Document:

exhibit_10-1a.htm

EXHIBIT 10.1a

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES LAWS, AND ARE PROPOSED TO BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.  SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.

 

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY OFFERED HEREBY MUST NOT TRADE THE SECURITY BEFORE [FOUR MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE].

 

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITY OFFERED HEREBY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER THE COUNTER MARKET ARE MET.

 

 

ZORO MINING CORP.

 

 

 

SUBSCRIPTION AGREEMENT FOR UNITS

By

THE UNDERSIGNED SUBSCRIBER

 

THE UNITS BEING OFFERED FOR SALE MAY ONLY BE PURCHASED BY SUBSCRIBERS IN THE UNITED STATES OF AMERICA, BY SUBSCRIBERS IN CANADA AND BY SUBSCRIBERS IN EUROPE

INSTRUCTIONS

 

A.           All Subscribers:

 

Complete and sign the Execution Page of the Subscription Agreement.

 

Complete and sign Schedule “B” attached to the Subscription Agreement and Appendix 1 attached thereto (Schedule “B” must be completed by all subscribers, including United States subscribers).

 

B.           United States Subscribers only:

 

Persons in the United States and U.S. Persons (as such terms are defined in Regulation S under the 1933 Act) should also complete and sign Schedule “C” attached to the Subscription Agreement.

 

A completed and originally executed copy of, and the other documents required to be delivered with, this Subscription Agreement, be, unless otherwise directed by the Corporation together with payment for the exact subscription price for such Units by way of either (i) a banker’s draft or certified check for the subscription price payable to the Corporation or (ii) by wire transfer to the Corporation pursuant to the following wiring instructions:

 

  

 

  

	 	
Beneficiary Bank Name: 

	
Bank of America

 

	 	
Beneficiary Bank Address:

	
6401 North Campbell Avenue, Tucson, Arizona  85718

	 	
Beneficiary Bank Routing Number

	
122101706

	 	
Beneficiary Bank Account Name:

	
Zoro Mining Corp

	 	
Beneficiary Bank Account No.: 

	
457012048506

	 	
Beneficiary Bank Swift Code:

	
BOFMCAM2

In this regard, and should the Subscriber’s subscription and/or subscription price payment be submitted to the Corporation’s Counsel, in trust or otherwise (as above in respect to the wire transfer), then the Subscriber agrees that the Corporation’s Counsel shall have no accountability to the Subscriber whatsoever and acknowledges that the Corporation’s Counsel is merely a recipient for the Corporation and has no obligation of any nature to the Subscriber.  The Subscriber agrees that submission of the subscription price to the Corporation’s Counsel in trust is to be deposited into the trust account of the Corporation and shall be the property of the Corporation immediately.  The Corporation’s Counsel shall have the right to transact the subscription price monies solely at the direction of the Corporation or its agents and the Corporation’s Counsel shall require no instruction from the Subscriber.  Under no circumstances shall the Corporation’s Counsel be considered to be giving legal or other advice or services to the Subscriber and no communication between the Subscriber and the Corporation’s Counsel shall be considered advice (at the most only administrative subscription assistance on behalf of the Corporation) and the Subscriber shall rely solely and exclusively on the Subscriber’s own judgment and the advice of the Subscriber’s own counsel.

__________

 

  

 

  

SUBSCRIPTION AGREEMENT FOR UNITS

 

To:                      Zoro Mining Corp.

 

The undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase the number of Units (as hereinafter defined; and each of which consists of one share of common stock and one-half  share purchase warrants) of Zoro Mining Corp. (the “Corporation”) set forth below for the aggregate purchase price set forth below, representing a purchase price of US$0.15 per Unit, upon and subject to the terms and conditions set forth in the following pages of this subscription agreement (together with the attached Terms and Conditions of Subscription for Units and the Schedules, collectively, referred to herein as the “Subscription Agreement” or the “Agreement”).  In addition to this Execution Page, the Subscriber must also complete all applicable Schedules which form part of this Subscription Agreement.

ACCEPTANCE:  The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement and the Corporation represents and warrants to the Subscriber that the representations and warranties contained in this Subscription Agreement are true and correct in all material respects as of the Closing Date (as hereinafter defined) and that the Subscriber is entitled to rely thereon.

__________________, 2011.

 

	
ZORO MINING CORP.

 

By:                                                                    

Authorized Signatory

	  	
Subscription No:

__________

 

Execution Page

  

 

  

TERMS AND CONDITIONS OF SUBSCRIPTION FOR UNITS

 

	
1.

	
Definitions

 

In this Agreement, unless the context otherwise requires:

 

	 	
(a) 

	
“1933 Act” means the United States Securities Act of 1933, as amended;

 

	
  

	
(b)

	
“Agreement” or “Subscription Agreement” means this subscription agreement, including all Schedules hereto, as the same may be amended, supplemented or restated from time to time;

 

	
  

	
(c)

	
“Business Day” means a day on which Canadian chartered banks are open for the transaction of regular business in the City of Vancouver, British Columbia, Canada;

 

	 	
(d) 

	
“Closing” means the closing of the purchase and sale of the Offered Securities;

 

	 	
(e) 

	
“Closing Date” means November 15, 2011, or such other date as the Corporation may agree;

 

	
  

	
(f)

	
“Common Shares” means the shares of common stock of the Corporation, par value US$0.001 per share, as constituted on the date hereof;

 

	
  

	
(g)

	
“Company Reports” means each current annual information form, management information circular, press release, technical report, and material change report and the Corporation’s most recent annual and interim consolidated financial statements and the notes thereto and the related management’s discussion and analysis filed on SEDAR;

 

	
  

	
(h)

	
“Corporation” means Zoro Mining Corp., a corporation incorporated under the laws of the State of Nevada and includes any successor corporation thereto;

 

	 	
(i) 

	
“Exchange” means the FINRA Over-the-counter Bulletin Board;

 

	
  

	
(j)

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

 

	 	
(k) 

	
“Offered Securities” means the Units of the Corporation offered for sale by the Corporation;

 

	
  

	
(l)

	
“Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of whatsoever nature or kind;

 

	
  

	
(m)

	
“Public Record” means the Corporation’s annual report on Forms 10-KSB, 10-K, quarterly reports filed on Form 10-Q and current reports filed on Form 8-K;

 

	 	
(n) 

	
“Purchase Price” means US$0.15 per Unit;

 

	
  

	
(o)

	
“Purchased Securities” means the Offered Securities purchased by the Subscriber pursuant to this Subscription Agreement;

 

	 	
(p) 

	
“Regulation D” means Regulation D under the 1933 Act;

 

	 	
(q) 

	
“Regulation S” means Regulation S under the 1933 Act;

 

	 	
(r) 

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

 

	
  

	
(s)

	
“Securities Laws” means the securities legislation and regulations of, and the instruments, policies, rules, orders, codes, notices and published interpretation notes of the applicable securities regulatory authority or applicable securities regulatory authorities of, the applicable jurisdiction or jurisdictions;

 

	
  

	
(t)

	
“Subscriber” or “you” means the Person purchasing the Purchased Securities and whose name appears on the Execution Page hereof;

 

	 	
(u) 

	
“United States” means the “United States” as that term is defined in Regulation S;

 

	
  

	
(v)

	
“U.S. Accredited Investor” means an “accredited investor” as that term is defined in Rule 501(a) of Regulation D;

 

  

1

  

	
  

	
(w)

	
“U.S. Person” means a “U.S. person” as that term is defined in Regulation S;

 

	
  

	
(x)

	
“U.S. Subscriber” means: (i) any Person purchasing the Offered Securities in the United States; (ii) any U.S. Person; (iii) any Person purchasing the Offered Securities on behalf of any Person in the United States or any U.S. Person; (iv) any Person that receives or received an offer for the Offered Securities while in the United States; or (v) any Person that is in the United States at the time the buy order was made or the Subscription Agreement was executed; provided, however, that a U.S. Subscriber shall not include any person who has any discretionary or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. Person by a professional fiduciary resident in the United States;

 

	
  

	
(y)

	
“Warrants” means the transferable share purchase warrants issued as part of the Units, each of which whole Warrant being exercisable to purchase one Warrant Share at a price of US$0.25 per Warrant Share, expiring at 5:00 p.m. (Vancouver, British Columbia, time) on the date which is two years from the Closing Date; and

 

	 	
(z) 

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

 

	
2.

	
The Offering

 

This Subscription Agreement confirms your agreement to purchase from the Corporation, subject to the terms and conditions set forth herein, that number of Units, at the price of US$0.15 per Unit (the “Purchase Price”), set out beside your name on the Execution Page hereof (the “Purchased Securities”).  Each Unit consists of ONE share of common stock (each a “Common Share”) of the Corporation and ONE-HALF transferable share purchase warrants (each whole warrant being a “Warrant”).  Each whole Warrant is immediately exercisable by the holder thereof to purchase one Common Share (each a “Warrant Share”) at an exercise price of US$0.25 per Warrant Share, expiring at 5:00 p.m. (Vancouver, British Columbia, time) on the date that is two years from the date of Closing.  You acknowledge (on your own behalf and, if applicable, on behalf of each beneficial purchaser for whom you are contracting hereunder) that the Purchased Securities form part of a larger offering (the “Offering”) of Units (each an “Offered Security” and collectively, the “Offered Securities”) of up to approximately US$1,500,000, which Offered Securities are being offered on a private placement basis to Persons resident in Canada, the United States and Europe.  A term sheet with respect to the offering of the Offered Securities is attached hereto as Schedule “A”.

 

	
3.

	
Conditions of Purchase

 

In connection with your purchase of the Purchased Securities, the following documents are enclosed herewith which you are requested to complete, sign as indicated and return together with an executed copy of this Agreement (see “Execution Page”) as soon as possible:

 

	
  

	
(a)

	
Schedule “B”, being the Certificate of Accredited Investor Status under NI 45-106; and

 

	
  

	
(b)

	
if you are or, if applicable, the beneficial person for whom you are contracting hereunder is, a U.S. Subscriber, Schedule “C”, being the Certificate for U.S. Accredited Investors.

 

The obligation of the Corporation to sell the Purchased Securities to you is subject to, among other things, the conditions that:

 

	
  

	
(a)

	
you execute and return all documents required by applicable Securities Laws, including the forms set out in Schedules “B” and “C” attached hereto, as applicable, to the Corporation’s direction herein or otherwise, as the offer and sale of the Purchased Securities by the Corporation to you will not be qualified or registered under applicable Securities Laws;

 

	
  

	
(b)

	
the representations and warranties made by you herein are true and correct when made and are true and correct on the Closing Date with the same force and effect as if they had been made on and as of such date;

 

	
  

	
(c)

	
all covenants, agreements and conditions contained in this Agreement to be performed by you on or prior to the Closing Date shall have been performed or complied with; and

 

	
  

	
(d)

	
all necessary regulatory approvals being obtained prior to the Closing Date.

 

  

2

  

	
  

	
By returning this Agreement you consent to the filing by the Corporation of all documents required by applicable Securities Laws.

 

If you are not subscribing for the Purchased Securities for your own account and you are not a portfolio manager purchasing as agent for accounts which are fully managed by you, each beneficial purchaser for whom you are contracting hereunder must be purchasing the Purchased Securities as principal for its own account and (unless you are an authorized agent with power to sign on behalf of the beneficial purchaser) must execute all documents required by applicable Securities Laws with respect to the Purchased Securities being acquired by each such purchaser as principal.  If you are signing as agent or pursuant to a power of attorney for the Subscriber, you have authority to bind the Subscriber.

 

You agree, and you agree to cause any beneficial purchaser for whom you are contracting hereunder, to comply with all applicable Securities Laws concerning the purchase of, the holding of, and the resale restrictions applicable to, the Purchased Securities and the Warrant Shares.

 

You acknowledge that the Corporation has the right to close the subscription books at any time without notice and to accept or reject any subscription in its sole discretion.  If this subscription is rejected, in whole or in part, you acknowledge that the unused portion of the aggregate Purchase Price will be returned to you without interest.

 

The obligation of the Subscriber to purchase the Purchased Securities is subject to the Subscriber receiving on the Closing Date each of a Common Share and Warrant certificate representing the Purchased Securities.

 

	
4.

	
The Closing

 

The Closing will be completed at the offices of the Corporation or its counsel at the Corporation’s election, McMillan LLP, Lawyers – Patent & Trade Mark Agents, located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7 (the “Corporation’s Counsel” herein), at such other time or times as the Corporation may agree.

 

Certificates representing the Common Shares and Warrants issued as part of the Purchased Securities will be available for delivery to you at Closing against payment to the Corporation through which you subscribed for the Purchased Securities of the aggregate amount of the Purchase Price for the Purchased Securities in freely transferable United States funds.  Such payment is to be made by way of either (i) a banker’s draft or certified check for the subscription price payable to the Corporation or (ii) by wire transfer to the Corporation pursuant to the wiring instructions set forth on the face page hereof.

 

In this regard, and should the Subscriber’s subscription and/or Purchase Price payment be submitted to the Corporation’s Counsel, in trust or otherwise (as above in respect to the wire transfer), then the Subscriber agrees that the Corporation’s Counsel shall have no accountability to the Subscriber whatsoever and acknowledges that the Corporation’s Counsel is merely a recipient for the Corporation and has no obligation of any nature to the Subscriber.  The Subscriber agrees that submission of the Purchase Price to the Corporation’s Counsel in trust is to be deposited into the trust account of the Corporation and shall be the property of the Corporation immediately.  The Corporation’s Counsel shall have the right to transact the Purchase Price monies solely at the direction of the Corporation or its agents and the Corporation’s Counsel shall require no instruction from the Subscriber.  Under no circumstances shall the Corporation’s Counsel be considered to be giving legal or other advice or services to the Subscriber and no communication between the Subscriber and the Corporation’s Counsel shall be considered advice (at the most only administrative subscription assistance on behalf of the Corporation) and the Subscriber shall rely solely and exclusively on the Subscriber’s own judgment and the advice of the Subscriber’s own counsel.

 

You hereby irrevocably appoint the Corporation to act as your agent for the purpose of acting as your representative at the Closing and hereby appoint the Corporation, with full power of substitution, as your true and lawful attorney in your place or stead to execute in your name and on your behalf all closing receipts and documents required, to complete or correct any errors or omissions in any form or document provided by you, including this Subscription Agreement, to approve any certificate or other document addressed to you, to waive, in whole or in part, any representation, warranty, covenant or condition for your benefit and contained in this Agreement, to terminate or not deliver this Agreement if any condition is not satisfied, in such manner and on such terms and conditions as the Corporation in its sole discretion thereof may determine, and to accept delivery of the certificate representing the Purchased Securities on the Closing Date.

 

  

3

  

5.           Prospectus Exemptions

 

The offer and sale of the Purchased Securities (and, if applicable, the issuance of any Warrant Shares) by the Corporation to you is conditional upon such offer, sale or issuance being exempt from the requirements as to the filing of a prospectus or registration statement, and as to the preparation of an offering memorandum or similar document contained in any statute, regulation, instrument, rule or policy applicable to the offer and sale of the Purchased Securities (and, if applicable, the offer and sale of any Warrant Shares) or upon the issue of such orders, consents or approvals as may be required to permit such sale or issuance without the requirement of filing a prospectus or registration statement, or delivering an offering memorandum or similar document.

 

You acknowledge and agree that:

 

	
  

	
(a)

	
you have, or any beneficial purchaser for whom you are contracting hereunder has, been independently advised as to or are aware of the restrictions with respect to trading in, and the restricted period or statutory hold period applicable to, the Purchased Securities and the Warrant Shares imposed by the Securities Laws of the jurisdiction in which you reside or to which you or such securities are subject, and that a suitable legend or legends will be placed on the certificates representing the Purchased Securities and the Warrant Shares to reflect the applicable restricted period and hold period to which the Purchased Securities and the Warrant Shares are subject;

 

	
  

	
(b)

	
you have, or any beneficial purchaser for whom you are contracting hereunder has, not received or been provided with a prospectus, registration statement, offering memorandum (within the meaning of the Securities Laws) or similar document and that your decision, or the decision of any beneficial purchaser for whom you are contracting hereunder, to enter into this Agreement and to purchase the Purchased Securities from the Corporation has not been based upon any verbal or written representation as to fact or otherwise made by or on behalf of the Corporation (other than those contained in this Agreement, in each case which will survive the Closing) and that your decision, or the decision of any beneficial purchaser for whom you are contracting hereunder, is based entirely upon such documents and publicly available information concerning the Corporation and, the offer and sale of the Purchased Securities was not accompanied by any advertisement in printed media of general and regular paid circulation including printed public media, radio, television or telecommunications, including electronic display and the Internet;

 

	
  

	
(c)

	
as a consequence of the sale being exempt from the prospectus and registration requirements of the Securities Laws:

 

	
  

	
(i)

	
certain protections, rights and remedies provided by the Securities Laws, including certain statutory rights of rescission or damages, will not be available to you, or any beneficial purchaser for whom you are contracting hereunder,

 

	
  

	
(ii)

	
you, or any beneficial purchaser for whom you are contracting hereunder, may not receive information that would otherwise be required to be given under the Securities Laws, and

 

	
  

	
(iii)

	
the Corporation is relieved from certain obligations that would otherwise apply under the Securities Laws; and

 

	
  

	
(d)

	
no Person has made any written or oral representation:

 

	
  

	
(i)

	
that any Person will resell or repurchase the Purchased Securities or the Warrant Shares,

 

	
  

	
(ii)

	
that any Person will refund the Purchase Price,

 

	
  

	
(iii)

	
as to the future price or value of the Common Shares or the Warrants; or

 

	
  

	
(iv)

	
that the Common Shares will be or remain listed or otherwise qualified for trading on any stock exchange or any quotation or stock reporting system.

