Document:

Exhibit 4.5

EXHIBIT 4.5

Private Financing

Non-brokered private placement with four institutional funds.

SUBSCRIPTION FOR COMMON SHARES

(For Non-Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages and the attached Exhibit I, as applicable, the "Subscription Agreement").

									
	 	 	 	 	 	 	Number of Common Shares: 1,360,000	  
	 	Brookdale International Partners, L.P.	 	 	 	Price Per Common Share: $4.35	  
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$5,916,000	  
	 	 	 	 	 	 	 	 
	 	By:	/s/ Eitan Milgram	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	 	 	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	Executive Vice President of WAM GP LLC, as General Partner of Weiss Asset Management LP, as Investment Manager of Brookdale International Partners, L.P.	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	  	 	 	 	 		 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 			 	 	 	 	 
	 	Eitan Milgram	 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	  	 	 	  
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 	REGISTERED ADDRESS	 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	 	 	(Fax Number)	 	 
	 	(MAILING ADDRESS)	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	  	 	 	(Email Address)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	  	 	 	 	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	  	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	 	  	 	 	 	 
	 	(Name)	  	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	  
	 	(Account reference, if applicable)	  	 	 	(Account reference, if applicable)	 
	 		  	 	 	 	 
	 	 	  	 	 	 	 
	 	(Address)	  	 	 	(Contact Name)	 	  
	 		 	 	 	 		 
	 	 	  	 	 	 	  
	 	 	 	  	 	 	(Address)	 	  
	 			 	 	 	 		  
	 	 	  	 	 	 	  
	 	 	 	  	 	 	 	 	 

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	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

		
	[ X ]	

   owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 	

    

	[   ]	

   owns directly or indirectly, or exercises control or direction over, ________, common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional ________common shares in the capital stock of the Corporation. 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

		
	Per:	/s/ Paul Carmel
	 	Authorized Signatory

Paul Carmel 
President&CEO

TERMS AND CONDITIONS OF SUBSCRIPTION AGREEMENT

  FOR COMMON SHARES OF RICHMONT MINES INC. 

  		
	1.	Definitions 

"$" means lawful money of Canada; 

"Agreement" or "Subscription Agreement" means this subscription agreement, as the same may be amended, supplemented or restated from time to time; 

"Business Day" means a day other than a Saturday, Sunday or any other day on which Canadian chartered banks are not open for the transaction of regular business in the City of Montréal, Québec; 

"Closing" means the closing on the Closing Date of the issue and sale of Common Shares as contemplated by this Subscription Agreement; 

"Closing Date" means on or about September 26, 2012, or such other date as agreed to by the Corporation; 

"Closing Time" means 8:00 a.m. (Montréal time) on the Closing Date or such other time as the Corporation may agree; 

"NI 45-106" means National Instrument 45-106 respecting Prospectus and Registration Exemptions or Regulation 45-106 respecting Prospectus and Registration Exemptions in Québec; 

"Person" means an individual (whether acting as an executor, trustee, administrator, legal representative or otherwise), 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; 

"Regulation D" means Regulation D promulgated by the SEC under the U.S. Securities Act; 

"Regulation S" means Regulation S promulgated by the SEC under the U.S. Securities Act; 

"SEC" means the United States Securities and Exchange Commission; 

"Securities Laws" means, as applicable, the securities laws, regulations, rules, rulings and orders in each Selling Jurisdiction, the applicable policy statements issued by the securities regulators in each Selling Jurisdiction and the rules and policies of the TSX, the NYSE MKT as well as the U.S. Securities Act and U.S. Securities Exchange Act of 1934, as amended, state securities laws and, in each case the rules and regulations adopted thereunder; 

"Securities Regulators" means the securities commissions or other securities regulatory authorities of all of the Selling Jurisdictions or the relevant Selling Jurisdiction as the context so requires; 

"Selling Jurisdiction" means, in the ease of any Subscriber, the provinces of Canada and the United States and such other jurisdictions in which any such Subscriber resides or is otherwise subject to the Securities Laws; 

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"TSX" means the Toronto Stock Exchange; 

"United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and 

"U.S. Securities Act" means the United States Securities Act of 1933, as amended. 

		
	2.	Terms of the Offering 

 

			
	

   
	

   (a)
	

   The Common Shares are part of an offering (the "Offering") of up to 8,045,978 Common Shares for aggregate gross proceeds of up to $35,000,000. 

 

			
	

   
	

   (b)
	

   The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that this subscription is subject to rejection or allotment by the Corporation in whole or in part. 

 

		
	3.	Representations, Warranties and Covenants of the Subscriber 

By executing this Subscription Agreement, the Subscriber (and, if applicable, the others for whom it is contracting hereunder) represents, warrants and covenants to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that: 

			
	

   
	

   (a)
	

   it has been independently advised as to restrictions with respect to trading in the Common Shares imposed by applicable Securities Laws in the jurisdiction in which it resides, confirms that no representation has been made to it by or on behalf of the Corporation with respect thereto, acknowledges that it is aware of the characteristics of Common Shares, the risks relating to an investment therein, and that it may not be able to resell the Common Shares until the expiration of the applicable hold period except in accordance with limited exemptions under applicable securities legislation and regulatory policy and it agrees that any certificates representing the Common Shares will bear a legend indicating that the sale of such securities is restricted. The Subscriber further acknowledges that it should consult its own legal counsel in its jurisdiction for full particulars of applicable resale restrictions; 

 

			
	

   
	

   (b)
	

   it has not received, nor has it requested, nor does it have any need to receive, any prospectus, sales or advertising literature, offering memorandum or any other document describing the business and affairs of the Corporation 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 Common Shares, and it has not become aware of any advertisement in printed public media, radio, television or telecommunications, including electronic display such as the Internet with respect to the distribution of the Common Shares; 

 

			
	

   
	

   (c)
	

   it has relied solely upon publicly available information relating to the Corporation and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Corporation except as expressly set forth herein; 

 

			
	

   
	

   (d)
	

   Unless it is purchasing under subparagraph 3(e), then it is purchasing the Common Shares as principal or deemed to be purchasing as principal in accordance with applicable Securities Laws, it is resident of, or otherwise subject to the laws of, the jurisdiction 

 

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disclosed under "Subscriber's Address" on the face page of this Agreement, and fully complies with one of the criteria set forth below: 

			
	 	(i)	if the Subscriber, or the disclosed principal on whose behalf it is acting, is a person resident in Canada, it is subscribing Common Shares for an aggregate acquisition cost of not less than Cdn$150,000 payable in cash at Closing and, if it is not an individual, it was not created and is not used solely to purchase or hold securities in reliance on the exemption from the prospectus requirement of Securities Laws contained in Section 2.10 of NI 45-106; or

 

			
	 	(ii)	if the Subscriber, or the disclosed principal on whose behalf it is acting, is not a person resident in Canada, the subscription for the Common Shares by the Subscriber, or such disclosed principal, does not contravene any of the applicable securities legislation in the jurisdiction in which the Subscriber, or such disclosed principal, resides and it has concurrently executed and delivered a Representation Letter in the form attached as Exhibit I to this Subscription Agreement and the representations and warranties contained therein will be true and correct both as of the date of execution of this Subscription Agreement and as of the applicable Closing Date;

 

			
	

    
	

   (e)
	

   if it is not purchasing as principal, and not deemed to be purchasing as a principal in accordance with applicable Securities Laws, it is duly authorized to enter into this Subscription Agreement and to execute all documentation in connection with the purchase on behalf of each beneficial purchaser, each of whom is named under "Name of Beneficial Subscriber" on the face page of this Agreement, and to provide and agree to all Subscriber's representations, warranties and covenants on behalf of such beneficial purchasers, it acknowledges that the Corporation may be required by law to disclose to certain regulatory authorities, the identity of each beneficial purchaser of Common Shares for whom it may be acting, and if it is acting as agent for one or more disclosed principals, each of such principals is purchasing as principal for its own account, and all of the representations, warranties and covenants, excluding this paragraph 3(e) are also given in respect of such principal, except that references to the Subscriber's address are deemed to be references to the disclosed address of the beneficial purchaser disclosed under "Beneficial Subscriber's Address" on the face page of this Agreement; 

 

			
	 	(f)	it acknowledges that:  

 

			
	 	(i)	no securities commission or similar regulatory authority has reviewed or passed on the merits of the Common Shares;

 

			
	 	(ii)	there is no government or other insurance covering the Common Shares; 
	 	 	 

 

			
	 	(iii)	there are restrictions on the Subscriber's ability to resell the Common Shares and it is the responsibility of the Subscriber to comply with them before selling the Common Shares;

 

			
	 	(iv)	the Corporation has advised the Subscriber that the Corporation is relying on an exemption from the requirements to provide the Subscriber with a prospectus and to sell securities through a person or company registered to sell securities under the applicable Securities Laws and, as a consequence of acquiring securities pursuant to this exemption, certain protections, rights and remedies provided by

 

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 applicable Securities Laws, including statutory rights of rescission or damages, will not be available to the Subscriber;

			
	 	(v)	an investment in the Common Shares involves a high degree of risk and the Subscriber may lose its entire investment;

 

			
	 	(vi)	the Corporation may complete additional financings in the future in order to develop the business of the Corporation and fund its ongoing development, and such future financings may have a dilutive effect on current shareholders or securityholders of the Corporation, including the Subscriber;

 

			
	 	(vii)	the offer, issuance, sale and delivery of the Common Shares is conditional upon such sale being exempt from the prospectus filing or registration requirements and the requirement to deliver an offering memorandum in connection with the distribution of the Common Shares under the Securities Laws of the Selling Jurisdictions or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus;

 

			
	 	(viii)	in purchasing the Common Shares, the Subscriber has not relied upon any verbal or written representation, including any investor presentation delivered to Subscribers, as to any fact or otherwise made by or on behalf of the Corporation or any of its employees, agents or affiliates thereof or any other person associated therewith; the Subscriber acknowledges that the decision to purchase the Common Shares was made solely on the basis of currently available public information and this Subscription Agreement;

 

			
	 	(ix)	the Corporation has the right to accept or reject the Subscriber's subscription in whole or in part;

 

			
	 	(x)	the Corporation's counsel is acting as counsel to the Corporation, and not as counsel to the Subscriber;

 

			
	

    
	

