ex102.htm


 


Exhibit 10.2


 





 




Confidential


Canadian and Non-U.S. Subscribers Only















PAN AMERICAN GOLDFIELDS LTD.


 


SUBSCRIPTION DOCUMENTS


 


for


 


CANADIAN AND NON-U.S. SUBSCRIBERS ONLY


 


SUBSCRIPTION DOCUMENTS AND PROCEDURE


 


Each prospective investor for the Units of Pan American Goldfields Ltd. is required to complete, execute and return to the Company the following documents:


 


1.           SUBSCRIPTION AGREEMENT:  Please complete all open lines, date and sign on page 18.


 


2.           REGISTRATION AND DELIVERY INSTRUCTIONS: Please complete the registration and delivery instructions on Schedule A.


 


3.           ELIGIBILITY CERTIFICATE:  If you are an Accredited Investor (within the meaning of National Instrument 45-106), please complete and sign the Eligibility Certificate attached as Schedule B.


 


4.           PURCHASER QUESTIONNAIRE: Please complete, date and sign the Subscriber Questionnaire on Appendix A to Schedule B. All items must be completed.


 


RETURN the completed documents, with payment in full as provided herein.


 






  





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THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE “AGREEMENT”) RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).


 


NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.


 







 


PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT


 


(Canadian and Non-U.S. Subscribers Only)


 


Pan American Goldfields Ltd.


Mountain View Center


12303 Airport Way, Suite 200


Broomfield, CO. 80021







Attention:  Miguel Di Nanno, President







Dear Sirs:







 


Pan American Goldfields Ltd., (the “Company”) is offering, on an exempt private placement basis, up to an aggregate of 2,500,000 units of its own issue (each a “Unit”) to eligible investors (a “Subscriber”) at a subscription price of U.S. $0.20 per Unit. Each Unit will consist of one share of the Company’s common stock (each a “Share” or the “Common Stock”) and one share purchase warrant (each a “Warrant”) exercisable at $0.30 per Warrant Share, a copy of which is attached as Reference source not found.). Each Warrant to acquire additional Shares shall have a term of twenty-four (24) months after the date of this Agreement. Each Warrant entitles the holder thereof to purchase one Share of the Company (each a “Warrant Share”) for a period of two years. The Units are being offered solely to Canadian and Non-U.S. Subscribers via this subscription agreement (the “Agreement”) at U.S. $0.20 per Unit for an aggregate purchase price of U.S. $500,000 (the “Offering”). The Units, the Shares, the Warrants and the Warrant Shares are sometimes hereinafter referred to as the “Securities.”  Subscriptions will be accepted only for an even number of Units and no fractional Units will be issued.


 






  





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The Company reserves the right to increase the size of the Offering without notice to investors or prospective investors.


 


1.           Subscription.


 


1.1           Based upon the terms of this Agreement, the Subscriber hereby irrevocably subscribes for and agrees to purchase _____ Units from the Company at a subscription price of U.S. $0.20 per Unit, for aggregate consideration of U.S. $____ (the “Subscription Proceeds”).


 


1.2           Each Unit consists of:


 


(a)           1 Share; and


 


(b)           1 Warrant to purchase 1 Warrant Share. The Warrant shall expire twenty-four months (24) months after the date of this Agreement and shall be exercisable at $0.30 per share of Common Stock.


 


1.3           Payment:


 


(a)           The Subscription Proceeds must accompany this Agreement and shall be paid by wire transfer of immediately available funds in U.S. dollars in accordance with the wire instructions attached hereto as Exhibit B. The Company has provided certain financial projections regarding the estimated use of the Subscription Proceeds in the “Use of Proceeds” section, attached hereto as Exhibit C.


 


(b)           The Subscriber acknowledges and agrees that this Agreement, the Subscription Proceeds and any other documents delivered in connection herewith will be held by the Company or the Escrow Agent (as defined herein). In the event that this Agreement is not accepted by the Company for whatever reason within 30 days of the delivery of an executed Agreement by the Subscriber, this Agreement, the Subscription Proceeds and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Agreement.


 


1.4           Documents Required from Subscriber:


 


(a)           The Subscriber must complete, sign and return to the Company two (2) executed copies of this Agreement; and


 


(b)           The Subscriber shall complete, sign and return to the Company as soon as possible, on request by the Company, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, the OTC Bulletin Board, stock exchanges and applicable law.


 


1.5           Escrow


 


The Subscription Proceeds shall be deposited by the Company in a bank account pursuant to the instructions in Exhibit B. The Subscriber acknowledges that the Subscription Proceeds will be deposited into an escrow account (the “Escrow Account”) at the Company’s corporate law firm, DLA Piper LLP (the “Escrow Agent”). The Subscriber agrees that the Escrow Agent shall have no accountability to the Subscriber whatsoever, and acknowledges that the Escrow Agent is merely the recipient for the Company and have no obligations to the Subscriber. The Subscriber agrees that submission of the Subscription Proceeds to the Escrow Agent in trust is to be deposited in an escrow fund and shall be the property of the Company at that point. The only duty the Escrow Agent shall have to the Subscriber is to deliver the Subscription Proceeds to the Company, all solely according to the Company’s instructions, and the Escrow Agent shall require no further instructions from the Subscriber in delivering the same to the Company.


 






  





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The proceeds of the Escrow Account shall be distributed in accordance with Section 1.6.


 


1.6           Closing


 


Closing of the offering of the Units shall occur in the following manner:


 


(a)           The Escrow Agent shall release all or part of the U.S. $500,000.00 (Five Hundred Thousand Dollars) from the Escrow Account to the Company once the sum of the Subscription Proceeds deposited in the Escrow Account is equal to or greater than U.S. $250,000.00 (Two Hundred and Fifty Thousand Dollars) (the “Closing”).


 


(b)           Unless otherwise agreed to by the Company and the Subscriber, on the Closing Date (as defined herein),  (x) the Company shall irrevocably instruct its transfer agent to deliver to the Subscriber one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in Section 3 hereof), evidencing the number of Shares the Subscriber is purchasing as is set forth on Subscriber’s signature page to this Agreement next to the heading “Shares Issued” within two (2) business days after the Closing Date (the “Subscribed Shares”) and (b) the Company shall issue to the Subscriber a Warrant pursuant to which the Subscriber shall have the right to acquire such number of Warrant Shares as is set forth on the Subscriber’s signature page to this Agreement next to the heading “Warrants Issued,” duly executed on behalf of the Company and registered in the name of the Subscriber. As used herein, the term “Closing Date” means the business day when all of the subscription documents have been executed and delivered by the applicable parties thereto, and all of the conditions set forth in Section 6 hereof are satisfied, or such other date as the parties may agree.


 


2.           Conditions to Offer.


 


This Offering is being conducted on a “best efforts” basis. Closing of the Offering shall occur as described in and subject to the provisions of Section 1.6 hereof.


 


3.           Representations, Warranties and Covenants.


 


3.1           Representation, Warranties and Covenants of the Subscriber. The Subscriber hereby represents and warrants to, and covenants with, the Company (which representation, warranties and covenants shall survive the closing of this Agreement) and acknowledges that the Company is relying thereon that:


 






  





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(a)           The undersigned is resident, or if not an individual, has a head office, in the jurisdiction set out under the heading “Address of subscriber” above the signature set forth on the execution page of this Agreement, which address is the undersigned’s principal residence or place of business, and such address was not obtained or used solely for the purpose of acquiring the Securities.


 


(b)           The Subscriber is not a “U.S. Person” (as such term is defined in Regulation S under the 1933 Act (“Regulation S”)) or person in the U.S. and the Securities are not being acquired, directly or indirectly, for the account or benefit of a U.S. Person or person in the U.S.  At the time Subscriber executed and delivered this Agreement, Subscriber was outside the U.S. and is outside of the U.S. as of the date of the execution and delivery of this Agreement.  Rule 902 of Regulation S of the 1933 Act includes the following people as a “U.S. person”:


 



	
  

	
(i)

	
any natural person resident in the U.S.;







 



	
  

	
(ii)

	
any partnership or corporation organized or incorporated under the laws of the U.S.;







 



	
  

	
(iii)

	
any estate of which any executor or administrator is a U.S. person;







 



	
  

	
(iv)

	
any trust of which any trustee is a U.S. person;







 



	
  

	
(v)

	
any agency or branch of a foreign entity located in the U.S.;







 



	
  

	
(vi)

	
any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;







 



	
  

	
(vii)

	
any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary, organized, incorporated, or (if an individual) resident in the U.S.; and







 



	
  

	
(viii)

	
any partnership or corporation if:







 



	
  

	
(A)

	
organized or incorporated under the laws of any foreign jurisdiction; and







 



	
  

	
(B)

	
formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned by accredited investors (as defined in Rule 501(a) of the 1933 Act) who are not natural persons, estates or trusts.