 

By your acceptance of this Agreement you and any others for whom you are contracting hereunder represent, warrant, covenant, agree and acknowledge, as applicable, to and with the Corporation (which representations, warranties, covenants, agreements and acknowledgements shall survive the Closing), and acknowledge that the Corporation is relying on such representations and warranties in connection with the transactions contemplated hereby, that:

 

 

  

4

  

 

 

 

	
A.

	
General

 

	
  

	
(a)

	
You are and any beneficial purchaser for whom you are contracting hereunder is resident in the jurisdiction set out under the heading “address” above your signature set forth on the Execution Page of this Agreement.

 

	
  

	
(b)

	
If you are an individual, you have attained the age of majority in the jurisdiction in which you are subscribing and have the legal capacity and competence to enter into and be bound by this Agreement and to perform the covenants and obligations herein.

 

	
  

	
(c)

	
If you are not an individual (i) you have the legal capacity to authorize, execute and deliver this Agreement, and (ii) the individual signing this Agreement has been duly authorized to execute and deliver this Agreement.

 

	
  

	
(d)

	
None of the funds being used to purchase the Purchased Securities are (or in connection with your purchase of the Warrant Shares, if applicable, will be) to your knowledge proceeds obtained or derived directly or indirectly as a result of illegal activities.

 

	
  

	
(e)

	
You are and any beneficial purchaser for whom you are contracting hereunder is at arm’s-length, within the meaning of the Securities Laws of British Columbia, with the Corporation.

 

	
  

	
(f)

	
You are not and any beneficial purchaser for whom you are contracting hereunder is not a “promoter” of the Corporation within the meaning of the Securities Laws of British Columbia.

 

	
  

	
(g)

	
You are not, with respect to the Corporation or any of its affiliates, a “control person” as defined under the Securities Laws of British Columbia or an “affiliate” as defined under the 1933 Act, and the purchase of the Purchased Securities (or, if applicable, purchase of the Warrant Shares) hereunder will not result in you becoming a control person or an affiliate.

 

	
  

	
(h)

	
If required by applicable Securities Laws or the Corporation, you will execute, deliver and file, or assist the Corporation in filing, such reports, undertakings and other documents with respect to the issue, offer and/or sale of the Purchased Securities (or, if applicable, the issue , offer and/or sale of the Warrant Shares) as may be required by any securities commission, stock exchange or other regulatory authority.

 

	
  

	
(i)

	
Other than what you have disclosed in advance to the Corporation, there is no person acting or purporting to act in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee.  The Company at its election may pay to finders that introduce subscribers to the Company a finder's fee of seven percent (8%) in cash and issue such number of warrants equal to seven percent (8%) of the shares issued in the Offering. If any person establishes a claim that any fee or other compensation is payable in connection with this subscription for the Purchased Securities, you covenant to indemnify and hold harmless the Corporation with respect thereto and with respect to all costs reasonably incurred in the defence thereof.

 

	
  

	
(j)

	
The Corporation’s Counsel and other legal counsel retained by the Corporation is acting as counsel to the Corporation and not as counsel to you.

 

	
  

	
(k)

	
If you are, or any beneficial purchaser for whom you are contracting hereunder is, a resident, or otherwise subject to the Securities Laws, of a jurisdiction other than a jurisdiction in Canada or of the United States, you and any beneficial purchaser for whom you are contracting hereunder: (i) have knowledge of or have been independently advised as to and will comply with the requirements of the Securities Laws of the jurisdiction of your residence or to which you are otherwise subject, or the jurisdiction of residence of any beneficial purchaser for whom you are contracting hereunder or to which such beneficial purchaser is otherwise subject, as the case may be; (ii) confirm that the requirements of the Securities Laws of the jurisdiction of your residence or to which you are otherwise subject, the jurisdiction of residence of any beneficial purchaser for whom you are contracting hereunder or to which such beneficial purchaser is otherwise subject, as the case may be, does not (A) require the Corporation to make any filings or seek any approvals of any kind whatsoever from any regulatory authority of any kind or nature whatsoever, (B) except as contemplated herein, require the Corporation to prepare and file a prospectus, registration statement or similar document or (C) impose any additional registration or other requirements on the Corporation; and (iii) will provide such evidence of compliance with all such matters as the Corporation may request.

 

 

 

 

  

5

  

 

 

	
  

	
(l)

	
You are and any beneficial purchaser for whom you are contracting hereunder is capable of assessing the proposed investment in the Purchased Securities (or, if applicable, the Warrant Shares) as a result of your financial or investment experience or as a result of advice received from a registered person other than the Corporation or an affiliate thereof and you are or any beneficial purchaser for whom you are contracting hereunder is, as the case may be, able to bear the economic loss of the investment in the Purchased Securities (or, if applicable, the Warrant Shares).

 

	
  

	
(m)

	
You have had access to such information, if any, concerning the Corporation as you considered necessary in connection with your investment decision to invest in the Purchased Securities and the Warrants Shares, including receiving satisfactory answers to any questions you have asked any of the officers of the Corporation.

 

	
  

	
(n)

	
You acknowledge that the financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles of the United States, which differ in some respects from generally accepted accounting principles of Canada, and thus may not be comparable to financial statements of Canadian companies.

 

	
  

	
(o)

	
You acknowledge that there may be material tax consequences to you of an acquisition, holding or disposition of the Purchased Securities (or, if applicable, the Warrant Shares).  The Corporation gives no opinion and makes no representation with respect to the tax consequences to you under United States, Canadian, state, provincial, local or foreign tax law of your acquisition, holding or disposition of such securities, and you acknowledge that you are solely responsible for determining the tax consequences of your investment.  You are not relying on the Corporation or their affiliates or counsel in this regard.

 

	
  

	
(p)

	
You are an “accredited investor” within the meaning of NI 45-106 and:

 

	
  

	
(i)

	
you are either purchasing the Purchased Securities: (A) as principal and not for the benefit of any other Person, or you are deemed under NI 45-106 to be purchasing the Purchased Securities as principal; or (B) as agent for a beneficial purchaser disclosed on the Execution Page of this Agreement, and you are an agent or trustee with proper authority to execute all documents required in connection with the purchase of the Purchased Securities on behalf of such disclosed beneficial purchaser and such disclosed beneficial purchaser for whom you are contracting hereunder is purchasing as principal and not for the benefit of any other Person, or is deemed under NI 45-106 to be purchasing the Purchased Securities as principal, and such disclosed beneficial purchaser is an “accredited investor” within the meaning of NI 45-106;

 

	
  

	
(ii)

	
if you are, or the beneficial purchaser for whom you are contracting hereunder is, as the case may be, a Person, other than an individual or investment fund, that has net assets of at least CDN$5,000,000, you were not, or the beneficial purchaser for whom you are contracting hereunder was not, as the case may be, created or used solely to purchase or hold securities as an accredited investor; and

 

	
  

	
(iii)

	
you have concurrently executed and delivered a certificate in the form attached as Schedule “B” hereto and have completed Appendix 1 thereto.

 

	
  

	
(q)

	
Unless you have made the representations set forth below in Section 5.B hereof (United States) and have completed Schedule “C” attached hereto:

 

	
  

	
(i)

	
you are not a Person in the United States or a U.S. Person and you are not acquiring the Purchased Securities (and will not acquire any Warrant Shares) for the account or benefit of any Person in the United States or U.S. Person;

 

	
  

	
(ii)

	
you were not offered the Offered Securities in the United States; and

 

  

6

  

	
  

	
(iii)

	
at the time the buy order for the Purchased Securities was originated, you were outside the United States and this Agreement was not executed or delivered in the United States.

 

	
  

	
(r)

	
If you are not a U.S. Subscriber:

 

	
  

	
(i)

	
you understand that if you decide to offer, sell, pledge or otherwise transfer the Common Shares or the Warrant Shares, such securities may be offered, sold or otherwise transferred only: (A) to the Corporation; (B) pursuant to an effective registration statement under the 1933 Act, (C) in accordance with Rule 144 under the 1933 Act, if available, and in compliance with applicable state Securities Laws, (D) in accordance with the provisions of Regulation S, if available, or (E) in a transaction that does not otherwise require registration under the 1933 Act or any applicable state Securities Laws if an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, has been provided to the Corporation to that effect, and further agree that hedging transactions involving such securities may not be conducted unless in compliance with the 1933 Act and other applicable Securities Laws;

 

	
  

	
(ii)

	
you understand that if you decide to offer, sell, pledge or otherwise transfer the Warrants, such securities may be offered, sold or otherwise transferred only: (A) pursuant to an effective registration statement under the 1933 Act; or (B) in a transaction that does not otherwise require registration under the 1933 Act or any applicable state Securities Laws if an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, has been provided to the Corporation to that effect, and further agree that hedging transactions involving such securities may not be conducted unless in compliance with the 1933 Act and other applicable Securities Laws;

 

	
  

	
(iii)

	
you acknowledge and agree that the Purchased Securities and the Warrant Shares, upon issuance, will be “restricted securities” within the meaning of Rule 144(a)(3) of the 1933 Act and may only be resold or otherwise transferred in accordance with subsection (r)(i) hereinabove; and

 

	
  

	
(iv)

	
you understand that the Corporation is the seller of the Purchased Securities and the Warrant Shares and that, for purposes of Regulation S, a “distributor” is any underwriter, dealer or other person who participates, pursuant to a contractual arrangement, in the distribution of securities offered or sold in reliance on Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question; except as otherwise permitted by Regulation S, you agree that you will not, during a six-month distribution compliance period, act as a distributor, either directly or through any affiliate, or sell, transfer, hypothecate or otherwise convey the Purchased Securities or the Warrant Shares other than to or for the account or benefit of a non-U.S. Person.

 

	
  

	
(s)

	
You and any beneficial purchaser for whom you are contracting hereunder acknowledge 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 of the investment in the Offered Securities or the Warrant Shares, nor have any such agencies or governmental authorities made any recommendation or endorsement with respect to such securities.

 

	
  

	
(t)

	
You consent to the Corporation making a notation on its records or giving instructions to any transfer agent of the Corporation in order to implement the restrictions on transfer set forth herein.

 

	
  

	
(u)

	
This Agreement has been duly executed and delivered by you and, when accepted by the Corporation, will constitute your legal, valid and binding obligation enforceable against you in accordance with the terms hereof or, if you are acting as agent for a beneficial purchaser, will constitute a legal, valid and binding obligation of such beneficial purchaser in accordance with the terms hereof.

 

	
  

	
(v)

	
If you are contracting hereunder as trustee or agent (including, for greater certainty, a portfolio manager or comparable adviser) for one or more beneficial purchasers, you are authorized to execute and deliver this Agreement and all other necessary documentation in connection with the subscription made on behalf of such beneficial purchaser or beneficial purchasers and this Agreement has been authorized, executed and delivered on behalf of such beneficial purchaser or beneficial purchasers, and you acknowledge that the Corporation may be required by law to disclose the identity of each beneficial purchaser for whom you are contracting hereunder.

 

 

 

  

7

  

 

 

	
  

	
(w)

	
The execution and delivery of this Agreement, the performance and compliance with the terms hereof, the purchase of the Purchased Securities and the completion of the transactions described herein by you will not result in any material breach of, or be in conflict with or constitute a material default under, or create a state of facts which, after notice or lapse of time, or both, would, if you are not or any beneficial purchaser for whom you are contracting hereunder is not an individual, constitute a material default under any term or provision of your constating documents, by-laws or resolutions or the constating documents, by-laws or resolutions of any beneficial purchaser for whom you are contracting hereunder, as the case may be, the Securities Laws or any other laws applicable to you or any beneficial purchaser for whom you are contracting hereunder, any agreement to which you are or any beneficial purchaser for whom you are contracting hereunder is a party, or any judgment, decree, order, statute, rule or regulation applicable to you or any beneficial purchaser for whom you are contracting hereunder.

 

	
  

	
(x)

	
You represent and warrant to the Corporation that the funds representing the Purchase Price in respect of the Purchased Securities (and, if applicable, the Warrants Shares) which will be advanced by you to the Corporation hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) or similar legislation and you acknowledge that the Corporation may in the future be required by law to disclose your name and other information relating to this Subscription Agreement and your subscription hereunder, on a confidential basis, pursuant to the PCMLTFA or similar legislation.  To the best of your knowledge: (A) none of the subscription funds provided by you (i) have been or will be derived from or related to any activity that is deemed criminal under the laws 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 you; and (B) you will promptly notify the Corporation if you discover that any of such representations cease to be true, and to provide the Corporation with appropriate information in connection therewith.

 

	
  

	
(y)

	
If you are, or the beneficial purchaser for whom you are contracting hereunder is, a resident of the Province of Ontario, you authorize the indirect collection of personal information (as defined in the Securities Laws of the Province of Ontario) by the Ontario Securities Commission and confirm that you have been notified by the Corporation:

 

	
  

	
(i)

	
that the Corporation will be delivering such personal information to the Ontario Securities Commission;

 

	
  

	
(ii)

	
that such personal information is being collected indirectly by the Ontario Securities Commission under the authority granted to it in the Securities Laws of the Province of Ontario;

 

	
  

	
(iii)

	
that such personal information is being collected for the purpose of the administration and enforcement of the Securities Laws of the Province of Ontario; and

 

	
  

	
(iv)

	
that the title, business address and business telephone number of the public official in the Province of Ontario who can answer questions about the Ontario Securities Commission’s indirect collection of personal information is as follows:

 

Administrative Assistant to the Director of Corporate Finance

Ontario Securities Commission

Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario, Canada, M5H 3S8

Telephone:  416-593-8086.

 

	
  

	
(z)

	
You, on your own behalf and, if applicable, on behalf of each beneficial purchaser for whom you are contracting hereunder, acknowledge and consent to the fact that the Corporation is collecting your personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) and any other applicable similar, replacement or supplemental provincial or federal legislation or laws in effect from time to time), or that of each beneficial purchaser for whom you are contracting hereunder, for the purpose of completing this Agreement.  You, on your own behalf and, if applicable, on behalf of each beneficial purchaser for whom you are contracting hereunder, acknowledge and consent to the Corporation retaining such personal information for as long as permitted or required by law or business practices.  You, on your own behalf and, if applicable, on behalf of each beneficial purchaser for whom you are contracting hereunder, further acknowledge and consent to the fact that the Corporation may be required by the Securities Laws and the rules and policies of any stock exchange to provide regulatory authorities with any personal information provided by you in this Agreement.  You represent and warrant that you have the authority to provide the consents and acknowledgements set out in this paragraph on behalf of each beneficial purchaser for whom you are contracting hereunder.  In addition to the foregoing, you agree and acknowledge that the Corporation may use and disclose your personal information, or that of each beneficial purchaser for whom you are contracting hereunder, as follows:

 

 

  

8

  

 

 

	
  

	
(i)

	
for internal use with respect to managing the relationships between and contractual obligations of the Corporation and you or any beneficial purchaser for whom you are contracting hereunder;

 

	
  

	
(ii)

	
for use and disclosure for income tax related purposes, including without limitation, where required by law, disclosure to Canada Revenue Agency;

 

	
  

	
(iii)

	
disclosure to stock exchanges, securities regulatory authorities and other regulatory bodies with jurisdiction with respect to listing applications, prospectus filings, reports of trade and similar regulatory filings;

 

	
  

	
(iv)

	
disclosure to a governmental or other authority to which the disclosure is required by court order or subpoena compelling such disclosure and where there is no reasonable alternative to such disclosure;

 

	
  

	
(v)

	
disclosure to professional advisers of the Corporation in connection with the performance of their professional services;

 

	
  

	
(vi)

	
disclosure to any person where such disclosure is necessary for legitimate business reasons and is made with your prior written consent;

 

	
  

	
(vii)

	
by including it in closing books relating to the offering contemplated hereby;

 

	
  

	
(viii)

	
disclosure to a court determining the rights of the parties under this Agreement; or

 

	
  

	
(ix)

	
for use and disclosure as otherwise required or permitted by law.