   (g)
	

   it is aware that the Common Shares have not been and will not be registered under the U.S. Securities Act or the Securities Laws of any state of the United States and that these securities may not be offered or sold in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration and the applicable laws of all applicable states and acknowledges that the Corporation has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Common Share; 

 

			
	

    
	

   (h)
	

   except if the United States is indicated as being its jurisdiction of residence on the face page of this Subscription Agreement, the Common Shares have not been offered to the Subscriber in the United States, and the Subscriber represents and warrants that the purchase of the Common Shares will occur in an "offshore transaction" (as defined under Regulation S); 

 

			
	

    
	

   (i)
	

   except if the United States is indicated as being its jurisdiction of residence on the face page of this Subscription Agreement, it is not a U.S. person (as defined in Regulation S under the U.S. Securities Act, which definition includes, but is not limited to, an individual resident in the United States, an estate or trust of which any executor or administrator or trustee, respectively, is a U.S. person and any partnership or corporation 

 

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organized or incorporated under the laws of the United States) and is not purchasing the Common Shares on behalf of, or for the account or benefit of, a person in the United States or a U.S. person or for resale in the United States; 

			
	

   
	

   (j)
	

   it undertakes and agrees that it will not offer or sell the Common Shares in the United States unless such securities are registered under the U.S. Securities Act and the Securities Laws of all applicable states of the United States or an exemption from such registration requirements is available; 

 

			
	

   
	

   (k)
	

   if it is an individual, it is of the full age of majority and is legally competent to execute this Subscription Agreement and take all action pursuant hereto; 

 

			
	

   
	

   (l)
	

   this Subscription Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Subscriber; 

 

			
	

   
	

   (m)
	

   if it is a company, partnership, unincorporated association or other entity, it has the legal capacity and competence to enter into and be bound by this Subscription Agreement and further certifies that all necessary approvals of directors, shareholders or otherwise have been given and obtained and it was not created solely and is not being used solely to purchase or hold securities in reliance on a prospectus exemption;

 

			
	

   
	

   (n)
	

   it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment;

 

			
	

   
	

   (o)
	

   it does not act jointly or in concert with any other subscriber for Common Shares for the purpose of the acquisition of the Common Shares; 

 

			
	

   
	

   (p)
	

   if required by applicable Securities Laws, regulations, rules, policies or orders or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing, such reports, undertakings and other documents with respect to the issue of the Common Shares (including a Representation Letter in the form attached hereto as Exhibit I, as applicable); 

 

			
	

   
	

   (q)
	

   the entering into of this Subscription Agreement and the transactions contemplated hereby will not result in a violation of any of the terms or provisions of any law applicable to the Subscriber or any agreement to which the Subscriber is a party or by which it is bound, or if the Subscriber is not an individual, any of the Subscriber's constating documents; 

 

			
	

   
	

   (r)
	

   the Subscriber acknowledges that it has been encouraged to and should obtain independent legal and investment advice with respect to its subscription for these Common Shares and accordingly, has been independently advised as to the meanings of all terms contained herein relevant to the Subscriber for purposes of giving representations, warranties and covenants under this Subscription Agreement; 

 

			
	

   
	

   (s)
	

   it acknowledges and confirms that no representation has been made to it with respect to the future value or price of any of the Common Shares; 

 

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   (t)
	

   it acknowledges that all certificates representing the Common Shares will bear the following restrictive legends required by applicable Securities Laws and stock exchange rules: 

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [four months and one day from the Closing Date]." 

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE." 

			
	

   
	

   (u)
	

   the funds which will be advanced by the Subscriber to the Corporation hereunder will not  represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the "PCMLA") and Terrorist Financing Act (Canada) and the Subscriber acknowledges that the Corporation may in the future be required by law to disclose the Subscriber's name and other information relating to this Subscription Agreement and the Subscriber's subscription hereunder, on a confidential basis, pursuant to the PCMLA. To the best of the knowledge of the Subscriber: (a) none of the subscription funds to be provided by the Subscriber: (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, or any other jurisdiction; or (ii) are being tendered on behalf of a person or entity who has not been identified to the Subscriber; and (b) it shall promptly notify the Corporation if the Subscriber discovers that any of such representations ceases to be true, and will provide the Corporation with appropriate information in connection therewith; 

 

			
	

   
	

   (v)
	

   the Subscriber has no knowledge of a "material fact" or "material change" (as those terms are defined in the applicable Securities Laws) in the affairs of the Corporation that has not been generally disclosed to the public; 

 

			
	

   
	

   (w)
	

   the representations, warranties and covenants of the Subscriber herein are made with the intent that they be relied upon in determining the suitability of a purchaser of Common Shares and will be true and correct at the Closing Time on the Closing Date and will survive the completion of the issuance of the Common Shares. The Subscriber undertakes to immediately notify the Corporation at 1501 McGill College, Montréal, Québec, H3A 3M8; Attention: Paul Carmel, of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the Closing Time on the Closing Date; and 

 

			
	

   
	

   (x)
	

   the Subscriber agrees to indemnify and hold harmless the Corporation, and its directors, officers, employees, agents, advisers and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any false representation or warranty of the Subscriber contained herein or in any document furnished by the 

 

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Subscriber to the Corporation in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any document furnished by the Subscriber to the Corporation in connection herewith. 

		
	4.	Representations, Warranties and Covenants of the Corporation 

The Corporation hereby represents, warrants and covenants and agrees to and with the Subscriber (and acknowledges that the Subscriber is relying thereon) that: 

			
	

    
	

   (a)
	

   the Corporation is incorporated and organized and existing under the laws of Québec, is qualified to carry on its business and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, and has all requisite corporate power and authority to carry on its business, to own, lease and operate its property and assets and to execute, deliver and perform its obligations under this Agreement, including the issuance of the Common Shares; 

 

			
	

    
	

   (b)
	

   the Corporation has conducted and is conducting its business in compliance with all applicable laws, rules and regulations of each jurisdiction in which its business is carried on and holds all necessary licenses, permits, approvals, consents, certificates, registrations and authorizations (whether governmental, regulatory or otherwise) (the "Licenses") to enable its business to be carried on as now conducted and its property and assets to be owned, leased and operated, and the Licenses are validly existing and in good standing and none of the Licenses contains any burdensome term, provision, condition or limitation which has or may have a materially adverse effect on the operation of the business of the Corporation as now carried on or as proposed to be carried on;

 

			
	

    
	

   (c)
	

   the authorized capital of the Corporation consists of an unlimited number of common shares, with no par value; 

 

			
	

    
	

   (d)
	

   the Corporation is a qualified issuing corporation under the Québec Stock Savings Plan II (QSSP II) in accordance with the Taxation Act (Québec) and the Common Shares qualify as qualifying shares upon issuance for inclusion in a QSSP II in accordance with applicable legislation for qualified investment funds; 

 

			
	

    
	

   (e)
	

   the Corporation will use the net proceeds of the Offering for general working capital purposes; 

 

			
	

    
	

   (f)
	

   the entering into of this Subscription Agreement and the transactions contemplated hereby will not result in a violation of any of the terms or provisions of any law applicable to the Corporation or any agreement to which the Corporation is a party or by which it is bound, or any of the Corporation's constating documents 

 

			
	

    
	

   (g)
	

   this Subscription Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Corporation;

 

			
	

    
	

   (h)
	

   the Commons Shares are or will be validly issued, fully paid, free from all liens, charges, claims, encumbrances and not subject to any call; 

 

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   (i)
	

   each consent, authorization, order or approval of, or filing or registration with, any governmental authority or other regulatory body or other third party required on or prior to the Closing Date for or in connection with the execution by the Corporation of this Subscription Agreement and the performance of the obligations to be assumed by this Subscription Agreement by the Corporation has been duly obtained and made and constitutes legal, valid, binding and enforceable obligations of the Corporation in accordance with its terms; 

 

			
	

   
	

   (j)
	

   all information relating to the Corporation which might be relevant or material in connection with the transactions contemplated by this Subscription Agreement has been generally disclosed to the public through public announcements or disclosures by the Corporation to the TSX and/or NYSE MKT; and

 

			
	

   
	

   (k)
	

   there are no legal proceedings started or threatened against the Corporation (to the best of the knowledge of the Corporation after making due and careful enquiries) for its winding- up or dissolution, or for it or any of them to enter into any arrangement for composition for the benefit of creditors, or for the appointment of a receiver, judicial manager, trustee or similar officer of any of them or any of their respective properties, revenues or assets.

 

		
	5.	Closing 

 

			
	

   
	

   (a)
	

   The Subscriber agrees to deliver to the Corporation at closing: (a) this duly completed and executed Subscription Agreement (including, if the Subscriber, or the disclosed principal on whose behalf it is acting, is not a person resident in Canada, a Representation Letter in the form attached as Exhibit I); and (b) payment, in such manner as is acceptable to the Corporation and as directed by the Corporation, for the aggregate subscription price of the Common Shares subscribed for under this Subscription Agreement. 

 

			
	

   
	

   (b)
	

   The Closing will be held at the offices of the Corporation's counsel at the Closing Time on the Closing Date. 

 

			
	

   
	

   (c)
	

   The Subscriber acknowledges that the certificates representing the Common Shares will be available for delivery upon Closing against payment of the aggregate subscription price for the Common Shares provided that the Subscriber has satisfied all applicable requirements of Section (a) hereof and the Corporation has accepted this Subscription Agreement.

 

			
	

   
	

   (d)
	

   The Corporation will be entitled to rely on delivery of a facsimile or scanned copy of executed Subscription Agreements, and acceptance by the Corporation of such agreements shall be legally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms hereof. In addition, this Subscription Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same document.

 

		
	6.	Privacy Legislation 

The Subscriber acknowledges and consents to the fact that the Corporation is collecting the Subscriber's (and any beneficial purchaser for which the Subscriber is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) 

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and any other applicable similar replacement or supplemental provincial or federal, or United States or any state, legislation or laws in effect from time to time) for the purpose of completing the Subscriber's subscription. The Subscriber acknowledges and consents to the Corporation retaining the personal information for so long as permitted or required by applicable law or business practices. The Subscriber further acknowledges and consents to the fact that the Corporation may be required by applicable Securities Laws, stock exchange rules and/or the Investment Industry Regulatory Organization of Canada rules to provide regulatory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser for which the Subscriber is contracting hereunder). The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Subscriber is contracting. 

