualified issuer’
under the Resale Instrument and section 2.5(2) thereof will apply to the
first trade of the Securities; |
|
| (n) | the Company is a ‘foreign private
issuer’ as defined in the 1933 Act and it will use its best efforts
to remain a foreign private issuer for a period of 12 months from the
Closing Date; and |
Rest Execution Copy - July 24, 2003
V - 12
| (o) | neither the Company nor any subsidiary shall take
any action which would be reasonably expected to result in the delisting
or suspension of the Shares on or from the Exchange or on or from any
securities exchange, market or trading or quotation facility on which
the Shares are then listed or quoted and the Company shall comply, in
all material respects, with the rules and regulations thereof. |
8. Company Indemnity
The Company shall indemnify, defend and hold the Subscriber and each other holder of the Securities (which term shall, for the purposes of this Section, include the Subscriber or its shareholders, managers, partners, directors, officers, members, employees, direct or indirect investors, agents and affiliates and assignees and the stockholders, partners, directors, members, managers, officers, employees direct or indirect investors and agents of such affiliates and assignees) harmless against any and all liabilities, loss, cost or damage, together with all reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses), arising from, relating to, or connected with the untruth, inaccuracy or breach of any statement, representation, warranty or covenant of the Company contained herein.
9. Legending of Securities
The Subscriber hereby acknowledges that legends will be placed upon the certificates representing the Securities to the effect that the securities represented thereby are subject to hold or restricted resale periods and may not be traded until the expiry thereof except as permitted under the Resale Instrument, the policies of the Exchange and any other applicable securities legislation, rules or policies.
Rest Execution Copy - July 24, 2003
V - 13
10. Costs
The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the acquisition of the Securities shall be borne by the Subscriber.
11. Governing Law
This Agreement is governed by the laws of the province of British Columbia and the federal laws of Canada applicable herein. The Subscriber, in its personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably attorn to the jurisdiction of the courts of the province of British Columbia.
12. Survival
This Agreement including, without limitation, the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties for a period of one year after the Closing Date notwithstanding the completion of the purchase of the Units by the Subscriber and any subsequent disposition by the Subscriber of the Securities.
13. Assignment
This Agreement is not transferable or assignable.
14. Execution
The Company shall be entitled to rely on delivery by facsimile machine of an executed copy of this Agreement and acceptance by the Company of such facsimile copy shall be equally effective to create a valid and binding agreement between the Subscriber and the Company in accordance with the terms hereof.
15. Severability
The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.
Rest Execution Copy - July 24, 2003
16. Entire Agreement
Except as expressly provided in this Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Agreement contains the entire agreement between the parties with respect to the sale of the Units and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute, by common law, by the Company, by the Subscriber, or by any third party.
17. Notice
Unless otherwise provided herein, any notice or other communication to a party under this Agreement may be made, given or served by registered mail, postage pre-paid, by telecopy or by delivery to the parties at the addresses as set out in this Agreement. Any notice or other communication:
| (a) | mailed shall be deemed to have been received on the fifth business day following its mailing; | |
| (b) | telecopied shall be deemed to have been received on the business day following the date of transmission; and | |
| (c) | delivered shall be deemed to have been received on the date of delivery. |
In the event of a postal strike or delay affecting mail delivery, the date of receipt of any notice by mail is deemed to be extended by the length of such strike or delay. Each party may change its address for service at any time by providing notice in writing of such change to the other party.
18. Securities Regulatory Approval
This Agreement shall be subject to the approval of all securities regulatory authorities having jurisdiction.
19. Time is of the Essence.
Time shall, in all respects, be of the essence.
20. Currency
All references in this Agreement to dollars, unless otherwise specifically indicated, are stated in Canadian dollars.
Rest Execution Copy - July 24, 2003