 



	
  

	
(C)

	
Unless paragraph 3.1(d) below applies, it is purchasing the Securities as principal for its own account, not for the benefit of any other person, for investment only and not with a view to resale or distribution of all or any of the Securities and unless exempted by an order of the securities commission or similar regulatory authority of the Province or Territory in which it resides, it fully complies with one or more of the following criteria (please initial one or more as applicable) and it has completed the appropriate Schedules to this Agreement:







 






  





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_____

	
(ix)    it is an “accredited investor” as such term is defined in NI 45-106 and has concurrently executed and delivered an Eligibility Certificate in the form attached as Schedule B to this Agreement; or


	
_____

	
(x)    it is not a resident of Ontario and (please also insert the name of the person) is:


	  	
_____

	
(A)        a director, executive officer or control person of the Company or of an affiliate of the Company; or


	  	
_____

	
(B)        a spouse, parent, grandparent, brother, sister or child of ______________________________________, a person referred to in subparagraph (ii)(A) above; or


	  	
_____

	
(C)        a parent, grandparent, brother, sister or child of the spouse of _________________________________, a person referred to in subparagraph (ii)(A) above; or


	  	
_____

	
(D)        a close personal friend of ___________________ __________________, a person referred to in subparagraph (ii)(A) above; or


	  	
_____

	
(E)        a close business associate of __________________ __________________, a person referred to in subparagraph (ii)(A) above; or


	  	
_____

	
(F)        a founder of the Company or a spouse, parent, grandparent, brother, sister, child, close personal friend or close personal business associate of __________ _______________________________, a founder of the Company;


	  	
_____

	
(G)        a parent, grandparent, brother, sister or child of the spouse of _________________________________, a founder of the Company;











  





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_____

	
(H)        a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are persons or companies described in subparagraphs (ii)(A) to (ii)(G) above; or


	  	
_____

	
(I)          a trust or estate of which all of the beneficiaries or a majority of the trustees are persons or companies described in subparagraphs (ii)(A) to (ii)(G) above; and if a resident of Saskatchewan, relying upon subparagraphs (ii)(D), (ii)(E), (ii)(F) where the subscriber is a close personal friend or close business associate of a founder of the Company, or (ii)(H) or (ii)(I) if the trade is based in whole or in part on a close personal friendship or close business association, the undersigned has concurrently executed and delivered to the Company a risk acknowledgment form in Form 45-106F5 in the form attached as Schedule C hereto.


	
_____

	
(xi)    it is a resident of Ontario and (please also insert the name of the person) is:


	  	
_____

	
(A)        a founder of the Company; or


	  	
_____

	
(B)        an affiliate of ______________________________, a founder of the Company; or


	  	
_____

	
(C)        a spouse, parent, brother, sister, grandparent or child of _______________________________________, an executive officer, director or founder of the Company; or


	  	
_____

	
(D)       a control person of the Company;


	
_____

	
(xii)    (please also insert the name of the person) is:


	  	
_____

	
(A)        an employee, executive officer, director or consultant of the Company or a related entity of the Company;











  





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_____

	
(B)       a trustee, custodian or administrator acting on behalf, or for the benefit of ________________________ ___________________, a person or company referred to in subparagraph (iv)(A) above;


	
_____

	
(C)       a holding entity of __________________________, an individual referred to in subparagraph (iv)(A) above;


	
_____

	
(D)       an RRSP or RRIF of _________________________ ______________________, an individual referred to in subparagraph (iv)(A) above;


	
_____

	
(E)       the spouse of ______________________________, an individual referred to in subparagraph (iv)(A) above;


	
_____

	
(F)       a trustee, custodian or administrator acting of behalf, or for the benefit of the spouse of _______________ __________________________, an individual referred to in subparagraph (iv(A) above;


	
_____

	
(G)       a holding entity of the spouse of ____________ _____________________________, an individual referred to in subparagraph (iv)(A) above;


	
_____

	
(H)       an RRSP or RRIF of the spouse of _____________ ____________________________, an individual referred to in subparagraph (iv)(A) above;


	
if participation in the trade is voluntary and for the purposes of this paragraph, the terms “executive officer,” “related entity,” “consultant,” “holding entity” and “permitted assign” have the meanings ascribed thereto in NI 45-106; or











  





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_____

	
(xiii)       it is purchasing Securities for an aggregate acquisition cost of not less than Cdn. $150,000 cash and if it is a corporation, syndicate, partnership or other form of association or entity, it was not created or used solely to purchase or hold securities in reliance upon the exemption set forth in section 2.10 of NI 45-106; or


	
_____

	
(xiv)      if it is a resident of any jurisdiction referred to in the preceding paragraphs but not purchasing thereunder, it is purchasing pursuant to an exemption from prospectus and registration requirements (particulars of which are enclosed herewith) available to it under applicable securities legislation and shall deliver to the Company such further particulars of the exemption(s) and the undersigned’s qualifications thereunder as the Company may request.







(c)           if it is purchasing on behalf of a beneficial purchaser, it is duly authorized to enter into this Agreement and to execute and deliver all documentation in connection with the purchase on behalf of each beneficial purchaser and it acknowledges that the Company is required by law to disclose to certain regulatory authorities the identity of each beneficial purchaser of Securities, and:


 



	
  

	
(i)

	
if it is resident in, or otherwise subject to the securities legislation of any Province or Territory, it is an “accredited investor” as defined in NI 45-106 and has concurrently executed and delivered a Representation Letter in the form attached as







 






  





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(ii)

	
Schedule A to this Agreement and is either:







 



	
  

	
(A)

	
a trust company or trust corporation described in paragraph (p) of the definition of “accredited investor” in NI 45-106 (excluding a trust company or trust corporation registered under the laws of the Province of Prince Edward Island that is not registered under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada); or







 



	
  

	
(B)

	
a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and in Ontario, is purchasing a security that is not a security of an investment fund, as described in paragraph (q) of the definition of “accredited investor” in NI 45-106;







 



	
  

	
(iii)

	
and was not created or used solely to purchase or hold securities as an accredited investor in reliance upon the exemption contained in paragraph (m) of the definition of “accredited investor” in NI 45-106; or







 



	
  

	
(iv)

	
if it is acting for one or more disclosed principals, each of such principals is purchasing as a principal for its own account, not for the benefit of any other person, and not with a view to the resale or distribution of all or any of the Securities and each of such principals complies with paragraph 3.1(C) above as applicable to it by virtue of its place of residence;







 


(d)           The Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Subscriber.


 


(e)           The Subscriber has sufficient liquid assets to sustain a loss of the Subscriber’s entire investment.


 


(f)           The Company has not made any other representations or warranties to the undersigned with respect to the Company or rendered any investment advice except as contained herein.


 


(g)           The undersigned has such knowledge and experience in financial, investment and business matters to be capable of evaluating the merits and risks of the prospective investment in the securities of the Company.  The undersigned has consulted with such independent legal counsel or other advisers as the undersigned has deemed appropriate to assist the undersigned in evaluating the proposed investment in the Company.  By accepting these documents, the undersigned agrees that the information contained herein, and in all related and ancillary documents, shall be kept confidential and will not be used for any other purpose other than in connection with considering the purchase of the Securities.


 






  





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(h)           The Subscriber (i) has adequate means of providing for its current financial needs and possible personal contingencies and does not have a need for liquidity of this investment in the Securities; (ii) can afford (a) to hold the Securities for an indefinite period of time; and (b) to sustain a complete loss of the entire amount of the Subscription Proceeds for the Securities; and (iii) has not made an overall commitment to investments which are not readily marketable, which is disproportionate so as to cause such overall commitment to become excessive.


