Exhibit 10.5

 

U.S. GOLD CORPORATION

 

SUBSCRIPTION AGREEMENT FOR SUBSCRIPTION RECEIPTS

 

TO:

U.S. GOLD CORPORATION

AND TO:

GMP SECURITIES L.P. (the “Canadian Agent”)

AND TO:

GRIFFITHS McBURNEY CORP. (the “U.S. Agent”)

 

The Subscriber (as hereinafter defined) hereby irrevocably subscribes for and
agrees to purchase from U.S. Gold Corporation (the “Corporation”) that number of
subscription receipts of the Corporation (the “Subscription Receipts”) set out
below at a price of US$4.50 per Subscription Receipt. Each Subscription Receipt
will entitle the holder thereof to receive, upon the satisfaction of certain
events and as set forth in Section 3.2 of the attached “Terms and Conditions of
Subscription for Subscription Receipts”, without payment of additional
consideration, one unit of the Corporation (a “Unit”). Each Unit is to be
comprised of one share of common stock of the Corporation (a “Common Share”) and
one-half of one common share purchase warrant (each whole common share purchase
warrant, a “Warrant”). Each Warrant will entitle the holder thereof to purchase
one Common Share (a “Warrant Share”) for a period of five years following the
Closing Date (as defined below) at a price of US$10.00 per Warrant. On closing
of the Offering (as defined below), 50% of the proceeds of the Offering will be
held in escrow pending the satisfaction of certain Release Conditions (as
defined below) prior to certain deadlines (as set out herein). The failure of
the Corporation to satisfy the Release Conditions by such deadlines could result
in one or both of (i) a change of the conversion basis of the Subscription
Receipts and (ii) half of the proceeds from the sale of the Subscription
Receipts being returned to the Subscribers, on the terms described herein. The
Subscriber agrees to be bound by the terms and conditions set forth in the
attached “Terms and Conditions of Subscription for Subscription Receipts”
including, without limitation, the representations, warranties and covenants set
forth in the applicable schedules attached thereto. The Subscriber further
agrees, without limitation, that the Corporation, the Canadian Agent and the
U.S. Agent may rely upon the Subscriber’s representations, warranties and
covenants contained in such documents.

 

SUBSCRIPTION AND SUBSCRIBER INFORMATION

 

Please print all information (other than signatures), as applicable, in the
space provided below

 

 

 

Number of Subscription Receipts:

xUS$4.50

(Name of Subscriber)

 

 

 

 

 

Account Reference (if applicable):

 

 

 

 

 

Aggregate Subscription Cost:

 

By:

 

 

 

(the “Subscription Amount”)

 

Authorized Signature

 

 

 

 

Please complete if purchasing as agent or trustee for a principal (beneficial
purchaser) (a “Disclosed Principal”) and not purchasing as trustee or agent for
accounts fully managed by it.  

 

 

(Official Capacity or Title – if the Subscriber is not an individual)

 

 

 

 

(Name of individual whose signature appears above if different than the name of
the subscriber printed above.)

 

 

(Name of Disclosed Principal)

 

 

 

 

 

 

(Subscriber’s Address, including Municipality and Province)

 

(Address of Disclosed Principal)

 

 

 

 

 

 

 

 

(Account Reference, if applicable)

 

 

 

(Telephone Number)      

(Email Address)

 

 

 

 

 

 

 

 

 Account Registration Information: 

 

Delivery Instructions as set forth below: 

 

 

 

 

 

 

(Name)

 

(Name)

 

 

 

 

 

 

(Account Reference, if applicable)

 

(Account Reference, if applicable)

 

 

 

 

 

 

(Address, including Postal or Zip Code)

 

(Address)

 

 

 

 

 

 

 

 

(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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TERMS AND CONDITIONS OF SUBSCRIPTION FOR
SUBSCRIPTION RECEIPTS

 

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:

 

“Agent” means the Canadian Agent and the U.S. Agent collectively.

 

“Agency Agreement” means the agency agreement to be entered into between the
Corporation on the one hand and the Agent on the other, to be dated as of the
Closing Date, in respect of the Offering.

 

“Blue Sky Laws” means the securities laws of any State.

 

“Broker Warrant” shall have the meaning ascribed to such term in Section 8.1.

 

“Business Day” means a day other than a Saturday, Sunday or any other day on
which the principal chartered banks located in the City of Toronto are not open
for business.

 

“Canadian Agent” or “GMP” means GMP Securities L.P.

 

“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 shares of common stock, par value $.10 per share in the
capital of the Corporation.

 

“Compensation Option” shall have the meaning ascribed to such term in Section
8.1.

 

 “Corporation” means U.S. Gold Corporation and includes any successor
corporation to or of the Corporation.

 

“Disclosed Principal” shall have the meaning ascribed to such term on the face
page of this Subscription Agreement.

 

“Escrow Agent” has the meaning attributed thereto in Section 3.2 hereof.

 

“Escrowed Funds” has the meaning attributed thereto in Section 3.2 hereof.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

 

“Final Qualification Deadline” has the meaning attributed thereto in Section 3.2
hereof.

 

“Final Receipt” means the final receipt for the Prospectus issued by the
securities regulatory authorities in all Jurisdictions.

 

“Initial Qualification Deadline” has the meaning attributed thereto in Section
3.2 hereof.

 

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“Insider” means (a) a director or senior officer of the Corporation (or a
subsidiary of the Corporation), (b) any person who beneficially owns, directly
or indirectly, voting securities of the Corporation or who exercises control or
direction over voting securities of the Corporation or a combination of both
carrying more than 10% of the voting rights attached to all voting securities of
the Corporation for the time being outstanding or (c) an insider of a person
described in (a) or (b) above.

 

“Institutional Accredited Investor” means an accredited investor, as defined in
Rule 501(a)(1), (2), (3) and (7) of the U.S. Securities Act.

 

“Jurisdiction” means all provinces of Canada where the Subscribers reside.

 

“NI 45-106” means National Instrument 45-106 - Prospectus and Registration
Exemptions of the Canadian Securities Administrators.

 

“Offering” means the offering of Subscription Receipts pursuant to this
Subscription Agreement and the Agency 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 every other form of legal or
business entity of whatever nature of kind, and pronouns have a similar extended
meaning.

 

“Prospectus” means the (final) prospectus of the Corporation to be filed in the
Jurisdictions to qualify the Common Shares and Warrants issuable upon conversion
of the Subscription Receipts and the Broker Warrants issuable upon the exercise
of the Compensation Options.

 

“Public Record” means the Corporation’s annual report on Form 10-KSB for the
year ended December 31, 2004, the quarterly reports filed on Form 10-QSB for the
quarters ended March 31, 2005, June 30, 2005 and September 30, 2005, the current
reports filed on Form 8-K since January 1, 2005 and the proxy statement dated
October 28, 2005.

 

“Registration Statement” means the registration statement of the Corporation to
be filed with the SEC in order to register the Registerable Securities.

 

“Registerable Securities” means the Common Shares and Warrants underlying the
Subscription Receipts, the Warrant Shares, the Broker Warrants and the Common
Shares and Warrants underlying the Broker Warrants.

 

“Regulation D” means Regulation D under the U.S. Securities Act.

 

“Regulation S” means Regulation S under the U.S. Securities Act.

 

“Release Conditions” means the conditions to be satisfied prior to automatic
conversion of the Subscription Receipts, which shall be satisfied upon the
latest to occur of the following: (i) the third business day after the date on
which a Final Receipt has been issued; (ii) the completion and filing via SEDAR
of a current technical report regarding the Tonkin Springs gold project that
complies with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators; (iii) the common shares of
the Corporation being listed for trading on the Toronto Stock Exchange; (iv) the
effectiveness of the Registration Statement; and (v) the delivery of a 10b-5
opinion, addressed to the Agent in a form satisfactory to the Agent, acting
reasonably, provided by United States counsel to the Corporation in respect of
the Registration Statement.

 

“Remaining Subscription Receipts” has the meaning ascribed to such term in
Section 3.2 hereof.

 

“Rule 144” means Rule 144 under the U.S. Securities Act.

 

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“Rule 144A” means Rule 144A under the U.S. Securities Act.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Laws” means, as applicable, the securities laws, regulations, rules,
rulings and orders in the Jurisdictions, the applicable policy statements issued
by the securities regulators in the Jurisdictions, the securities laws of the
United States, any applicable States and any jurisdictions outside of Canada and
the United States, the regulations and rules thereunder and the forms prescribed
thereby and the rules of any applicable stock exchange.

 

“State” means any one of the 50 states of the United States of America or the
District of Columbia.

 

“Subscriber” means the person purchasing the Subscription Receipts as set out on
the face page of this Subscription Agreement and includes, as applicable, each
Disclosed Principal for whom it is acting.

 

“Subscription Agreement” means this subscription agreement (including any
schedules hereto) and any instrument amending this Subscription Agreement.

 

“Subscription Amount” shall have the meaning ascribed to such term on the face
page of this Subscription Agreement.

 

“Subscription Receipt Agreement” shall have the meaning ascribed to such term in
Section 3.2.

 

“Subscription Receipts” shall have the meaning ascribed to such term on the face
page of this Subscription Agreement.

 

“Term Sheet” means the term sheet attached hereto as Schedule “A”.

 

“United States” means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia.

 

“Units” shall have the meaning ascribed to such term on the face page of this
Subscription Agreement.

 

“U.S. Agent” means Griffiths McBurney Corp.

 

“U.S. Institutional Accredited Investor Status Certificate” means the
certificate attached hereto as Schedule “C” which is required to be completed by
a Subscriber who is resident in the United States

 

“U.S. Person” has the meaning set forth 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.