		
	7.	Subscriber Acknowledgement 

In addition, the Subscriber agrees and acknowledges that: 

			
	

   
	

   (a)
	

   the Corporation will deliver certain personal information, including information regarding the name, address, telephone number and amount subscribed for, to the securities regulatory authorities, including the Ontario Securities Commission, the TSX, the NYSE MKT and the Autorité des marchés financiers, as applicable; 

 

			
	

   
	

   (b)
	

   the information is being collected indirectly by the securities regulatory authorities under authority granted to them in securities legislation; 

 

			
	

   
	

   (c)
	

   the information is being collected for the purposes of the administration and enforcement of such securities legislation; and 

 

			
	

   
	

   (d)
	

   the Subscriber can contact the Administrative Support Clerk at the Ontario Securities Commission at Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario, (416) 593-3684 for information regarding the collection and use of this personal information by the Ontario Securities Commission. 

 

		
	8.	Conditional upon NYSE MKT and TSX Approvals 

Without limitation, this subscription and the transactions contemplated hereby are conditional upon and subject to the Corporation receiving the required TSX and NYSE MKT approvals of this subscription and the transactions contemplated hereby. 

		
	9 .	Assignment

The terms and provisions of this Subscription Agreement shall be binding upon and enure to the benefit of the Subscriber and the Corporation and their respective heirs, executors, administrators, successors and assigns; provided however, that this Subscription Agreement may not be assigned by either party without the consent of the other party. 

		
	10 .	General

 

			
	

   
	

   (a)
	

   The contract arising out of this Subscription Agreement shall be governed by and construed in accordance with the laws of the Province of Québec and the laws of Canada 

 

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applicable therein. The Subscriber and the Corporation each irrevocably attorn to the jurisdiction of the courts of the Province of Québec. 

			
	 	(b)	Time shall be of the essence hereof. 

 

			
	

    
	

   (c)
	

   This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. 

 

			
	

    
	

   (d)
	

   The Subscriber acknowledges and agrees that all costs incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the sale of the Common Shares to the Subscriber shall be borne by the Subscriber. 

 

			
	

    
	

   (e)
	

   The Subscriber acknowledges and agrees that the acceptance of the Subscription Agreement will be conditional among other things upon the sale of the Common Shares to the Subscriber being exempt from any prospectus requirements of all applicable Securities Laws. 

 

			
	

    
	

   (f)
	

   The Subscriber acknowledges that it has consented to and requested that all documents evidencing or relating in any way to the sale of the Common Shares be drawn up in the English language only. Le souscripteur reconnaît par les présentes avoir consenti et exigé que tous les documents faisant foi ou se rapportant de quelque manière à la vente des actions ordinaires soient rédigés en anglais seulement. 

 

			
	 	(g)	The covenants, representations and warranties contained herein shall survive the Closing. 

 

EXHIBIT I 

REPRESENTATION LETTER
FOR NON-CANADIAN SUBSCRIBERS 

To: Richmont Mines Inc. 

The Subscriber, on its own behalf and (if applicable) on behalf of others for whom it is contracting hereunder, further represents, warrants and covenants to and with the Corporation and its counsel (and acknowledges that the Corporation and its counsel are relying thereon) that it is, and (if applicable) any disclosed beneficial purchaser for whom it is contracting hereunder is, a resident of, or otherwise subject to, the securities legislation of a jurisdiction other than Canada, and: 

			
	

   
	

   (a)
	

   the Subscriber is, and (if applicable) any other purchaser for whom it is contracting hereunder, is: 

 

	 	(i)      	

   a purchaser that is recognized by the securities regulators in the jurisdiction in which it is, and (if applicable) any other purchaser for whom it is contracting hereunder is resident or otherwise subject to the securities laws of such jurisdiction as an exempt purchaser and (subject to (b)(i) below) is purchasing the Common Shares as principal for its, or (if applicable) each such other purchaser's, own account, and not for the benefit of any other person, for investment only and not with a view to resale or distribution and no other person, corporation, firm or other organization has a beneficial interest in the said securities being purchased, or purchasing the securities as agent or trustee for the principal disclosed on the face page of this Agreement and each disclosed principal for whom the Subscriber is acting is purchasing as principal for its own account, and not for the benefit of any other person, and is purchasing for investment only and not a view to resale or distribution; or 

	 	 	 
	 	(ii)      	

   a purchaser which is purchasing Common Shares pursuant to an exemption from any prospectus or securities registration requirements (particulars of which are enclosed herewith) available to the Corporation, the Subscriber and any such other purchaser under applicable securities laws of their jurisdiction of residence or to which the Subscriber and any such other purchaser are otherwise subject to, and the Subscriber and any such other purchaser shall deliver to the Corporation such further particulars of the exemption and their qualification thereunder as the Corporation may reasonably request; 

	 	 	 

			
	

   
	

   (b)
	

   if the Subscriber is resident in or otherwise subject to applicable securities laws of the United States: 

 

			
	 	(i)	it understands and agrees that the Common Shares have not been and will not be registered under the U.S. Securities Act, or applicable state securities laws, and the Common Shares are being offered and sold by the Corporation, to the Subscriber in reliance upon Rule 506 of Regulation D or Section 4(2) under the U.S. Securities Act;

 

			
	 	(ii)	the undersigned represents, warrants and covenants (which representations, warranties and covenants shall survive the Closing) to the Corporation (and acknowledges that the Corporation is relying thereon) that:

 

2 

(a) it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits, and risks of the investment and it is able to bear the economic risk of loss of the investment; 

(b) it is purchasing the Common Shares for its own account or for the account of one or more persons for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Common Shares in the United States; provided, however, that the Subscriber may sell or otherwise dispose of any Common Shares pursuant to registration thereof pursuant to the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements; 

(c) it, and if applicable, each person for whose account it is purchasing the Common Shares satisfies one or more of the categories of "accredited investor" indicated below (the Subscriber must initial the appropriate line(s)): 

				
	 	________	Category 1.	A bank, as defined in Section 3(a)(2) of 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 United States Securities Exchange Act of 1934; or

 

				
	 	________	Category 4.	An insurance company as defined in Section 2(13) of the U.S Securities Act; or

 

				
	 	________	Category 5.	An investment company registered under the United States Investment Company Act of 1940; or

 

				
	 	________	Category 6.	A business development company as defined in Section 2(a)(48) of the United States 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 United States Small Business Investment Act of 1958; or

 

				
	 	________	Category 8.	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, with total assets in excess of U.S. $5,000,000; or

 

3

				
		________	Category 9.	An employee benefit plan within the meaning of the United States 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 adviser, or an employee benefit plan with total assets in excess of U. S. $5,000,000 or, if a self- directed plan, with investment decisions 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 United States Investment Advisers Act of 1940; or

 

				
		   [EM]       	Category 11.	An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of U.S. $5,000,000; or

 

				
		________	Category 12.	Any director or executive officer of the Corporation; or

 

				
		________	Category 13.	A natural person whose individual net worth, or joint net worth with that person's spouse (exclusive of the value of such person's primary residence), at the date hereof exceeds U.S.$ 1,000,000; or

 

				
		________	Category 14.	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 that person'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; or

 

				
		________	Category 15.	A trust, with total assets in excess of U.S.$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 Rule 506(b)(2)(ii) under the U.S. Securities Act; or

 

				
		________	Category 16.	Any entity in which all of the equity owners meet the requirements of at least one of the above categories;

(d) it has not purchased the Common Shares as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; 

(e) it understands that if it decides to offer, sell or otherwise transfer the Common Shares, it will not offer, sell or otherwise transfer any of such securities directly or indirectly, unless: 

(i) the transfer is to the Corporation;

4 

(ii) the transfer is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations; 

(iii) the transfer is made in compliance with the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in accordance with applicable state securities laws; or 

(iv) the securities are transferred in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities; and 

(v) in the case of transfers pursuant to (iii) or (iv) above, it has prior to such sale furnished to the Corporation an opinion of counsel or other evidence of exemption, in either case reasonably satisfactory to the Corporation; 

			
	 	(iii)	it understands that upon the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the U.S. Securities Act or applicable U.S. state securities laws and regulations, the certificates representing the Common Shares will bear a legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS, AND IN EACH CASE OF (C) OR (D) THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. IF THE SECURITIES ARE BEING SOLD AT ANY TIME THE CORPORATION IS A "FOREIGN ISSUER" AS DEFINED IN RULE 902 UNDER THE U.S. SECURITIES ACT, A NEW CERTIFICATE, BEARING NO LEGEND, THE DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM THE CORPORATION'S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION IN THE FORM SET FORTH IN APPENDIX I OF EXHIBIT I OF THE SUBSCRIPTION AGREEMENT DATED [SEPTEMBER XX, 2012] TO THE CORPORATION AND THE CORPORATION'S TRANSFER AGENT TO THE EFFECT THAT THE SALE OF THE SECURITIES IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT." 

5

provided, that if the Common Shares are being sold under clause (B) above, at a time when the Corporation is a "foreign issuer" as defined in Rule 902 under the U.S. Securities Act, the legend set forth above may be removed by providing a declaration in the form attached as Appendix I to this Exhibit I to the effect that the sale of the securities is being made in compliance with Rule 904 of Regulation S under the U.S. Securities Act; 

			
	 	(iv)	if any of the Common Shares are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation's transfer agent of an opinion reasonably satisfactory to the Corporation to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;

 

			
	 	(v)	it understands and acknowledges that the Corporation is not obligated to remain a "foreign issuer" within the meaning of Regulation S under the U. S. Securities Act;
	 	 	 
	 	(vi)	it has had the opportunity to ask questions of and receive answers from the Corporation regarding the investment, and has received all the information regarding the Corporation that it has requested;

 

			
	 	(vii)	it understands that the Corporation may instruct its registrar and transfer agent not to record any transfer of any securities of the Corporation without first being notified by the Corporation that it is satisfied that such transfer is exempt from or not subject to the registration requirements of the U.S. Securities Act and applicable state securities laws;

 

	 	(viii)      	

   it consents to the Corporation making a notation on its records or giving instructions to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described herein; 

	 	 	 
	 	(ix)      	

   it understands and acknowledges that the Corporation has no obligation or present intention of filing with the United States Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Common Shares in the United States; 

	 	 	 
	 	(x)      	

   it understands and agrees that there may be material tax consequences to the Subscriber of an acquisition, disposition or exercise of any of the Common Shares. The Corporation gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under United States, state, local or foreign tax law of the undersigned's acquisition or disposition of such securities. In particular, no determination has been made whether the Corporation will be a "passive foreign investment company" ("PFIC") within the meaning of Section 1291 of the United States Internal Revenue Code; 

	 	 	 
	 	(xi)      	

   the office or other address of the Subscriber at which the Subscriber received and accepted the offer to purchase the Common Shares is the address listed on the face page of the Subscription Agreement; 

	 	 	 
	 	(xii)      	

   it acknowledges that the representations, warranties and covenants contained in this Agreement are made by it with the intent that they may be relied upon by the Corporation in determining its eligibility or the eligibility of others on whose behalf it is contracting thereunder to purchase Common Shares. It agrees that by accepting Common Shares it shall be representing and warranting that the

	 	 	

 

6 

representations and warranties above are true as at the Closing with the same force and effect as if they had been made by it at the Closing and that they shall survive the purchase by it of Common Shares and shall continue in full force and effect notwithstanding any subsequent disposition by it of such securities; and 

			
	 	(xiii)	The Subscriber undertakes to notify the Corporation immediately of any change in any representation, warranty or other information relating to the Subscriber set forth herein which takes place prior to the Closing.