 


(i)           The Subscriber has been afforded the opportunity to ask questions of, and receive answers from, the officers and/or directors of the Company acting on its behalf concerning the terms and conditions of this transaction and to obtain any additional information, to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information furnished; and the undersigned has received satisfactory answers to all such questions to the extent deemed appropriate in order to evaluate the merits and risks of an investment in the Company.


 


(j)           The Subscriber acknowledges that the none of the Securities are currently registered under the 1933 Act and, except as provided in Section 10 hereof, the Company has not undertaken to register any of such securities under U.S. Federal or State law, and, unless so registered, none of them may be offered or sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Regulation S, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case in accordance with applicable state and provincial securities laws.


 


(k)           The undersigned further understands that it is purchasing all such securities without being furnished any prospectus setting forth all of the information that may be required to be furnished under applicable securities laws and as a consequence, certain protections, rights and remedies provided in applicable securities legislation, including statutory rights of rescission or damages, may not be available to it.


 


(l)           The undersigned further acknowledges that no agency, governmental authority, securities commission or similar regulatory body, stock exchange or other entity has reviewed, passed on or made any finding or determination as to the merit for investment of the Securities nor have any such agencies or governmental authorities made any recommendation or endorsement with respect to the Securities.


 


(m)           The undersigned acknowledges that there are restrictions on its ability to resell the Securities and it is the responsibility of the undersigned to find out what those restrictions are and to comply with them before selling the Securities.  The undersigned agrees not to sell, transfer, pledge or otherwise dispose of or encumber the Securities except pursuant to the applicable rules and regulations of applicable securities laws, including Regulation S, and prior to any such sale, transfer, pledge, disposition or encumbrance, the undersigned will, upon request, furnish the Company and its transfer agent with an opinion of counsel satisfactory to the Company in form and substance that registration or equivalent action under the 1933 Act and all other applicable securities laws is not required.  In addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Subscriber’s ability to resell any of the Securities under Canadian provincial securities laws and Canada’s National Instrument 45-102, Resale of Securities (“NI 45-102”).


 






  





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(n)           This Agreement has been duly executed and delivered and, when accepted by the Company, will constitute a legal, valid and binding obligation of the undersigned enforceable against it in accordance with the terms hereof.


 


(o)           No prospectus or offering memorandum within the meaning of the securities laws has been delivered to, summarized for or seen by the Subscriber in connection with the sale of the Units and the Subscriber is not aware of any prospectus or offering memorandum having been prepared by the Company.


 


(p)           It has not received, nor has it requested, nor does it have any need to receive, any offering memorandum (as defined in or contemplated by applicable securities legislation) or any other document (other than financial statements or any other continuous disclosure documents, the contents of which are prescribed by statute or regulation) describing the business and affairs of the Company which has been prepared for delivery to, and review by, prospective subscribers in order to assist them in making an investment decision in respect of the Securities (or any of them), and it has not become aware of any advertisement including, by way of example and not in limitation, advertisement in any printed media of general and regular circulation or on radio or television with respect to the distribution of the Units.


 


(q)           The decision to execute this Subscription Agreement and acquire the Units hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information, including the risk factors described in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), (the adequacy of which is hereby acknowledged) about the Company that is available to any member of the public on the EDGAR database maintained by the SEC at www.sec.gov.


 


(r)           There are risks associated with an investment in the Company, including, by way of example and not in limitation, the specific risks identified in the Company’s most recent periodic reports filed with the SEC and available for viewing at the SEC’s website at www.SEC.gov.


 


(s)           The Subscriber is not acquiring the Units as a result of, and will not itself engage in any “directed selling efforts” (as that term is defined in Regulation S) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Subscriber may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act, and any applicable state and provincial securities laws or under an exemption from such registration requirements.


 






  





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(t)           None of the Securities may be offered or sold by the Subscriber to a U.S. Person, or for the account or benefit of a U.S. Person (other than a distributor) prior to the end of the Distribution Compliance Period (as defined herein).


 


(u)           The Subscriber understands and agrees that there may be material tax consequences to it of an acquisition, holding or disposition of the Securities. The Company gives no opinion and makes no representation with respect to the tax consequences under U.S., Canadian, state, provincial, local or foreign tax law of the acquisition, holding or disposition of the Securities and the Subscriber acknowledges that it is solely responsible for determining the tax consequences of its investment.


 


(v)           Any offer and/or sale of any of the Securities prior to the expiration of a period of six (6) months after the date of original issuance of that respective Security (the six-month period hereinafter referred to as the “Distribution Compliance Period”), shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom, and in each case only in accordance with applicable state and provincial securities laws.


 


(w)           If required by applicable securities legislation, regulations, rules, policies or orders or by any securities commission, stock exchange or other regulatory authority, the undersigned will execute, deliver, file and otherwise assist the Company in filing such reports, undertakings and other documents with respect to the issue of the Securities (including, without limitation, an Eligibility Certificate in the form attached as Schedule B).


 


(x)           The undersigned hereby agrees that the Company will insert the following legends on the face of the Securities in compliance with applicable securities laws:


 


“Unless permitted under securities legislation, the holder of this security must not trade the security in Canada before the date that is 4 months and a day after the later of (i) _________________________ [insert the distribution date], and (B) the date the issuer became  a reporting issuer in any province or territory of Canada.”











  





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“THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN), EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”







(y)           The undersigned has not purchased the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, television or other form of telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.


 


(z)           The undersigned certifies that each of the foregoing representations and warranties set forth in subsections (a) through (aa) inclusive of this Section 3.1 are true as of the date hereof and shall survive such date.


 


(aa)           Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants and covenants to the Subscriber that:


 


(bb)           Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable). The Company has all necessary corporate power and authority to own, lease, use and operate its properties and to carry on its business as now being conducted and presently proposed to be conducted. The Company and each of its subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which its ownership or leasing of assets, or the conduct of its business, makes such qualification necessary.


 






  





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(cc)           Requisite Power and Authorization. The Company has all necessary corporate power and authority to execute and deliver this Agreement, to issue the Shares and the Warrants and to carry out the provisions of this Agreement. All corporate action on the part of the Company required for the lawful execution and delivery of this Agreement, issuance and delivery of the Shares and the Warrants and the performance by the Company of its obligations hereunder has been taken. Upon execution and delivery, this Agreement constitutes valid and binding obligations of the Company enforceable in accordance with their respective terms, except as enforcement may be limited by insolvency and similar laws affecting the enforcement of creditors’ rights generally and equitable remedies. The Shares, when issued in compliance with the provisions of this Agreement, and the Warrant Shares, if issued, when issued in compliance with the provisions of the Warrants, will be duly authorized and validly issued, fully paid, non-assessable, subject to no lien, claim or encumbrance and issued in compliance with federal securities laws and applicable state securities laws. No stockholder of the Company or other person has any preemptive, anti-dilution, “poison-pill” or similar right with respect to the Shares and the Warrants and, if issued, the Warrant Shares. The Company has reserved such number of shares of its Common Stock necessary for issuance of the Shares and the Warrant Shares.


 


(dd)           SEC Documents. The Company has filed all of its SEC Filings (as defined herein) for the 12 month period preceding the date hereof. As of their respective filing dates, or such later date on which such reports were amended, the SEC Filings complied in all material respects with the requirements of the Exchange Act. The SEC Filings as of their respective dates, or such later date on which such reports were amended, when issued did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. The financial statements included in the SEC Filings comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto. Except as may be indicated in the notes to the financial statements included in the SEC Filings or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC, such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied and fairly present the consolidated financial position of the Company and any subsidiaries at the dates thereof and the consolidated results of their operations and consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring adjustments). As used herein, the term “SEC Documents” means the Company annual reports on Form 10-K for fiscal year ended February 28, 2010 (including any amendments thereto) and (ii) the Company’s quarterly reports on Form 10-Q for the 2010 fiscal year and the term “SEC Filings” means the SEC Documents, along with all other reports, schedules, forms, statements and other documents that the Company is required to file with the SEC pursuant to the reporting requirements of the Securities and Exchange Act of 1934, as amended, for the 12 month period preceding the date hereof.