 

“Warrants” means the common share purchase warrants of the Corporation that
partly comprise the Units, as described on the face page hereof.

 

“Warrant Shares” means the Common Shares of the Corporation issuable upon
exercise of the Warrants.

 

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.

 

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1.3                                                                              
CURRENCY

 

Unless otherwise specified, all dollar amounts in this Subscription Agreement,
including the symbol “$”, are expressed in U.S. dollars.

 

1.4                                                                              
SUBDIVISIONS AND HEADINGS

 

The division of this Subscription Agreement into Articles, Sections, Schedules
and other subdivisions and the inclusion of headings 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:

 

Schedule “A”       –              Term Sheet

 

Schedule “B”        –              Accredited Investor Status Certificate

 

Schedule “C”        –              U.S. Institutional Accredited Investor Status
Certificate

 

ARTICLE 3- SUBSCRIPTION AND DESCRIPTION OF SUBSCRIPTION RECEIPTS

 

3.1                                                                              
SUBSCRIPTION FOR SUBSCRIPTION RECEIPTS

 

The Subscriber hereby confirms its subscription for and offer to purchase the
Subscription Receipts from the Corporation, on and subject to the terms and
conditions set out in this Subscription Agreement, for the Subscription Amount,
which is payable as described in Article 4 hereto.

 

3.2                                                                              
CREATION AND ISSUANCE OF SUBSCRIPTION RECEIPTS

 

The Subscription Receipts shall be created and issued pursuant to a subscription
receipt agreement (the “Subscription Receipt Agreement”) to be entered into
between Equity Transfer Services Inc., (the “Escrow Agent”), the Corporation and
the Agent to be dated as of the Closing Date. The specific attributes of the
Subscription Receipts shall be set forth in the Subscription Receipt Agreement.

 

On Closing, 50% of the gross proceeds from the Offering will be delivered to and
held by Escrow Agent and invested in short term investment grade debt
obligations as agreed to by the Corporation and GMP. The funds held in escrow by
the Escrow Agent, together with all interest and other income earned thereon,
are referred to herein as the “Escrowed Funds”.

 

The Subscription Receipts will automatically convert into Units upon
satisfaction of the Release Conditions, without any action, including additional
payment, required on the part of the holders thereof. Upon the satisfaction of
all of the Release Conditions, the Escrowed Funds shall be released by the
Escrow Agent to the Company.

 

If any of the Release Conditions has not been satisfied on or prior to 5:00 p.m.
(Mountain time) on that date which is 183 days following the Closing Date, each
Subscription Receipt shall thereafter be convertible into 1.1 Common Shares (in
lieu of one Common Share) and 0.55 Warrants (in lieu of 0.5

 

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Warrants). If any of the Release Conditions have not been satisfied prior to
5:00 p.m. (Mountain time) on that date that is twelve months following the
Closing Date (the “Initial Qualification Deadline”), the Escrowed Funds shall be
returned by the Escrow Agent, on behalf of the Corporation, to the holders of
the Subscription Receipts in exchange for the delivery to the Corporation of 50%
of the outstanding Subscription Receipts held by each holder. The remaining 50%
of the Subscription Receipts not returned to the Company on the Initial
Qualification Deadline (the “Remaining Subscription Receipts”) shall remain
outstanding until the earlier of: (i) 18 months following the Closing Date (the
“Final Qualification Deadline”); and (ii) the satisfaction by the Company, or
the waiver by the Agent, of each of the Release Conditions. If any of the
Release Conditions have not been satisfied prior to 5:00 p.m. (Mountain time) on
the Final Qualification Deadline, the Remaining Subscription Receipts shall be
deemed to be exchanged into Units in accordance with the provisions of the
Subscription Receipt Agreement.

 

The Term Sheet, a copy of which is attached hereto as Schedule “A”, summarizes
the terms of the Subscription Receipts. The description of the Subscription
Receipts contained in the Term Sheet and this Subscription Agreement is a
summary only and is qualified in its entirety by the Subscription Receipt
Agreement. In the event of any inconsistency between the provisions hereof and
the provisions of the Subscription Receipt Agreement, the provisions of the
Subscription Receipt Agreement shall prevail and take precedence.

 

3.3                                                                              
ACCEPTANCE AND REJECTION OF SUBSCRIPTION BY THE CORPORATION

 

The Subscriber acknowledges and agrees that the Corporation reserves the right,
in its absolute discretion, to reject this subscription for Subscription
Receipts, 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 Agent representing the Subscription Amount 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
Amount for that portion of the subscription for the Subscription Receipts which
is not accepted, will be promptly delivered to the Subscriber without interest
or deduction.

 

ARTICLE 4 - CLOSING

 

4.1                                                                              
CLOSING

 

Delivery and sale of the Subscription Receipts and payment of the Subscription
Amount will be completed (the “Closing”) at the offices of the Corporation’s
counsel, Fraser Milner Casgrain LLP in Toronto, Ontario at 10:00 a.m. (Toronto
time) (the “Closing Time”) on February 22, 2006 or such other place, date or
time as the Corporation and GMP (on behalf of the Agent) may agree (the “Closing
Date”). If, prior to the Closing Time, the terms and conditions contained in
this Subscription Agreement and the Agency Agreement have been complied with to
the satisfaction of the Agent, or waived by the Agent, the Agent shall (i)
deliver to the Corporation at the Closing Time all completed Subscription
Agreements, including this Subscription Agreement, (ii) deliver to the
Corporation 50% of the aggregate Subscription Amount for the Subscription
Receipts sold pursuant to the Agency Agreement , and (iii) deliver to the Escrow
Agent 50% of the aggregate Subscription Amount of the Subscription Receipts sold
pursuant to the Agency Agreement, against delivery by the Corporation of
certificates representing the Subscription Receipts and such other documentation
as may be required pursuant to the Subscription Agreement and the Agency
Agreement.

 

If, prior to the Closing Time, the terms and conditions contained in this
Subscription Agreement (other than delivery by the Corporation, as applicable,
to the Subscriber of certificates representing the Subscription Receipts) and
the Agency Agreement have not been complied with to the satisfaction of the
Agent, or waived by the Agent, the Agent, the Corporation and the Subscriber
will have no further obligations under this Subscription Agreement.

 

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4.2                                                                              
CONDITIONS OF CLOSING

 

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 fulfillment of the following additional conditions as
soon as possible and in any event not later than the Closing Time:

 

(A)                                  PAYMENT BY THE SUBSCRIBER OF THE
SUBSCRIPTION AMOUNT BY CERTIFIED CHEQUE OR BANK DRAFT IN UNITED STATES DOLLARS
PAYABLE TO “GMP SECURITIES L.P.” OR “GRIFFITHS MCBURNEY CORP.” (IF THE
SUBSCRIBER IS A U.S. PERSON);

 

(B)                                 THE SUBSCRIBER HAVING PROPERLY COMPLETED,
SIGNED AND DELIVERED THIS SUBSCRIPTION AGREEMENT TO:

 

GMP Securities L.P.

145 King Street West

Suite 1100

Toronto, Ontario  M5H 1J8

 

Attention:

Joanne Stansfield

Fax:

(416) 943-6129

 

(C)                                  THE SUBSCRIBER HAVING PROPERLY COMPLETED,
SIGNED AND DELIVERED SCHEDULE “B” OR SCHEDULE “C” HERETO, AS APPLICABLE:

 

4.3                                                                              
AUTHORIZATION OF GMP

 

The Subscriber irrevocably authorizes GMP in its discretion, to act as the
Subscriber’s representative at the Closing, and hereby appoints GMP, 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 CERTIFICATES REPRESENTING THE
SUBSCRIPTION RECEIPTS, 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, INCLUDING THIS
SUBSCRIPTION AGREEMENT AND THE SCHEDULES HERETO, IN CONNECTION WITH THE
SUBSCRIPTION FOR THE SUBSCRIPTION RECEIPTS AND TO EXERCISE ANY RIGHTS OF
TERMINATION CONTAINED IN THE AGENCY AGREEMENT;

 

(B)                                 TO APPROVE ANY OPINION, CERTIFICATE OR OTHER
DOCUMENT ADDRESSED TO THE SUBSCRIBER;

 

(C)                                  TO EXTEND SUCH TIME PERIODS AND TO WAIVE,
IN WHOLE OR IN PART, ANY REPRESENTATIONS, WARRANTIES, COVENANTS OR CONDITIONS
FOR THE SUBSCRIBER’S BENEFIT CONTAINED IN THIS SUBSCRIPTION AGREEMENT AND THE
AGENCY AGREEMENT OR ANY ANCILLARY OR RELATED DOCUMENT;

 

(D)                                 TO TERMINATE THIS SUBSCRIPTION AGREEMENT IF
ANY CONDITION PRECEDENT IS NOT SATISFIED, IN SUCH MANNER AND ON SUCH TERMS AND
CONDITIONS AS GMP IN ITS SOLE DISCRETION MAY DETERMINE; AND

 

(E)                                  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, TO NEGOTIATE, SETTLE, EXECUTE, DELIVER AND AMEND THE AGENCY
AGREEMENT.

 

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ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF
THE CORPORATION

 

5.1                                                                              
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

 

THE SUBSCRIBER SHALL HAVE THE BENEFIT OF THE REPRESENTATIONS, WARRANTIES AND
COVENANTS MADE BY THE CORPORATION TO THE AGENT AND SET FORTH IN THE AGENCY
AGREEMENT. SUCH REPRESENTATIONS AND WARRANTIES SHALL FORM AN INTEGRAL PART OF
THIS SUBSCRIPTION AGREEMENT AND SHALL SURVIVE THE CLOSING OF THE PURCHASE AND
SALE OF THE SUBSCRIPTION RECEIPTS AND SHALL CONTINUE IN FULL FORCE AND EFFECT
FOR THE BENEFIT OF THE SUBSCRIBER IN ACCORDANCE WITH THE AGENCY AGREEMENT.