Dated at Boston, MA this 25th day of September,2012.

		
		Brookdale International Partners, L.P.
	 	Name of Subscriber
	 	 
		By: /s/ Eitan Milgram
	 	Signature

Eitan Milgram

			
		Title:	Executive Vice President of WAM GP LLC,
		 	as General Partner of Weiss Asset Management L.P.
		 	as Investment Manager of Brookdale International Partners, L.P.

 

APPENDIX I

FORM OF DECLARATION FOR REMOVAL OF U.S. LEGEND 

		
	To	Richmont Mines Inc. (the "Corporation")
	 	and its Transfer Agent Computershare Investor Services Inc. 

The undersigned (A) acknowledges that the sale of the securities of the Corporation to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and (B) certifies that (1) the undersigned is not (a) an "affiliate" of the Corporation (as that term is defined in Rule 405 under the U.S. Securities Act), (b) a "distributor" or (c) an affiliate of a distributor; (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, 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; (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of "washing off” the resale restrictions imposed because the securities are "restricted securities" (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace such securities with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S under the U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act. 

			
	Dated ________ 20__.	X 	 
	 	Signature of individual (if Purchaser is an individual)
	 	 	 
	 	X 	 
	 	Authorized signatory (if Purchaser is not an individual)
	 	 
	 	 
	 	Name of Purchaser (please print) 
	 	 
	 	 
	 	Name of authorized signatory (please print) 
	 	 
	 	 
	 	Official capacity of authorized signatory (please print)

 

SUBSCRIPTION FOR COMMON SHARES

(For Non-Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages and the attached Exhibit I, as applicable, the "Subscription Agreement").

									
	 	 	 	 	 	 	Number of Common Shares: 640,000	  
	 	Brookdale Global Opportunity Fund	 	 	 	Price Per Common Share: $4.35	  
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$2,784,000	  
	 	 	 	 	 	 	 	 
	 	By:	/s/ Eitan Milgram	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	 	 	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	Executive Vice President of WAM GP LLC, as General Partner of Weiss Asset Management LP, as Investment Manager of Brookdale Global Opportunity Fund	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	  	 	 	 	 		 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 			 	 	 	 	 
	 	Eitan Milgram	 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	  	 	 	  
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 	REGISTERED ADDRESS	 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	 	 	(Fax Number)	 	 
	 	(MAILING ADDRESS)	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	  	 	 	(Email Address)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	  	 	 	 	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	  	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	 	  	 	 	 	 
	 	(Name)	  	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	  
	 	(Account reference, if applicable)	  	 	 	(Account reference, if applicable)	 
	 		  	 	 	 	 
	 	 	  	 	 	 	 
	 	(Address)	  	 	 	(Contact Name)	 	  
	 		 	 	 	 		 
	 	 	  	 	 	 	  
	 	 	 	  	 	 	(Address)	 	  
	 			 	 	 	 		  
	 	 	  	 	 	 	  
	 	 	 	  	 	 	 	 	 

2 

			
	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

		
	[ X ]	

   owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 	

    

	[   ]	

   owns directly or indirectly, or exercises control or direction over, ________, common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional ________common shares in the capital stock of the Corporation. 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

		
	Per:	/s/ Paul Carmel
	 	Authorized Signatory

Paul Carmel 
President&CEO

TERMS AND CONDITIONS OF SUBSCRIPTION AGREEMENT

  FOR COMMON SHARES OF RICHMONT MINES INC. 

  		
	1.	Definitions 

"$" means lawful money of Canada; 

"Agreement" or "Subscription Agreement" means this subscription agreement, as the same may be amended, supplemented or restated from time to time; 

"Business Day" means a day other than a Saturday, Sunday or any other day on which Canadian chartered banks are not open for the transaction of regular business in the City of Montréal, Québec; 

"Closing" means the closing on the Closing Date of the issue and sale of Common Shares as contemplated by this Subscription Agreement; 

"Closing Date" means on or about September 26, 2012, or such other date as agreed to by the Corporation; 

"Closing Time" means 8:00 a.m. (Montréal time) on the Closing Date or such other time as the Corporation may agree; 

"NI 45-106" means National Instrument 45-106 respecting Prospectus and Registration Exemptions or Regulation 45-106 respecting Prospectus and Registration Exemptions in Québec; 

"Person" means an individual (whether acting as an executor, trustee, administrator, legal representative or otherwise), 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; 

"Regulation D" means Regulation D promulgated by the SEC under the U.S. Securities Act; 

"Regulation S" means Regulation S promulgated by the SEC under the U.S. Securities Act; 

"SEC" means the United States Securities and Exchange Commission; 

"Securities Laws" means, as applicable, the securities laws, regulations, rules, rulings and orders in each Selling Jurisdiction, the applicable policy statements issued by the securities regulators in each Selling Jurisdiction and the rules and policies of the TSX, the NYSE MKT as well as the U.S. Securities Act and U.S. Securities Exchange Act of 1934, as amended, state securities laws and, in each case the rules and regulations adopted thereunder; 

"Securities Regulators" means the securities commissions or other securities regulatory authorities of all of the Selling Jurisdictions or the relevant Selling Jurisdiction as the context so requires; 

"Selling Jurisdiction" means, in the ease of any Subscriber, the provinces of Canada and the United States and such other jurisdictions in which any such Subscriber resides or is otherwise subject to the Securities Laws; 

2 

"TSX" means the Toronto Stock Exchange; 

"United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and 

"U.S. Securities Act" means the United States Securities Act of 1933, as amended. 

		
	2.	Terms of the Offering 

 

			
	

   
	

   (a)
	

   The Common Shares are part of an offering (the "Offering") of up to 8,045,978 Common Shares for aggregate gross proceeds of up to $35,000,000. 

 

			
	

   
	

   (b)
	

   The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) that this subscription is subject to rejection or allotment by the Corporation in whole or in part. 

 

		
	3.	Representations, Warranties and Covenants of the Subscriber 

By executing this Subscription Agreement, the Subscriber (and, if applicable, the others for whom it is contracting hereunder) represents, warrants and covenants to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that: 

			
	

   
	

   (a)
	

   it has been independently advised as to restrictions with respect to trading in the Common Shares imposed by applicable Securities Laws in the jurisdiction in which it resides, confirms that no representation has been made to it by or on behalf of the Corporation with respect thereto, acknowledges that it is aware of the characteristics of Common Shares, the risks relating to an investment therein, and that it may not be able to resell the Common Shares until the expiration of the applicable hold period except in accordance with limited exemptions under applicable securities legislation and regulatory policy and it agrees that any certificates representing the Common Shares will bear a legend indicating that the sale of such securities is restricted. The Subscriber further acknowledges that it should consult its own legal counsel in its jurisdiction for full particulars of applicable resale restrictions; 

 

			
	

   
	

   (b)
	

   it has not received, nor has it requested, nor does it have any need to receive, any prospectus, sales or advertising literature, offering memorandum or any other document describing the business and affairs of the Corporation 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 Common Shares, and it has not become aware of any advertisement in printed public media, radio, television or telecommunications, including electronic display such as the Internet with respect to the distribution of the Common Shares; 

 

			
	

   
	

   (c)
	

   it has relied solely upon publicly available information relating to the Corporation and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Corporation except as expressly set forth herein; 

 

			
	

   
	

   (d)
	

   Unless it is purchasing under subparagraph 3(e), then it is purchasing the Common Shares as principal or deemed to be purchasing as principal in accordance with applicable Securities Laws, it is resident of, or otherwise subject to the laws of, the jurisdiction 

 

3 

disclosed under "Subscriber's Address" on the face page of this Agreement, and fully complies with one of the criteria set forth below: 

			
	 	(i)	if the Subscriber, or the disclosed principal on whose behalf it is acting, is a person resident in Canada, it is subscribing Common Shares for an aggregate acquisition cost of not less than Cdn$150,000 payable in cash at Closing and, if it is not an individual, it was not created and is not used solely to purchase or hold securities in reliance on the exemption from the prospectus requirement of Securities Laws contained in Section 2.10 of NI 45-106; or

 

			
	 	(ii)	if the Subscriber, or the disclosed principal on whose behalf it is acting, is not a person resident in Canada, the subscription for the Common Shares by the Subscriber, or such disclosed principal, does not contravene any of the applicable securities legislation in the jurisdiction in which the Subscriber, or such disclosed principal, resides and it has concurrently executed and delivered a Representation Letter in the form attached as Exhibit I to this Subscription Agreement and the representations and warranties contained therein will be true and correct both as of the date of execution of this Subscription Agreement and as of the applicable Closing Date;

 

			
	

    
	