 






  





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(ee)           Capital Stock. The authorized capital stock of the Company consists of 200,000,000 shares of Common Stock, with no par value, and 20,000,000 shares of Preferred Stock, with no par value. As of January 31, 2011, there were 54,003,827 shares of Common Stock issued and outstanding and there was no issued and outstanding Preferred Stock. All outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. As of January 31, 2011, none of the authorized Common Stock is reserved for issuance, other than (i) 386,666 units consisting of 386,666 shares of Common Stock, and 193,333 warrants exercisable at $0.50 pursuant to a cancellation of debt and release agreement, (ii) 3,860,000 shares of Common Stock reserved for future issuance pursuant to 5,000,000 options approved under the Company’s 2009 stock option plan, (iii) 2,875,000 shares of Common Stock reserved for future issuance pursuant to options and awards which may be granted under the Company’s 2008 and 2007 stock option plans, and (iv) 25,826,733 shares of Common Stock reserved for future issuance pursuant to outstanding warrants. Attached hereto as Exhibit 3.2(d) is the Company capitalization table as of the date of the Agreement. Except as set forth in this paragraph 3.2(d) and Exhibit 3.2(d), the Company has no outstanding securities convertible into or exchangeable for Common Stock and no contracts, rights, options or warrants to purchase or otherwise acquire Common Stock or securities convertible into or exchangeable for Common Stock.


 


(ff)           No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby (including, without limitation, the issuance and reservation for issuance of the Warrant Shares) will not: (i) conflict with or result in a violation of any provision of the Company’s certificate of incorporation or bylaws or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected. Neither the Company nor any of its subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its subsidiaries in default) under, and, to the knowledge of the Company, neither the Company nor any of its subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party or by which any property or assets of the Company or any of its subsidiaries is bound or affected. Neither the Company nor its subsidiaries is in violation of any material law, rule ordinance or regulation of any governmental entity. Except as required under federal securities laws and any applicable state securities laws, rules or regulations, by the terms of this Agreement, or by any applicable trading market, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement or the Warrants in accordance with the terms hereof or thereof or to issue and sell the Shares and Warrants in accordance with the terms hereof and to issue the Warrant Shares upon exercise of the Warrants in accordance with the terms thereof.


 






  





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(gg)           No Material Adverse Change. Since the date of the latest audited financial statements included in the SEC Documents, except as set forth in the SEC Documents, there has not been:


 



	
  

	
(i)

	
any changes in the assets, liabilities, financial condition, prospects or operations of the Company from that reflected in the financial statements except changes in the ordinary course of business which have not been, either in any individual case or in the aggregate, materially adverse to the Company and its subsidiaries taken as a whole;







 



	
  

	
(ii)

	
any material change, except in the ordinary course of business, in the contingent obligations of the Company whether by way of guarantee, endorsement, indemnity, warranty or otherwise; or







 



	
  

	
(iii)

	
any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the properties or business of the Company.







 


(hh)           Litigation. Except as described in the SEC Documents, there is no material action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending, or, to the Company’s knowledge, threatened or contemplated, against the Company or any of its subsidiaries, or against any officer, director or employee of the Company or any such subsidiary in connection with such person’s employment therewith. Neither the Company nor any of its subsidiaries is a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which could reasonably be expected to have a material adverse effect on the Company, its assets, liabilities, financial condition or business prospects.


 


(ii)           Contracts. The material contracts to which the Company is a party that have been filed as exhibits to the SEC Filings, have been duly and validly authorized, executed and delivered by the Company and constitute the legal, valid and binding agreements of the Company, enforceable by and against it in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and judicial decisions of general application relating to enforcement of creditors’ rights generally, and the application of general equitable principles relating to or affecting the availability of remedies, and except as rights to indemnity or contribution may be limited by federal or state securities laws or the public policy underlying such laws.


 


(jj)           Real Property. The Company has good and valid title to all items of tangible personal property (“Real Property”) used in its operations free and clear of all Liens (as defined herein). Any Real Property described in the SEC Filings as being leased by the Company or any subsidiary is held by the Company under valid, existing and enforceable leases. As used herein, the term “Liens” shall mean any security interests, liens, pledges, mortgages or other encumbrances, whether arising voluntarily, involuntarily or by operation of law. Attached hereto as Exhibit 3.2(i) is a list of all Real Property and leases used in the Company’s operations. Except as disclosed on Exhibit 3.2(i), there are no unrecorded covenants, deed restrictions, easements, leases, subleases or rights of occupancy or liens which encumber the Real Property, or any part thereof. There are no easements, rights of way or licenses which are not in full force and effect necessary for the operation of any of the parcels constituting the Real Property. The Company has the right of ingress and egress, through a public road or street, to and from each of the parcels comprising the Real Property. No utility easement or right of way which services any portion of the Real Property may be terminated by the owner or mortgagee of any property through which any such easement or right of way runs.


 






  





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(kk)           Permits; Compliance. The Company and each of its subsidiaries is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders issued by the appropriate federal, state local or foreign regulatory authorities necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its subsidiaries is in conflict with, or in default or violation of, any of the Company Permits.


 


(ll)           Certain Transactions. Except as set forth in the SEC Filings, to the knowledge of the Company there are no loans, leases, royalty agreements or other transactions between: (i) the Company or any of its subsidiaries or any of their respective customers or suppliers, and (ii) any officer, employee, consultant or director of the Company or any person owning five percent (5%) or more of the capital stock of the Company or five percent (5%) or more of the ownership interests of the Company or any of its subsidiaries or any member of the immediate family of such officer, employee, consultant, director, stockholder or owner or any corporation or other entity controlled by such officer, employee, consultant, director, stockholder or owner, or a member of the immediate family of such officer, employee, consultant, director, stockholder or owner.


 


(mm)           No Brokers. Except as disclosed herein, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person with respect to the Offering. To the knowledge of the Company, the Subscriber shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated herein that may be due in connection with the transactions contemplated by the Offering.


 


(nn)           Internal Controls. The Company is in compliance with the provision of the Sarbanes-Oxley Act of 2002 currently applicable to the Company.


 


(oo)           FCPA Matters. Neither the Company, nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his or her actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic governmental or private official or person.


 






  





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(pp)           Non-Public Information. The Company has not disclosed to the Subscriber any information that would constitute material non-public information other than the existence of the transactions contemplated hereby.


 


(qq)           Disclosure. All disclosure provided to the Subscriber or Andean regarding the Company, its business and the transactions contemplated hereby, furnished by or on behalf of the Company, were, as of the date made, true and correct and did not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.


 


(rr)           Survival. The representations, warranties and covenants of the Company shall survive the Final Closing and shall continue in full force and effect for the benefit of the Subscriber for a period of one (1) year following the Final Closing, all in accordance with this Agreement.


 


(ss)           No Undisclosed Events, Liabilities, Developments or Circumstances. Except for the transactions contemplated hereby, no event, liability, development or circumstance has occurred or exists, or is contemplated to occur, with respect to the Company, its business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.


 


(tt)           Use of Proceeds. The Company hereby covenants to use the monies raised from the Offering only as described in the “Use of Proceeds” section, attached hereto as Exhibit C.


 


(uu)           The Company certifies that each of the foregoing representations and warranties set forth in this Section 3.2 are true as of the date hereof and shall survive such date.


 


4.           Indemnification. The parties hereto understand that the Securities are being offered in reliance upon representation, warranties and covenants of each of the parties hereto, the exemptions under applicable securities laws; that the availability of such exemptions are, in part, dependent upon the truthfulness and accuracy of the representations made by the undersigned herein; that the Company will rely on such representations in accepting any subscriptions for the Securities, and that the Company may take such steps as it considers reasonable to verify the accuracy and truthfulness of such representations in advance of accepting or rejecting the undersigned’s subscription. The undersigned agrees to indemnify and hold harmless the Company against any reasonable damage, loss, expense or cost, including reasonable attorneys’ fees, sustained as a result of any misstatement or omission on the undersigned’s part in this Agreement.


 






  





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5.           No Waiver. Notwithstanding any of the representations, warranties, acknowledgments or agreements made herein by the undersigned, the undersigned does not thereby, or in any manner, waive any rights granted to him under applicable securities laws.


 


6.           Revocation. The undersigned agrees that he or she shall not cancel, terminate or revoke this Agreement or any agreement of the undersigned made hereunder, and this Agreement shall survive the death or disability of the undersigned.