 

ARTICLE 6 - ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE
SUBSCRIBER

 

6.1                                                                              
ACKNOWLEDGEMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER

 

The Subscriber, on its own behalf and, if applicable, on behalf of others for
whom it is acting hereunder, hereby represents and warrants to, and covenants
with, the Corporation and the Agent as follows and acknowledges that the
Corporation and the Agent are relying on such representations and warranties in
connection with the transactions contemplated herein:

 

(A)                                  THE SUBSCRIBER CERTIFIES THAT IT IS
RESIDENT IN THE JURISDICTION SET OUT ON THE FACE PAGE OF THIS SUBSCRIPTION
AGREEMENT. SUCH ADDRESS WAS NOT CREATED AND IS NOT USED SOLELY FOR THE PURPOSE
OF ACQUIRING THE SUBSCRIPTION RECEIPTS AND THE SUBSCRIBER WAS SOLICITED TO
PURCHASE IN SUCH JURISDICTION.

 

(B)                                 IF THE SUBSCRIBER IS NOT A PERSON IN THE
UNITED STATES OR A U.S. PERSON, OR NOT PURCHASING THE SUBSCRIPTION RECEIPTS ON
BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON:

 

(I)                                     THE SUBSCRIBER HAS PROPERLY COMPLETED,
EXECUTED AND DELIVERED TO THE CORPORATION SCHEDULE “B” HERETO (DATED AS OF THE
DATE HEREOF), AS APPLICABLE AND THE INFORMATION CONTAINED THEREIN IS TRUE AND
CORRECT;

 

(II)                                  THE REPRESENTATIONS, WARRANTIES AND
COVENANTS CONTAINED IN SCHEDULE “B” WILL BE TRUE AND CORRECT BOTH AS OF THE DATE
OF EXECUTION OF THIS SUBSCRIPTION AGREEMENT AND AS OF THE CLOSING TIME;

 

(III)                               NEITHER THE SUBSCRIBER NOR ANY DISCLOSED
PRINCIPAL IS A U.S. PERSON NOR SUBSCRIBING FOR THE SUBSCRIPTION RECEIPTS FOR THE
ACCOUNT OF A U.S. PERSON OR FOR RESALE IN THE UNITED STATES AND THE SUBSCRIBER
CONFIRMS THAT THE SUBSCRIPTION RECEIPTS HAVE NOT BEEN OFFERED TO THE SUBSCRIBER
IN THE UNITED STATES AND THAT THIS SUBSCRIPTION AGREEMENT HAS NOT BEEN SIGNED IN
THE UNITED STATES;

 

(IV)                              THE SUBSCRIBER ACKNOWLEDGES THAT THE
SUBSCRIPTION RECEIPTS HAVE NOT BEEN, AND WILL NOT BE, AND THE COMMON SHARES, THE
WARRANTS ISSUABLE UPON THE CONVERSION OF THE SUBSCRIPTION RECEIPTS AND THE
COMMON SHARES ISSUABLE UPON THE EXERCISE OF THE WARRANTS HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES OR TO A U.S. PERSON UNLESS THE SECURITIES ARE REGISTERED UNDER THE
U.S. SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE, AND FURTHER AGREES THAT
HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE U.S. SECURITIES ACT;

 

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(V)                                 THE SUBSCRIBER AND IF APPLICABLE, THE
DISCLOSED PRINCIPAL FOR WHOM THE SUBSCRIBER IS ACTING, UNDERSTANDS THAT THE
CORPORATION IS THE SELLER OF THE SUBSCRIPTION RECEIPTS AND UNDERLYING SECURITIES
AND THAT, FOR PURPOSES OF REGULATION S, A “DISTRIBUTOR” IS ANY UNDERWRITER,
DEALER OR OTHER PERSON WHO PARTICIPATES, PURSUANT TO A CONTRACTUAL ARRANGEMENT
IN THE DISTRIBUTION OF SECURITIES SOLD IN RELIANCE ON REGULATION S AND THAT AN
“AFFILIATE” IS ANY PARTNER, OFFICER, DIRECTOR OR ANY PERSON DIRECTLY OR
INDIRECTLY CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY PERSON IN
QUESTION. EXCEPT AS OTHERWISE PERMITTED BY REGULATION S, THE SUBSCRIBER AND IF
APPLICABLE, THE DISCLOSED PRINCIPAL FOR WHOM THE SUBSCRIBER IS ACTING, AGREES
THAT IT WILL NOT, DURING A ONE YEAR DISTRIBUTION COMPLIANCE PERIOD, ACT AS A
DISTRIBUTOR, EITHER DIRECTLY OR THROUGH ANY AFFILIATE, OR SELL, TRANSFER,
HYPOTHECATE OR OTHERWISE CONVEY THE SUBSCRIPTION RECEIPTS OR UNDERLYING
SECURITIES OTHER THAN TO A NON-U.S. PERSON;

 

(VI)                              THE SUBSCRIBER AND IF APPLICABLE, THE
DISCLOSED PRINCIPAL FOR WHOM THE SUBSCRIBER IS ACTING, ACKNOWLEDGES AND
UNDERSTANDS THAT IN THE EVENT THE SUBSCRIPTION RECEIPTS OR UNDERLYING SECURITIES
ARE OFFERED, SOLD OR OTHERWISE TRANSFERRED BY THE SUBSCRIBER OR IF APPLICABLE,
THE DISCLOSED PRINCIPAL FOR WHOM THE SUBSCRIBER IS ACTING, TO A NON-U.S PERSON
PRIOR TO THE EXPIRATION OF A ONE YEAR DISTRIBUTION COMPLIANCE PERIOD, THE
PURCHASER OR TRANSFEREE MUST AGREE NOT TO RESELL SUCH SECURITIES EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER
THE U.S. SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION; AND MUST FURTHER AGREE NOT TO ENGAGE IN HEDGING TRANSACTIONS WITH
REGARD TO SUCH SECURITIES UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT; AND

 

(VII)                           NEITHER THE SUBSCRIBER NOR ANY DISCLOSED
PRINCIPAL WILL OFFER, SELL OR OTHERWISE DISPOSE OF THE SUBSCRIPTION RECEIPTS,
THE COMMON SHARES, WARRANTS OR WARRANT SHARES IN THE UNITED STATES OR TO A U.S.
PERSON UNLESS THE CORPORATION HAS CONSENTED TO SUCH OFFER, SALE OR DISPOSITION
AND SUCH OFFER, SALE OR DISPOSITION IS MADE IN ACCORDANCE WITH AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT AND THE SECURITIES
LAWS OF ALL APPLICABLE STATES OF THE UNITED STATES OR THE SEC HAS DECLARED
EFFECTIVE A REGISTRATION STATEMENT IN RESPECT OF SUCH SECURITIES.

 

(C)                                  IF THE SUBSCRIBER IS A PERSON IN THE UNITED
STATES OR A U.S. PERSON, OR IS PURCHASING THE SUBSCRIPTION RECEIPTS ON BEHALF OF
A PERSON IN THE UNITED STATES OR A U.S. PERSON, THE SUBSCRIBER:

 

(i)                                  or each beneficial purchaser as to which
the Subscriber exercises sole investment discretion for whom it is purchasing,
is acquiring the Subscription Receipts to be held for investment only and not
with a view to resale, distribution or other disposition of the Subscription
Receipts, the Common Shares and Warrants issuable upon conversion of the
Subscription Receipts, and the Warrant Shares, or any portion thereof, and
without any present intention of selling, offering to sell or otherwise
disposing of or distributing such securities, or any portion thereof, in any
transaction other than a transaction complying with the registration
requirements of the U.S. Securities Act and applicable Blue Sky Laws, or
pursuant to an exemption therefrom;

 

(ii)                               is aware that the Subscription Receipts have
not been registered under the U.S. Securities Act and the sale contemplated
hereby is being made in reliance on a private placement exemption to
Institutional Accredited Investors;

 

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(iii)                            or each beneficial purchaser as to which the
Subscriber exercises sole investment discretion for whom it is purchasing,
satisfies one or more of the categories set out in Schedule “C” hereto;

 

(iv)                           acknowledges that the representations, warranties
and covenants contained in Schedule “C” will be true and correct both as of the
date of execution of this Subscription Agreement and as of the Closing Time;

 

(v)                              is not purchasing the Subscription Receipts as
a result of any “general solicitation or general advertising” (as such term is
defined in Regulation D), including any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting where the
attendees have been invited by general solicitation or general advertising;

 

(VI)                           UNDERSTANDS THAT, UNLESS THE REGISTRATION
STATEMENT HAS BECOME EFFECTIVE, THE WARRANTS ISSUABLE UPON CONVERSION OF THE
SUBSCRIPTION RECEIPTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON
BEHALF OF A U.S. PERSON UNLESS AN EXEMPTION IS AVAILABLE FROM THE REGISTRATION
REQUIREMENTS OF THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS;

 

(vii)                        acknowledges that any person who exercises a
Warrant prior to the Registration Statement becoming effective will be required
to provide to the Corporation one of the following:

 

(A)                           a written certification that the holder (1) at the
time of exercise of the Warrant is not in the United States, (2) is not a U.S.
Person and is not exercising the Warrant on behalf of a U.S. Person or a person
in the United States, and (3) did not execute or deliver the exercise form for
the Warrant in the United States;

 