 

 

The contact information for the officer of the Corporation who can answer questions about the collection of information by the Corporation is as follows:

 

	
Name and Title:

	
Frank Garcia,

Chief Financial Officer and a director

	
Issuer Name:

	
Zoro Mining Corp.

	
Address:

	
3040 North Campbell Avenue, Suite 110,

Tucson, Arizona, U.S.A., 85719

	
Phone No.:

	
(520) 989-0022

	
E-mail:

	
info@zorominingcorp.com

 

	
  

	
(aa)

	
You agree that your representations, warranties and covenants herein will be true and correct both as of the execution of this Subscription Agreement and as of the time of Closing and will survive the completion of the issue of the Purchased Securities.  Your representations, warranties and covenants herein are made with the intent that they be relied upon by the Corporation and its counsel in determining your eligibility to subscribe for the Purchased Securities, and you agree to indemnify and hold harmless the Corporation and its respective affiliates, shareholders, directors, officers, partners, employees, advisors, counsel and agents, from and against all losses, claims, costs, expenses and damages or liabilities whatsoever which any of them may suffer or incur which are caused or arise from a breach thereof.  You undertake to immediately notify the Corporation at Zoro Mining Corp., 3040 North Campbell Avenue, Suite 110, Tucson, Arizona, U.S.A., 85719  Attention: Frank Garcia, CFO (Phone No.: (520) 989-0022 of any change in any statement or other information relating to you set forth herein which takes place prior to the time of the Closing.

 

 

 

  

9

  

 

 

 

	
B.

	
United States

 

If you are a U.S. Subscriber, then:

 

	
  

	
(a)

	
You understand and acknowledge that the Purchased Securities and the Warrant Shares have not been registered under the 1933 Act or any state securities laws and that the sale of the Purchased Securities contemplated hereby is being made to a limited number of U.S. Accredited Investors in transactions not requiring registration under the 1933 Act; accordingly, the Purchased Securities are “restricted securities” within the meaning Rule 144(a)(3) of the 1933 Act.

 

	
  

	
(b)

	
You have no contract, undertaking, agreement or arrangement with any Person to sell, transfer or pledge to such Person, or anyone else, the Purchased Securities or the Warrant Shares, or any part thereof, or any interest therein, and you have no present plans to enter into any such contract, undertaking, agreement or arrangement.

 

	
  

	
(c)

	
You acknowledge that the Corporation has not filed a registration statement under the 1933 Act in respect of the Purchased Securities, that you have not been supplied with any of the information that would be found in a registration statement if the Purchased Securities were registered under the 1933 Act and that there will be substantial restrictions on the transferability of, and that it may not be possible to liquidate your investment readily in, the Purchased Securities.

 

	
  

	
(d)

	
You are a U.S. Accredited Investor and acknowledge that you are acquiring the Purchased Securities as an investment for your own account or for the account of a U.S. Accredited Investor as to which you exercise sole investment discretion and not with a view to any resale, distribution or other disposition of the Purchased Securities in violation of the federal or state securities laws of the United States and you have concurrently executed and delivered a certificate in the form attached as Schedule “C” hereto.  You acknowledge that you will be required to confirm your status as a U.S. Accredited Investor and make similar representations to those contained in this Section 5.B. at the time of exercise of any Warrants.

 

	
  

	
(e)

	
You have concurrently executed and delivered a certificate in the form attached as Schedule “B” hereto and have completed Appendix 1 thereto.

 

	
  

	
(f)

	
You understand and agree that there may be material tax consequences to you of an acquisition, holding or disposition of the Purchased Securities or the Warrant Shares.  The Corporation gives no opinion and makes no representation with respect to the tax consequences to you under United States, state, local or foreign tax law of your acquisition, holding or disposition of such securities, and you acknowledge that you are solely responsible for determining the tax consequences of your investment.

 

	
  

	
(g)

	
You understand that the Purchased Securities and the Warrant Shares may not be sold or transferred in the United States or to a U.S. Person unless an exemption is available from the registration requirements of the 1933 Act and applicable state Securities Laws.

 

	
  

	
(h)

	
You understand that if you decide to offer, sell, pledge or otherwise transfer the Common Shares or the Warrant Shares, such securities may be offered, sold or otherwise transferred only: (A) to the Corporation; (B) pursuant to an effective registration statement under the 1933 Act; (C) in accordance with Rule 144 under the 1933 Act, if available, and in compliance with applicable state Securities Laws; (D) in accordance with the provisions of Regulation S, if available; or (E) in a transaction that does not otherwise require registration under the 1933 Act or any applicable state Securities Laws if an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, has been provided to the Corporation to that effect, and further agree that hedging transactions involving such securities may not be conducted unless in compliance with the 1933 Act and other applicable Securities Laws.

 

  

10

  

	
  

	
(i)

	
You understand that if you decide to offer, sell, pledge or otherwise transfer the Warrants, such securities may be offered, sold or otherwise transferred only: (A) pursuant to an effective registration statement under the 1933 Act; or (B) in a transaction that does not otherwise require registration under the 1933 Act or any applicable state Securities Laws if an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, has been provided to the Corporation to that effect, and further agree that hedging transactions involving such securities may not be conducted unless in compliance with the 1933 Act and other applicable Securities Laws.

 

	
  

	
(j)

	
You have not purchased the Purchased Securities as a result of any form of general solicitation or general advertising (as those terms are used in Regulation D), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

 

	
6.

	
Legends

 

A.           Common Shares Issued as Part of Units

 

You acknowledge that, in addition to the other legends that may be required by this Agreement, the certificates representing the Common Shares issued as part of the Units will bear the following legend:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [FOUR MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE]”;

 

provided that subsequent to such date (that is, the date that is four months and one day after the Closing Date), the certificate representing such securities may be exchanged for a certificate not bearing this legend.

 

In addition, the certificates representing the Common Shares issued as part of the Units will bear the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, (B) TO THE CORPORATION, (C) IN ACCORDANCE WITH RULE 144 UNDER THE 1933 ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, IF AVAILABLE, OR (E) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS IF AN OPINION OF COUNSEL, OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION, HAS BEEN PROVIDED TO THE CORPORATION TO THAT EFFECT.  THE SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE 1933 ACT AND OTHER APPLICABLE SECURITIES LAWS.”;

 

 

provided that, if after the expiration of the six month distribution compliance period you sell any Common Shares: (A) in compliance with Rule 904 of Regulation S, the above legend may be removed by providing a declaration to the Corporation’s registrar and transfer agent in the form of Schedule “D” hereto (or as the Corporation may reasonably prescribe from time to time); (B) in compliance with Rule 144 of the U.S. Securities Act, the above legend may be removed by providing a declaration to the Corporation’s registrar and transfer agent in the form of Schedule “E” hereto (or as the Corporation may reasonably prescribe from time to time); and (C) pursuant to another transaction that does not require registration under the U.S. Securities Act or applicable state securities laws, the above legend may be removed by delivery to the registrar and transfer agent of the Corporation of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act.

 

  

11

  

 

B.           Warrants Issued as Part of Units

 

You acknowledge that, in addition to the other legends that may be required by this Agreement, the certificates representing the Warrants issued as part of the Units will bear the following legend:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [FOUR MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE]”;

 

provided that subsequent to that date (that is, the date that is four months and one day after the Closing Date), the certificate representing such securities may be exchanged for a certificate not bearing this legend.

 

In addition, the certificates representing the Warrants issued as part of the Units will bear the following legend:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.   THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR UNLESS THE CORPORATION RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION STATING THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE 1933 ACT AND OTHER APPLICABLE SECURITIES LAWS.”

 

“THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE 1933 ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.  “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”

 

C.           Warrant Shares Issued upon Exercise of Warrants

 

You acknowledge that, in addition to the other legends that may be required by this Agreement, the certificates representing any Warrant Shares issued upon exercise of Warrants on or before the date that is four months and one day from the date of Closing, will bear the following legend:

 

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [FOUR MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE]”;

 

provided that subsequent to such date (that is, the date that is four months and one day after the Closing Date), the certificate representing such securities may be exchanged for a certificate not bearing this legend.

 

In addition, the certificates representing any Warrants Shares issued upon exercise of the Warrants before the Registration Statement is declared effective will bear the following legend:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) OR APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, (B) TO THE CORPORATION, (C) IN ACCORDANCE WITH RULE 144 UNDER THE 1933 ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, IF AVAILABLE, OR (E) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAWS IF AN OPINION OF COUNSEL, OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION, HAS BEEN PROVIDED TO THE CORPORATION TO THAT EFFECT.  THE SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE 1933 ACT AND OTHER APPLICABLE SECURITIES LAWS.”;

 

 

 

  

12

  

 

 

 

provided that, if after the expiration of the six month distribution compliance period you sell any Warrant Shares: (A) in compliance with Rule 904 of Regulation S, the above legend may be removed by providing a declaration to the Corporation’s registrar and transfer agent in the form of Schedule “D” hereto (or as the Corporation may reasonably prescribe from time to time); (B) in compliance with Rule 144 of the U.S. Securities Act, the above legend may be removed by providing a declaration to the Corporation’s registrar and transfer agent in the form of Schedule “E” hereto (or as the Corporation may reasonably prescribe from time to time); and (C) pursuant to another transaction that does not require registration under the U.S. Securities Act or applicable state securities laws, the above legend may be removed by delivery to the registrar and transfer agent of the Corporation of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the U.S. Securities Act.

 

	
7.

	
Representations and Warranties of the Corporation

 

By executing this Agreement, the Corporation represents, warrants and covenants to the Subscriber and acknowledges that the Subscriber is relying thereon, that:

 

	
  

	
(a)

	
Organization, Good Standing and Qualification.  The Corporation has been duly organized and is validly subsisting as a corporation under the laws of its jurisdiction of incorporation with corporate power and authority to own, lease and operate its properties and assets and carry on its businesses as currently owned and carried on and is duly registered, licensed or qualified to carry on business in each jurisdiction in which the nature of the business now being carried on or the property owned or leased by it makes such registration, licensing or qualification necessary except such as would not, individually or in the aggregate, have a material adverse effect on the financial condition, properties, business or results of the Corporation (on a consolidated basis) (a “Material Adverse Effect”).

 

	
  

	
(b)

	
Capital Structure.  The Corporation has no Common Shares reserved for issuance except as publicly disclosed in the Company Reports prior to the date of this Agreement, except for Common Shares issuable on the exercise of the Warrants to be issued pursuant to this Agreement and Common Shares issuable on the exercise of the options granted or that may be granted under the current Stock Incentive Plans of the Corporation.  Except as provided for in this Agreement, the Company Reports or press releases issued by the Corporation, in each case prior to the date of this Agreement and, except for the warrants to acquire Common Shares outstanding as of the date of this Agreement and the Warrants to be issued pursuant to this Agreement and the options to acquire Common Shares granted or other options to purchase Common Shares that may be granted under the Stock Option Plans of the Corporation there are, and there will be on the Closing Date:

 

	
  

	
(i)

	
no options, warrants, conversion privileges, stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of the Corporation or other rights, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) obligating the Corporation to issue or sell any shares of the Corporation or securities or obligations of any kind convertible into or exchangeable for any shares of the Corporation;

 

	
  

	
(ii)

	
no bonds, debentures or other evidences of indebtedness of the Corporation having the right to vote (or that are convertible for or exercisable into securities having the right to vote) on any matter; and

  

13

  

 

	
  

	
(iii)

	
no contractual obligations of the Corporation to repurchase, redeem or otherwise acquire any outstanding securities or indebtedness of the Corporation.

 

The vesting provisions contained in any of the Corporation’s outstanding securities will not be accelerated or otherwise amended as a result of the completion of the purchase and sale of the Purchased Securities.

 

	
  

	
(c)

	
Authority and Approval.  The Corporation has all requisite corporate power and authority and has taken all action necessary in order to execute, deliver and perform its obligations under this Agreement.  This Agreement has been duly executed and delivered by the Corporation and constitutes a legal, valid and binding agreement of the Corporation enforceable against the Corporation in accordance with its terms subject to bankruptcy, insolvency and other similar Laws affecting creditors’ rights generally and general principles of equity.  The Corporation has obtained all regulatory approvals and shareholder approvals required by law for the consummation of the transactions contemplated by this Agreement.

 

	
  

	
(d)

	
No Violations.  The Corporation is not in violation of its charter or by-laws.  The Corporation is not in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan agreement, evidence of indebtedness, note, lease or other agreement, understanding or instrument to which it is a party or by which it may be bound or to which any of its property or assets is subject, other than defaults that would not, individually or in the aggregate, have a Material Adverse Effect.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated thereunder:

 

	
  

	
(i)

	
do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Corporation pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Corporation is a party or by which the Corporation is bound or to which any of the property or assets of the Corporation is subject (other than conflicts, breaches, defaults, liens, charges and encumbrances that would not, individually or in the aggregate, have a Material Adverse Effect);

 

	
  

	
(ii)

	
do not and will not result in any violation of the provisions of the constating documents of the Corporation; and

 

	
  

	
(iii)

	
do not and will not result in any violation of the provisions of applicable Laws other than violations that would not, individually or in the aggregate, have a Material Adverse Effect.

 

	
  

	
(e)

	
Financial Statements.  Each of the balance sheets included in the Company Reports (including the related notes) fairly presents, in all material respects, the financial position of the Corporation as of its date and each statement of earnings and cash flows included in the Company Reports (including the related notes) fairly presents, in all material respects, the results of operations, retained earnings and cash flows, as the case may be, of the Corporation for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end adjustments), in each case in accordance with the Public Company Accounting Oversight Board (United States), consistently applied during the periods involved, except as may be noted therein.

 

	
  

	
(f)

	
Absence of Undisclosed Liabilities.  Except as disclosed in the Company Reports filed prior to the date of this Agreement, there are no obligations or liabilities whether or not accrued, contingent or otherwise and whether or not required to be disclosed, including those relating to matters involving environmental laws that would be reasonably likely to result in any claims against or obligations or liabilities of, the Corporation, except for those that would not, individually or in the aggregate, have a Material Adverse Effect.

 

	
  

	
(g)

	
Absence of Orders. No order to cease or suspend trading of any securities of the Corporation has been issued by any regulatory authority in Canada and, to the best of the Corporation’s knowledge, no investigations or proceedings for such purposes are pending or threatened.

  

14

  

 

	
  

	
(h)

	
Litigation.  There are no claims, actions or proceedings or investigations pending or, to the knowledge of the Corporation, threatened against the Corporation before any regulatory authority.

 

	
  

	
(i)

	
Compliance with Laws; Permits.  Except as set forth in the Company Reports filed prior to the date of this Agreement, the business of the Corporation has not been, and is not being conducted, in violation of any laws, except for violations and possible violations that would not individually or in the aggregate, have a Material Adverse Effect.  Except as set forth in the Company Reports filed prior to the date of this Agreement, no investigation or review by any governmental entity with respect to the Corporation is pending or, to the knowledge of the Corporation, threatened, except for those the outcome of which would not have a Material Adverse Effect.  Except as set forth in the Company Reports filed prior to the date of this Agreement, the Corporation has all permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct its business as presently conducted, except those the absence of which would not, individually or in the aggregate, have a Material Adverse Effect.

 

The Corporation hereby agrees with you that the representations and warranties made by the Corporation in this Agreement shall be true and correct as of the Closing Date.  You shall be entitled to rely on, and benefit from, the representations, warranties and covenants made by the Corporation in this Agreement which shall survive the Closing and shall continue in full force and effect for your the benefit in accordance with the terms of this Agreement.

 

	
8.

	
Covenants of the Corporation

 

The Corporation hereby covenants and agrees with you as follows:

 

	
  

	
(a)

	
Corporate Status:  For a period of a least two years after the Closing Date the Corporation shall remain a corporation validly subsisting under the laws of its jurisdiction of incorporation, licensed, registered or qualified as an extra-provincial or foreign corporation in all jurisdictions where the character of its properties owned or leased or the nature of the activities conducted by it make such licensing, registration or qualification necessary and shall carry on its business in the ordinary course and in compliance in all material respects with all applicable laws, rules and regulations of each such jurisdiction.

 

	
  

	
(b)

	
Securities Filings:  Forthwith after the Closing the Corporation shall file such forms and documents as may be required under the Securities Laws of the Provinces of Canada and the United States and any state thereof relating to the offering of the Purchased Securities and the Warrant Shares (if any) which, without limiting the generality of the foregoing, shall include: (i) a Form 45-106-F1 as prescribed by NI 45-106; and (ii) a Form D as prescribed under the 1933 Act and any filings required under applicable state laws.

 

	
  

	
(c)

	
Performance of Acts:  The Corporation shall perform and carry out all of the acts and things to be completed by it as provided in this Agreement.

 

	
  

	
(d)

	
Use of Proceeds Amount:  The Corporation shall apply the proceeds of the Offered Securities to support the Corporation’s current exploration and development strategy and for general corporate purposes.