 


7.           Termination of Agreement. If the Company elects to cancel this Agreement, provided that it returns to the undersigned, without interest and without deduction, all sums paid by the undersigned, this Offering shall be null and void and of no further force and effect, and no party shall have any rights against any other party hereunder.


 


8.           Risks of New Business. The undersigned has been advised that the Company is preparing to engage in mineral exploration operations and has commenced limited business operations to date and generated limited revenues. The Company will be subject to all of the risks inherent in a developing mining business and there is no assurance that the Company will succeed, become profitable or that investors in the Company will receive a return on all or any part of their investment. Moreover, mineral exploration operations are significantly volatile and uncertain, and there is no assurance that the market for metals explored for will be sustained.


 


THIS IS A HIGHLY SPECULATIVE INVESTMENT THAT SHOULD NOT BE MADE BY ANYONE WHO CANNOT AFFORD TO SUSTAIN A LOSS OF HIS ENTIRE INVESTMENT.


 


9.           Miscellaneous.


 


9.1           All notices or other communications given or made hereunder shall be in writing and shall be mailed by registered or certified mail, return receipt requested, postage prepaid, to the undersigned at their address set forth below and to the Company.


 


9.2           This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by all parties.


 


9.3           The provisions of this Agreement shall survive the execution thereof.


 


9.4           This Agreement shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. The parties further:  (a) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in any Federal or State court of competent jurisdiction within the State of New York, (b) waive any objection that they may have now or hereafter to the venue of any such suit, action or proceeding, and (c) irrevocably consent to the in personam jurisdiction of any Federal or State court of competent jurisdiction within the State of New York in any such suit, action or proceeding. The parties each further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in a Federal or State court of competent jurisdiction within the State of New York, and that service of process upon the parties mailed by certified mail to their respective addresses shall be deemed in every respect effective service of process upon the parties, in any action or proceeding.


 






  





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10.           Collection of Personal Information.  The undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) acknowledges and consents to the fact the Company is collecting the undersigned’s (and any beneficial purchaser’s) personal information for the purpose of completing the undersigned’s subscription.  The undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) acknowledges and consents to the Company retaining the personal information for as long as permitted or required by applicable law or business practices.  The undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) further acknowledges and consents to the fact the Company may be required by applicable securities laws and stock exchange rules to provide regulatory authorities any personal information provided by the undersigned respecting itself (and any beneficial purchaser).  The undersigned hereby acknowledges and consents to the fact that (i) the undersigned’s (and any beneficial purchaser’s) personal information is being collected indirectly by securities regulatory authorities, including the Ontario Securities Commission, under the authority granted to such authorities in applicable securities legislation; and this information is being collected for the purposes of the administration and enforcement of the applicable securities legislation.  The undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) hereby acknowledges that the public official in Ontario who can answer questions about the Ontario Securities Commission’s indirect collection of such information is the Administrative Assistant to the Director of Corporate Finance, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8, who may be contacted at (416) 593-8086.  By executing this Agreement, the undersigned is deemed to be consenting to the foregoing collection, use and disclosure of the undersigned’s (and any beneficial purchaser’s) personal information.  The undersigned also consents to the filing of copies or originals of any of the undersigned’s documents described herein as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby.  The undersigned represents and warrants that it has the authority to provide the consents and acknowledgments set out in this paragraph on behalf of all beneficial purchasers.


 


11.           Not Proceeds of Crime.  The undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) represents and warrants that the funds representing the Subscription Proceeds which will be advanced by the undersigned to the Company hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the “PCMLA”) and the undersigned (on its own behalf and, if applicable, on behalf of any person for whose benefit the undersigned is subscribing) acknowledges that the Company may in the future be required by law to disclose the undersigned’s name and other information relating to this Agreement and the undersigned’s subscription hereunder, on a confidential basis, pursuant to the PCMLA.  To the best of its knowledge (a) none of the subscription funds to be provided by the undersigned (i) have been or will be derived from or related to any activity that is deemed criminal under the law of Canada, the United States of America, or any other jurisdiction, or (ii) are being tendered on behalf of a person or entity who has not been identified to the undersigned, and (b) it shall promptly notify the Company if the undersigned discovers that any of such representations ceases to be true, and to provide the Company with appropriate information in connection therewith.


 






  





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12.           Certification.  The undersigned has read this entire Agreement and certifies that every statement on the part of the undersigned is true and complete.


 







 


[Remainder of page intentionally left blank]


 






  





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IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date their signature has been subscribed and sworn to below.


 


DATED as of this _____ day of ____________, 2011.


 



	
Number of Units to be purchased at U.S. $0.20 each:

	  	  
	
Aggregate Subscription Proceeds:

	
$

	  
	
Name (full legal name of subscriber):

	  	
 





(print name of subscriber)


 


	
Address of subscriber

	  	
 











  






  








(address, including postal code)


 








(telephone number)


 






(facsimile number) 


 








 (e-mail address)


 


By: ________________________________________________________________________________________________________


(signature)


 






(if corporation, print name of authorized signatory)


 






(official capacity)


 






(social insurance number or federal corporate/business account number)


 











  





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ACCEPTED as of the ________________ day of ____, 2011.


 


PAN AMERICAN GOLDFIELDS LTD.


 


 


 


 












 



	  	  	
Shares Issued:  


	
By: _________________________________________________________


Name:             Miguel Di Nanno


Title:             President


 

	  	
 


Warrants Issued:  ____________

















 






  





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FORM OF SUBSCRIPTION


 







 



	
TO:

	
Pan American Goldfields Ltd.







Mountain View Center


12303 Airport Way, Suite 200


Broomfield, CO. 80021







Attention:  Miguel Di Nanno, President:







The undersigned Holder of the within Warrants hereby subscribes for ____________ common shares (the “Shares”) of Pan American Goldfields Ltd. (the “Company”) pursuant to the Warrants within at US$0.30 per share on the terms specified in said Warrants. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.


 


This subscription is accompanied by a certified cheque or bank draft payable to or to the order of the Company for the aggregate purchase price of the Shares.


 


The undersigned represents that, at the time of the exercise of these Warrants, all of the representations and warranties contained in the Subscription Agreement between the Company and the undersigned pursuant to which these Warrants were issued are true and accurate.


 


The undersigned hereby directs that the Shares be registered as follows:


 



	
NAME(S) IN FULL

	  	
ADDRESS(ES)

	  	
NUMBER OF SHARES


	  	  	  	  	  
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	  	  	
TOTAL:

	  	  










 


(Please print full name in which share certificates are to be issued, stating whether Mr., Mrs. or Miss as applicable).


 


DATED this ________  day of __________________ , ______.


 


In the presence of:


 






  





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Signature of Witness

	  	
Signature of Warrant Holder







 


Please print your name and address in full below.


 


Name (Mr./Mrs./Miss)


 


Address  _________________________________________________________________________


 


           _________________________________________________________________________


 







 






  





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INSTRUCTIONS FOR SUBSCRIPTION


 


The signature to the subscription must correspond in every particular with the name written upon the face of the Warrant without alteration or enlargement or any change whatever. If there is more than one subscriber, all must sign. In the case of persons signing by agent or attorney or by personal representative(s), the authority of such agent, attorney or representative(s) to sign must be proven to the satisfaction of the Company. If the Warrant certificate and the form of subscription are being forwarded by mail, registered mail must be employed.


 






  





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EXHIBIT B


 


INSTRUCTIONS FOR WIRING FUNDS


 







 



	
 


For the Benefit of:


 


DLA Piper US LLP Trust Account - Pan American Goldfields Ltd.