(B)                             a written certification that the holder (1)
purchased the Subscription Receipt, from which the Warrant was converted,
directly from the Corporation pursuant to a written Subscription Agreement for
the purchase of the Subscription Receipts, (2) is exercising the Warrant solely
for its own account and not on behalf of any other person, and (3) is an
Institutional Accredited Investor, both on the date the Subscription Receipts
were purchased by the Subscriber from the Corporation and on the date of the
exercise of the Warrant; or

 

(C)                             a written opinion of counsel of recognized
standing in form and substance satisfactory to the Corporation to the effect
that an exemption from the registration requirements of the U.S. Securities Act
and applicable state securities laws is available for the issuance of the
Warrant Shares;

 

and understands that unless the holder provides a written certification pursuant
to paragraph (c)(vii)(A) above, the certificates representing the Warrant Shares
issued upon exercise of the Warrants prior to the Registration Statement
becoming effective will bear a legend restricting transfer without registration
under the U.S. Securities Act and applicable state securities laws unless an
exemption from registration is available;

 

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(viii)                     understands that if it decides to offer, sell, pledge
or otherwise transfer the Subscription Receipts, and, prior to the Registration
Statement becoming effective, the Common Shares and Warrants issuable upon
conversion of the Subscription Receipts and the Warrant Shares, such securities
may be offered, sold or otherwise transferred only: (A) to the Corporation; (B)
in compliance with Rule 904 under Regulation S, (C) in accordance with Rule 144
or Rule 144A under the U.S. Securities Act, if available, and in compliance with
applicable local laws and regulations, or (D) in a transaction that does not
otherwise require registration under the U.S. Securities Act or any applicable
state securities laws if an opinion of counsel, of recognized standing
reasonably satisfactory to the Corporation has been provided to the Corporation
to that effect; and

 

(ix)                             consents to the Corporation making a notation
on it records or giving instructions to any transfer agent of the Corporation in
order to implement the restrictions on transfers set forth and described herein,
and the Subscriber understands and acknowledges that the Corporation may
instruct the registrar and transfer agent of the Corporation not to record a
transfer without first being notified by the Corporation that it is satisfied
that such transfer is exempt from or not subject to registration under the U.S.
Securities Act.

 

(D)                                 IF THE SUBSCRIBER OR ANY DISCLOSED
PRINCIPAL, IS NOT A PERSON DESCRIBED IN PARAGRAPHS 6.1(B) OR 6.1(C) ABOVE, THE
SUBSCRIPTION FOR THE SUBSCRIPTION RECEIPTS BY THE SUBSCRIBER DOES NOT CONTRAVENE
ANY OF THE APPLICABLE SECURITIES LEGISLATION IN THE JURISDICTION IN WHICH THE
SUBSCRIBER RESIDES AND DOES NOT GIVE RISE TO ANY OBLIGATION OF THE CORPORATION
OR THE AGENT TO PREPARE AND FILE A PROSPECTUS OR SIMILAR DOCUMENT OR TO REGISTER
THE SUBSCRIPTION RECEIPTS OR TO BE REGISTERED WITH, OR TO FILE ANY REPORT OR
NOTICE WITH, ANY GOVERNMENTAL OR REGULATORY AUTHORITY.

 

(E)                                  THE EXECUTION AND DELIVERY OF THIS
SUBSCRIPTION AGREEMENT, THE PERFORMANCE AND COMPLIANCE WITH THE TERMS HEREOF,
THE SUBSCRIPTION FOR THE SUBSCRIPTION RECEIPTS 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 THAT, 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, THE SECURITIES LAWS OR ANY
OTHER LAWS APPLICABLE TO THE SUBSCRIBER, ANY AGREEMENT TO WHICH THE SUBSCRIBER
IS A PARTY, OR ANY JUDGMENT, DECREE, ORDER, STATUTE, RULE OR REGULATION
APPLICABLE TO THE SUBSCRIBER.

 

(F)                                    THE SUBSCRIBER IS SUBSCRIBING FOR THE
SUBSCRIPTION RECEIPTS AS PRINCIPAL FOR ITS OWN ACCOUNT AND NOT FOR THE BENEFIT
OF ANY OTHER PERSON (WITHIN THE MEANING OF APPLICABLE SECURITIES LAWS). IF IT IS
SUBSCRIBING AS AGENT FOR A DISCLOSED PRINCIPAL, IT HAS DISCLOSED THE NAME OF THE
DISCLOSED PRINCIPAL ON THE FACE PAGE OF THIS SUBSCRIPTION AGREEMENT AND
ACKNOWLEDGES THAT THE CORPORATION MAY BE REQUIRED BY LAW TO DISCLOSE TO CERTAIN
REGULATORY AUTHORITIES THE IDENTITY OF EACH DISCLOSED PRINCIPAL FOR WHOM THE
SUBSCRIBER IS ACTING.

 

(G)                                 IN THE CASE OF A SUBSCRIPTION FOR THE
SUBSCRIPTION RECEIPTS BY THE SUBSCRIBER ACTING AS TRUSTEE OR AGENT FOR A FULLY
MANAGED ACCOUNT OR AS AGENT FOR A DISCLOSED PRINCIPAL, THE SUBSCRIBER IS DULY
AUTHORIZED TO EXECUTE AND DELIVER THIS SUBSCRIPTION AGREEMENT AND ALL OTHER
NECESSARY DOCUMENTATION IN CONNECTION WITH SUCH SUBSCRIPTION ON BEHALF OF THE
FULLY MANAGED ACCOUNT OR DISCLOSED PRINCIPAL, AS APPLICABLE AND THIS
SUBSCRIPTION

 

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AGREEMENT HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY OR ON BEHALF OF
AND CONSTITUTES A LEGAL, VALID AND BINDING AGREEMENT OF, THE FULLY MANAGED
ACCOUNT OR DISCLOSED PRINCIPAL, AS APPLICABLE.

 

(H)                                 IN THE CASE OF A SUBSCRIPTION FOR THE
SUBSCRIPTION RECEIPTS BY THE SUBSCRIBER ACTING AS PRINCIPAL, THIS SUBSCRIPTION
AGREEMENT HAS BEEN DULY 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.

 

(I)                                     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
SUBSCRIPTION RECEIPTS AS CONTEMPLATED HEREIN AND TO CARRY OUT 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 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.

 

(J)                                     OTHER THAN THE AGENT, 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
ESTABLISHES A CLAIM THAT ANY FEE OR OTHER COMPENSATION IS PAYABLE IN CONNECTION
WITH THIS SUBSCRIPTION FOR THE SUBSCRIPTION RECEIPTS, THE SUBSCRIBER COVENANTS
TO INDEMNIFY AND HOLD HARMLESS THE CORPORATION AND THE AGENT WITH RESPECT
THERETO AND WITH RESPECT TO ALL COSTS REASONABLY INCURRED IN THE DEFENCE
THEREOF.

 

(K)                                  THE SUBSCRIBER IS NOT, WITH RESPECT TO THE
CORPORATION OR ANY OF ITS AFFILIATES, A “CONTROL PERSON” AS DEFINED UNDER THE
SECURITIES LAWS AND THE PURCHASE OF THE SUBSCRIPTION RECEIPTS HEREUNDER AND THE
EXERCISE OR DEEMED EXERCISE OF THE SUBSCRIPTION RECEIPTS WILL NOT RESULT IN THE
SUBSCRIBER BECOMING A CONTROL PERSON.

 

(L)                                     IF REQUIRED BY APPLICABLE SECURITIES
LAWS OR THE CORPORATION, THE SUBSCRIBER WILL EXECUTE, DELIVER AND FILE, OR
ASSIST THE CORPORATION IN FILING, SUCH REPORTS, UNDERTAKINGS AND OTHER DOCUMENTS
WITH RESPECT TO THE ISSUE AND/OR SALE OF THE SUBSCRIPTION RECEIPTS AS MAY BE
REQUIRED BY ANY SECURITIES COMMISSION, STOCK EXCHANGE OR OTHER REGULATORY
AUTHORITY.

 

(M)                               THE SUBSCRIBER HAS BEEN ADVISED TO CONSULT ITS
OWN LEGAL ADVISORS WITH RESPECT TO TRADING IN THE SUBSCRIPTION RECEIPTS, AND
WHEN AND IF ISSUED, THE COMMON SHARES, WARRANTS AND WARRANT SHARES AND WITH
RESPECT TO THE RESALE RESTRICTIONS IMPOSED BY THE SECURITIES LAWS OF THE
JURISDICTION 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 THAT RESTRICT THE ABILITY OF THE
SUBSCRIBER (OR OTHERS FOR

 

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WHOM IT IS CONTRACTING HEREUNDER) TO RESELL SUCH SECURITIES, THAT THE SUBSCRIBER
(OR OTHERS FOR WHOM IT IS CONTRACTING HEREUNDER) IS SOLELY RESPONSIBLE TO FIND
OUT WHAT THESE RESTRICTIONS ARE AND THE SUBSCRIBER IS SOLELY RESPONSIBLE (AND
NEITHER THE CORPORATION NOR THE AGENT ARE IN ANY WAY RESPONSIBLE) FOR COMPLIANCE
WITH APPLICABLE RESALE RESTRICTIONS AND THE SUBSCRIBER IS AWARE THAT IT (OR
BENEFICIAL PERSONS FOR WHOM IT IS CONTRACTING HEREUNDER) MAY NOT BE ABLE TO
RESELL SUCH SECURITIES EXCEPT IN ACCORDANCE WITH LIMITED EXEMPTIONS UNDER THE
SECURITIES LAWS AND OTHER APPLICABLE SECURITIES LAWS.