 

	
  

	
(e)

	
Reverse stock split:  The Corporation intends to complete a reverse stock split of its current authorized and issued share capitals within six months from the Closing Date hereunder on the basis of not greater than one new Common Share for each old one-half  (1:3) Common Shares of common stock of the Corporation.

 

	
9.

	
Termination Events

 

	
  

	
(a)

	
Change in Material Fact.  In the event that prior to the Closing Date the Subscriber or the Subscriber’s representatives, through due diligence investigations or otherwise, discovers or there should occur a material change or a change in any material fact or a new material fact shall arise which, in the sole opinion of the Subscriber, has or could be expected to have a material adverse change or Material Adverse Effect on the business, affairs or profitability of the Corporation, each taken as a whole, or on the market price or value of the Common Shares, the Subscriber shall be entitled, at its sole option, to terminate its obligations under this Agreement by written notice to that effect given to the Corporation prior to the Closing Date.

 

 

  

15

  

 

 

	
  

	
(b)

	
Non-Compliance With Conditions. The Corporation agrees that all terms, conditions and covenants in this Agreement shall be construed as conditions and complied with so far as the same relate to acts to be performed or caused to be performed by the Corporation, as applicable, that it will use its reasonable commercial efforts to cause such conditions to be complied with, and any breach or failure by the Corporation to comply with any of such conditions or in the event that any representation or warranty given by the Corporation becomes false and is not rectified as at the Closing Date, shall entitle the Subscriber, at its sole option, to terminate its obligations under this Agreement by notice to that effect given to the Corporation at or prior to the Closing Date.  The Subscriber may waive, in whole or in part, or extend the time for compliance with, any terms and conditions without prejudice to its rights in respect of any other of such terms and conditions or any other or subsequent breach or non-compliance, provided that any such waiver or extension shall be binding upon the Subscriber only if the same is in writing and signed by it.

 

	
10.

	
Expenses

 

You acknowledge and agree that, except as set forth in this Agreement, all costs incurred by you (including any fees and disbursements and any special counsel retained by you) relating to the issue and sale to you of the Purchased Securities and if applicable, the Warrants and the Warrant Shares, shall be borne by you.

 

	
11.

	
General

 

	
  

	
(a)

	
Headings.  The division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “this Subscription Agreement”, “hereof”, “hereunder”, “herein” and similar expressions refer to this Agreement and not to any particular article, section or other portion hereof and include any agreement supplemental thereto and any exhibits attached hereto.  Unless something in the subject matter or context is inconsistent therewith, reference herein to articles, sections and paragraphs are to articles, sections, subsections and paragraphs of this Agreement.

 

	
  

	
(b)

	
Number and Gender.  Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine gender and neuter and vice versa.

 

	
  

	
(c)

	
Severability.  If one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or impaired thereby.  Each of the provisions of this Agreement is hereby declared to be separate and distinct.

 

	
  

	
(d)

	
Notices.  All notices or other communications to be given hereunder shall be delivered by hand or by fax, and if delivered by hand, shall be deemed to have been given on the date of delivery or, if sent by fax, on the date of transmission if sent before 5:00 p.m. and such day is a Business Day or, if not, on the first Business Day following the date of transmission.

 

	
  

	
(e)

	
Notices to the Corporation shall be addressed to:

 

Zoro Mining Corp.

3040 North Campbell Avenue, Suite 110, Tucson, Arizona, U.S.A., 85719

Attention:       Frank Garcia, Chief Financial Officer and a director

Phone No.:      (520) 989-0022

 

Notices to you shall be addressed to the address of the Subscriber set out on the Execution Page hereof.

 

Either the Corporation or you may change the address for service thereof aforesaid by notice in writing to the other party hereto specifying the new address for service hereunder.

 

	
  

	
(f)

	
Further Assurances.  Each party hereto shall from time to time at the request of the other party hereto do such further acts and execute and deliver such further instruments, deeds and documents as shall be reasonably required in order to fully perform and carry out the provisions of this Agreement.  The parties hereto agree to act honestly and in good faith in the performance of their respective obligations hereunder.

 

 

 

  

16

  

 

 

	
  

	
(g)

	
Successors and Assigns.  Except as otherwise provided, this Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns.

 

	
  

	
(h)

	
Entire Agreement.  The terms of this Agreement express and constitute the entire agreement between the parties hereto with respect to the subject matter hereof and no implied term or liability of any kind is created or shall arise by reason of anything in this Agreement.

 

	
  

	
(i)

	
Time of Essence.  Time is of the essence of this Agreement.

 

	
  

	
(j)

	
Amendments.  The provisions of this Agreement may only be amended in a written instrument signed by the Corporation and the Subscribers holding at least 50.1% of Offered Securities based on the initial Purchase Price hereunder.

 

	
  

	
(k)

	
Survival.  Notwithstanding any other provision of this Agreement, the representations, warranties, covenants and indemnities of or by you or the Corporation contained herein or in any certificate, document or instrument delivered pursuant hereto shall survive the completion of the transactions contemplated by this Agreement.

 

	
  

	
(l)

	
Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of Nevada and the laws of Nevada and the United States applicable therein and the parties hereto irrevocably attorn to the jurisdiction of the courts of the State of Nevada.

 

	
  

	
(m)

	
Counterparts.  This Agreement may be executed in two or more counterparts which when taken together shall constitute one and the same agreement.  Delivery of counterparts may be effected by facsimile transmission thereof.

 

	
  

	
(n)

	
Facsimile Copies.  The Corporation shall be entitled to rely on a facsimile copy of an executed Subscription Agreement and acceptance by the Corporation of such facsimile subscription shall be legally effective to create a valid and binding agreement between you and the Corporation in accordance with the terms thereof.

 

	
  

	
(o)

	
Currency.  All references to dollars or “$” shall refer to United States dollars unless otherwise provided.

 

If the foregoing is in accordance with your understanding, please sign and return this Agreement together with the other required documents signifying your agreement to purchase the Purchased Securities.

__________

 

  

17

  

Schedule “A”

 

TERM SHEET

 

Zoro Mining Corp.

 

Private Placement Offering of Securities

 

	
Issuer:

	
Zoro Mining Corp. (the “Corporation”).

 

	
Issue:

	
Up to 10,000,000 units (each a “Unit”) of the Corporation.  Each Unit shall consist of one share of common stock of the Corporation (each a “Common Share”) and one-half transferable share purchase warrants (each a “Warrant”), with each such whole Warrant entitling the subscriber to purchase one additional Common Share (each a “Warrant Share”) at an exercise price of US$0.25 per Warrant Share expiring at 5:00 p.m. (Vancouver, British Columbia, time) on the date that is two year from the Closing Date.

 

	
Issue Price:

	
US$0.15 per Unit.

 

	
Issue Size:

	
Up to approximately US$1,500,000.

 

	
Currency:

	
United States dollars, unless otherwise indicated.

 

	
Use of Proceeds:

	
The net proceeds of the offering will be used to support the Corporation’s current exploration and development strategy and for general corporate purposes.

 

	
Offering Procedure:

	
The Units will be offered by private placement basis pursuant to subscription agreements. The Units may be offered in each of the provinces of Canada, in the United States and in Europe under applicable private placement exemptions.

 

	
Resale Restrictions Under United States Securities Laws:

 

	
The Common Shares (including the Warrant Shares) will be under resale restrictions until six months from the closing of the offering.

	
Closing Date:

	
On or about November 15, 2011 unless extended by the Corporation.

__________

 

  

A-1

  

Schedule “B”

 

CERTIFICATE OF ACCREDITED INVESTOR STATUS UNDER NI 45-106

 

	
To:

	
Zoro Mining Corp.

3040 North Campbell Avenue, #110, Tucson, AZ 85719

 

In connection with the purchase of units (each unit consisting of one common share and one-half  transferable share purchase warrants, which units are hereinafter referred to as the “Purchased Securities”) of Zoro Mining Corp. (the “Corporation”), the undersigned hereby represents, warrants and certifies that:

 

	
(a)

	
the Subscriber (the undersigned or, if the undersigned is purchasing the Purchased Securities as agent on behalf of a disclosed beneficial purchaser, such beneficial purchaser being referred to herein as the “Subscriber”) is resident in a province of Canada or a jurisdiction other than the United States or is subject to the securities laws of a province of Canada;

	 	 
	
(b)

	
the Subscriber is purchasing the Purchased Securities as principal or is deemed under National Instrument 45-106 - Prospectus and Registration Exemptions of the Canadian Securities Administrators (“NI 45-106”) to be purchasing the Purchased Securities as principal; and

	 	 
	
(c)

	
the Subscriber is an “accredited investor” within the meaning of NI 45-106, by virtue of satisfying the indicated criterion as set out in Appendix 1 to this certificate (YOU MUST ALSO INITIAL OR PLACE A CHECK-MARK ON THE APPROPRIATE LINE IN APPENDIX 1 ATTACHED TO THIS CERTIFICATE).

	 	 
	
The above representations and warranties will be true and correct both as of the execution of this certificate and as of the closing time of the purchase and sale of the Purchased Securities and acknowledges that they will survive the completion of the issue of the Purchased Securities.

	 
	
The undersigned acknowledges that the foregoing representations and warranties are made by the undersigned with the intent that they be relied upon in determining the suitability of the Subscriber as a purchaser of the Purchased Securities and that this certificate is incorporated into and forms part of the Subscription Agreement and the undersigned undertakes to immediately notify the Corporation of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the closing time of the purchase and sale of the Purchased Securities.

 

Dated: ________________________, 2011.

 

	 	 
	 	Print name of Subscriber (or person signing as agent)
	 	 	 
	 	By:	 
	 	 	
Signature

	 	 	 
	 	 	 
	 	 	
Title

	 	 	 
	 	 	 
	 	 	
(Please print name of individual whose signature appears above, if different from name of Subscriber or agent printed above)

 

__________

 

  

B-1

  

Appendix 1 to Schedule “B”

 

NOTE:  THE SUBSCRIBER MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION BELOW.

 

Accredited Investor - (defined in NI 45-106) means:

 

	
__________

	
(a)

	
a Canadian financial institution or an authorized foreign bank named in Schedule III of the Bank Act (Canada);

	 	 	 
	
__________

	
(b)

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

	 	 	 
	
__________

	
(c)

	
a subsidiary of any person referred to in paragraph (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 Quebec;

	 	 	 
	
__________

	
(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 CDN$1,000,000;

	 	 	 
	
__________

	
(k)

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

	 	 	 
	
__________

	
(l)

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

	 	 	 
	
__________

	
(m)

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

	 	 	 
	
__________

	
(n)

	
an investment fund that distributes or has distributed its securities only to:

	 	 	 
	  	
(i)

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

	 	 	 
	  	
(ii)

	
a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] and 2.19 [Additional investment in investment funds] of NI 45-106; or

 

 

 

  

B-2

  

 

 

	 	 	 
	  	
(iii)

	
a person described in paragraph (i) or (ii) immediately above that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106;

	 	 	 
	
__________

	
(o)

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

	 	 	 
	
__________

	
(p)

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

	 	 	 
	
__________

	
(q)

	
a person acting on behalf of a fully managed account managed by that person, if that person:

	 	 	 
	  	
(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;

	 	 	 
	
__________

	
(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 British Columbia or Alberta.

 

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 the Cooperative Credit Associations Act (Canada); 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-3

  

 

 

	 	 	 
	
(b)

	
“control person” has the meaning ascribed to that term in securities legislation except in Manitoba, Ontario, Quebec, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories and Nunavut where “control person” means any person that holds or is one of a combination of persons that hold:

	 	 
	  	
(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 that issuer;

	 	 	 
	
(c)

	
“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 Subscriber 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 practising member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not:

	 	 	 
	  	
(A)

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

	 	 	 
	  	
(B)

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

	 	 	 
	
(d)

	
“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;

	 	 	 
	
(e)

	
“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;

	 	 
	
(f)

	
“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;

	 	 	 
	
(g)

	
“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;

	 	 
	
(h)

	
“investment fund” has the meaning ascribed thereto in National Instrument 81-106 - Investment Fund Continuous Disclosure;

	 	 

 

 

 

  

B-4

  

 

 

 

	
(i)

	
“person” includes:

	 	 
	  	
(i)

	
an individual;

	 	 	 
	  	
(ii)

	
a corporation;

	 	 	 
	  	
(iii)

	
a partnership, trust, fund and 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;

	 	 	 
	
(j)

	
“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;

	 	 	 
	
(k)

	
“spouse” means an individual who:

	 	 
	  	
(i)

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

	 	 	 
	  	
(ii)

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

	 	 	 
	  	
(iii)

	
in Alberta, is an individual referred to in paragraph (i) or (ii) immediately above or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and

	 	 	 
	
(l)

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

	 	 
	
Affiliated Entities and Control

	 
	
1.

	
An issuer is considered to be an affiliate of another issuer if one of them is the subsidiary of the other, or if each of them is controlled by the same person.

	 	 
	
2.

	
A person (first person) is considered to control another person (second person) if:

	 	 
	  	
(a)

	
the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless the first person holds the voting securities only to secure an obligation;

	 	 	 
	  	
(b)

	
the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests in the partnership; or

	 	 	 
	  	
(c)

	
the second person is a limited partnership and the general partner of the limited partnership is the first person.

	 	 	 

__________

 

  

B-5

  

Schedule “C”

 

CERTIFICATE FOR U.S. ACCREDITED INVESTORS

 

 

	
To:

	
Zoro Mining Corp.

3040 North Campbell Avenue, #110, Tucson, AZ 85719

 

In connection with the purchase by the undersigned subscriber (the “Subscriber”) of units (each unit consisting of one common share and one-half  transferable share purchase warrants, which units are hereinafter referred to as the “Purchased Securities”) of Zoro Mining Corp. (the “Corporation”), the Subscriber hereby represents, warrants, covenants and certifies that the undersigned (or any beneficial purchaser on whose behalf it is acting) is a U.S. Subscriber (as such term is defined in the Subscription Agreement to which this Certificate is attached) and satisfies one or more of the categories indicated below (please initial the appropriate line below):

 

	
__________

	
Category 1.

	
A bank, as defined in Section 3(a)(2) of the United States Securities Act of 1933 (the “U.S. Securities Act”), whether acting in its individual or fiduciary capacity; or

	 	 	 
	
__________

 	
Category 2.

	
A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

	 	 	 
	
__________

	
Category 3.

	
A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

	 	 	 
	
__________

	
Category 4.

	
An insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; or

	 	 	 
	
__________

	
Category 5.

	
An investment company registered under the Investment Company Act of 1940; or

	 	 	 
	
__________

	
Category 6.

	
A business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; or

	 	 	 
	
__________

	
Category 7.

	
A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

	 	 	 
	
__________

	
Category 8.

	
A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of US$5,000,000; or

	 	 	 
	
__________

	
Category 9.

	
An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or

	 	 	 
	
__________

	
Category 10.

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or

	 	 	 
	
__________

	
Category 11.

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

	 	 	 
	
__________

	
Category 12.

	
A director, executive officer or general partner of the Corporation; or

	 	 	 
	
__________

	
Category 13.

	
A natural person whose individual net worth or joint net worth with that person’s spouse, but excluding in each case the value of the Subscriber's primary residence, at the date hereof, exceeds US$1,000,000; or

	 	 	 
	
__________

	
Category 14.

	
A natural person who had an individual income in excess of US$200,000 in each year of the two most recent years or joint income with that person’s spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

	 	 	 
	
__________

	
Category 15.

	
A trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in SEC Rule 506(b)(2)(ii); or

 

 

 

  

C-1

  

 

 

	 	 	 
	
__________

	
Category 16.

	
An entity in which each of the equity owners meets the requirements of one of the above categories.

	 	 	 

 

 

Dated: ________________________, 2011.

 

 

	 	 
	 	Print name of Subscriber (or person signing as agent)
	 	 	 
	 	By:	 
	 	 	
Signature

	 	 	 
	 	 	 
	 	 	
Title

	 	 	 
	 	 	 
	 	 	
(Please print name of individual whose signature appears above, if different from name of Subscriber or agent printed above)

 

 

__________

  

C-2

  

Schedule “D”

 

FORM OF DECLARATION FOR REMOVAL OF LEGEND

IN CONNECTION WITH A SALE UNDER RULE 904 OF REGULATION S

 

	
To:

	
Zoro Mining Corp.

3040 North Campbell Avenue, #110, Tucson, AZ 85719

 

	
Re: 

	
Removal of U.S. Legend pursuant to Rule 904.