   (e)
	

   if it is not purchasing as principal, and not deemed to be purchasing as a principal in accordance with applicable Securities Laws, it is duly authorized to enter into this Subscription Agreement and to execute all documentation in connection with the purchase on behalf of each beneficial purchaser, each of whom is named under "Name of Beneficial Subscriber" on the face page of this Agreement, and to provide and agree to all Subscriber's representations, warranties and covenants on behalf of such beneficial purchasers, it acknowledges that the Corporation may be required by law to disclose to certain regulatory authorities, the identity of each beneficial purchaser of Common Shares for whom it may be acting, and if it is acting as agent for one or more disclosed principals, each of such principals is purchasing as principal for its own account, and all of the representations, warranties and covenants, excluding this paragraph 3(e) are also given in respect of such principal, except that references to the Subscriber's address are deemed to be references to the disclosed address of the beneficial purchaser disclosed under "Beneficial Subscriber's Address" on the face page of this Agreement; 

 

			
	 	(f)	it acknowledges that:  

 

			
	 	(i)	no securities commission or similar regulatory authority has reviewed or passed on the merits of the Common Shares;

 

			
	 	(ii)	there is no government or other insurance covering the Common Shares; 
	 	 	 

 

			
	 	(iii)	there are restrictions on the Subscriber's ability to resell the Common Shares and it is the responsibility of the Subscriber to comply with them before selling the Common Shares;

 

			
	 	(iv)	the Corporation has advised the Subscriber that the Corporation is relying on an exemption from the requirements to provide the Subscriber with a prospectus and to sell securities through a person or company registered to sell securities under the applicable Securities Laws and, as a consequence of acquiring securities pursuant to this exemption, certain protections, rights and remedies provided by

 

4

 applicable Securities Laws, including statutory rights of rescission or damages, will not be available to the Subscriber;

			
	 	(v)	an investment in the Common Shares involves a high degree of risk and the Subscriber may lose its entire investment;

 

			
	 	(vi)	the Corporation may complete additional financings in the future in order to develop the business of the Corporation and fund its ongoing development, and such future financings may have a dilutive effect on current shareholders or securityholders of the Corporation, including the Subscriber;

 

			
	 	(vii)	the offer, issuance, sale and delivery of the Common Shares is conditional upon such sale being exempt from the prospectus filing or registration requirements and the requirement to deliver an offering memorandum in connection with the distribution of the Common Shares under the Securities Laws of the Selling Jurisdictions or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus;

 

			
	 	(viii)	in purchasing the Common Shares, the Subscriber has not relied upon any verbal or written representation, including any investor presentation delivered to Subscribers, as to any fact or otherwise made by or on behalf of the Corporation or any of its employees, agents or affiliates thereof or any other person associated therewith; the Subscriber acknowledges that the decision to purchase the Common Shares was made solely on the basis of currently available public information and this Subscription Agreement;

 

			
	 	(ix)	the Corporation has the right to accept or reject the Subscriber's subscription in whole or in part;

 

			
	 	(x)	the Corporation's counsel is acting as counsel to the Corporation, and not as counsel to the Subscriber;

 

			
	

    
	

   (g)
	

   it is aware that the Common Shares have not been and will not be registered under the U.S. Securities Act or the Securities Laws of any state of the United States and that these securities may not be offered or sold in the United States without registration under the U.S. Securities Act or compliance with requirements of an exemption from registration and the applicable laws of all applicable states and acknowledges that the Corporation has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Common Share; 

 

			
	

    
	

   (h)
	

   except if the United States is indicated as being its jurisdiction of residence on the face page of this Subscription Agreement, the Common Shares have not been offered to the Subscriber in the United States, and the Subscriber represents and warrants that the purchase of the Common Shares will occur in an "offshore transaction" (as defined under Regulation S); 

 

			
	

    
	

   (i)
	

   except if the United States is indicated as being its jurisdiction of residence on the face page of this Subscription Agreement, it is not a U.S. person (as defined in Regulation S under the U.S. Securities Act, which definition includes, but is not limited to, an individual resident in the United States, an estate or trust of which any executor or administrator or trustee, respectively, is a U.S. person and any partnership or corporation 

 

5 

organized or incorporated under the laws of the United States) and is not purchasing the Common Shares on behalf of, or for the account or benefit of, a person in the United States or a U.S. person or for resale in the United States; 

			
	

   
	

   (j)
	

   it undertakes and agrees that it will not offer or sell the Common Shares in the United States unless such securities are registered under the U.S. Securities Act and the Securities Laws of all applicable states of the United States or an exemption from such registration requirements is available; 

 

			
	

   
	

   (k)
	

   if it is an individual, it is of the full age of majority and is legally competent to execute this Subscription Agreement and take all action pursuant hereto; 

 

			
	

   
	

   (l)
	

   this Subscription Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Subscriber; 

 

			
	

   
	

   (m)
	

   if it is a company, partnership, unincorporated association or other entity, it has the legal capacity and competence to enter into and be bound by this Subscription Agreement and further certifies that all necessary approvals of directors, shareholders or otherwise have been given and obtained and it was not created solely and is not being used solely to purchase or hold securities in reliance on a prospectus exemption;

 

			
	

   
	

   (n)
	

   it has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and it is able to bear the economic risk of loss of its investment;

 

			
	

   
	

   (o)
	

   it does not act jointly or in concert with any other subscriber for Common Shares for the purpose of the acquisition of the Common Shares; 

 

			
	

   
	

   (p)
	

   if required by applicable Securities Laws, regulations, rules, policies or orders or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing, such reports, undertakings and other documents with respect to the issue of the Common Shares (including a Representation Letter in the form attached hereto as Exhibit I, as applicable); 

 

			
	

   
	

   (q)
	

   the entering into of this Subscription Agreement and the transactions contemplated hereby will not result in a violation of any of the terms or provisions of any law applicable to the Subscriber or any agreement to which the Subscriber is a party or by which it is bound, or if the Subscriber is not an individual, any of the Subscriber's constating documents; 

 

			
	

   
	

   (r)
	

   the Subscriber acknowledges that it has been encouraged to and should obtain independent legal and investment advice with respect to its subscription for these Common Shares and accordingly, has been independently advised as to the meanings of all terms contained herein relevant to the Subscriber for purposes of giving representations, warranties and covenants under this Subscription Agreement; 

 

			
	

   
	

   (s)
	

   it acknowledges and confirms that no representation has been made to it with respect to the future value or price of any of the Common Shares; 

 

6 

			
	

   
	

   (t)
	

   it acknowledges that all certificates representing the Common Shares will bear the following restrictive legends required by applicable Securities Laws and stock exchange rules: 

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [four months and one day from the Closing Date]." 

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE." 

			
	

   
	

   (u)
	

   the funds which will be advanced by the Subscriber to the Corporation hereunder will not  represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) Act (Canada) (the "PCMLA") and Terrorist Financing Act (Canada) and the Subscriber acknowledges that the Corporation may in the future be required by law to disclose the Subscriber's name and other information relating to this Subscription Agreement and the Subscriber's subscription hereunder, on a confidential basis, pursuant to the PCMLA. To the best of the knowledge of the Subscriber: (a) none of the subscription funds to be provided by the Subscriber: (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, or any other jurisdiction; or (ii) are being tendered on behalf of a person or entity who has not been identified to the Subscriber; and (b) it shall promptly notify the Corporation if the Subscriber discovers that any of such representations ceases to be true, and will provide the Corporation with appropriate information in connection therewith; 

 

			
	

   
	

   (v)
	

   the Subscriber has no knowledge of a "material fact" or "material change" (as those terms are defined in the applicable Securities Laws) in the affairs of the Corporation that has not been generally disclosed to the public; 

 

			
	

   
	

   (w)
	

   the representations, warranties and covenants of the Subscriber herein are made with the intent that they be relied upon in determining the suitability of a purchaser of Common Shares and will be true and correct at the Closing Time on the Closing Date and will survive the completion of the issuance of the Common Shares. The Subscriber undertakes to immediately notify the Corporation at 1501 McGill College, Montréal, Québec, H3A 3M8; Attention: Paul Carmel, of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the Closing Time on the Closing Date; and 

 

			
	

   
	

   (x)
	

   the Subscriber agrees to indemnify and hold harmless the Corporation, and its directors, officers, employees, agents, advisers and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any false representation or warranty of the Subscriber contained herein or in any document furnished by the 

 

7 

Subscriber to the Corporation in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any document furnished by the Subscriber to the Corporation in connection herewith. 

		
	4.	Representations, Warranties and Covenants of the Corporation 

The Corporation hereby represents, warrants and covenants and agrees to and with the Subscriber (and acknowledges that the Subscriber is relying thereon) that: 

			
	

    
	

   (a)
	

   the Corporation is incorporated and organized and existing under the laws of Québec, is qualified to carry on its business and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, and has all requisite corporate power and authority to carry on its business, to own, lease and operate its property and assets and to execute, deliver and perform its obligations under this Agreement, including the issuance of the Common Shares; 

 

			
	

    
	

   (b)
	

   the Corporation has conducted and is conducting its business in compliance with all applicable laws, rules and regulations of each jurisdiction in which its business is carried on and holds all necessary licenses, permits, approvals, consents, certificates, registrations and authorizations (whether governmental, regulatory or otherwise) (the "Licenses") to enable its business to be carried on as now conducted and its property and assets to be owned, leased and operated, and the Licenses are validly existing and in good standing and none of the Licenses contains any burdensome term, provision, condition or limitation which has or may have a materially adverse effect on the operation of the business of the Corporation as now carried on or as proposed to be carried on;

 

			
	

    
	

   (c)
	

   the authorized capital of the Corporation consists of an unlimited number of common shares, with no par value; 

 

			
	

    
	

   (d)
	

   the Corporation is a qualified issuing corporation under the Québec Stock Savings Plan II (QSSP II) in accordance with the Taxation Act (Québec) and the Common Shares qualify as qualifying shares upon issuance for inclusion in a QSSP II in accordance with applicable legislation for qualified investment funds; 

 

			
	

    
	

   (e)
	

   the Corporation will use the net proceeds of the Offering for general working capital purposes; 

 

			
	

    
	

   (f)
	

   the entering into of this Subscription Agreement and the transactions contemplated hereby will not result in a violation of any of the terms or provisions of any law applicable to the Corporation or any agreement to which the Corporation is a party or by which it is bound, or any of the Corporation's constating documents 

 

			
	

    
	

   (g)
	

   this Subscription Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Corporation;

 

			
	

    
	

   (h)
	

   the Commons Shares are or will be validly issued, fully paid, free from all liens, charges, claims, encumbrances and not subject to any call; 

 

8 

			
	

   
	

   (i)
	

   each consent, authorization, order or approval of, or filing or registration with, any governmental authority or other regulatory body or other third party required on or prior to the Closing Date for or in connection with the execution by the Corporation of this Subscription Agreement and the performance of the obligations to be assumed by this Subscription Agreement by the Corporation has been duly obtained and made and constitutes legal, valid, binding and enforceable obligations of the Corporation in accordance with its terms; 

 

			
	

   
	

   (j)
	

   all information relating to the Corporation which might be relevant or material in connection with the transactions contemplated by this Subscription Agreement has been generally disclosed to the public through public announcements or disclosures by the Corporation to the TSX and/or NYSE MKT; and

 

			
	

   
	

   (k)
	

   there are no legal proceedings started or threatened against the Corporation (to the best of the knowledge of the Corporation after making due and careful enquiries) for its winding- up or dissolution, or for it or any of them to enter into any arrangement for composition for the benefit of creditors, or for the appointment of a receiver, judicial manager, trustee or similar officer of any of them or any of their respective properties, revenues or assets.