 


Bank Name:  Union Bank of California


 


ABA Number: 122000496


 


Swift code: BOFCUS33MPK


 


Account Number: 6470017579


 


Account Name: DLA Piper LLP (US)


 


DLA Piper US LLP Trust Account


 


Bank Address: 400 University Avenue Palo Alto, CA 94301


 


Contact Information:


 


DLA Piper LLP (US), Atten: Jeffery Thacker


 


Address: 4365 Executive Drive, Suite 1100


San Diego, California 92121


 












 






  





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EXHIBIT C


 


USE OF PROCEEDS


 







 



	
Name

	
Amount

	 	
Reason


	  	  	  	 	  
	
Equity financing

	
$

	
500,000

	 	  
	
Total cash inflows

	  	
500,000

	 	  
	  	  	  	 	  
	  	  	  	 	  
	
Acquisition of exploration property

	  	
150,000

	 	  
	
Geological work

	  	
120,000

	 	  
	
Consultants' fee, legal, travel and related costs

	  	
30,000

	 	
Due diligence on prospective exploration property acquisition


	
General administration

	  	
100,000

	 	  
	
Total cash outflows

	
$

	
400,000

	 	  
	  	  	  	 	  
	
Working capital

	
$

	
100,000

	 	  
	  	  	  	 	  
	  	  	  	 	  
	  	  	  	 	  
	
Total

	
$

	
500,000

	 	  















 






  





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EXHIBIT D


 







 


TECHNICAL REPORT SUMMARY


 


GEOLOGY AND MINERAL RESOURCES


 


CIENEGUITA PROJECT


 


CHIHUAHUA, MEXICO


 







 



	
1.0

	
EXECUTIVE SUMMARY












This technical report was prepared by Delve Consultants at the request of PAN AMERICAN GOLDFIELDS LTD. (“Panam”) (formerly, Mexoro Minerals Limited), a United States (Delaware) corporation, listed on the Over The Counter Bulletin Board as MXOM, in connection with its filings with British Columbia Securities Commission. The report was written in compliance with disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101, Companion Policy 43-101CP, and Form 43-101F1. The resource estimate contained in Section 17.8 for the Cieneguita deposit was prepared by P & E Mining Consultants, Inc in April 2010. No mineral reserves were estimated. Mr. Durgin, Mr. Wood, Mr. Puritch and Mr. Yassa (the authors) are qualified persons under Canadian Securities ministrators’ National Instrument 43-101. The authors have independently investigated the data provided to them by Pan American Goldfields Limited to the extent deemed necessary in their professional judgment for him to be able to reasonably rely on this information.







1.1 Introduction







The Cieneguita project is located southwestern Chihuahua in northern Mexico, and is 375 km by road from the state capital, Chihuahua City. The project is about 30 km south of the town of Cerocahui, adjacent to the village of Cienequita. It is part of the Sierra Madre Occidental silver-gold belt. The centre of the property is located at latitude 27 degrees 8 minutes North and longitude 108 degrees 12 minutes (WGS 1984, UTM zone 12, 3003848N, 795718E).







1.2 Geology and Mineralization







At the Cieneguita project, disseminated gold-silver-lead-zinc mineralization is hosted by a diatreme breccia, which has the appearance of a coarse, poorly sorted, poorly consolidated felsic tuff. Disseminated pyrite, galena, sphalerite and chalcopyrite are spatially associated with widespread sericitic and peripheral argillic alteration. The diatreme body has the appearance of a flattened funnel, approximately 1200 meters long and 200 meters wide, and dips nearly vertically. Host rocks are andesitic volcanic rocks of lower Tertiary age. This is the first mineralized diatreme breccia described in the region.











  





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EXHIBIT D (continued)







1.3 Exploration and Mining History







In general, the region has a mining history dating to the early Spanish colonial days. The church at nearby Cerocahui was built in 1620. There was no significant mining activity in the immediate area of Cieneguita until Cominco drilled 51 diamond drill holes (6700m) in 1981 and 1982. Glamis Gold completed drilling programs in 1994 and 1997. From 1995 to 1998, the Cieneguita deposit was a producing gold mine operated by Glamis. From 1995 to 1998, an indicated 197,993 metric tonnes of oxidized ore grading at 2.27 grams per tonne gold (g/t Au) was mined







from the Cieneguita Property. Panam began its ongoing exploration and development program in December 2007.







1.4 Drilling and Sampling







The quality and technical specifications of sampling techniques and procedures of any drilling done prior to that of Panam are not well known. The precise hole locations of most of the earlier


generations of drilling cannot be ascertained with certainty due to mining activity and the passage of time having erased much of the prior survey grid. Panam initiated a diamond drilling program in December 2008, using GDA Servicios Mineros, as the contractor. The program was completed late in 2009 using two drill rigs. A total of 20,733 meters of HQ (2.5 inch core) drilling was completed in 103 drill holes. Core recovery has been excellent. All of the core in each hole has been photographed, logged in detail, split, sampled, and assayed by Chemex Laboratory for silver and gold as well as a suite of trace elements. In the area which has become the # 3 Pit, a program of closely spaced shallow ore definition drilling was completed in the second quarter of 2009. This program contained 133 holes, also HQ in size, for a total of 5420 meters.







1.5 Metallurgical Testing







Panam has processed more than 17,700 tons of material testing bulk sulfide flotation methods in


Minera Rio Tinto’s mill in Choix, Sinaloa, described in detail in Section 16. This testing was focused on achieving the best gold and silver recoveries for the in-house mineralization estimate in the # 3 Pit, currently being mined, with little emphasis on the base metals. Recoveries on the order of 95% of the gold and 85% of the silver seem achievable. Bench scale flotation testing was also done with the aim of enhancing both base and precious metal recoveries. This will be vital to the larger scale deposit from which recovery of gold, silver, lead, zinc and copper is anticipated. These test showed that, in producing a lead concentrate, a zinc concentrate, and perhaps a pyrite concentrate, very good recoveries will be possible. A conservative estimate of the anticipated metal recoveries is:







Au = 95%, Ag = 83%, Pb = 80%, Zn = 80%, Cu = 75%











  





31











  



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EXHIBIT D (continued)







1.6 Mineral Resource Estimation







There are two separate resource estimates. First, in the spring of 2009 an in-house krigged mineralization estimate was made for the small, higher grade # 3 Pit using a database of 5420 meters of drilling in 133 shallow holes and a few deeper exploration holes. Minesight modeling software was used. The block model is approximately 160 by 100 by 50 meters. Within this, using a density of 2.4 tonnes per cubic meter, and a cutoff grade of 1 g/t AuEq ( EuEq = Au g/t + (Ag g/t / 67), this figure was calculated at 658,451 tonnes at a grade of 1.793 g/t Au and 93.51 g/t Ag, or a gold -equivalent grade of 3.173 g/t. With a pit slope of 45 degrees, the strip ratio was calculated to be 0.59 to 1.







The large scale, lower grade, more formal resource estimate, which is the principal focus of this report, has been completed in a NI 43-101 compliant manner by P & E Mining Consultants, Inc. It is based on 17,833 meters of core drilling in 90 holes with an approximate spacing of 40 meters. The database has been carefully verified. Mining of the larger scale resource will be at a larger scale and include recoveries of all five metals - Au, Ag, Pb, Zn, Cu - as efficiently as possible. From the results of metallurgical testing by Panam and comparison with other projects, estimated metal recoveries used in the modeling are:


Au = 90%, Ag = 83%, Pb = 80%, Zn = 890%, Cu = 75%.







Based on sales of concentrates produced in pre-startup testing of 17,700 tons of material and general guidelines (there are no smelter contracts at this time), the following smelter paybacks are used in the estimate: Au = 95%, Ag = 95%, Pb = 70%, Zn = 70%, Cu = 80%.







24 month trailing average metal prices used are: Au = $945/oz, Ag = $14.75/g, Pb = $0.85/lb, Zn = $0.80/lb, Cu = $2.75.







In defining boundaries of mineralization in the estimation of the resource, mining and processing costs must be included, as well as the above factors. Based on mining engineering studies, assuming production rates of 1000 tons per day, and a 1.5 to 1 stripping ratio, mining and processing costs are estimated to be $24.50 per tonne. Thus the cutoff used for defining ore boundaries was $24.50.
















  





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EXHIBIT D (continued)







Modeling of the larger scale Cieneguita deposit using the drilling database, the price, recovery, and smelter return figures above and Gemcom modeling software produced the following resources:

















1.7 Interpretation and Conclusions







From their review of data provided by Panam, the authors believe that the data generally provide an accurate and reasonable representation of the Cieneguita project. Panam’s exploration program has delineated a gold and silver resource with significant base metal values. These resources are classified as Measured & Indicated and Inferred Resources as defined by CIM. These have been estimated based on detailed and reliable exploration and testing information gathered using appropriate techniques and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Some portion of these resources may be upgraded to Proven and Probable Reserves as more data is obtained, more engineering and economic studies are completed and more sophisticated methods of deposit modeling are applied. It cannot be assumed that all such resources will be converted to Reserves, however the authors believe that such improvements will lead to definition of additional resources or reserves in higher categories for large portions of the deposit.