 

(N)                                 THE SUBSCRIBER HAS NOT RECEIVED OR BEEN
PROVIDED WITH A PROSPECTUS, REGISTRATION STATEMENT OR OFFERING MEMORANDUM,
WITHIN THE MEANING OF THE SECURITIES LAWS, AND THE SUBSCRIBER’S DECISION TO
SUBSCRIBE FOR THE SUBSCRIPTION RECEIPTS 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 AGENT. THE SUBSCRIBER HAS HAD ACCESS TO
AND HAS REVIEWED, TO THE EXTENT IT DEEMS NECESSARY, THE PUBLIC RECORD AND THE
SUBSCRIBER’S DECISION TO SUBSCRIBE FOR THE SUBSCRIPTION RECEIPTS WAS BASED
SOLELY UPON THE TERM SHEET ATTACHED HERETO AS SCHEDULE “A” AND THE PUBLIC RECORD
(ANY SUCH INFORMATION HAVING BEEN OBTAINED BY THE SUBSCRIBER WITHOUT INDEPENDENT
INVESTIGATION OR VERIFICATION BY THE AGENT).

 

(O)                                 THE SUBSCRIBER IS NOT PURCHASING
SUBSCRIPTION RECEIPTS WITH KNOWLEDGE OF MATERIAL INFORMATION CONCERNING THE
CORPORATION THAT HAS NOT BEEN GENERALLY DISCLOSED.

 

(P)                                 NO PERSON HAS MADE ANY WRITTEN OR ORAL
REPRESENTATIONS:

 

(I)                                     THAT ANY PERSON WILL RESELL OR
REPURCHASE THE SUBSCRIPTION RECEIPTS, THE COMMON SHARES, WARRANTS OR WARRANT
SHARES;

 

(II)                                  THAT ANY PERSON WILL REFUND THE
SUBSCRIPTION AMOUNT; OR

 

(III)                               AS TO THE FUTURE PRICE OR VALUE OF THE
SUBSCRIPTION RECEIPTS OR COMMON SHARES IN THE CAPITAL OF THE CORPORATION.

 

(Q)                                 THERE ARE RISKS ASSOCIATED WITH THE PURCHASE
OF AND INVESTMENT IN THE SUBSCRIPTION RECEIPTS AND THE SUBSCRIBER HAS SUCH
KNOWLEDGE AND EXPERIENCE THAT IT IS CAPABLE OF EVALUATING THE MERITS AND RISKS
OF AN INVESTMENT IN THE SUBSCRIPTION RECEIPTS, COMMON SHARES, WARRANTS AND
WARRANT SHARES AND FULLY UNDERSTANDS THE RESTRICTIONS ON RESALE OF THE
SUBSCRIPTION RECEIPTS, COMMON SHARES, WARRANTS AND WARRANT SHARES AND IS CAPABLE
OF BEARING THE ECONOMIC RISK OF THE INVESTMENT.

 

(R)                                    THE FUNDS REPRESENTING THE SUBSCRIPTION
AMOUNT THAT WILL BE ADVANCED BY THE SUBSCRIBER TO THE CORPORATION HEREUNDER, AS
APPLICABLE, WILL NOT REPRESENT PROCEEDS OF CRIME FOR THE PURPOSES OF THE
PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT (CANADA) (THE
“PCMLTFA”) AND THE SUBSCRIBER ACKNOWLEDGES THAT THE CORPORATION MAY IN THE
FUTURE BE REQUIRED BY LAW TO DISCLOSE THE SUBSCRIBER’S NAME AND OTHER
INFORMATION RELATING TO THIS SUBSCRIPTION AGREEMENT AND THE SUBSCRIBER’S
SUBSCRIPTION HEREUNDER, ON A CONFIDENTIAL BASIS, PURSUANT TO THE PCMLTFA. TO THE
BEST OF ITS KNOWLEDGE (A) NONE OF THE SUBSCRIPTION AMOUNT TO BE PROVIDED BY THE
SUBSCRIBER (I) HAS BEEN OR WILL BE DERIVED FROM OR RELATED TO ANY ACTIVITY THAT
IS DEEMED CRIMINAL UNDER THE LAW OF CANADA, THE UNITED STATES OF AMERICA, OR ANY
OTHER JURISDICTION, OR (II) IS BEING TENDERED ON BEHALF OF A PERSON OR ENTITY
WHO HAS NOT BEEN IDENTIFIED TO THE SUBSCRIBER, AND (B) IT SHALL PROMPTLY NOTIFY
THE CORPORATION IF THE SUBSCRIBER DISCOVERS THAT ANY OF SUCH REPRESENTATIONS
CEASES TO BE TRUE, AND TO PROVIDE THE CORPORATION WITH APPROPRIATE INFORMATION
IN CONNECTION THEREWITH.

 

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6.2                                                                              
ADDITIONAL ACKNOWLEDGMENTS AND COVENANTS OF THE SUBSCRIBER

 

The Subscriber, on its own behalf and, if applicable, on behalf of others for
whom it is acting hereunder,  hereby acknowledges, covenants and agrees as
follows:

 

(A)                                  IT HAS RECEIVED AND REVIEWED A COPY OF THE
TERM SHEET SETTING OUT THE PRINCIPAL TERMS OF THE OFFERING.

 

(B)                                 NO SECURITIES COMMISSION, AGENCY,
GOVERNMENTAL AUTHORITY, REGULATORY BODY, STOCK EXCHANGE OR OTHER REGULATORY BODY
OR SIMILAR REGULATORY AUTHORITY HAS REVIEWED OR PASSED ON THE MERITS OF THE
SUBSCRIPTION RECEIPTS, THE COMMON SHARES, WARRANTS, OR WARRANT SHARES.

 

(C)                                  THE SUBSCRIPTION RECEIPTS SHALL BE SUBJECT
TO STATUTORY RESALE RESTRICTIONS UNDER THE SECURITIES LAWS OF THE JURISDICTION
IN WHICH THE SUBSCRIBER RESIDES AND UNDER OTHER APPLICABLE SECURITIES LAWS, AND
THE SUBSCRIBER COVENANTS THAT IT WILL NOT RESELL THE SUBSCRIPTION RECEIPTS
EXCEPT IN COMPLIANCE WITH SUCH LAWS AND THE SUBSCRIBER ACKNOWLEDGES THAT IT IS
SOLELY RESPONSIBLE (AND NEITHER THE CORPORATION NOR THE AGENT ARE IN ANY WAY
RESPONSIBLE) FOR SUCH COMPLIANCE.

 

(D)                                 THE ABILITY TO TRANSFER THE SUBSCRIPTION
RECEIPTS IS LIMITED BY, AMONG OTHER THINGS, APPLICABLE SECURITIES LAWS AND THE
CORPORATION SHALL REFUSE, AND SHALL INSTRUCT ITS TRANSFER AGENT TO REFUSE, TO
REGISTER ANY TRANSFER THAT DOES NOT COMPLY WITH THE SECURITIES LAWS.

 

(E)                                  THE CERTIFICATES REPRESENTING THE
SUBSCRIPTION RECEIPTS, AND THE CERTIFICATES REPRESENTING COMMON SHARES, WARRANTS
AND WARRANT SHARES, IF ISSUED PRIOR TO RECEIPT OF THE FINAL RECEIPT, WILL BEAR
LEGENDS SUBSTANTIALLY IN THE FOLLOWING FORM AND WITH THE NECESSARY INFORMATION
INSERTED:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE
LATER OF (I) [THE CLOSING DATE]; AND (II) THE DATE THAT THE ISSUER BECAME A
REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

 

THE CERTIFICATES REPRESENTING THE SUBSCRIPTION RECEIPTS AND THE CERTIFICATES
REPRESENTING COMMON SHARES, WARRANTS AND WARRANT SHARES, IF ISSUED PRIOR TO THE
REGISTRATION STATEMENT BECOMING EFFECTIVE, AND ALL CERTIFICATES ISSUED IN
SUBSTITUTION OR EXCHANGE THEREOF, WILL BEAR A LEGEND SUBSTANTIALLY IN THE
FOLLOWING FORM:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
U.S. GOLD CORPORATION (“U.S. GOLD”), (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH
RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
(E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION

 

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UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO U.S. GOLD AN OPINION OF COUNSEL OR OTHER
EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO U.S. GOLD.
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE U.S. SECURITIES ACT.

 

(F)                                    THE AGENT AND/OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES ASSUME NO RESPONSIBILITY OR
LIABILITY OF ANY NATURE WHATSOEVER FOR THE ACCURACY OR ADEQUACY OF ANY SUCH
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.

 

(G)                                 THE CORPORATION AND THE AGENT 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 THE SUBSCRIPTION RECEIPTS UNDER APPLICABLE SECURITIES LAWS AND
THE SUBSCRIBER AGREES TO INDEMNIFY THE CORPORATION, THE AGENT AND EACH OF THEIR
DIRECTORS, OFFICERS AND AGENTS AGAINST ALL LOSSES, CLAIMS, COSTS, EXPENSES,
DAMAGES OR LIABILITIES THAT ANY OF THEM MAY SUFFER OR INCUR AS A RESULT OF OR
ARISING FROM RELIANCE THEREON. THE SUBSCRIBER UNDERTAKES TO IMMEDIATELY NOTIFY
THE CORPORATION OF ANY CHANGE IN ANY STATEMENT OR OTHER INFORMATION RELATING TO
THE SUBSCRIBER SET FORTH IN SUCH APPLICABLE SCHEDULES WHICH TAKES PLACE PRIOR TO
THE CLOSING TIME.