 

		
	5.	Closing 

 

			
	

   
	

   (a)
	

   The Subscriber agrees to deliver to the Corporation at closing: (a) this duly completed and executed Subscription Agreement (including, if the Subscriber, or the disclosed principal on whose behalf it is acting, is not a person resident in Canada, a Representation Letter in the form attached as Exhibit I); and (b) payment, in such manner as is acceptable to the Corporation and as directed by the Corporation, for the aggregate subscription price of the Common Shares subscribed for under this Subscription Agreement. 

 

			
	

   
	

   (b)
	

   The Closing will be held at the offices of the Corporation's counsel at the Closing Time on the Closing Date. 

 

			
	

   
	

   (c)
	

   The Subscriber acknowledges that the certificates representing the Common Shares will be available for delivery upon Closing against payment of the aggregate subscription price for the Common Shares provided that the Subscriber has satisfied all applicable requirements of Section (a) hereof and the Corporation has accepted this Subscription Agreement.

 

			
	

   
	

   (d)
	

   The Corporation will be entitled to rely on delivery of a facsimile or scanned copy of executed Subscription Agreements, and acceptance by the Corporation of such agreements shall be legally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms hereof. In addition, this Subscription Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same document.

 

		
	6.	Privacy Legislation 

The Subscriber acknowledges and consents to the fact that the Corporation is collecting the Subscriber's (and any beneficial purchaser for which the Subscriber is contracting hereunder) personal information (as that term is defined under applicable privacy legislation, including, without limitation, the Personal Information Protection and Electronic Documents Act (Canada) 

9 

and any other applicable similar replacement or supplemental provincial or federal, or United States or any state, legislation or laws in effect from time to time) for the purpose of completing the Subscriber's subscription. The Subscriber acknowledges and consents to the Corporation retaining the personal information for so long as permitted or required by applicable law or business practices. The Subscriber further acknowledges and consents to the fact that the Corporation may be required by applicable Securities Laws, stock exchange rules and/or the Investment Industry Regulatory Organization of Canada rules to provide regulatory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser for which the Subscriber is contracting hereunder). The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of all beneficial purchasers for which the Subscriber is contracting. 

		
	7.	Subscriber Acknowledgement 

In addition, the Subscriber agrees and acknowledges that: 

			
	

   
	

   (a)
	

   the Corporation will deliver certain personal information, including information regarding the name, address, telephone number and amount subscribed for, to the securities regulatory authorities, including the Ontario Securities Commission, the TSX, the NYSE MKT and the Autorité des marchés financiers, as applicable; 

 

			
	

   
	

   (b)
	

   the information is being collected indirectly by the securities regulatory authorities under authority granted to them in securities legislation; 

 

			
	

   
	

   (c)
	

   the information is being collected for the purposes of the administration and enforcement of such securities legislation; and 

 

			
	

   
	

   (d)
	

   the Subscriber can contact the Administrative Support Clerk at the Ontario Securities Commission at Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario, (416) 593-3684 for information regarding the collection and use of this personal information by the Ontario Securities Commission. 

 

		
	8.	Conditional upon NYSE MKT and TSX Approvals 

Without limitation, this subscription and the transactions contemplated hereby are conditional upon and subject to the Corporation receiving the required TSX and NYSE MKT approvals of this subscription and the transactions contemplated hereby. 

		
	9 .	Assignment

The terms and provisions of this Subscription Agreement shall be binding upon and enure to the benefit of the Subscriber and the Corporation and their respective heirs, executors, administrators, successors and assigns; provided however, that this Subscription Agreement may not be assigned by either party without the consent of the other party. 

		
	10 .	General

 

			
	

   
	

   (a)
	

   The contract arising out of this Subscription Agreement shall be governed by and construed in accordance with the laws of the Province of Québec and the laws of Canada 

 

10 

applicable therein. The Subscriber and the Corporation each irrevocably attorn to the jurisdiction of the courts of the Province of Québec. 

			
	 	(b)	Time shall be of the essence hereof. 

 

			
	

    
	

   (c)
	

   This Subscription Agreement represents the entire agreement of the parties hereto relating to the subject matter hereof and there are no representations, covenants or other agreements relating to the subject matter hereof except as stated or referred to herein. 

 

			
	

    
	

   (d)
	

   The Subscriber acknowledges and agrees that all costs incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the sale of the Common Shares to the Subscriber shall be borne by the Subscriber. 

 

			
	

    
	

   (e)
	

   The Subscriber acknowledges and agrees that the acceptance of the Subscription Agreement will be conditional among other things upon the sale of the Common Shares to the Subscriber being exempt from any prospectus requirements of all applicable Securities Laws. 

 

			
	

    
	

   (f)
	

   The Subscriber acknowledges that it has consented to and requested that all documents evidencing or relating in any way to the sale of the Common Shares be drawn up in the English language only. Le souscripteur reconnaît par les présentes avoir consenti et exigé que tous les documents faisant foi ou se rapportant de quelque manière à la vente des actions ordinaires soient rédigés en anglais seulement. 

 

			
	 	(g)	The covenants, representations and warranties contained herein shall survive the Closing. 

 

EXHIBIT I 

REPRESENTATION LETTER
FOR NON-CANADIAN SUBSCRIBERS 

To: Richmont Mines Inc. 

The Subscriber, on its own behalf and (if applicable) on behalf of others for whom it is contracting hereunder, further represents, warrants and covenants to and with the Corporation and its counsel (and acknowledges that the Corporation and its counsel are relying thereon) that it is, and (if applicable) any disclosed beneficial purchaser for whom it is contracting hereunder is, a resident of, or otherwise subject to, the securities legislation of a jurisdiction other than Canada, and: 

			
	

   
	

   (a)
	

   the Subscriber is, and (if applicable) any other purchaser for whom it is contracting hereunder, is: 

 

	 	(i)      	

   a purchaser that is recognized by the securities regulators in the jurisdiction in which it is, and (if applicable) any other purchaser for whom it is contracting hereunder is resident or otherwise subject to the securities laws of such jurisdiction as an exempt purchaser and (subject to (b)(i) below) is purchasing the Common Shares as principal for its, or (if applicable) each such other purchaser's, own account, and not for the benefit of any other person, for investment only and not with a view to resale or distribution and no other person, corporation, firm or other organization has a beneficial interest in the said securities being purchased, or purchasing the securities as agent or trustee for the principal disclosed on the face page of this Agreement and each disclosed principal for whom the Subscriber is acting is purchasing as principal for its own account, and not for the benefit of any other person, and is purchasing for investment only and not a view to resale or distribution; or 

	 	 	 
	 	(ii)      	

   a purchaser which is purchasing Common Shares pursuant to an exemption from any prospectus or securities registration requirements (particulars of which are enclosed herewith) available to the Corporation, the Subscriber and any such other purchaser under applicable securities laws of their jurisdiction of residence or to which the Subscriber and any such other purchaser are otherwise subject to, and the Subscriber and any such other purchaser shall deliver to the Corporation such further particulars of the exemption and their qualification thereunder as the Corporation may reasonably request; 

	 	 	 

			
	

   
	

   (b)
	

   if the Subscriber is resident in or otherwise subject to applicable securities laws of the United States: 

 

			
	 	(i)	it understands and agrees that the Common Shares have not been and will not be registered under the U.S. Securities Act, or applicable state securities laws, and the Common Shares are being offered and sold by the Corporation, to the Subscriber in reliance upon Rule 506 of Regulation D or Section 4(2) under the U.S. Securities Act;

 

			
	 	(ii)	the undersigned represents, warrants and covenants (which representations, warranties and covenants shall survive the Closing) to the Corporation (and acknowledges that the Corporation is relying thereon) that:

 

2 

(a) it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits, and risks of the investment and it is able to bear the economic risk of loss of the investment; 

(b) it is purchasing the Common Shares for its own account or for the account of one or more persons for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Common Shares in the United States; provided, however, that the Subscriber may sell or otherwise dispose of any Common Shares pursuant to registration thereof pursuant to the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements; 

(c) it, and if applicable, each person for whose account it is purchasing the Common Shares satisfies one or more of the categories of "accredited investor" indicated below (the Subscriber must initial the appropriate line(s)): 

				
	 	________	Category 1.	A bank, as defined in Section 3(a)(2) of 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 United States Securities Exchange Act of 1934; or

 

				
	 	________	Category 4.	An insurance company as defined in Section 2(13) of the U.S Securities Act; or

 

				
	 	________	Category 5.	An investment company registered under the United States Investment Company Act of 1940; or

 

				
	 	________	Category 6.	A business development company as defined in Section 2(a)(48) of the United States 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 United States Small Business Investment Act of 1958; or

 

				
	 	________	Category 8.	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, with total assets in excess of U.S. $5,000,000; or

 

3

				
		________	Category 9.	An employee benefit plan within the meaning of the United States 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 adviser, or an employee benefit plan with total assets in excess of U. S. $5,000,000 or, if a self- directed plan, with investment decisions 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 United States Investment Advisers Act of 1940; or

 

				
		   [EM]       	Category 11.	An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of U.S. $5,000,000; or

 

				
		________	Category 12.	Any director or executive officer of the Corporation; or

 

				
		________	Category 13.	A natural person whose individual net worth, or joint net worth with that person's spouse (exclusive of the value of such person's primary residence), at the date hereof exceeds U.S.$ 1,000,000; or