In addition, the resources described remain somewhat open to the northwest and in depth. The drilling program on which this resource calculation has been based was done at a nominal hole spacing of 40 meters. Additional drilling is clearly warranted both as infill of the known resource in some areas and as additional step-out drilling peripheral to the known resource. This is planned later in 2010.







 







 







 






  





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EXHIBIT 3.2(d)


 


CAPITALIZATION SPREAD SHEET



	 	 	 	 	 	 	 	 	 	 
	  	 	
Number of

	 	 	
Number of

	 	 	
Number of

	 
	  	 	
Shares

	 	 	
Options

	 	 	
Warrants

	 
	  	 	 	 	 	 	 	 	 	 
	
Balance, February 28, 2009

	 	 	31,019,302	 	 	 	4,835,000	 	 	 	7,102,890	 
	
Issued

	 	 	22,734,525	 	 	 	2,060,000	 	 	 	22,887,500	 
	
Cancelled/forfeited

	 	 	-	 	 	 	(335,000	)	 	 	(4,609,490	)
	
Exercised

	 	 	-	 	 	 	-	 	 	 	-	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Balance, February 28, 2010

	 	 	53,753,827	 	 	 	6,560,000	 	 	 	25,380,900	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Issued

	 	 	 	 	 	 	 	 	 	 	 	 
	
    Share subscription - Michael McKnight

	 	 	250,000	 	 	 	-	 	 	 	-	 
	
    Warrants issued to new directors

	 	 	-	 	 	 	-	 	 	 	3,000,000	 
	
Cancelled/forfeited

	 	 	-	 	 	 	(825,000	)	 	 	(2,554,167	)
	
    Options granted - Miguel Di Nanno

	 	 	 	 	 	 	1,000,000	 	 	 	 	 
	
Exercised

	 	 	-	 	 	 	-	 	 	 	-	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Balance, December 31, 2010

	 	 	54,003,827	 	 	 	6,735,000	 	 	 	25,826,733	 





 







 






  





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EXHIBIT 3.2(i)


 


REAL PROPERTY


 







 


Properties owned by Sunburst Mining de Mexico, a 100% subsidiary of Pan American Goldfields Ltd.


 



	
Encino Gordo

	  	  	  
	
Lot Name

	
Title Number

	
Area (Ha)

	
Term of Validity


	  	  	  	  
	
Encino Gordo

	
225277

	
450.00

	
8/12/2005 to 8/11/2055


	
Encino Gordo

	
227125

	
382.00

	
5/17/2006 to 5/16/2056







 


Properties under option agreements with Sunburst Mining de Mexico,


 



	
Cieneguita

	  	  	  
	
Lot Name

	
Title Number

	
Area (Ha)

	
Term of Validity


	  	  	  	  
	
Aurifero

	
196356

	
492.00

	
7/16/1993 to 7/15/2043


	
Aurifero Norte

	
196153

	
60.00

	
7/16/1993 to 7/15/2043


	
Aquilon Uno

	
208339

	
222.11

	
9/23/1998 to 9/22/2048


	
La Maravilla

	
190479

	
48.00

	
4/29/1991 to 4/24/2041







 



	
Encino Gordo

	  	  	  
	
Lot Name

	
Title Number

	
Area (Ha)

	
Term of Validity


	  	  	  	  
	
La Paloma

	
220148

	
100.00

	
6/17/2003 to 6/16/2053


	
El Camuchin

	
220149

	
100.00

	
6/17/2003 to 6/16/2053







 


 


 


 


 







 







 







 







 







 







 






  





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EXHIBIT 3.2(i) (continued)


 


 



	
Machinery and Equipment

	  
	
Description

	
Date


	  	
Acquired


	
Structures and belts

	
2/1/2007


	
Agglomerations and base

	
3/31/2007


	
BHD 8x20 ft. container

	
7/24/2007


	
BHD 8x20 ft. container

	
8/1/2007


	
3 Prefab metal containers

	
11/20/2007







 



	
Transportation Equipment

	  
	
Description

	
Date


	  	
Acquired


	
Ford F-250 20355

	
4/29/2006


	
Ford F-250 20503

	
4/25/2006


	
Ford Lobo Deducible81850

	
8/26/2006


	
Housing trailer 0772

	
11/1/2006


	
Housing trailer 23361

	
11/1/2006


	
Ford F-250 Diesel 43477

	
6/26/2007


	
Ford F-250 30517

	
7/30/2007


	
Ford F-250 4X4 29899

	
6/5/2008







 







 







 







 






  





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SCHEDULE A


 


ALL SUBSCRIBERS


 


REGISTRATION AND DELIVERY INSTRUCTIONS


 



	
1.

	
Delivery:  Please deliver the certificates representing the Securities to:


 















Name


 


Account reference, if applicable


 


Contact name


 


Address, including postal code


 


Telephone number


 



	
2.

	
Registration:  The certificates representing the Securities which are to be delivered by the Company should be registered as follows:


 















Name


 


Account reference, if applicable




 



	
 

	
 







 






Address, including postal code


 


Words and terms herein with the initial letter or letters thereof capitalized and defined in the Agreement shall have the meanings given to such capitalized words and terms in the Agreement.


 











  





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SCHEDULE B


 


ELIGIBILITY CERTIFICATE


 




	
TO:

	
Pan American Goldfields Ltd.  (the “Company”)














In connection with the purchase of units of common stock and warrants in the capital of the Company (the “Units”) by the undersigned subscriber or, if applicable, the principal on whose behalf the undersigned is purchasing as agent (the “Subscriber” for the purposes of this Schedule B), the Subscriber hereby represents, warrants, covenants and certifies to the Company that:


 



	
1.

	
the Subscriber is a resident in a province or territory of Canada or is subject to the laws of a province or territory of Canada;







 



	
2.

	
the Subscriber is purchasing the Units as principal for its own account or is deemed to be purchasing as principal pursuant to National Instrument 45-106 - Prospectus and Registration Exemptions (“NI 45-106”);







 



	
3.

	
the Subscriber is an “accredited investor” within the meaning of National Instrument 45-106 by virtue of satisfying one or more of the indicated criterion set out in Appendix A To Schedule B to this Eligibility Certificate; and







 



	
4.

	
upon execution of this Eligibility Certificate by the Subscriber, this Eligibility Certificate (including Appendix A To Schedule B hereto) shall be incorporated into and form a part of the Agreement to which this Eligibility Certificate is attached.







 


DATED:  _______________________, 2009.


 



	  	  	






Print name of Subscriber


 


	  	  	
By:        _____________________________________________________________________________________________________


            Signature


 


             _____________________________________________________________________________________________________


               Print name of Signatory (if different from Subscriber)


 


_____________________________________________________________________________________________________


  Title


	  	  	
_____________________________


	  	  	
_____________________________


	  	  	
_____________________________


	  	  	
Address of Subscriber







 


IMPORTANT:  PLEASE INITIAL ONE OR MORE OF THE ITEMS, AS APPLICABLE, IN APPENDIX A TO SCHEDULE B ON THE NEXT PAGE


 






  





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APPENDIX A TO SCHEDULE B


 


The Subscriber hereby represents, warrants and certifies to the Company that the Subscriber (or its disclosed principal) is an “accredited investor” as defined in National Instrument 45-106 by virtue of being:  [initial appropriate item(s) below]


 



	
_____

	
(a)        a Canadian financial institution, or a Schedule III bank;


	 	 
	
_____

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


	 	 
	
_____

	
(c)        a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;


	 	 
	
_____

	
(d)        a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);


	 	 
	
_____

	
(e)        an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);


	 	 
	
_____

	
(f)          the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly-owned entity of the Government of Canada or a jurisdiction of Canada;


	 	 
	
_____

	
(g)        a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;


	 	 
	
_____

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


	 	 
	
_____

	
(i)          a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;


	 	 
	
_____

	
(j)          an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;


	 	 
	
_____

	
(k)         an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;











  





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_____

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


	 	 
	
_____

	
(m)       a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;


	 	 
	
_____

	
(n)        an investment fund that distributes or has distributed its securities only to


 


(i)       a person that is or was an accredited investor at the time of the distribution;


 


(ii)      a person that acquires or acquired securities in the circumstances referred to in sections 2.10 and 2.19 of National Instrument 45-106; or


 


(iii)     a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 of National Instrument 45-106.