 

(H)                                 THE CORPORATION IS RELYING ON AN EXEMPTION
FROM THE REQUIREMENT TO PROVIDE THE SUBSCRIBER WITH A PROSPECTUS OR REGISTRATION
STATEMENT UNDER THE SECURITIES LAWS AND, AS A CONSEQUENCE OF ACQUIRING THE
SUBSCRIPTION RECEIPTS PURSUANT TO SUCH EXEMPTION, CERTAIN PROTECTIONS, RIGHTS
AND REMEDIES PROVIDED BY THE SECURITIES LAWS, INCLUDING STATUTORY RIGHTS OF
RESCISSION OR DAMAGES, WILL NOT BE AVAILABLE TO THE SUBSCRIBER.

 

(I)                                     THE SUBSCRIBER IS RESPONSIBLE FOR
OBTAINING SUCH 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.

 

(J)                                     THERE IS NO GOVERNMENT GUARANTY OR
INSURANCE COVERING THE SUBSCRIPTION RECEIPTS, WARRANTS OR COMMON SHARES.

 

(K)                                  THERE ARE RISKS ASSOCIATED WITH THE
PURCHASE OF THE SUBSCRIPTION RECEIPTS AND THE SUBSCRIBER MAY LOSE HIS, HER OR
ITS ENTIRE INVESTMENT.

 

(L)                                     THIS SUBSCRIPTION AGREEMENT AND THE
SCHEDULES HERETO REQUIRE THE SUBSCRIBER TO PROVIDE CERTAIN PERSONAL INFORMATION
TO THE CORPORATION. SUCH INFORMATION IS BEING COLLECTED BY THE CORPORATION FOR
THE PURPOSES OF COMPLETING THE OFFERING, WHICH INCLUDES, WITHOUT LIMITATION,
DETERMINING THE SUBSCRIBER’S ELIGIBILITY TO PURCHASE THE SUBSCRIPTION RECEIPTS
UNDER THE SECURITIES LAWS AND OTHER APPLICABLE SECURITIES LAWS, PREPARING AND
REGISTERING CERTIFICATES REPRESENTING SUBSCRIPTION RECEIPTS TO BE ISSUED TO THE
SUBSCRIBER AND COMPLETING FILINGS REQUIRED BY ANY STOCK EXCHANGE OR SECURITIES
REGULATORY AUTHORITY. THE SUBSCRIBER’S PERSONAL INFORMATION MAY BE DISCLOSED BY
THE CORPORATION, THE AGENT, AND THEIR RESPECTIVE ADVISORS TO: (A) STOCK
EXCHANGES OR SECURITIES REGULATORY AUTHORITIES, (B) THE CANADA REVENUE AGENCY,
AND (C) ANY OF THE OTHER PARTIES INVOLVED IN

 

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THE OFFERING, INCLUDING LEGAL COUNSEL AND MAY BE INCLUDED IN RECORD BOOKS IN
CONNECTION WITH THE OFFERING. BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE
SUBSCRIBER IS DEEMED TO BE CONSENTING TO THE FOREGOING COLLECTION, USE AND
DISCLOSURE OF THE SUBSCRIBER’S PERSONAL INFORMATION. THE SUBSCRIBER ALSO
CONSENTS TO THE FILING OF COPIES OR ORIGINALS OF ANY OF THE SUBSCRIBER’S
DOCUMENTS DESCRIBED IN SECTION 6.1(L) HEREOF AS MAY BE REQUIRED TO BE FILED WITH
ANY STOCK EXCHANGE OR SECURITIES REGULATORY AUTHORITY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY. THE SUBSCRIBER REPRESENTS AND WARRANTS THAT IT
HAS THE AUTHORITY TO PROVIDE THE CONSENTS AND ACKNOWLEDGEMENTS SET OUT IN THIS
PARAGRAPH ON BEHALF OF EACH DISCLOSED PRINCIPAL.

 

(M)                               IF THE CORPORATION OBTAINS APPROVAL FOR THE
LISTING OF THE COMMON SHARES AND WARRANTS ON A CANADIAN STOCK EXCHANGE, PRIOR TO
THE EFFECTIVENESS OF THE REGISTRATION STATEMENT, SUCH SECURITIES WILL TRADE ON
SUCH CANADIAN STOCK EXCHANGE ON A RESTRICTED BASIS. NO CANADIAN BROKER-DEALER
WOULD BE PERMITTED, UNDER THE U.S. SECURITIES ACT, TO EXECUTE A TRANSACTION IN
THOSE SECURITIES ON A CANADIAN STOCK EXCHANGE IF THAT MEMBER KNOWS THAT THE
PURCHASER IS IN THE UNITED STATES OR A U.S. PERSON OR IS ACTING FOR THE ACCOUNT
OR BENEFIT OF A U.S. PERSON. ALSO, THE CANADIAN BROKER-DEALER MUST MAKE
REASONABLE EFFORTS TO ASCERTAIN WHETHER A PURCHASER IS IN THE UNITED STATES OR
IS A U.S. PERSON OR IS ACTING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND
IMPLEMENT MEASURES DESIGNED TO ASSURE REASONABLE COMPLIANCE WITH THIS
REQUIREMENT.

 

(N)                                 IF THE SUBSCRIBER IS RESIDENT IN OR
OTHERWISE SUBJECT TO THE SECURITIES LAWS APPLICABLE IN THE PROVINCE OF ONTARIO,
THE INFORMATION PROVIDED BY THE SUBSCRIBER ON THE FACE PAGE OF THIS SUBSCRIPTION
AGREEMENT IDENTIFYING THE NAME, ADDRESS AND TELEPHONE NUMBER OF THE SUBSCRIBER,
THE NUMBER OF SUBSCRIPTION RECEIPTS BEING PURCHASED HEREUNDER AND THE TOTAL
PURCHASE PRICE AS WELL AS THE CLOSING DATE AND THE EXEMPTION THAT THE
CORPORATION IS RELYING ON IN SELLING THE SUBSCRIPTION RECEIPTS TO THE SUBSCRIBER
WILL BE DISCLOSED TO THE ONTARIO SECURITIES COMMISSION, AND SUCH INFORMATION IS
BEING INDIRECTLY COLLECTED BY THE ONTARIO SECURITIES COMMISSION UNDER THE
AUTHORITY GRANTED TO IT UNDER SECURITIES LEGISLATION. THIS INFORMATION IS BEING
COLLECTED FOR THE PURPOSES OF THE ADMINISTRATION AND ENFORCEMENT OF THE
SECURITIES LEGISLATION OF THE PROVINCE OF ONTARIO. EACH SUBSCRIBER (FOR
CERTAINTY INCLUDING EACH DISCLOSED PRINCIPAL) HEREBY AUTHORIZES THE INDIRECT
COLLECTION OF SUCH INFORMATION BY THE ONTARIO SECURITIES COMMISSION. IN THE
EVENT THE SUBSCRIBER HAS ANY QUESTIONS WITH RESPECT TO THE INDIRECT COLLECTION
OF SUCH INFORMATION BY THE ONTARIO SECURITIES COMMISSION, THE SUBSCRIBER SHOULD
CONTACT THE ONTARIO SECURITIES COMMISSION, ADMINISTRATIVE ASSISTANT TO THE
DIRECTOR OF CORPORATE FINANCE AT (416) 593-8086 OR IN PERSON OR WRITING AT SUITE
1900, BOX 55, 20 QUEEN STREET WEST, TORONTO, ONTARIO M5H 3S8.

 

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 Agent.

 

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
Agent with respect thereto and notwithstanding any subsequent disposition by

 

--------------------------------------------------------------------------------

 

the Subscriber of any of the Subscription Receipts, or the Common Shares and
Warrants issuable upon conversion thereof, or the Warrant Shares issuable upon
exercise of the Warrants, and shall continue in full force and effect for the
benefit of the Corporation and the Agent.

 

ARTICLE 8 - COMMISSION

 

8.1                                                                              
COMMISSION TO THE AGENT

 

The Subscriber understands that, in connection with the issue and sale of the
Subscription Receipts pursuant to the Offering, the Agent will receive from the
Corporation on Closing, a cash commission equal to 7.0% of the aggregate
Subscription Amount. The Corporation will also issue to the Agent compensation
options (the “Compensation Option”) exercisable, without payment of additional
consideration, to acquire broker warrants (the “Broker Warrants”) equal, in the
aggregate, to 6.0% of the number of Subscription Receipts sold pursuant to the
Offering. Each Broker Warrant will be exercisable to purchase one Unit at a
price of $4.50 until 5:00 p.m. (Toronto time) on the date that is 18 months
following the Closing Date. 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 Agent in connection with
the Offering, as set out in the Agency Agreement.

 

ARTICLE 9 – CONTRACTUAL RIGHT OF RESCISSION

 

9.1                                                                              
GRANT OF CONTRACTUAL RIGHT OF RESCISSION

 

By its acceptance of this Subscription Agreement, the Corporation hereby grants
to the Subscriber a contractual right of action for rescission set forth below
in Section 9.2 and the Subscriber agrees to assign and explicitly extend the
benefit of such right (but without liability to any Subscriber who is not a
dealer) to any permitted assignee or transferee of the Subscription Receipts.
Subject to the foregoing, the Subscriber (and, if applicable, others for whom it
is contracting hereunder) hereby waives and releases the Corporation, and the
Agent from, to the fullest extent permitted by law, all rights of withdrawal to
which the Subscriber might otherwise be entitled under applicable Securities
Laws including, without limitation, any rights pursuant to subsection 71(2) of
the Securities Act (Ontario) and the analogous provisions of the Securities Laws
of the other provinces of Canada.