 

				
		________	Category 14.	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 that person'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; or

 

				
		________	Category 15.	A trust, with total assets in excess of U.S.$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 Rule 506(b)(2)(ii) under the U.S. Securities Act; or

 

				
		________	Category 16.	Any entity in which all of the equity owners meet the requirements of at least one of the above categories;

(d) it has not purchased the Common Shares as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; 

(e) it understands that if it decides to offer, sell or otherwise transfer the Common Shares, it will not offer, sell or otherwise transfer any of such securities directly or indirectly, unless: 

(i) the transfer is to the Corporation;

4 

(ii) the transfer is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations; 

(iii) the transfer is made in compliance with the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 thereunder, if available, and in accordance with applicable state securities laws; or 

(iv) the securities are transferred in a transaction that does not require registration under the U.S. Securities Act or any applicable state laws and regulations governing the offer and sale of securities; and 

(v) in the case of transfers pursuant to (iii) or (iv) above, it has prior to such sale furnished to the Corporation an opinion of counsel or other evidence of exemption, in either case reasonably satisfactory to the Corporation; 

			
	 	(iii)	it understands that upon the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the U.S. Securities Act or applicable U.S. state securities laws and regulations, the certificates representing the Common Shares will bear a legend in substantially the following form:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS, AND IN EACH CASE OF (C) OR (D) THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. IF THE SECURITIES ARE BEING SOLD AT ANY TIME THE CORPORATION IS A "FOREIGN ISSUER" AS DEFINED IN RULE 902 UNDER THE U.S. SECURITIES ACT, A NEW CERTIFICATE, BEARING NO LEGEND, THE DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM THE CORPORATION'S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION IN THE FORM SET FORTH IN APPENDIX I OF EXHIBIT I OF THE SUBSCRIPTION AGREEMENT DATED [SEPTEMBER XX, 2012] TO THE CORPORATION AND THE CORPORATION'S TRANSFER AGENT TO THE EFFECT THAT THE SALE OF THE SECURITIES IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT." 

5

provided, that if the Common Shares are being sold under clause (B) above, at a time when the Corporation is a "foreign issuer" as defined in Rule 902 under the U.S. Securities Act, the legend set forth above may be removed by providing a declaration in the form attached as Appendix I to this Exhibit I to the effect that the sale of the securities is being made in compliance with Rule 904 of Regulation S under the U.S. Securities Act; 

			
	 	(iv)	if any of the Common Shares are being sold pursuant to Rule 144 of the U.S. Securities Act, the legend may be removed by delivery to the Corporation's transfer agent of an opinion reasonably satisfactory to the Corporation to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws;

 

			
	 	(v)	it understands and acknowledges that the Corporation is not obligated to remain a "foreign issuer" within the meaning of Regulation S under the U. S. Securities Act;
	 	 	 
	 	(vi)	it has had the opportunity to ask questions of and receive answers from the Corporation regarding the investment, and has received all the information regarding the Corporation that it has requested;

 

			
	 	(vii)	it understands that the Corporation may instruct its registrar and transfer agent not to record any transfer of any securities of the Corporation without first being notified by the Corporation that it is satisfied that such transfer is exempt from or not subject to the registration requirements of the U.S. Securities Act and applicable state securities laws;

 

	 	(viii)      	

   it consents to the Corporation making a notation on its records or giving instructions to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described herein; 

	 	 	 
	 	(ix)      	

   it understands and acknowledges that the Corporation has no obligation or present intention of filing with the United States Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Common Shares in the United States; 

	 	 	 
	 	(x)      	

   it understands and agrees that there may be material tax consequences to the Subscriber of an acquisition, disposition or exercise of any of the Common Shares. The Corporation gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under United States, state, local or foreign tax law of the undersigned's acquisition or disposition of such securities. In particular, no determination has been made whether the Corporation will be a "passive foreign investment company" ("PFIC") within the meaning of Section 1291 of the United States Internal Revenue Code; 

	 	 	 
	 	(xi)      	

   the office or other address of the Subscriber at which the Subscriber received and accepted the offer to purchase the Common Shares is the address listed on the face page of the Subscription Agreement; 

	 	 	 
	 	(xii)      	

   it acknowledges that the representations, warranties and covenants contained in this Agreement are made by it with the intent that they may be relied upon by the Corporation in determining its eligibility or the eligibility of others on whose behalf it is contracting thereunder to purchase Common Shares. It agrees that by accepting Common Shares it shall be representing and warranting that the

	 	 	

 

6 

representations and warranties above are true as at the Closing with the same force and effect as if they had been made by it at the Closing and that they shall survive the purchase by it of Common Shares and shall continue in full force and effect notwithstanding any subsequent disposition by it of such securities; and 

			
	 	(xiii)	The Subscriber undertakes to notify the Corporation immediately of any change in any representation, warranty or other information relating to the Subscriber set forth herein which takes place prior to the Closing.

Dated at Boston, MA this 25th day of September,2012.

		
		Brookdale Global Opportunity Fund
	 	Name of Subscriber
	 	 
		By: /s/ Eitan Milgram
	 	Signature

Eitan Milgram

			
		Title:	Executive Vice President of WAM GP LLC,
		 	as General Partner of Weiss Asset Management L.P.
		 	as Investment Manager of Brookdale Global Opportunity Fund

 

APPENDIX I

FORM OF DECLARATION FOR REMOVAL OF U.S. LEGEND 

		
	To	Richmont Mines Inc. (the "Corporation")
	 	and its Transfer Agent Computershare Investor Services Inc. 

The undersigned (A) acknowledges that the sale of the securities of the Corporation to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and (B) certifies that (1) the undersigned is not (a) an "affiliate" of the Corporation (as that term is defined in Rule 405 under the U.S. Securities Act), (b) a "distributor" or (c) an affiliate of a distributor; (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, 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; (3) neither the seller nor any affiliate of the seller nor any person acting on their behalf has engaged or will engage in any directed selling efforts in the United States in connection with the offer and sale of such securities; (4) the sale is bona fide and not for the purpose of "washing off” the resale restrictions imposed because the securities are "restricted securities" (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act); (5) the seller does not intend to replace such securities with fungible unrestricted securities; and (6) the contemplated sale is not a transaction, or part of a series of transactions, which, although in technical compliance with Regulation S under the U.S. Securities Act, is part of a plan or scheme to evade the registration provisions of the U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S under the U.S. Securities Act. 

			
	Dated ________ 20__.	X 	 
	 	Signature of individual (if Purchaser is an individual)
	 	 	 
	 	X 	 
	 	Authorized signatory (if Purchaser is not an individual)
	 	 
	 	 
	 	Name of Purchaser (please print) 
	 	 
	 	 
	 	Name of authorized signatory (please print) 
	 	 
	 	 
	 	Official capacity of authorized signatory (please print)

 

SUBSCRIPTION FOR COMMON SHARES

(For Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages, the "Subscription Agreement").

									
	 	 	 	 	 	 	Number of Common Shares: 23,000	  
	 	Paul Carmel	 	 	 	Price Per Common Share: $4.35	  
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$100,050.00	  
	 	 	 	 	 	 	 	 
	 	By:	/s/ Paul Carmel	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	 	 	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	President and CEO	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	  	 	 	 	 		 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 			 	 	 	 	 
	 			 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	  	 	 	  
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	  	 	 	(Fax Number)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	  	 	 	(Email Address)	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	  	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	Paul Carmel	  	 	 	Paul Carmel	 
	 	(Name)	  	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	  
	 	(Account reference, if applicable)	  	 	 	(Account reference, if applicable)	 
	 		  	 	 	 	 
	 	 	  	 	 	 	 
	 	(Address)	  	 	 	(Contact Name)	 	  
	 		 	 	 	 		 
	 	 	  	 	 	 	  
	 	 	 	  	 	 	(Address)	 	  
	 			 	 	 	 		  
	 	 	  	 	 	 	  
	 	 	 	  	 	 	 	 	 

 

2 

			
	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

			
	[   ]	 	owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 		

	[ X ]		owns directly or indirectly, or exercises control or direction over, 30,000 common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional 0 common shares in the capital stock of the Corporation. 

	 		 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

				
	Per:	/s/ H. Greg Chamandy
	 	Authorized Signatory
	 	 	H. Greg Chamandy, 
Chairman

SUBSCRIPTION FOR COMMON SHARES

(For Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages, the "Subscription Agreement").

									
	 	 	 	 	 	 	Number of Common Shares: 10,000	  
	 	Christian Pichette	 	 	 	Price Per Common Share: $4.35	  
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$43,500	  
	 	 	 	 	 	 	 	 
	 	By:	 /s/ Christian Pichette 	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	 	 	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	Executive vice president & COO	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	  	 	 	 	 		 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 			 	 	 	 	 
	 			 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	  	 	 	  
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	  	 	 	(Fax Number)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	  	 	 	(Email Address)	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	  	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	 	 	  	 	 	 	 	 
	 	(Name)	  	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	 	 	  
	 	(Account reference, if applicable)	  	 	 	(Account reference, if applicable)	 
	 		  	 	 	 	 
	 	 	 	  	 	 	 	 
	 	(Address)	  	 	 	(Contact Name)	 	  
	 		 	 	 	 		 
	 	 	 	  	 	 	 	  
	 	 	 	  	 	 	(Address)	 	  
	 			 	 	 	 		  
	 	 	 	  	 	 	 	  
	 	 	 	  	 	 	 	 	 

 

2 

			
	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

			
	[   ]	 	owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 		

	[ X ]		owns directly or indirectly, or exercises control or direction over, 40,000 common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional 10,000 common shares in the capital stock of the Corporation. 

	 		 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

				
	Per:	/s/ Paul Carmel
	 	Authorized Signatory
	 	 	Paul Carmel

     President & CEO 

SUBSCRIPTION FOR COMMON SHARES

(For Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages, the "Subscription Agreement").