	 	 
	
_____

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


	 	 
	
_____

	
(p)        a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully-managed account managed by the trust company or trust corporation, as the case may be;


	 	 
	
_____

	
(q)         a person acting on behalf of a fully-managed account managed by that person, if that person


 


(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


	 	 
	
_____

	
(r)         a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;


	 	 
	
_____

	
(s)         an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;











  





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_____

	
(t)         a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;


	 	 
	
_____

	
(u)        an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; or


	 	 
	
_____

	
(v)        a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Quebec, the regulator as


 


(i)       an accredited investor, or


 


(ii)      an exempt purchaser in Alberta or British Columbia after National Instrument 45-106 comes into force.












 


NOTE: A summary of the meanings of some terms used in the Accredited Investor Questionnaire follows the signature block below.


 







DATED:  _______________________, 2011.


 



	  	  	







Print name of Subscriber


 


	  	  	
By:        ______________________________________________________________________________________________________


Signature


 


           ______________________________________________________________________________________________________


           Print name of Signatory (if different from Subscriber)


 


______________________________________________________________________________________________________



Title




 


	  	  	
_____________________________


	  	  	
_____________________________


	  	  	
_____________________________


	  	  	
Address of Subscriber


	  	  	  










 







 






  





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For the purposes hereof:


 



	
(a)        “Canadian financial institution” means


 


(i)         an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or


 


(ii)         a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada.


 


	
(b)        “control person” has the same meaning as in securities legislation except in Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island and Quebec where control person means any person that holds or is one of the combination of persons that holds:


 


(i)          a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or


 


(ii)         more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of the issuer;


 


	
(c)        “director” means


 


(i)          a member of the board of directors of a company or an individual who performs similar functions for a company, and


 


(ii)         with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company;


 


	
(d)        “eligibility adviser” means


 


(i)          a person that is registered as an investment dealer or in an equivalent category of registration under the securities legislation of the jurisdiction of a purchaser and authorized to give advice with respect to the type of security being distributed, and


 


(ii)         in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not:


 


(A)        have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders, or control persons; and


 


(B)        have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months.





 


 


 




  





42











  






 


 


 


 


	
(e)       “eligible investor” means


 


(i)         a person whose


 


(A)       net assets, alone or with a spouse, in the case of an individual, exceed $400,000;


 


(B)       net income before taxes exceeded $75,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year; or


 


(C)       net income before taxes, alone or with a spouse, in the case of an individual, exceeded $125,000 in each of the 2 most recent calendar years and who reasonably expects to exceed that income level in the current calendar year.


	 
	
(ii)         a person of which a majority of the voting securities are beneficially owned by eligible investors or a majority of the directors are eligible investors;


	 
	
(iii)        a general partnership of which all of the partners are eligible investors;


	 
	
(iv)        a limited partnership of which the majority of the general partners are eligible investors;


	 
	
(v)         a trust or estate in which all of the beneficiaries or a majority of the trustees or executors are eligible investors;


	 
	
(vi)        an accredited investor;


	 
	
(vii)       a person described in section 2.5 [family, friends and business associates] of National Instrument 45-106; or


	 
	
(viii)      a person that has obtained advice regarding the suitability of the investment and, if the person is resident in a jurisdiction of Canada, that advice has been obtained from an eligibility adviser.


	 
	
(f)       “EVCC” means an employee venture capital corporation that does not have a restricted constitution and is registered under Part 2 of the Employee Investment Act (British Columbia) and whose business objective is making multiple investments.


	 
	
(g)      “executive officer” means, for an issuer, an individual who is


 


(i)         a chair, vice chair or president;


 


(ii)        a vice president in charge of a principal business unit, division or function, including sales, finance or production;


 


(iii)       an officer of the issuer or any of its subsidiaries and who performs a policy-making function in respect of the issuer; or


 


(iv)       performing a policy-making function in respect of the issuer.


 


	
(h)        “financial assets” means


 


(i)         cash;


 


(ii)        securities; or


 


(iii)       a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation.


 


	
(i)         “foreign jurisdiction” means a country other than Canada or a political subdivision of a country other than Canada.


 


	
(j)         “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.


 


	
(k)        “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.


	 
	
(l)         “jurisdiction” means a province or territory of Canada except when used in the term foreign jurisdiction.


	 
	
(m)       “investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an EVCC and VCC.


	 
	
(n)        “local jurisdiction” means the jurisdiction in which the Canadian securities regulatory authority is situate.





 


 


 




  





43











  






 


 


	
(o)       “non-redeemable investment fund” means an issuer:


(i)         whose primary purpose is to invest money provided by its securityholders;


 


(ii)         that does not invest;


 


(A)       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


 


(B)       for the purpose of being actively involved in the management of any issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund.


 


(iii)        that is not a mutual fund.


 


	
(p)       “person” includes:


 


(i)        an individual;


 


(ii)       a corporation;


 


(iii)      a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and


 


(iv)       an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative.


 


	
(q)       “regulator” means, for the local jurisdiction, the Executive Director as defined under securities legislation of the local jurisdiction.


 


	
(r)       “related liabilities” means


 


(i)       liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or


 


(ii)      liabilities that are secured by financial assets.


 


	
(s)       “spouse” means, an individual who


 


(i)       is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual;


 


(ii)      is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender; or


 


(iii)     in Alberta, is an individual referred to in paragraph (a) or (b), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta).


 





 


 


 




  





44











  






 


 


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


 


	
(u)       “VCC” means a venture capital corporation registered under Part 3 of the Small Business Venture Capital Act (British Columbia) whose business objective is making multiple investments.












 






  





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SCHEDULE C


 



	
RISK ACKNOWLEDGMENT


Saskatchewan Close Personal Friends and Close Business Associates


I acknowledge that this is a risky investment:


·I am investing entirely at my own risk.


·No securities regulatory authority has evaluated or endorsed the merits of these securities.


·I will not be able to sell these securities for 4 months.


·I could lose all the money I invest.


·I do not have a 2-day right to cancel my purchase of these securities or the statutory rights of action for misrepresentation I would have if I were purchasing the securities under a prospectus.


 


I am investing $____________ [total consideration] in total; this includes any amount I am obliged to pay in future.


 


I am a close personal friend or close business associate of ____________ [state name], who is a ____________ [state title - founder, director, executive officer or control person] of ____________ [state name of issuer or its affiliate - if an affiliate state “an affiliate of the issuer” and give the issuer’s name].


 


I acknowledge that I am purchasing based on my close relationship with ____________ [state name of founder, director, executive officer or control person] whom I know well enough and for a sufficient period of time to be able to assess her/his capabilities and trustworthiness.


 


I acknowledge that this is a risky investment and that I could lose all the money I invest.


   


________________________________                    _______________________________________________


Date                                                                                        Signature of Subscriber


 


_______________________________________________  


Print name of Subscriber


 


Sign 2 copies of this document.  Keep one copy for your records.


 












 


W A R N I N G







 






  





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You are buying Exempt Market Securities.


 


They are called exempt market securities because two parts of securities law do not apply to them.  If an issuer wants to sell exempt market securities to you:


 



	
•

	
the issuer does not have to give you a prospectus (a document that describes the investment in detail and gives you some legal protections), and








	
•

	
the securities do not have to be sold by an investment dealer registered with a securities regulatory authority.







 


You may not receive any written information about the issuer or its business.


 


If you have any questions about the issuer or its business, ask for written clarification before you purchase the securities.  You should consult your own professional advisers before investing in the securities.


 


Unless you consult your own professional advisers, you will not get professional advice about whether the investment is suitable for you.


 


For more information on the exempt market, refer to the Saskatchewan Financial Services Commission’s website at http://www.sfsc.gov.sk.ca.


 


[Instruction:  The Subscriber must sign 2 copies of this form.  The Subscriber and the issuer must each receive a signed copy.]


 


 













47