 

(i) The undersigned (the “Holder”) hereby requests that Zoro Mining Corp. (the “Issuer”), and the transfer agent (the “Transfer Agent”) in respect of the common shares of the Issuer, authorizes the removal of the restrictive legend under the United States Securities Act of 1933, as amended (the “1933 Act”) from the security certificates bearing the numbers specified below (collectively, the “Certificates”) and representing the specified number and type, class and/or series of securities of the Issuer (collectively, the “Securities”):

 

	
Security Certificate Number

	
 

	
Number and Type/Class/Series of Security Represented by such Certificate

	
 

	
 

	
 

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

(attach additional sheets if additional space is required)

 

2. In connection with this request the Holder represents and warrants that the sale of the Securities represented by the Certificates is being made in reliance on Rule 904 of Regulation S (“Regulation S”) under the 1933 Act, and certifies that:

 

	
  

	
(a)

	
The Holder acquired such securities from the Issuer or an affiliate of the Issuer more than six months ago on __________________, 2011, and the Holder paid the full purchase price for such securities on that date;

 

	
  

	
(b)

	
the Holder is not an “affiliate” (as defined in Rule 405 under the 1933 Act) of the Issuer;

 

	
  

	
(c)

	
the offer of the securities was not made to a person in the United States or to a U.S. person, and either (A) at the time the buy order was originated, the buyer was outside the United States and was not a U.S. person, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States and was not a U.S. person, or (B) the transaction was executed on or through the facilities of a “designated offshore securities market”, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States or a U.S. person;

 

	
  

	
(d)

	
neither the seller nor any affiliate of the seller nor any person acting on any of their behalves has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of the securities; and

  

D-1

  

 

	
  

	
(e)

	
the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act.

 

Unless otherwise indicated, terms used in this declaration have the meanings given to them in Regulation S.

 

 

The Issuer[, the nominee] and the Transfer Agent named above and their respective counsel may rely upon the representations and warranties made in this letter as though it had been addressed to them.  The Holder agrees to notify the Issuer and its counsel promptly of any changes in the facts set forth in this letter.

 

Sincerely,

 

 

 ______________________________

(Signature)

 

______________________________

(Name of Holder)

 

______________________________

(Name of Signatory)

 

______________________________

(Title of Signatory)

__________

 

 

 

 

 

  

D-2

  

Schedule “E”

 

FORM OF DECLARATION FOR REMOVAL OF LEGEND

IN COMPLIANCE WITH RULE 144 OF THE U.S. SECURITIES ACT

 

__________________, 20____

 

 

 

	
To:

	
Zoro Mining Corp.

3040 North Campbell Avenue, #110, Tucson, AZ 85719

 

	
Re:

	
Removal of U.S. Legend pursuant to Rule 144 [not for use in connection with securities held through CDS]

 

The undersigned (the “Holder”) hereby requests that Zoro Mining Corp. (the “Issuer”), and the transfer agent (the “Transfer Agent”) in respect of the common shares of the Issuer, authorizes the removal of the restrictive legend under the United States Securities Act of 1933, as amended (the “1933 Act”) from the security certificates bearing the numbers specified below (collectively, the “Certificates”) and representing the specified number and type, class and/or series of securities of the Issuer (collectively, the “Securities”):

 

	
 

Security Certificate Number

	  	
Number and Type/Class/Series of Security Represented by such Certificate

	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  

(attach additional sheets if additional space is required)

 

In support of such request the Holder hereby represents and warrants to the Issuer and to the Transfer Agent as follows:

 

	
(1)

	
[The Holder is the beneficial holder of the Securities represented by the Certificates through: ________________________________________, which acts as the Holder’s nominee for purposes of holding such Securities.]  OR   [The Holder is the registered and beneficial holder of the Securities represented by the Certificates.]

 

	
(2)

	
The Holder is not, and has not been at any time during the preceding one-half  months, an “affiliate” (as that term is defined in paragraph (a)(1) of Rule 144 under the 1933 Act) of the Issuer.

 

	
(3)

	
Such Securities were, when issued, “restricted securities” as that term is defined in paragraph (a)(3) of Rule 144 under the 1933 Act.

 

	
(4)

	
The Holder acquired such Securities from the Issuer or an affiliate of the Issuer more six months ago on __________________, 2011, and the Holder paid the full purchase price for such Securities on that date.

 

	
(5)

	
The Holder is not aware of any facts or circumstances indicating that the Holder is or may be deemed to be an “underwriter” (as defined in the 1933 Act) of securities of the Issuer.

 

	
(6)

	
The Holder confirms that it is not aware of any material, non-public information regarding the Issuer.

 

 

  

E-1

  

 

 

 

	
  

	
Rule 144 defines an “affiliate” of the Issuer as any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Issuer.

 

The Issuer[, the nominee] and the Transfer Agent named above and their respective counsel may rely upon the representations and warranties made in this letter as though it had been addressed to them.  The Holder agrees to notify the Issuer and its counsel promptly of any changes in the facts set forth in this letter.

 

Sincerely,

______________________________

(Signature)

______________________________

(Name of Holder)

______________________________

(Name of Signatory)

______________________________

(Title of Signatory)

 

The signature(s) on this letter must be guaranteed by one of the following methods:

 

Canada and the USA:  A Medallion Signature Guarantee obtained from a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, MSP).  Many commercial banks, savings banks, credit unions, and all broker dealers participate in a Medallion Signature Guarantee Program.  The Guarantor must affix a stamp bearing the actual words “Medallion Guaranteed”.

 

Outside North America:  For holders located outside North America, present the certificate(s) and/or document(s) that require a guarantee to a local financial institution that has a corresponding Canadian or American affiliate which is a member of an acceptable Medallion Signature Guarantee Program.  The corresponding affiliate will arrange for the signature to be over-guaranteed.

__________

 

End of Subscription Agreement

__________

 

 

 

 

 

 

 

 

 

 

E-2exhibit_10-1b.htm

EXHIBIT 10.1b

FORM OF WARRANT AS ATTACHED TO SUBSCRIPTION AGREEMENT

 

 

 

 

	 
	$0.25 SHARE PURCHASE WARRANT CERTIFICATE
	 

 

 

From:

ZORO MINING CORP.

To:

w[NAME]w

Zoro Mining Corp.

3040 North Campbell Avenue, Suite 110, Tucson, Arizona, U.S.A., 85719

__________

  

1

  

 

$0.25 SHARE PURCHASE WARRANT CERTIFICATE

 

$0.25 Series No. w[0000-2011-00]w

 

ZORO MINING CORP.

 

(Incorporated under the laws of the State of Nevada, U.S.A.)

WARRANTS FOR UP TO w[#NR.]w SHARES OF COMMON STOCK

THE WARRANTS REPRESENTED HEREBY ARE NON-TRANSFERABLE EXCEPT IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 5:00 P.M. (TUCSON, ARIZONA, U.S.A.. TIME) ON DECEMBER 13, 2012, AND MAY EXPIRE EARLIER IN CERTAIN CIRCUMSTANCES.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.

(OR)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.  HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

 

 

  

2

  

 

 

(AND)

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED HEREBY SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER DECEMBER 13, 2011.

(AND)

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKET ARE MET.

SHARE PURCHASE WARRANTS

(the “Warrants”)

THIS IS TO CERTIFY THAT, for value received,  w[NAME]w  (the “Holder”), is entitled to purchase up to a total of  w[# UNITS]w  fully paid and non-assessable shares of the common stock (each a “Warrant Share”) of ZORO MINING CORP. (the “Company”) for the period commencing upon the date of issuance of the within Warrants by the Company; that being on December 13, 2011; and ending at 5:00 p.m. (Tucson, Arizona, U.S.A., time) on DECEMBER 13, 2012 (such time period being the “Warrant Exercise Period” and the final such day of such Warrant Exercise Period being the “Time of Expiry” herein), at an exercise price of U.S. $0.25 per Warrant Share (the “Warrant Exercise Price”) during the Warrant Exercise Period.

This Warrant is subject to the terms and conditions contained hereinbelow together with the terms and conditions which are attached to this Warrant as Schedule “A”.

The aforesaid right to purchase Warrant Shares may be exercised by the Holder at anytime and from time to time prior to the Time of Expiry (i) by duly completing in the manner indicated and executing the subscription form attached hereto, (ii) by surrendering this Warrant to the Company at its executive office located in Tucson, Arizona, U.S.A., and (iii) by paying the requisite Warrant Exercise Price for the Warrant Shares subscribed for either in cash or by certified cheque or money order payable at par to the order of the Company.  Upon said surrender and payment the Company will issue to the Holder of the subscription form the number of Warrant Shares subscribed for and said Holder will become a shareholder or shareholders of the Company in respect of the Warrant Shares as of the date of such surrender and payment.  Subject to the terms and conditions of this Warrant, the Company will, as soon as practicable after said surrender and payment, mail to the person or persons at the address or addresses specified in the subscription form a certificate or certificates evidencing the Warrant Shares subscribed for.  If the Holder of this Warrant subscribes for a lesser number of Warrant Shares than the number of Warrant Shares referred to in this Warrant, the Holder shall be entitled to receive a further Warrant in respect of Warrant Shares not subscribed for.

The Holder of this Warrant may surrender this Warrant to the Company at its executive office located in Tucson, Arizona, U.S.A., in exchange for new certificates representing this Warrant entitling the Holder to purchase in the aggregate the same number of Warrant Shares referred to in this Warrant.

  

3

  

The Holder hereof and the Company, by acceptance and issuance of this Warrant, agree that this Warrant and all rights hereunder may not be transferred or assigned.

Nothing contained herein shall confer any right upon the Holder hereof or any other person to subscribe for or purchase any Warrant Shares at any time subsequent to the Time of Expiry and, from and after such time, this Warrant and all rights hereunder shall be void and of no value.

This Warrant shall not constitute the holder a stockholder of the Company.

Time shall be of the essence hereof.

IN WITNESS WHEREOF ZORO MINING CORP. has caused its common seal to be affixed and this Warrant to be signed by its authorized representative effective on this the 13th day of December 2011.

Signed by:

 

	 	

ZORO MINING CORP.

	 
	 	 	 	 
	 	 	 	 
	
(C/S)

	 	 	 
	 	 	 	 
	
 

	
Per

	 	 
	 	 	Authorized Signatory	 
	 	 	 	 

  

4

  

 

FORM OF SUBSCRIPTION

 

To:                      ZORO MINING CORP.

THE WARRANTS REPRESENTED HEREBY ARE NON-TRANSFERABLE EXCEPT IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 5:00 P.M. (TUCSON, ARIZONA, U.S.A.. TIME) ON DECEMBER 13, 2012, AND MAY EXPIRE EARLIER IN CERTAIN CIRCUMSTANCES.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.

(OR)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.  HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

(AND)

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED HEREBY SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER  DECEMBER 13, 2011.

(AND)

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC

  

5

  

INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKET ARE MET.

The undersigned “Holder” of the attached “Warrant” hereby subscribes for _____________________ “Warrant Shares” of ZORO MINING CORP. (again the “Company”) pursuant to the attached Warrant at a “Warrant Exercise Price” of U.S. $0.25 per Warrant Share during the Warrant Exercise Price (or such number of other Warrant Shares or securities to which such subscription entitles it in lieu thereof or in addition thereto under the terms and conditions mentioned in the within Warrant) on the terms specified in the said Warrant.  This subscription is accompanied by a certified cheque or money order payable to or to the order of the Company for the whole amount of the requisite Warrant Exercise Price of the said Warrant Shares.

The undersigned hereby irrevocably directs that above-mentioned number of Warrant Shares are to be registered as follows:

 

	Name	Address in Full 	
Social 

Insur. No.   

	
Number of

Warrant Shares

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Total:   	 

 

 

	
  

	
DATED on this _____ day of _______________, _____.

 

 

	 	 	 
	Signature of Guarantor*	 	Signature of Holder
	 	 	 
	 	 	 
	 	 	
Print Name of Holder

(If Warrant Holder is not an individual,

name and title of signatory)

	 	 	 
	 	 	 
	 	 	Residence Address of Holder in full
	 	 	 
	 	 	 

 

	
*

	
If this Warrant subscription form indicates that Warrant Shares are to be issued to a person or persons other than the registered Holder of the Warrant certificate, the signature of such Holder of the subscription form must be medallion guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.  If the subscription form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the subscription form must be accompanied by evidence of authority to sign satisfactory to the Company.

 

 

 

  

6

  

 

 

The Warrant Share certificate(s) will be mailed by registered mail to the address appearing on the face page of the Warrant certificate.

 

The Holder’s representations, warranties, certifications and understandings.   The Holder certifies, acknowledges, represents and warrants to the Company and understands that:

	 	
(a)

	
If not a U.S. Person:   if applicable and if the Holder is not a resident of the United States, the Holder: (i) is not a “U.S. Person” (as defined in Rule 902 of Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “U.S. Act”), which definition includes, but is not limited to, any natural person resident in the United States, any corporation or partnership incorporated or organized under the laws of the United States or any estate or trust of which any executor, administrator or trustee is a U.S. Person; (ii) is not purchasing any of the Warrant Shares for the account or benefit of any U.S. Person or for offering, resale or delivery for the account or benefit of any U.S. Person or for the account of any person in any jurisdiction other than the jurisdiction set out in the name and address of the Holder set forth hereinabove; and (iii) was not offered any Warrant Shares in the United States and was outside the United States at the time of execution and delivery of this Warrant subscription;

	
  

	
(b)

	
No registration and sales under Regulation S:   if applicable and if the Holder is not a resident of the United States under subsection (a) hereinabove, the Holder acknowledges that the Warrant Shares have not been registered under the U.S. Act and the Company has no obligation or present intention of filing a registration statement under the U.S. Act in respect of the Warrant Shares.  In addition, and if the Holder is not a resident of the United States, the Holder agrees to resell the Warrant Shares only in accordance with the provisions of Regulation S, pursuant to a registration under the U.S. Act or pursuant to an available exemption from such registration, and that hedging transactions involving the Warrant Shares may not be conducted unless in compliance with the U.S. Act.  The Holder understands that any certificate representing the Warrant Shares will bear a legend setting forth the foregoing restrictions.  Furthermore, the Holder understands that the Warrant Shares are restricted within the meaning of “Rule 144” promulgated under the U.S. Act; that the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of purchase and payment of the Warrant Shares by the Holder, and even then will not be available unless (i) a public trading market then exists for the shares of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Warrant Shares may be made by the Holder only in limited amounts in accordance with such terms and conditions;

	
  

	
(c)

	
No U.S. beneficial interest:   if applicable and if the Holder is not a resident of the United States, no U.S. Person, either directly or indirectly, has any beneficial interest in any of the Warrant Shares acquired by Holder hereunder, nor does the Holder have any agreement or understanding (written or oral) with any U.S. Person respecting:

  

7

  

	
  

	
(i)

	
the transfer or any assignment of any rights or interest in any of the Warrant Shares;

	
  

	
(ii)

	
the division of profits, losses, fees, commissions or any financial stake in connection with this subscription; or

	
  

	
(iii)

	
the voting of the Warrant Shares;

	
  

	
(d)

	
Holder’s declarations as an “Accredited Investor” if resident in the United States:   if applicable and if the Holder is a resident of the United States, the Holder also warrants and certifies that the Holder is an “Accredited Investor”, as that term is defined in Section 4(2) of the U.S. Act, and in “Rule 501” of “Regulation D” promulgated thereunder, by virtue of the Subscriber’s qualification under one or more of the following categories {please check the appropriate category or categories where applicable}:

	 	
o

	
The Holder is a natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds U.S. $1,000,000.

	 	
o

	
The Holder is a natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with the Subscriber’s spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

	 	
o

	
The Holder is a corporation, organization described in section 501(c)(3) of the United States Internal Revenue Code, Massachusetts, or similar business trust or partnership, not formed for the specific purpose of acquiring the Warrant Shares, with total assets in excess of U.S. $5,000,000.

	 	
o

	
The Holder is a trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Warrant Shares, whose purchase is directed by a sophisticated person.

	 	
o

	
The Holder is a Director or Executive Officer of the Company.

	 	
o

	
The Holder is a “private business development company” as that term is defined in section 202(a)(22) of the United States Investment Advisers Act of 1940.

	 	
o

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

  

8

  

 

	
  

	
The Holder is an entity in which all of the equity owners are accredited investors under one or more of the categories set forth hereinabove.