 

9.2                                                                              
RIGHT OF RESCISSION

 

The Corporation has agreed that in the event that a holder of a Subscription
Receipt who acquires Common Shares and Warrants upon the exercise of such
Subscription Receipt as provided for in the Prospectus is or becomes entitled
under the Securities Laws to the remedy of rescission by reason of the
Prospectus or any amendment thereto containing a misrepresentation, such holder
shall be entitled to rescission not only of the holder’s exercise of its
Subscription Receipts, but also of the private placement transaction pursuant to
which the Subscription Receipts were initially acquired and shall be entitled in
connection with such rescission to a full refund from the Corporation of the
Subscription Amount. In the event such holder is a permitted or lawful assignee
of the interest of the original Subscription Receipt Subscriber, such assignee
shall be entitled to exercise such rights of rescission and refund as if such
permitted assignee were such original Subscriber. The provisions of this section
are a direct contractual right extended by the Corporation to holders of
Subscription Receipts, assignees of such holders and holders of Common Shares or
Warrants acquired by such holders on exercise of Subscription Receipts and are
in addition to any other right or remedy available to a holder of Subscription
Receipts under section 130 of the Securities Act (Ontario) or otherwise at law.
The foregoing contractual rights of action for rescission shall be subject to
the defence described under section 130(2) of the Securities Act (Ontario) which
is incorporated herein by reference, mutatis mutandis. No action shall be
commenced to enforce the foregoing rights of action for rescission more than 180
days after payment is made for the Subscription Receipts.

 

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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:

 

U.S. Gold Corporation

99 George Street

3rd Floor

Toronto, Ontario  M5A 2N4

 

Attention:

Robert R. McEwen

Fax:

(647) 258-0408

 

with a copy to:

 

Fraser Milner Casgrain LLP

1 First Canadian Place
39th Floor
100 King Street West
Toronto, Ontario  M5X 1B2

 

Attention:

Michael Melanson

Fax:

(416) 863-4592

 

and to:

 

Dufford & Brown P.C.
1700 Broadway, Suite 2100
Denver, CO 80290-2101

 

Attention:

David Babiarz

Fax:

(303) 832-3804

 

(II)                                  IN THE CASE OF THE SUBSCRIBER, AT THE
ADDRESS SPECIFIED ON THE FACE PAGE HEREOF, WITH A COPY TO THE AGENT AT:

 

GMP Securities L.P.

145 King Street West

Suite 1100

Toronto, Ontario  M5H 1J8

 

Attention:

Mark Wellings

 

--------------------------------------------------------------------------------

 

Fax:

(416) 943-6160

 

with a copy to:

 

Cassels Brock & Blackwell LLP

2100 Scotia Plaza

40 King Street West

Toronto, Ontario  M5H 3C2

 

Attention:

Chad Accursi

Fax:

(416) 360-8877

 

and to:

 

Dorsey & Whitney LLP

161 Bay Street, Suite 4310

Toronto, Ontario  M5J 2S1

 

Attention:

Gil Cornblum

Fax:

(416) 367-7371

 

(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 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 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 laws of the Province of
Ontario and the laws of Canada applicable therein. 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.

 

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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

 

It is the express wish of the Subscriber that the Subscription Agreement and any
related documentation be drawn up in English. Il est de la volonté expressed du
souscripteur que la convention de souscription ainsi que tout document connexe
soient rédigés en langue anglaise.

 

The Corporation hereby accepts the subscription for Subscription Receipts as set
forth on the face page of this Subscription Agreement on the terms and
conditions contained in the Subscription Agreement (including all applicable
schedules) this                day of                             , 2006.

 

 

U.S. GOLD CORPORATION

 

 

 

 

 

Per:

 

 

 

 

Authorized Signing Officer

 

 

 

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SCHEDULE “A”

 

TERM SHEET

 

U.S. GOLD CORPORATION

 

PRIVATE PLACEMENT OF SUBSCRIPTION RECEIPTS

 

Unless otherwise defined herein, all capitalized terms shall have the meaning
ascribed to such terms in the subscription agreement to which this Schedule is
attached.

 

Issuer:

 

U.S. Gold Corporation (the “Company”).

 

 

 

Issue Price:

 

US$4.50 per Subscription Receipt (the “Issue Price”).

 

 

 

Offering Size:

 

Up to US$75,150,000 (with a minimum offering of 9,000,000 Subscription Receipts
for aggregate gross proceeds to the Company of US$40,050,000).

 

 

 

Subscription Receipt Terms:

 

The Subscription Receipts shall be automatically converted into Units upon the
satisfaction of the Release Conditions (as defined below) without any action on
the part of the holder. Each Unit shall be comprised of one share of common
stock in the capital of the Company (a “Common Share”) and one-half of one
Common Share purchase warrant (each whole Common Share purchase warrant being a
“Warrant”). Each Warrant will entitle the holder thereof to purchase one Common
Share (a “Warrant Share”) for a period of five years following the Closing Date
(as defined below) at a price of US$10.00.

 

 

 

Exchange Terms:

 

The Release Conditions shall be satisfied upon the latest to occur of the
following conditions (the “Release Conditions”): (i) the third business day
after the date on which a receipt (the “Final Receipt”) has been issued by the
securities regulatory authorities in the Jurisdictions in which Canadian holders
are resident for a (final) prospectus qualifying the Common Shares and Warrants
issuable upon exchange of the Subscription Receipts and the Broker Warrants (as
defined below); (ii) the completion and filing via SEDAR of a current technical
report regarding the Tonkin Springs gold project that complies with National
Instrument 43-101 of the Canadian Securities Administrators; (iii) the Common
Shares being listed for trading on the Toronto Stock Exchange; (iv) the
effectiveness of a registration statement with respect to the resale in the
United States of the Common Shares and Warrants underlying the Subscription
Receipts, the Warrant Shares, the Broker Warrants, and the Common Shares and
Warrants underlying the Broker Warrants; and (v) the delivery of a 10b-5 opinion
addressed to the Agent, in a form satisfactory to the Agent, acting reasonably,
provided by United States counsel to the Company in respect of the Registration
Statement.

 

 

--------------------------------------------------------------------------------

 

Escrow of Proceeds:

 

On the closing of the Offering, 50% of the gross proceeds from the Offering will
be delivered to and held by an escrow agent (the “Escrow Agent”) mutually
acceptable to the Company and GMP and invested in short term investment grade
debt obligations as agreed to by the Company and GMP. The Escrowed Funds shall
be released from escrow to the Company upon the occurrence of all of the Release
Conditions.

 

 

 

 

 

If any of the Release Conditions has not been satisfied on or prior to 5:00 p.m.
(Mountain time) on that date which is 183 days following the Closing Date, each
Subscription Receipt shall thereafter be convertible into 1.1 Common Shares (in
lieu of one Common Share) and 0.55 Warrants (in lieu of 0.5 Warrants). If any of
the Release Conditions have not been satisfied prior to 5:00 p.m. (Mountain
time) on that date which is twelve months following the Closing Date (the
“Initial Qualification Deadline”), the Escrowed Funds shall be returned by the
Escrow Agent, on behalf of the Company, to the holders of the Subscription
Receipts in exchange for the delivery to the Company of 50% of the outstanding
Subscription Receipts held by each holder. The remaining 50% of the Subscription
Receipts not returned to the Company on the Initial Qualification Deadline (the
“Remaining Subscription Receipts”) shall remain outstanding until the earlier
of: (i) 18 months following the Closing Date (the “Final Qualification
Deadline”); and (ii) the satisfaction by the Company, or the waiver by the
Agent, of each of the Release Conditions. If any of the Release Conditions have
not been satisfied prior to 5:00 p.m. (Mountain time) on the Final Qualification
Deadline, the Remaining Subscription Receipts shall be deemed to be exchanged
into Units.

 

 

 

Use of Proceeds:

 

Expenditures at the Tonkin Springs gold project and for general corporate
purposes and working capital.

 

 

 

Agent’s Commission:

 

The Company will pay the Agent a cash commission equal to 7% of the gross
proceeds of the Offering (the “Cash Commission”). The Agent shall also be issued
compensation options exercisable for, with no payment of additional
consideration, broker warrants (“Broker Warrants”). The Broker Warrants shall
entitle the holder thereof to purchase such number of Units as is equal to 6% of
the number of Subscription Receipts sold pursuant to the Offering. Each Broker
Warrant shall be exercisable to purchase one Unit at a price of US$4.50 for a
period of 18 months following the Closing Date, which Units shall be qualified
in Canada by the Prospectus and be registered in the United States. The Cash
Commission will be paid, and the Broker Warrants will be issued, to the Agent as
follows: (i) 50% of such amounts on the Closing Date; and (ii) the remaining 50%
of such amounts upon the release of the Escrowed Funds to the Company.

 

 

 

Agent:

 

GMP Securities L.P. (“GMP”).

 

--------------------------------------------------------------------------------

 

Jurisdictions of Sale:

 

The United States and each of the provinces of Canada and those jurisdictions
outside of the United States and Canada as agreed to by the Company and the
Agent.

 

 

 

TSX Listing:

 

The Company shall list the Common Shares issuable on the exchange of the
Subscription Receipts and the Warrant Shares on the Toronto Stock Exchange.

 

 

 

Type of Transaction:

 

Best efforts Subscription Receipt financing, subject to formal agency agreement.
The Subscription Receipts to be sold by private placement without an Offering
Memorandum.

 

 

 

Closing Date:

 

On or about February 22, 2006 or such other date as mutually agreed to by GMP
and the Company (the “Closing Date”).

 

--------------------------------------------------------------------------------

 

SCHEDULE “B”

 

ACCREDITED INVESTOR STATUS CERTIFICATE

 

TO BE COMPLETED BY BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,
QUÉBEC, NEWFOUNDLAND AND LABRADOR, NOVA SCOTIA, NEW BRUNSWICK AND PRINCE EDWARD
ISLAND ACCREDITED INVESTORS

 

The categories listed herein contain certain specifically defined terms.  If you
are unsure as to the meanings of those terms, or are unsure as to the
applicability of any category below, please contact your broker and/or legal
advisor before completing this certificate.