	
  

	
(e)

	
Experience:   the Holder has the requisite knowledge and experience in financial and business matters for properly evaluating the risks of an investment in the Company;

	
  

	
(f)

	
Information:   the Holder has received all information regarding the Company reasonably requested by the Holder;

	
  

	
(g)

	
Risk:   the Holder understands that an investment in the Company involves certain risks of which the Holder has taken full cognizance, and which risks the Holder fully understands;

	
  

	
(h)

	
Adequacy of information:   the Holder has been given the opportunity to ask questions of, and to receive answers from, the Company concerning the terms and conditions of the within Warrants and to obtain additional information necessary to verify the accuracy of the information contained in the information described in subsection (f) hereinabove, or such other information as the Holder desired in order to evaluate an investment in the Company;

	
  

	
(i)

	
Residency:   the residence of the Holder as set forth hereinabove is the true and correct residence of the Holder and the Holder has no present intention of becoming a resident or domiciliary of any other State or jurisdiction;

	
  

	
(j)

	
Independent investigation:   in making a decision to invest in the Company the Holder has relied solely upon independent investigations made by the Holder, and the particular tax consequences arising from an investment in the Company will depend upon the Holder’s individual circumstances;

	
  

	
(k)

	
Principal:   the Holder is purchasing the Warrant Shares as principal for the Holder’s own account and not for the benefit of any other person, except as otherwise stated herein, and not with a view to the resale or distribution of all or any of the Warrant Shares;

	
  

	
(l)

	
Decision to purchase:   the decision of the Holder to purchase Warrant Shares pursuant hereto has been based only on the representations of this Warrant and any collateral business plan or offering memorandum provided herewith or based upon the Holder’s relationship with a Director and/or Executive Officer of the Company.  It is not made on other information relating to the Company and not upon any oral representation as to fact or otherwise made by or on behalf of the Company or any other person.  The Holder agrees that the Company assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of any business plan information which has been created based upon the Company’s management experience.  In particular, and without limiting the generality of the foregoing, the decision to subscribe for Warrant Shares has not been influenced by:

  

9

  

 

	
  

	
(i)

	
newspaper, magazine or other media articles or reports related to the Company or its business;

	
  

	
(ii)

	
promotional literature or other materials used by the Company for sales or marketing purposes; or

	
  

	
(iii)

	
any representations, oral or otherwise, that the Company will become a listed company, that the Warrant Shares will be repurchased or have any guaranteed future realizable value or that there is any certainty as to the success of the Company or the liquidity or value of the Warrant Shares;

	
  

	
(m)

	
Advertisements:   the Holder acknowledges that the Holder has not purchased Warrant Shares as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

	
  

	
(n)

	
Information not received:   the Holder has not received, nor has the Holder requested, nor does the Holder have any need to receive, any offering memorandum or any other document (other than financial statements or any other document the content of which is prescribed by statute or regulation) describing the business and affairs of the Company which has been prepared for delivery to, and review by, prospective purchasers in order to assist them in making an investment decision in respect of the Warrant Shares, and the Holder has not become aware of any advertisement in printed media of general and regular paid circulation, radio or television with respect to the distribution of the Warrant Shares;

	
  

	
(o)

	
Information received:   the Holder has had access to such additional information, if any, concerning the Company as the Holder has considered necessary in connection with the Holder’s investment decision to acquire the Warrant Shares;

	
  

	
(p)

	
Reliance on public information:   the Holder has relied solely upon the publicly available information relating to the Company and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Company; such publicly available information having been delivered to the Holder without independent investigation or verification by the Company, and agrees that the Company assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of the publicly available information;

	
  

	
(q)

	
Satisfaction with information received:   the Holder acknowledges that, to the Holder’s satisfaction:

	
  

	
(i)

	
the Holder has either had access to or has been furnished with sufficient information regarding the Company and the terms of this investment transaction to the Holder’s satisfaction;

  

10

  

	 	
(ii) 

	
the Holder has been provided the opportunity to ask questions concerning this investment transaction and the terms and conditions thereof and all such questions have been answered to the Holder’s satisfaction; and

	
  

	
(iii)

	
the Holder has been given ready access to and an opportunity to review any information, oral or written, that the Holder has requested, in particular to any offering memorandum or business plan of the Company, if available concurrent with or as a part of this Warrant;

	 	
(r)

	
Reliance of representative:   the Holder, by reason of the Holder’s knowledge and experience in financial and business matters, is capable of evaluating the risks and merits of an investment in the Warrant Shares or, if the Holder is relying upon the investment advice of a representative who has advised the undersigned in connection with this investment (the “Representative”), the undersigned believes the Representative to be sophisticated and competent in the area of investment advice and analysis and therefore capable of evaluating the risks and merits of an investment in the Warrant Shares;

	
  

	
(s)

	
Economic risk:   the Holder has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the Holder’s investment in the Warrant Shares, and the Holder is able to bear the economic risk of a total loss of the Holder’s investment in the Warrant Shares;

	
  

	
(t)

	
Speculative investment:   the Holder understands that an investment in the Warrant Shares is a speculative investment and that there is no guarantee of success of the Company’s management’s plans.  Management’s plans are an effort to apply present knowledge and experience to project a future course of action which is hoped will result in financial success employing the Company’s assets and with the present level of management’s skills and of those whom the Company will need to attract (which cannot be assured).  Additionally, all plans are capable of being frustrated by new or unrecognized or unappreciated present or future circumstances which can typically not be accurately, or at all, predicted;

	
  

	
(u)

	
Risk and resale restriction:   the Holder is aware of the risks and other characteristics of the Warrant Shares and of the fact that the Holder will not be able to resell the Warrant Shares except in accordance with the applicable securities legislation and regulatory policy;

	 	
(v)

	
Representations as to resale:   no person has made to the Holder any written or oral representations:

	 	
(i)

	
that any person will resell or repurchase the Warrant Shares;

	 	
(ii)

	
that any person will refund the purchase of the Warrant Shares;

	 	
(iii)

	
as to the future price or value of any of the Warrant Shares; or

	 	
(iv)

	
that the Warrant Shares will be listed and posted for trading on any stock exchange, over-the-counter or bulletin board market, or that application has been made to list and post any of the Warrant Shares for trading on any stock exchange, over-the-counter or bulletin board market; and

	
  

	
the Purchaser will not resell the Warrant Shares except in accordance with the provisions of applicable securities legislation and stock exchange rules;

  

11

  

	
  

	
(w)

	
Reports and undertakings:   if required by applicable securities legislation, policy or order or by any securities commission, stock exchange or other regulatory authority, the Holder will execute and otherwise assist the Company in filing such reports, undertakings and other documents as may be reasonably required with respect to the issue of the Warrant Shares;

	
  

	
(x)

	
Resale restrictions:   the Holder has been independently advised as to the applicable hold period imposed in respect of the Warrant Shares by securities legislation in the jurisdiction in which the Holder’s resides and confirms that no representation has been made respecting the applicable hold periods for the Warrant Shares and is aware of the risks and other characteristics of the Warrant Shares and of the fact that the Holder may not be able to resell the Warrant Shares except in accordance with the applicable securities legislation and regulatory policy.  In this regard the Holder agrees that if the Holder decides to offer, sell or otherwise transfer any of the Warrant Shares the Holder will not offer, sell or otherwise transfer any of such Warrant Shares, directly or indirectly, unless:

	
  

	
(i)

	
the sale is to the Company; or

	
  

	
(ii)

	
the sale is made outside the United States in compliance with the requirements of Rule 904 of Regulation S under the U.S. Act and in compliance with applicable state securities laws; or

	
  

	
(iii)

	
the sale is made pursuant to an exemption from registration under the U.S. Act provided by Rule 144 thereunder and in compliance with applicable state securities laws; or

	
  

	
(iv)

	
with the prior written consent of the Company, the sale is made pursuant to another applicable exemption from registration under the U.S. Act and in compliance with applicable state securities laws;

	
  

	
(y)

	
No prospectus filing:   the Holder acknowledges that this is an offering made on a private basis without a prospectus and that no federal, state, provincial or other agency has made any finding or determination as to the merits of the investment nor made any recommendation or endorsement of the Warrant Shares, and that:

	
  

	
(i)

	
the Holder may be or is restricted from using most of the civil remedies available under applicable securities legislation; and

	
  

	
(ii)

	
the Company is relieved from certain obligations that would otherwise apply under applicable securities legislation;

	
  

	
(z)

	
Confidentiality:   the Holder understands that the Company’s business plan and this Warrant are confidential.  Furthermore, the Holder has not distributed such, or divulged the contents thereof, to anyone other than such legal or financial advisors as the Holder has deemed desirable for purposes of evaluating an investment in the Warrant Shares, and the Holder has not made any copies thereof except for the Holder’s own records;

	
  

	
(aa)

	
Age of majority:   the Holder, if an individual, has attained the age of majority and is legally competent to execute this Warrant subscription and to take all actions required pursuant hereto;

  

12

  

	 	
(ab) 

	
Authorization and formation of Holder:   the Holder, if a corporation, partnership, trust or other form of business entity, is authorized and otherwise duly qualified to purchase and hold the Warrant Shares, and such entity has not been formed for the specific purpose of acquiring Warrant Shares in this issue.  If the Holder is one of the aforementioned entities it hereby agrees that, upon request of the Company, it will supply the Company with any additional written information that may be requested by the Company.  In addition, the entering into of this Warrant subscription and the transactions contemplated hereby will not result in the violation of any of the terms of and provisions of any law applicable to, or the constating documents, if a corporation, of, the Holder or of any agreement, written or oral, to which the Holder may be a party or by which the Holder may be bound;

	
  

	
(ac)

	
Legal obligation:   this Warrant subscription has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Holder;

	
  

	
(ad)

	
Legal and tax consequences:   the Holder acknowledges that an investment in the Warrant Shares of the Company may have tax consequences to the Holder under applicable law, which the Holder is solely responsible for determining, and the Holder also acknowledges and agrees that the Holder is responsible for obtaining its own legal and tax advice;

	
  

	
(ae)

	
Compliance with applicable laws:   The Holder knows of no reason (and is sufficiently knowledgeable to determine the same or has sought legal advice) why the delivery of this Warrant subscription, the acceptance of it by the Company and the issuance of the Warrant Shares to the Holder will not comply with all applicable laws of the Holder’s jurisdiction of residence or domicile, and all other applicable laws, and the Holder has no reason to believe that the Holder’s subscription hereby will cause the Company to become subject to or required to comply with any disclosure, prospectus or reporting requirements or to be subject to any civil or regulatory review or proceeding.  In addition, the Holder will comply with all applicable securities laws and will assist the Company in all reasonable manner to comply with all applicable securities laws;

	
  

	
(af)

	
Encumbrance or transfer of Warrant Shares:   the Holder will not sell, assign, gift, pledge or encumber in any manner whatsoever the Warrant Shares herein subscribed for without the prior written consent of the Company and in accordance with applicable securities legislation; and

	
  

	
(ag)

	
Regulation S:   the Holder further represents and warrants that the Holder was not specifically formed to acquire any of the Warrants Share subscribed for in this Warrant subscription in violation of the provisions of Regulation S.

The Holder understands that the Company will rely on the representations and warranties of the Holder herein in determining whether a sale of the Warrant Shares to the Holder is in compliance with federal and applicable state and provincial securities laws.  The Holder hereby agrees to indemnify the Company and its affiliates and to hold the Company and its affiliates, together with each of the Company’s officers, directors, employees and professional advisors, harmless from and against any and all liability, damage, cost or expense (including reasonable attorney’s fees) incurred on account of or arising out of: (i) any inaccuracy in the Holder’s acknowledgements, representations or warranties set forth in this Warrant subscription; (ii) the disposition of any of the Warrant Shares which the Holder will receive, contrary to the Holder’s acknowledgements, representations or warranties in this Warrant subscription or otherwise; (iii) any suit or proceeding based upon the claim that such acknowledgments, representations or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company or its affiliates; and (iv) the Holder’s failure to fulfill any or all of the Holder’s obligations herein.

 

 

 

  

13

  

 

 

Restrictions, legend on and disposition of the Warrant Shares.   The Holder acknowledges and understands that neither the sale of the Warrant Shares which the Holder is acquiring nor the Warrant Shares themselves has been registered under the U.S. Act or any state securities laws, and, furthermore, that the Warrant Shares must be held indefinitely unless subsequently registered under the U.S. Act or an exemption from such registration is available.

The Holder also acknowledges and understands that the share certificate representing the Warrant Shares will be stamped with the following legend (or substantially equivalent language) restricting transfer in the following manner:

“The securities represented hereby have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or under any state securities laws, and may not be offered, sold or otherwise transferred unless (a) to the issuer, (b) outside the United States in accordance with Rule 904 of regulation S under the U.S. Securities Act, (c) pursuant to an exemption from registration under the U.S. Securities Act provided by rule 144 thereunder, if applicable, and in compliance with applicable U.S. state securities laws, or (d) pursuant to another exemption from registration under U.S. securities laws and any applicable state securities laws.  provided that in the case of transfers pursuant to (c) or (d) above, the holder of the securities has furnished to the issuer an opinion of counsel of recognized standing in form and substance satisfactory to the issuer.”

(or)

“The securities represented hereby have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or under any state securities laws, and may not be offered, sold or otherwise transferred unless (a) to the issuer, (b) outside the United States in accordance with Rule 904 of regulation S under the U.S. Securities Act, (c) pursuant to an exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder, if applicable, and in compliance with applicable U.S. state securities laws, or (d) pursuant to another exemption from registration under U.S. securities laws and any applicable state securities laws.  Provided that in the case of transfers pursuant to (c) or (d) above, the holder of the securities has furnished to the issuer an opinion of counsel of recognized standing in form and substance satisfactory to the issuer.  Hedging transactions involving these securities may not be conducted unless in compliance with the U.S. Securities Act.”

(and)

“Unless permitted under securities legislation, the holder of the securities represented hereby shall not trade the securities in Canada before the date that is four months and a day after December 13, 2011."

(and)

“Unless otherwise permitted under securities legislation, the holder of this security must not trade the security in or from British Columbia unless the conditions in section 12(2) of BC Instrument 51-509 issuers quoted in the U.S. over-the-counter market are met.”

The Holder hereby consents to the Company making a notation on its records or giving instructions to any transfer agent of the Warrant Shares in order to implement the restrictions on transfer set forth and described hereinabove.

The Holder also acknowledges and understands that:

	
  

	
(a)

	
the Warrant Shares are restricted securities within the meaning of Rule 144 promulgated under the U.S. Act;

  

14

  

	 	
(b) 

	
the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of purchase and payment of the Warrant Shares by the Holder, and even then will not be available unless (i) a public trading market then exists for the shares of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and

	
  

	
(c)

	
any sale of the Warrant Shares may be made by the Holder only in limited amounts in accordance with such terms and conditions.

The Holder further acknowledges and understands that, without in anyway limiting the acknowledgements and understandings as set forth hereinabove, the Holder agrees that the Holder shall in no event make any disposition of all or any portion of the Warrant Shares which the Holder is acquiring hereunder unless and until:

	
  

	
(a)

	
there is then in effect a “Registration Statement” under the U.S. Act covering such proposed disposition and such disposition is made in accordance with said Registration Statement; or

	
  

	
(b)

	
(i) the Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, (ii) the Holder shall have furnished the Company with an opinion of the Holder’s own counsel to the effect that such disposition will not require registration of such Warrant Shares under the U.S. Act and (iii) such opinion of the Holder’s counsel shall have been concurred in by counsel for the Company and the Company shall have advised the Holder of such concurrence.

__________

 

 

 

 

 

  

15

  

 

Schedule “A”

 

TERMS AND CONDITIONS

Of

 

WARRANTS

 

THE WARRANTS REPRESENTED HEREBY ARE NON-TRANSFERABLE EXCEPT IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS AND WILL BE VOID AND OF NO VALUE UNLESS EXERCISED ON OR BEFORE 5:00 P.M. (TUCSON, ARIZONA, U.S.A.. TIME) ON DECEMBER 13, 2012, AND MAY EXPIRE EARLIER IN CERTAIN CIRCUMSTANCES.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.

(OR)

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER.  HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

(AND)

  

A-1

  

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED HEREBY SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER DECEMBER 13, 2011.

(AND)

UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKET ARE MET.

These are the Terms and Conditions which are attached to the Warrants issued by Zoro Mining Corp.