 

TO:                                                                         
U.S. Gold Corporation (the “Corporation”)

 

In connection with the purchase by the undersigned Subscriber of the
Subscription Receipts, the Subscriber, on its own behalf and on behalf of each
Disclosed Principal for whom the Subscriber is acting (collectively, the
“Subscriber”), hereby represents, warrants, covenants and certifies to the
Corporation (and acknowledges that the Corporation and its counsel are relying
thereon) that:

 

(a)                                  the Subscriber is resident in or otherwise
subject to the securities laws of one of the provinces of British Columbia,
Alberta, Saskatchewan, Manitoba, Ontario, Québec, Newfoundland and Labrador,
Nova Scotia, New Brunswick or Prince Edward Island;

 

(b)                                 the Subscriber is purchasing the
Subscription Receipts as principal for its own account and not for the benefit
of any other person;

 

(c)                                  the Subscriber is an “accredited investor”
within the meaning of NI 45-106 on the basis that the undersigned fits within
one of the categories of an “accredited investor” reproduced below beside which
the undersigned has indicated the undersigned belongs to such category;

 

(d)                                 the Subscriber was not created or used
solely to purchase or hold securities as an accredited investor as described in
paragraph (m) below; and

 

(e)                                  upon execution of this Schedule B by the
Subscriber, this Schedule B shall be incorporated into and form a part of the
Subscription Agreement.

 

(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)

 

o

(a)

a Canadian financial institution, or a Schedule III bank;

 

 

 

o

(b)

the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);

 

 

 

o

(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;

 

 

 

o

(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);

 

 

 

o

(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);

 

--------------------------------------------------------------------------------

 

o

(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;

 

 

 

o

(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;

 

 

 

o

(h)

any national, federal, state, provincial, territorial or municipal government of
or in any foreign jurisdiction, or any agency of that government;

 

 

 

o

(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;

 

 

 

o

(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;

 

 

 

o

(k)

an individual whose net income before taxes exceeded $200,000 in each of the two
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded $300,000 in each of the two most recent calendar years and
who, in either case, reasonably expects to exceed that net income level in the
current calendar year;

 

 

 

o

(l)

an individual who, either alone or with a spouse, has net assets of at least
$5,000,000;

 

 

 

o

(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;

 

 

 

o

(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

(o)

an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt;

 

 

 

o

(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;

 

 

 

o

(q)

a person acting on behalf of a fully managed account managed by that person, if
that person (i) is registered or authorized to carry on business as an adviser
or the equivalent under the securities legislation of a jurisdiction of Canada
or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is
not a security of an investment fund;

 

 

 

o

(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;

 

 

 

o

(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;

 

--------------------------------------------------------------------------------

 

o

(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;

 

 

 

o

(u)

an investment fund that is advised by a person registered as an adviser or a
person that is exempt from registration as an adviser, or

 

 

 

o

(v)

a person that is recognized or designated by the securities regulatory authority
or, except in Ontario and Québec, the regulator as (i) an accredited investor,
or (ii) an exempt purchaser in Alberta or British Columbia.

 

For the purposes hereof, the following definitions are included for convenience:

 

(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, Prince Edward Island and Québec
where control person means any person that holds or is one of a 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)                                  “entity” means a company, syndicate,
partnership, trust or unincorporated organization;

 

(d)                                 “financial assets” means cash, securities,
or any a contract of insurance, a deposit or an evidence of a deposit that is
not a security for the purposes of securities legislation;

 

(e)                                  “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;

 

(f)                                    “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;

 

(g)                                 “investment fund” means a mutual fund or a
non-redeemable investment fund, and, for greater certainty in British Columbia,
includes 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), R.S.B.C. 1996 c. 112, and whose business objective is making
multiple investments and a venture capital corporation registered under Part 1
of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c.
429 whose business objective is making multiple investments;

 

(h)                                 “mutual fund” means an issuer whose primary
purpose is to invest money provided by its security holders and whose securities
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 part of the net assets, including a separate fund or trust
account, of the issuer;

 

(i)                                     “non-redeemable investment fund” means
an issuer,

 

(A) whose primary purpose is to invest money provided by its securityholders,

 

(B) that does not invest,

 

--------------------------------------------------------------------------------

 

(i) 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

 

(ii) for the purpose of being actively involved in the management of any issuer
in which it invests, other than an issuer that is a mutual fund or a
non-redeemable investment fund, and

 

(C) that is not a mutual fund;

 

(j)                                     “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;

 

(k)                                  “Schedule III bank” means an authorized
foreign bank named in Schedule III of the Bank Act (Canada);

 

(l)                                     “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 (i) or (ii), or is an adult
interdependent partner within the meaning of the Adult Interdependent
Relationships Act (Alberta); and

 

(m)                               “subsidiary” means an issuer that is
controlled directly or indirectly by another issuer and includes a subsidiary of
that subsidiary.

 

In NI 45-106 a person or company is an affiliate of another person or company if
one of them is a subsidiary of the other, or if each of them is controlled by
the same person.

 

In NI 45-106 a person (first person) is considered to control another person
(second person) if (a) the first person,   directly or indirectly, beneficially
owns or exercises control or direction over securities of the second person
carrying votes which, if exercised, would entitle the first person to elect a
majority of the directors of the second person, unless that first person holds
the voting securities only to secure an obligation, (b) the second person is a
partnership, other than a limited partnership, and the first person holds more
than 50% of the interests of the partnership, or (c) the second person is a
limited partnership and the general partner of the limited partnership is the
first person.

 

The foregoing representations contained in this certificate are true and
accurate as of the date of this certificate and will be true and accurate as of
the Closing Time.  If any such representations shall not be true and accurate
prior to the Closing Time, the undersigned shall give immediate written notice
of such fact to the Corporation prior to the Closing Time.

 

 

Dated:

 

 

Signed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Witness (If Subscriber is an Individual)

Print the name of Subscriber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Print Name of Witness

If Subscriber is a corporation,
print name and title of Authorized Signing Officer

 

 

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SCHEDULE C

 

UNITED STATES INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE

TO:

 

U.S. Gold Corporation (the “Corporation”)

AND TO:

 

GMP Securities L.P.

AND TO:

 

Griffiths McBurney Corp.

 

CERTIFICATE

 

Capitalized terms not otherwise defined herein shall have the meanings
attributed thereto in the Subscription Agreement to which this certificate was
attached.

 

In connection with the purchase of subscription receipts (the “Subscription
Receipts”) of U.S. Gold Corporation (the “Corporation”), the undersigned hereby
represents, warrants and certifies that:

 

1.                                       the Subscriber (or if the Subscriber is
acting on behalf of a principal, then for the principal for whom the Subscriber
is acting) satisfies one or more of the following categories of “accredited
investor” as that term is defined in Rule 501(a) of the Securities Act of 1933,
as amended (the “U.S. Securities Act”), by virtue of the Subscriber being:

 

[please check one]

 

o  Category 1.                                                                
Any bank as defined in Section 3(a)(2) of the U.S. Securities Act, or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the U.S. Securities Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of
the United States Securities Exchange Act of 1934; any insurance company as
defined in Section 2(a)(13) of the U.S. Securities Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions or any agency
or instrumentality of a state or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess of US$5,000,000; or any
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 (“ERISA”), if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings
and loan association, insurance company, or registered investment adviser, or if
the employee benefit plan has total assets in excess of US$5,000,000, or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors

 

o  Category 2.                                                                 A
private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940

 

o  Category 3.                                                                
An organization described in Section 501(c)(3) of the United States Internal
Revenue Code, a corporation, a Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Subscription
Receipts, with total assets in excess of US$5,000,000

 

o  Category 4.                                                                 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 Subscription Receipts, and (c) is
directed in its purchases of securities by a person who has such knowledge and
experience in financial and business matters that he/she is capable of
evaluating the merits and risks of an investment in the Subscription Receipts

 

o  Category 5.                                                                
An entity in which all of the equity owners satisfy the requirements of one or
more of the foregoing categories

 

2.                                       (a) if the undersigned is the
Subscriber, he or she is making the above statement based on personal knowledge
of his or her financial situation and has reviewed personal financial
documentation with an accountant, financial advisor or other financial
professional, if necessary, to determine that the above statement is true; or
(b) if the undersigned is other than the Subscriber, he or she is making the
above statement based on a review, if necessary, of the financial statements of
the Subscriber for the most recently completed financial year and any interim
financial statements prepared since the end of such financial year and has
undertaken such other review and due diligence necessary to determine and
certify that the Subscriber is an “accredited investor” as that term is defined
in Rule 501(a) of the U.S. Securities Act; and

 

--------------------------------------------------------------------------------

 

3.                                       the Subscriber understands that the
Corporation is relying on this certificate as evidence of the Subscriber’s
status as an “accredited investor” in accordance with Rule 501(a) of the U.S.
Securities Act.

 

The foregoing representations contained in this certificate are true and
accurate as of the date of this certificate and will be true and accurate as of
the Closing Time.  If any such representations shall not be true and accurate
prior to the Closing Time, the undersigned shall give immediate written notice
of such fact to the Corporation prior to the Closing Time.

 

 

Dated:

 

 

Signed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Witness (If Subscriber is an Individual)

Print the name of Subscriber

 

 

 

 

 

 

 

 

 

 

 

 

Print Name of Witness

If Subscriber is a corporation,
print name and title of Authorized Signing Officer

 

 

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