ARTICLE ONE - INTERPRETATION

Section 1.01 - Definitions

In these Terms and Conditions, unless there is something in the subject matter or context inconsistent:

	
  

	
(a)

	
“Company” means Zoro Mining Corp. or any successor company referred to in Article 7 hereinbelow;

	
  

	
(b)

	
“Company’s Auditors” means an independent firm of accountants duly appointed as auditors of the Company;

	
  

	
(c)

	
“Current Market Price” of a share at any date means the price per share equal to the weighted average price at which the shares have traded during any 30 consecutive trading days selected by the Company, commencing not more than 45 trading days before and ending not less than five trading days before such date, on any recognized stock exchange on which such shares are listed as may be selected for such purpose by the Directors or, if such shares are not listed on any stock exchange, then on such over-the-counter market or bulletin board trading market upon which such trade as may be selected for such purpose by the Directors.  The weighted average price per share shall be determined by dividing the aggregate sale price of all such shares sold on the aforementioned exchange or market, as the case may be, during the aforementioned 30 consecutive trading days by the total number of such shares so sold;

	
  

	
(d)

	
“Director” means a director of the Company for the time being, and reference, without more, to action by the Directors of the Company shall mean action taken by the directors of the Company as a board, or whenever duly empowered, action by an executive committee of the board;

	
  

	
(e)

	
“Dividends Paid in the Ordinary Course” means dividends paid on the shares in any fiscal year of the Company, whether in: (i) cash; (ii) shares of the Company; (iii) warrants or similar rights to purchase any shares of the Company; or (iv) property or other assets of the Company; provided that the amount or value of such dividends (any such shares, warrants or similar rights, or property or other assets so distributed to be valued at the fair market value of such shares, warrants or similar rights, or property or other assets, as the case may be, as determined by action by the Directors (such determination to be conclusive)), does not in such fiscal year exceed the greatest of:

  

A-2

  

 

	
  

	
(i)

	
150% of the aggregate amount of dividends declared payable by the Company on the shares in the period of twelve consecutive months ended immediately prior to the first day of such fiscal year; and

	
  

	
(ii)

	
100% of the consolidated net income of the Company before extraordinary items for the period of twelve consecutive months ended immediately prior to the first day of such fiscal year less the amount of all dividends payable on all shares ranking prior to or on a parity with the shares in respect of the payment of dividends (such consolidated net income, extraordinary items and dividends to be shown in the audited consolidated financial statements of the Company for such period of twelve consecutive months or if there are no audited consolidated financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited consolidated financial statements of the Company);

	
  

	
(f)

	
“herein”, “hereby” and similar expressions refer to these Terms and Conditions as the same may be amended or modified from time to time; and the expressions “Article”, “Section” or “subsection” followed by a number refer to the specified Article or Section of these Terms and Conditions;

	
  

	
(g)

	
“Issuance Date” means that date on which the Company issued the attached Warrants;

	
  

	
(h)

	
“person” means an individual, company, partnership, trustee or any unincorporated organization, and any words importing persons have a similar meaning;

	
  

	
(i)

	
“shares” means the common shares in the capital of the Company as constituted at the Issuance Date and any shares resulting from any subdivision or consolidation of the shares;

	
  

	
(j)

	
“Time of Expiry” means 5:00 p.m. (Tucson, Arizona, U.S.A., time) on December 13, 2012;

	
  

	
(k)

	
“Warrant Exercise Period” means the period in time between the Issuance Date and the Time of Expiry;

	
  

	
(l)

	
“Warrant Exercise Price” means U.S. $0.25 per Warrant Share during the Warrant Exercise Period;

	
  

	
(m)

	
“Warrant Holders” or “Holders” means the bearers of the Warrants for the time being;

	
  

	
(n)

	
“Warrant Holders’ Request” means an instrument signed in one or more counterparts by Warrant Holders entitled to purchase in the aggregate not less than 25% of the aggregate number of Warrant Shares which could be purchased pursuant to all the Warrants outstanding for the time being, requesting the Company to take some action or proceeding;

  

A-3

  

	 	
(o) 

	
“Warrants” means the Warrants of the Company issued and presently authorized, as set out in Section 2.01 and for the time being outstanding, and any other warrants made subject to these Terms and Conditions;

	
  

	
(p)

	
“Warrant Shares” means the shares in the capital of the Company issuable upon the exercise of the within Warrants by the Holder thereof; and

	
  

	
(q)

	
words importing the singular number include the plural and vice versa, and words importing the masculine gender include the feminine and neuter genders.

Section 1.02 - Interpretation Not Affected by Headings

The division of these Terms and Conditions into Articles and Sections and the insertion of headings are for convenience of reference only and will not affect their construction of interpretation.

Section 1.03 - Applicable Law

The Warrants will be construed in accordance with the laws of the State of Nevada, U.S.A., and will be treated in all respects as Nevada contracts.

ARTICLE TWO - ISSUE OF WARRANTS

Section 2.01 - Issue of Warrants

Warrants entitling the Holders thereof to purchase an aggregate of up to 100,000 Warrant Shares are authorized to be issued by the Company on the basis of an issue of 100,000 Warrants where one Warrant is required to purchase one Warrant Share of the Company.

Section 2.02 - Additional Warrants

Nothing contained herein shall preclude the Company from time to time to make further equity or debt offerings and sell additional shares, warrants or grant options or similar rights to purchase shares of its capital stock.

Section 2.03 - Issue in Substitution for Lost Warrants

	
  

	
(a)

	
Subject to Section 2.03(b) hereinbelow, if a Warrant is mutilated, lost, destroyed or stolen, the Company shall issue and deliver a new Warrant of like date and tenor as the one mutilated, lost, destroyed or stolen, in exchange for and in place of and upon cancellation of such mutilated Warrant, or in lieu of, and in substitution for such lost, destroyed or stolen Warrant, and the substituted Warrant will be entitled to the benefit of these Terms and Conditions and rank equally in accordance with its terms with all other Warrants issued or to be issued by the Company.

	
  

	
(b)

	
The applicant for the issue of a new Warrant will bear the cost of its issue and in case of loss, destruction or theft, furnish to the Company such evidence of ownership and of loss, destruction or theft of the Warrant so lost, destroyed or stolen, as will be satisfactory to the Company in its discretion, and such applicant may also be required to furnish indemnity in amount and form satisfactory to the Company in its discretion, and will pay the reasonable charges of the Company in connection with such issuance of a new Warrant.

  

A-4

  

Section 2.04 - Warrant Holder Not a Shareholder

The holding of a Warrant will not constitute the Holder a stockholder of the Company, nor entitle him to any right or interest except as expressly provided in the Warrant and herein.

ARTICLE THREE - OWNERSHIP AND TRANSFER

Section 3.01 - Exchange of Warrants

	
  

	
(a)

	
Warrants in any authorized denomination may, upon compliance with the reasonable requirements of the Company, be exchanged for Warrants in any other authorized denomination, of the same class and date of expiry, entitling the Holder to purchase an equal aggregate number of shares at the same subscription price and on the same terms as the Warrants so exchanged.

	
  

	
(b)

	
Warrants may be exchanged only at the office of the Company and any Warrants tendered for exchange will be surrendered to the Company and cancelled.

Section 3.02 - Ownership of Warrants

	
  

	
(a)

	
The Company may deem and treat the registered holder of any Warrant as the absolute owner of such Warrant, for all purposes, and will not be affected by any notice or knowledge to the contrary.

	
  

	
(b)

	
The registered holder of any Warrant will be entitled to the rights evidenced by such Warrant free from all equities or rights of set-off or counterclaim between the Company and the original or any intermediate Holder and all persons may act accordingly, and the receipt of any such bearer for the shares will be a good discharge to the Company for the same and the Company will not be bound to inquire into the title of any such bearer.

Section 3.03 - Transfer of Warrants

The Warrants are non-transferable.

Section 3.04 - Notice to Warrant Holders

Any notice to be given to Warrant Holders will be deemed to be validly given if delivered or sent by ordinary post addressed to such Warrant Holders at the addresses appearing on the register hereinbefore-mentioned and shall be deemed to have been effectively given on the date of delivery or, if mailed, on the seventh business day following the date of mailing.

ARTICLE FOUR - EXERCISE OF WARRANTS

Section 4.01 - Method of Exercise of Warrants

The right to purchase Warrant Shares conferred by the Warrants may be exercised, before the Time of Expiry, by the Holder of such Warrant surrendering it, with a duly completed and executed subscription in the form attached thereto and cash or a certified cheque or money order payable to or to the order of the Company, at par in Tucson, Arizona, U.S.A., for the Warrant Exercise Price per Warrant Share applicable at the time of surrender in respect of the Warrant Shares subscribed for in lawful money of the United States, to the Company at its executive office in Tucson, Arizona, U.S.A..

 

 

 

  

A-5

  

 

 

Section 4.02 - Effect of Exercise of Warrants

As soon as practicable after surrender and payment, and subject to the terms and conditions set forth herein, the Company will cause to be delivered to the person or persons in whose name or names the Warrant Shares subscribed for are to be issued as specified in such subscription or mailed to him or them at his or their respective addresses specified in such subscription, a certificate or certificates for the appropriate number of Warrant Shares not exceeding those which the Warrant Holder is entitled to purchase pursuant to the Warrant surrendered.  Upon issuance, such person or persons shall be deemed to have become the holder or holders of record of such Warrant Shares on the date of surrender and payment.

Section 4.03 - Subscription for Less than Entitlement

The Holder of any Warrant may subscribe for and purchase a number of Warrant Shares less than the number which he is entitled to purchase pursuant to the surrendered Warrant.  In the event of any purchase of a number of Warrant Shares less than the number which can be purchased pursuant to a Warrant, the Company will issue a new Warrant in respect of the balance of the Warrant Shares which the Holder was entitled to purchase pursuant to the surrendered Warrant and which were not then purchased.

Section 4.04 - Warrants for Fractions of Warrant Shares

No fractional Warrant Shares shall be issued upon exercise of these Warrants.  If any fractional interest in a Warrant Share would, except for the provisions of the first sentence of this Section 4.04, be deliverable upon the exercise of a Warrant, the number of Warrant Shares to be issued to the Warrant Holder upon exercise of the Warrant shall be rounded up to the next whole number.

Section 4.05 - Expiration of Warrants

After the Time of Expiry all rights attaching to the Warrants will wholly cease and terminate and the Warrants will be void and of no effect.

Section 4.06 – Warrant Exercise Price

The Warrant Exercise Price per Warrant Share which must be paid to exercise a Warrant is as prescribed by resolution of the Board of Directors of the Company and set forth in this Warrant certificate subject to adjustment as provided for herein.

Section 4.07 - Adjustment of Subscriptions Rights and Exercise Price

The Warrant Exercise Price and the number of Warrant Shares deliverable upon the exercise of the Warrants will be subject to adjustment in the events and in the manner following:

	
  

	
(a)

	
Share Reorganization.  If prior to the Time of Expiry the Company shall:

	
  

	
(i)

	
issue shares without the receipt of any consideration therefor to all or substantially all of the holders of the shares by way of stock dividend or other distribution (other than as dividends paid in the common course (“Dividends Paid in the Common Course”)), or

  

A-6

  

 

	
  

	
(ii)

	
subdivide its outstanding shares into a greater number of shares; or

	
  

	
(iii)

	
consolidate its outstanding shares into a lesser number of shares,

(any of such events in these paragraphs (i), (ii) and (iii) being called a “Share Reorganization”), then the Warrant Exercise Price per Warrant Share shall be adjusted as of the effective date or record date, as the case may be, at which the holders of shares are determined for the purpose of the Share Reorganization by multiplying the Warrant Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of shares outstanding on such effective date or record date before giving effect to such Share Reorganization and the denominator of which shall be the number of shares outstanding as of the effective date or record date after giving effect to such Share Reorganization.

	
  

	
(b)

	
Rights Offering.  If prior to the Time of Expiry the Company shall fix a record date for the issue of rights, options or warrants to all or substantially all of the holders of shares under which such holders are entitled, during a period expiring not more than 45 calendar days after the record date for such issue (“Rights Period”), to subscribe for or purchase shares at a price per share to the holder of less than ninety-five percent (95%) of the Current Market Price for the shares on such record date (any of such events being called a “Rights Offering”), then the Warrant Exercise Price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Warrant Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

	
  

	
(i)

	
the numerator of which shall be the aggregate of:

	
  

	
A.

	
the number of shares outstanding as of the record date for the Rights Offering; and

	
  

	
B.

	
a number determined by dividing (1) the product of the number of shares issued or subscribed during the Rights Period upon the exercise of the rights, warrants or options under the Rights Offering and the price at which such shares are offered by (2) the Current Market Price of the shares as of the record date for the Rights Offering; and

	
  

	
(ii)

	
the denominator of which shall be the number of shares outstanding after giving effect to the Rights Offering and including the number of shares actually issued or subscribed for during the Rights Period upon exercise of the rights, warrants or options under the Rights Offering.

	
  

	
Any Warrant Holder who shall have exercised his right to purchase shares in accordance with this Article 4 during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor shall, in addition to the shares to which he is otherwise entitled upon such exercise in accordance with this Article 4, be entitled to that number of additional shares equal to the result obtained when the difference, if any, resulting from the subtraction of the Warrant Exercise Price as adjusted for such Rights Offering pursuant to this subsection (b) hereinabove from the Warrant Exercise Price in  effect immediately prior to the end of such Rights Offering is multiplied by the number of Warrant Shares purchased upon exercise of the Warrants held by such Warrant Holder during such period, and the resulting product is divided by the Warrant Exercise Price as adjusted for such Rights Offering pursuant to this subsection 4.07(b); provided that the provisions of this Article 4 shall be applicable to any fractional interest in any share to which such Warrant Holder might otherwise be entitled under the foregoing provisions of this subsection 4.07(b).  Such additional shares shall be deemed to have been issued to the Warrant Holder immediately following the end of the Rights Period and a certificate for such additional shares shall be delivered to such Warrant Holder within ten business days following the end of the Rights Period.

  

A-7

  

  

	
  

	
(c)

	
Special Distribution.  If prior to the Time of Expiry the Company shall issue or distribute to all or to substantially all the holders of the shares:

	
  

	
(i)

	
securities of the Company including rights, options or warrants to acquire shares of any class or securities exchangeable for or convertible into or exchangeable into any such shares or property or assets and including evidences of its indebtedness; or

	
  

	
(ii)

	
any property or other assets;

and if such issuance or distribution does not constitute Dividends Paid in the Ordinary Course, a Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Warrant Exercise Price per Warrant Share shall be adjusted effective immediately after the record date at which the holders of affected shares are determined for purposes of the Special Distribution to a price determined by multiplying the Warrant Exercise Price in effect on such record date by a fraction:

(iii)           the numerator of which shall be:

	
  

	
A.

	
the product of the number of shares outstanding on such record date and the Current Market Price of the shares on such record date; less

	
  

	
B.

	
the excess, if any, of (1) the fair market value on such record date, as determined by action by the Directors (whose determination shall be conclusive), to the holders of the shares of such securities or property or other assets so issued or distributed in the Special Distribution over (2) the fair market value of the consideration received therefor by the Company from the holders of the shares, as determined by action by the Directors (whose determination shall be conclusive); and

	
  

	
(iv)

	
the denominator of which shall be the number of shares outstanding on such record date multiplied by the Current Market Price of the shares on such record date.

	
  

	
(d)

	
Capital Reorganization.  If prior to the Time of Expiry there shall be a reclassification of shares at any time outstanding or a change of the shares into other shares or into other securities (other than a Share Reorganization), or a consolidation, amalgamation, arrangement or merger of the Company with or into any other Company or other entity (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification of the outstanding shares or a change of the shares into other securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another Company or other entity (any of such events being herein called a “Capital Reorganization”), any Warrant Holder who exercises his right to purchase Warrant Shares pursuant to Warrant(s) then held after the effective date of such Capital Reorganization shall be entitled to receive, and shall accept for the same aggregate consideration in lieu of the number of Warrant Shares to which such holder was theretofore entitled upon such exercise the aggregate number of shares, other securities or other property which such holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Warrant Holder had been the registered holder of the number of Warrant Shares to which such holder was theretofore entitled upon exercise of the Warrant subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this Section 4.07; provided, however, that no such Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken to so entitle the Warrant Holders.  If determined appropriate by the Company, acting reasonably, appropriate adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Article 4 with respect to the rights and interests thereafter of Warrant Holders to the end that the provisions set forth in this Article 4 shall thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any Warrant.  Any such adjustments shall be made by and set forth in terms and conditions supplemental hereto approved by action by the Directors and by the Company, acting reasonably and shall for all purposes be conclusively deemed to be appropriate adjustments.

  

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(e)

	
If prior to the Time of Expiry a Share Reorganization shall occur which results in an adjustment in the Exercise Price pursuant to the provisions of this Section 4.07, the number of Warrant Shares purchasable pursuant to each whole Warrant shall be adjusted contemporaneously with the adjustment of the Warrant Exercise Price per Warrant Share by multiplying the number of Warrant Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the Warrant Exercise Price in effect immediately prior to such adjustment and the denominator of which shall be the Warrant Exercise Price resulting from such adjustment.

	
  

	
Section 4.08 - Rules Regarding Calculation of Adjustment of Exercise Price and Number of Warrant Shares Purchasable upon Exercise

	
  

	
For the purposes of Section 4.07 hereinabove:

	
  

	
(a)

	
The adjustments provided for in Section 4.07 are cumulative, and shall, in the case of adjustments to the Warrant Exercise Price per Warrant Share, be computed to the nearest one-tenth of one cent (U.S. $0.001) and shall be made successively whenever an event referred to therein shall occur, subject to the following subsections of this Section 4.08.

	
  

	
(b)

	
No adjustment in the Warrant Exercise Price per Warrant Share shall be required unless such adjustment would result in a change of at least one and one-half percent (1.5%) in the prevailing Warrant Exercise Price and no adjustment shall be made in the number of Warrant Shares purchasable upon exercise of a Warrant unless it would result in a change of at least one one-tenth of a Warrant Share (1/10); provided, however, that any adjustments which, except for the provisions of this subsection 4.08(b) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment.

 

 

 

 

 

 

 

  

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(c)

	
Subject to the prior consent, if required, of any recognized stock exchange or over-the-counter or bulletin board trading market which may have jurisdiction over the affairs of the Company, from time to time, no adjustment in the Warrant Exercise Price per Warrant Share or in the number of Warrant Shares purchasable upon exercise of Warrants shall be made in respect of any event described in Section 4.07, other than the events referred to in paragraphs (ii) and (iii) of subsection (a) thereof, if Warrant Holders are entitled to participate in such event on the same terms, mutatis mutandis, as if Warrant Holders had exercised their Warrants prior to or on the effective date or record date of such event.

	
  

	
(d)

	
No adjustment in the Warrant Exercise Price shall be made pursuant to Section 4.07 in respect of the issue from time to time:

(i)           of Warrant Shares purchasable on exercise of the Warrants; or

	
  

	
(ii)

	
in respect of the issue from time to time as Dividends Paid in the Ordinary Course of shares to holders of shares who exercise an option or election to receive substantially equivalent dividends in shares in lieu of receiving a cash dividend;

and any such issue shall be deemed not to be a Share Reorganization.

	
  

	
(e)

	
If a dispute shall at any time arise with respect to adjustments provided for in Section 4.07, such dispute shall be conclusively determined by the Company’s Auditors, or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the Directors and any such determination shall be binding upon the Company and the Warrant Holders; such auditors or accountants shall be provided access to all necessary records of the Company.  In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Holders describing such determination.

	
  

	
(f)

	
In case the Company after the date of issue of the Warrants shall take any action affecting the shares, other than action described in Section 4.07, which in the opinion of the Directors of the Company would materially affect the rights of Warrant Holders, the Warrant Exercise Price per Warrant Share or the number of Warrant Shares purchasable upon exercise shall be adjusted in such manner, if any, and at such time, by action by the Directors, in their sole discretion as they may determine to be equitable in the circumstances, but subject in all cases to the prior approval, if required, of any recognized stock exchange or over-the-counter or bulletin board trading market which may have jurisdiction over the affairs of the Company, from time to time, together with all other applicable regulatory authorities.  Failure of the taking of action by the Directors so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the shares shall be conclusive evidence that the Board of Directors of the Company has determined that it is equitable to make no adjustment in the circumstances.

	
  

	
(g)

	
If the Company shall set a record date to determine the holders of the shares for the purpose of entitling them to receive any dividend or distribution or any  subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Warrant Exercise Price per Warrant Share or the number of Warrant Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

  

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(h)

	
In the absence of a resolution of the Directors fixing a record date for a Special Distribution or Rights Offering, the Company shall be deemed to have fixed as the record date therefor the date on which the Special Distribution or Rights Offering is effected.

	
  

	
(i)

	
As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to any of the Warrants, including the Warrant Exercise Price per Warrant Share and the number or class of Warrant Shares or other securities which are to be received upon the exercise thereof, the Company shall take any corporate action which may, in the opinion of counsel to the Company, be necessary in order that the Company have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which all the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions thereof.

	
  

	
Section 4.09 - Postponement of Subscription

In any case in which this Article 4 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such an event:

	
  

	
(a)

	
issuing to the Holder of any Warrant exercised after such record date and before the occurrence of such event, the additional Warrant Shares issuable upon such exercise by reason of the adjustment required by such event; and

	
  

	
(b)

	
delivering to such Holder any distributions declared with respect to such additional Warrant Shares after such exercise date and before such event;

provided, however, that the Company shall deliver to such Holder an appropriate instrument evidencing such Holder’s right, upon the occurrence of the event requiring the adjustment, to an adjustment in the Warrant Exercise Price per Warrant Share or the number of Warrant Shares purchasable on the exercise of any Warrant to such distributions declared with respect to any additional Warrant Shares issuable on the exercise of any Warrant.

	
  

	
Section 4.10 - Notice of Adjustment of Warrant Exercise Price and Number of Warrant Shares Purchasable Upon Exercise

	
  

	
(a)

	
At least 14 calendar days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment in any of the subscription rights pursuant to any of the Warrants, including the Warrant Exercise Price per Warrant Share and the number of Warrant Shares which are purchasable upon the exercise thereof, or such longer period of notice as the Company shall be required to provide holders of shares in respect of any such event, the Company shall give notice to the Warrant Holders by way of a certificate of the Company specifying the particulars of such event and, if determinable, the required adjustment and the computation of such adjustment.

  

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(b)

	
In case any adjustment for which a notice in subsection 4.10(a) of this Section 4.10 has been given is not then determinable the Company shall promptly after such adjustment is determinable, give notice to the Warrant Holders of the adjustment and the computation of such adjustment.

Section 4.11 - Legending of Warrants and Warrant Shares

	
  

	
(a)

	
The Holder of any Warrants hereby agrees and consents by acceptance hereof that the certificate or certificates representing any Warrants or Warrant Shares shall be impressed with a legend (the “Legend”) reciting that the transfer thereof is restricted for a prescribed period (the “Restricted Period”), substantially in the following form:

“The securities represented by this certificate have not been registered under the United States Securities Act of 1933, as amended, or the laws of any state, and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation by the security holder named hereon that said securities have been acquired for purposes of investment and not for purposes of distribution.  These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, or the availability of an exemption from such registration.  The stock transfer agent has been ordered to effectuate transfers of this certificate only in accordance with the above instructions.”

(or)

“These securities have not been registered under the United States Securities Act of 1933, as amended (the “Act”), or the laws of any state, and are being issued in reliance upon Regulation S promulgated under the Act.  These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, the availability of an exemption from such registration or compliance with Regulation S.  Furthermore, no offer, sale, transfer, pledge or hypothecation is to take place without the prior written approval of counsel to the company.  The stock transfer agent has been ordered to effectuate transfers only in accordance with the above instructions.”

(and, if applicable)

“Unless permitted under applicable securities legislation, the holder of the securities represented hereby shall not trade the securities in Canada before the earlier of (i) the date that is four months and a day after the date the company first became a reporting issuer in any of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the company is a sedar filer, and (ii) the date that is four months and a day after the later of (a) the distribution date, and (b) the date the company became a reporting issuer in the local jurisdiction of the subscriber of the securities that are the subject of the trade.”

(and)

“Unless otherwise permitted under securities legislation, the holder of this security must not trade the security in or from British Columbia unless the conditions in section 12(2) of BC Instrument 51-509 Issuers Quoted in the U.S. Over-the-Counter Market are met.”; and

	
  

	
(b)

	
The Holder and any transferee thereof acknowledges by acceptance hereof that if any Warrants are exercised during the Restricted Period the certificate or certificates representing the Warrant Shares issuable upon such exercise shall also be impressed with the Legend set forth above unless counsel reasonably acceptable to the Company delivers an unqualified opinion that such Legend need not be imposed.

  

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ARTICLE FIVE - COVENANTS BY THE COMPANY

Section 5.01 - Reservation of Warrant Shares

The Company will reserve and there will remain unissued out of its authorized capital a sufficient number of shares to satisfy the rights of purchase in the Warrants should the Holders of all the Warrants from time to time outstanding determine to exercise such rights in respect of all Warrant Shares which they are or may be entitled to purchase pursuant thereto.

ARTICLE SIX - MEETING OF WARRANT HOLDERS

Section 6.01 - Right to Convene Meeting

	
  

	
(a)

	
The Company may at any time and from time to time, and will on receipt of a Warrant Holder’s Request and upon being indemnified to its reasonable satisfaction by the Warrant Holders signing such Warrant Holder’s Request against the costs which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Warrant Holders.

	
  

	
(b)

	
If the Company fails, within 15 calendar days after receipt of such Warrant Holder’s Request and indemnity, to give notice convening a meeting, such Warrant Holders may convene such meeting.

	
  

	
(c)

	
Every such meeting will be held in Tucson, Arizona, U.S.A., unless required by law to be held elsewhere in the United States.

Section 6.02 - Notice

At least 30-calendar days’ notice of any meeting will be given by the Company to the Warrant Holders.  Such notice will state the time when and the place where the meeting is to be held and will state briefly the general nature of the business to be transacted, but it will not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article.

Section 6.03 - Chairman

Some person nominated in writing by the Company will be Chairman of the meeting and if no person is so nominated, or if the person so nominated is not present within fifteen minutes from the time fixed for the holding of the meeting, the Warrant Holders present in person or by proxy will choose some person present to be Chairman.

Section 6.04 - Quorum

Subject to the provisions of Section 6.12, at any meeting of the Warrant Holders a quorum will consist of Warrant Holders present in person or by proxy and entitled to purchase at least 25% of the aggregate number of Warrant Shares which could be purchased pursuant to all the then outstanding Warrants of the class, provided that at least two persons entitled to vote are personally present.  If a quorum of the Warrant Holders is not present within half-an-hour from the time fixed for holding any meeting, the meeting, if summoned by the Warrant Holders, or on a Warrant Holder’s request, will be dissolved; but in any other case the meeting will be adjourned to the same day in the next week (unless such day is a non-business day, in which case it will be adjourned to the next following business day) at the same time and place.  At the adjourned meeting the Warrant Holders present in person or by proxy will form a quorum and may transact the business for which the meeting was originally convened notwithstanding that they may not be entitled to purchase at least 25% of the aggregate number of Warrant Shares which can be purchased pursuant to all of the then outstanding Warrants.

 

 

 

  

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Section 6.05 - Power to Adjourn

The Chairman of any meeting at which a quorum of the Warrant Holders is present may with the consent of the meeting adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

Section 6.06 - Show of Hands

Every question submitted to a meeting will be decided in the first place by a majority of the votes given on a show of hands.  At any such meeting, unless a poll is demanded, a declaration by the Chairman that a resolution has been carried or carried unanimously or by a particular majority will be conclusive evidence of the fact.

Section 6.07 - Poll

On any question submitted to a meeting and after a vote by show of hands, when demanded by the Chairman or by one or more of the Warrant Holders acting in person or by proxy and entitled to purchase in the aggregate at least 5% of the aggregate number of Warrant Shares which could be purchased pursuant to all the Warrants for the time being outstanding, a poll will be taken in such manner as the Chairman will direct.  Questions other than extraordinary resolutions will be decided by a majority of the votes cast on the poll.

Section 6.08 - Voting

On a show of hands every person who is present and entitled to vote, whether as a Warrant Holder or as proxy for one or more absent Warrant Holders or both, will have one vote.  On a poll each Warrant Holder present in person or represented by proxy duly appointed by instrument in writing will be entitled to one vote in respect of each Warrant Share which he is entitled to purchase pursuant to the Warrant or Warrants then held by him.  A proxy need not be a Warrant Holder.

Section 6.09 - Regulations

The Company may from time to time make or vary such regulations as it will think fit:

	
  

	
(a)

	
for the issue of voting certificates by any bank, trust company or other depository, certifying that specified Warrants have been deposited with it by a named Holder and will remain on deposit until after the meeting, which voting certificate will entitle the Holders to be present and vote at any such meeting and at any adjournment thereof in the same manner and with the same effect as though the holders so named in such voting certificates were the actual bearers of the Warrants specified therein;

  

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(b) 

	
for the deposit of voting certificates or instruments appointing proxies at such place and time as the Company or the Warrant Holders convening the meeting, as the case may be, may in the notice convening the meeting direct;

	
  

	
(c)

	
for the deposit of voting certificates or instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held, and enabling particulars of such voting certificates or instruments appointing proxies to be mailed, cabled or telegraphed before the meeting to the Company at the place where the same is to be held, and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting; and

	 	
(d) 

	
for the form of the instrument of proxy.

Any regulations so made will be binding and effective and the votes given in accordance therewith will be valid and will be counted.  Save as such regulations may provide, the only persons who will be recognized at any meeting as the Holder of any Warrants, or as entitled to vote or be present at the meeting in respect thereof, will be persons who produce Warrants at the meeting.

Section 6.10 - Company May Be Represented

The Company, by its Directors and Officers and the legal advisors of the Company, may attend any meeting of the Warrant Holders, but will have no vote as such.

Section 6.11 - Powers Exercisable by Extraordinary Resolution

In addition to all other powers conferred upon them by any other provisions hereof or by law, the Warrant Holders at a meeting will have the following powers, exercisable from time to time by extraordinary resolution:

	
  

	
(a)

	
to enforce any of the covenants on the part of the Company contained in the Warrants, or to enforce any of the rights of the Warrant Holders in any manner specified in such extraordinary resolution, or to refrain from enforcing any such covenant or right;

	
  

	
(b)

	
to waive any default on the part of the Company in complying with any provision hereof either conditionally or upon any conditions specified in such extraordinary resolution; and

	
  

	
(c)

	
to consent to any amendment of the provisions of these Terms and Conditions.

Section 6.12 - Meaning of “Extraordinary Resolution”

	
  

	
(a)

	
The Expression “extraordinary resolution” when used herein means, subject as hereinafter in this Section and in Section 6.15 provided, a resolution proposed at a meeting of Warrant Holders duly convened for that purpose, and held in accordance with the provisions in this Article contained at which there are present, in person or by proxy, Warrant Holders entitled to purchase at least 25% of the aggregate number of Warrant Shares which can be purchased pursuant to all the then outstanding Warrants, and passed by the affirmative votes of Warrant Holders entitled to purchase not less than 75% of the aggregate number of Warrant Shares which can be purchased pursuant to all the then outstanding Warrants represented at the meeting and voted upon such resolution.

  

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(b)

	
If, at any such meeting called for the purpose of passing an extraordinary resolution, Warrant Holders entitled to purchase 25% of the aggregate number of Warrant Shares which can be purchased pursuant to all the then outstanding Warrants are not present in person or by proxy within half-an-hour after the time appointed for the meeting, then the meeting, if convened by Warrant Holders or on a Warrant Holder’s Request, will be dissolved; but in any other case it will stand adjourned and the provisions of Section 6.04 will mutatis mutandis apply.

Section 6.13 - Powers Cumulative

Any one or more of the powers or any combination of the powers to be exercisable by the Warrant Holders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time will not be deemed to exhaust the right of the Warrant Holders to exercise such power or powers or combination of powers then or any power or powers or combination of powers thereafter from time to time.

Section 6.14 - Minutes

Minutes of all resolutions and proceedings at every such meeting will be made and duly entered in books to be from time to time provided for that purpose by the Company, and any such minutes, if signed by the Chairman of the meeting at which such resolutions were passed or proceedings had, or by the Chairman of the next succeeding meeting of the Warrant Holders, will be prima facie evidence of the matters stated and until the contrary is proved, every such meeting, in respect of the proceedings of which minutes will have been made, will be deemed to have been duly convened and held, and all resolutions passed or proceedings taken, to have been duly passed and taken.

Section 6.15 - Binding Effect of Resolutions

Every resolution and every extraordinary resolution passed in accordance with the provisions of this Article at a meeting of Warrant Holders will be binding upon all Warrant Holders.

Section 6.16 - Status of Warrant Holders

The Holders of Warrants of a particular class will not be entitled as such to attend or vote at a meeting of the Holders of Warrants of another class, and any action taken at a meeting of the Holders of Warrants of a particular class will in no way affect the rights of the Holders of the Warrants of another class.

ARTICLE SEVEN - MODIFICATION OF TERMS, MERGER, SUCCESSORS

	
  

	
Section 7.01 - Modification of Terms for Certain Purposes

From time to time the Company may, and it will, when so directed by these presents, modify these Terms and Conditions, for any one or more or all of the following purposes:

	
  

	
(a)

	
giving effect to any extraordinary resolution passed as provided in Article 6;

	
  

	
(b)

	
adding to or altering these provisions in respect of the registration and transfer of Warrants making provision for the exchange of Warrants of different denominations; and making any modification in the form of the Warrants which does not affect their substance;

  

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(c)

	
for any other purpose, including the correction or rectification of any ambiguous, defective provisions, errors or omissions herein; and

	
  

	
(d)

	
to evidence any succession of any Company and the assumption by any successor of the covenants of the Company and in the Warrants contained as provided in this Article.

Section 7.02 - No Extension of Expiry Date

Notwithstanding Section 7.01, no modification will be made to the Time of Expiry without the prior consent of the Directors of the Company together with all recognized stock exchange or over-the-counter or bulletin board trading markets and regulatory authorities who may have, from time to time, jurisdiction over the affairs of the Company.

Section 7.03 - Company May Consolidate, etc. on Certain Terms

Nothing will prevent any consolidation, amalgamation or merger of the Company with or into any other corporation or corporations; however, the corporation formed by such consolidation or into which such merger will have been made will be a corporation organized and existing under the laws of Canada or of the United States of America, or any Province, State, District or Territory thereof, and will, simultaneously with such consolidation, amalgamation or merger assume the due and punctual performance and observance of all the covenants and conditions hereof to be performed or observed by the Company.

Section 7.04 - Successor Company Substituted

In case the Company is consolidated, amalgamated or merged with or into any other corporation or corporations, the successor corporation formed by such consolidation or amalgamation, or into which the Company will have been merged, will succeed to and be substituted for the Company hereunder.  Such changes in phraseology and form (but not in substance) may be made in the Warrants as may be appropriate in view of such consolidation, amalgamation or merger.

__________

 

 

 

 

 

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