  									
	 	 	 	 	 	 	Number of Common Shares: 60,000	 
	 	Eberhard Scherkus	 	 	 	Price Per Common Share: $4.35	 
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$261,000	  
	 	 	 	 	 	 	 	 
	 	By:	/s/ Eberhard Scherkus	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	 	 	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	 	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	 	 	 	 	 		 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 			 	 	 	 	 
	 			 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	 	 	 	 
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	 	 	 	(Fax Number)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	(Email Address)	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	 	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	Eberhard Scherkus	 	 	 	 	 
	 	(Name)	 	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	 
	 	(Account reference, if applicable)	 	 	 	(Account reference, if applicable)	 
	 		 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	(Address)	 	 	 	(Contact Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Address)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

2 

			
	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

			
	[ X ]	 	owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 		

	[   ]		owns directly or indirectly, or exercises control or direction over, ________ common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional ________ common shares in the capital stock of the Corporation. 

	 		 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

				
	Per:	/s/ Paul Carmel
	 	Authorized Signatory
	 	 	Paul Carmel
President & CEO 

SUBSCRIPTION FOR COMMON SHARES

(For Canadian Subscribers) 

TO: Richmont Mines Inc. (the "Corporation") 

The undersigned (hereinafter referred to as the "Subscriber") hereby subscribes for and agrees to purchase from the Corporation the number of common shares of the capital of the Corporation (each a "Common Share") to be issued for the aggregate consideration set forth below, representing a subscription price of Cdn$4.35 per Common Share (the "Offering Price"), upon and subject to the terms and conditions set forth in "Terms and Conditions of Subscription Agreement for Common Shares of Richmont Mines Inc." attached hereto (together with the face pages, the "Subscription Agreement").

  									
	 	 	 	 	 	 	Number of Common Shares: 919,540	 
	 	FDS INV REA II Natcan Transitoire acting through its manager Fiera Capital Corporation	 	 	 	Price Per Common Share: $4.35	 
	 	(Name of Subscriber – please print)	 	 	 	Aggregate Consideration:	$3,999,999.00	  
	 	 	 	 	 	 	 	 
	 	By:	/s/ Robert Trepamier

        /s/ Pierre Blanchette	 	 	 	 	 	 
	 		Authorized Signature 	 	 	 	 	 	 
	 	1. Senior Vice-President, Operations and I.T.	 	 	 	Beneficial Subscriber Information (if not the same as Subscriber)	 
	 	2. Senior Vice-President, Finance	 	 	 	 
	 	(Official Capacity or Title – please print)	 	 	 	 	 	 
	 	 	 	 	 	- Not Applicable -	 
	 	Please print name of individual whose signature appears above if different than the name of the subscriber printed above.	 	 	 	(Name of Beneficial Subscriber for whom subscriber is contracting)	 
	 	1. Robert Trepamier	 	 	 	 	 
	 	2. Pierre Blanchette	 	 	 	 	 
	 	 	 	 	 	 	(Beneficial Subscriber’s Residential Address)	 
	 	 	 	 	 	 	 	 	 
	 	(Subscriber’s Residental Address)	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Telephone Number)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 		 
	 	 	 	 	 	 	(Fax Number)	 	 
	 	(Telephone Number)	(E-mail Address)	  	 	 	 	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	(Email Address)	 	 
				 	 	 	 		 
	 	Register the Common Shares as set forth below:	 	 	 	Deliver the Common Shares as set forth below:	 
	 		 	 	 	 	 
	 	 	 	 	 	 	 
	 	(Name)	 	 	 	(Name)	 	 
	 		 	 	 	 		 
	 	- See Appendix A Attached -	 	 	 	- See Appendix A Attached -	 
	 	(Account reference, if applicable)	 	 	 	(Account reference, if applicable)	 
	 		 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	(Address)	 	 	 	(Contact Name)	 	 
	 		 	 	 	 		 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Address)	 	 
	 			 	 	 	 		 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

2 

			
	 	A.	Present Ownership of Securities 

The Subscriber either [check appropriate box]:

			
	[   ]	 	owns directly or indirectly, or exercises control or direction over, no common shares of the Corporation or securities convertible into common shares in the capital stock of the Corporation; or

	 		

	[ X ]		owns directly or indirectly, or exercises control or direction over, 495,340common shares of the Corporation and convertible securities entitling the Subscriber to acquire an additional 0 common shares in the capital stock of the Corporation. 

	 		 

 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement Sept. 25, 2012

Richmont Mines Inc.

  				
	Per:	/s/ Paul Carmel
	 	Authorized Signatory
	 	 	Paul Carmel

        President & CEOexhibit_4-3.htm

Exhibit 4.3

 

Execution Version

 

LOAN AGREEMENT

 

LOAN AGREEMENT (the “Agreement”) dated as of 27 February 2012 (the “Effective Date”) is by and between RADA Electronic Industries Ltd., a company organized under the laws of the State of Israel having its main place of business at 7 Giborei Israel Street, Netanya, 42504, Israel, (the “Borrower”) and Faith Content Development Limited, a company organized under the laws of Hong Kong having its main place of business at 1/F King Fook Building, 30-32 Des Voeux Road C, Hong Kong ("FCD") and Mr. Benzion Gruber of 11(a) HaGeffen St. Ephrat, Israel ("Gruber").  Each of FCD and Gruber may also be referred to herein as a “Lender” and collectively as the "Lenders".

W I T N E S S E T H:

 

WHEREAS, the Borrower has requested that the Lenders lend to it an aggregate principal amount, as set forth opposite each Lender's name in Schedule I hereto (“The Lenders“) under the header Principal Amount, pursuant to the terms and conditions herein set forth;

 

WHEREAS, the Lenders have agreed to make a loan to Borrower on the terms and subject to the conditions herein set forth; and

 

WHEREAS, the amount lent hereunder is to be used exclusively and directly for the Permitted Uses, as defined below.

 

NOW, THEREFORE, the Borrower and the Lender hereby agree as follows:

 

ARTICLE I

 

Definitions

 

1.1.        Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

 

“Agreement” shall have the meaning assigned to such term in the preamble and shall include the recitals which shall constitute an integral part hereof;

 

“Banks” shall mean, Bank Leumi Le-Israel B.M. and the State Bank of India;

 

“Bank Facilities” shall mean, the Borrower’s existing credit agreements and arrangements with the Banks as in effect on the date hereof, further details of which are set out at Part 1 to Exhibit D hereto;

 

“Borrower” shall have the meaning assigned to such term in the preamble;

 

“Change of Control Event” shall mean any event whereby the Borrower shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Borrower is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Borrower to another Person, or (iii) allow a purchase, tender or exchange offer to be made to and accepted by the holders of more than the 50% of the Borrowers issued share capital (not including any shares held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) enter into a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person;

 

  

  

  

 

“CEO” shall mean the chief executive officer of the Borrower;

 

“Charge Agreement” shall mean the amendment to the floating charge debenture in the form of Exhibit C hereto, dated as of the date hereof between the Borrower and FCD, which will amend the Existing Floating Charge;

 

“Charged Assets” shall mean all of the assets of the Borrower, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the following: (a) all the assets, monies, property and rights of any kind whatsoever without exception, whether now or hereafter at any time in the future owned by or in the possession of the Borrower in any manner or way whatsoever, including, without limitation, any intangible assets; (b) all the current assets, without exception, now or hereafter at any time in the future owned by or in the possession of the Borrower in any manner or way whatsoever, the expression “current assets” meaning all the assets, monies, property and rights of any kind with the exception of land, buildings and fixtures; (c) all the fixed assets now or hereafter at any time in the future owned by or in possession of the Borrower in any manner or way whatsoever, the expression “fixed assets” to include, inter alia, land, buildings and fixtures; (d) all the securities and other documents or instruments owned by the Borrower now and at any time in the future held by Borrower and/or any rights in respect thereof; and (e) all other tangible and intangible personal property of the Borrower, including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Borrower described above (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Borrower in respect of any of the items listed above), and all books, correspondence, files and other records, including, without limitation, all tapes, desks, cards, software, data and computer programs in the possession or under the control of the Borrower or any other Person from time to time acting for the Borrower that at any time evidence or contain information relating to any of the property described above or are otherwise necessary or helpful in the collection or realization thereof; in each case howsoever the Borrower's interest therein may arise or appear (whether by ownership, security interest, claim or otherwise);

 

“Closing Date” shall mean with respect to each Lender, such date which falls two business days after the date on which all of the conditions set forth in Article IV with respect to such Lender shall have been satisfied or waived or such other date agreed to by the Borrower and the applicable Lender;

 

“Commission” shall mean the US Securities and Exchange Commission;

 

“Convertible Note” shall mean the convertible note in the principal amount of U.S.$3,000,000 (three million US dollars) issued by the Borrower on 10 December 2007;

 

  

2

  

 

“Default” shall mean any event or condition, which upon notice, lapse of time or both would constitute an Event of Default;

 

“Default Interest Rate” shall mean the Interest Rate plus 5%;

 

"Disbursed Amount" shall mean the actual amount of any disbursement disbursed by a Lender from time to time, on account of the its respective Principal Amount, without any deduction of taxes, Original Fee or other deductions.

 

“Event of Default” shall have the meaning assigned to such term in Article VI;

 

“Excess Cash”  shall mean and shall be calculated as the Borrower's current assets minus its current liabilities as such figures appear on the Borrower's most recent annual or half year Financial Statements, less an amount equal to the sum of (i) repayments due under the Convertible Note during the six (6) month period following the date of the most recent annual or half year Financial Statements (the “Interim Period”), in amounts of up to US$750,000 for each Interim Period; (ii) repayments due under the July 2008 Loan Agreement during the Interim Period; and (iii) the Borrower's cash requirements for the Interim Period (excluding repayments due under the Convertible Note and July 2008 Loan Agreement), as set out in the budget approved by the board of directors of the Borrower and as revised and updated in each financial quarter. Excess Cash shall be determined on a six months basis from the annual or half year Financial Statements of the Borrower;

“Exchange Act” shall mean the US Securities Exchange Act of 1934, as amended;

 

“Existing Floating Charge” shall mean that certain second priority floating charge over the Charged Assets, registered for the benefit of FCD with the Israeli Registrar of Companies on November 8, 2009.

 

"FCD" shall have the meaning assigned to such term in the preamble.

 

“Financial Statements” shall mean the annual or the interim financial statements of the Borrower as prepared in accordance US GAAP and the United States Securities and Exchange Commission;

 

“Governmental Authority”  shall mean any government, any state, city, town, municipality, local or other political subdivision thereof or thereto and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government;

 

"Gruber" shall have the meaning assigned to such term in the preamble.

 

“Indebtedness” of any Person shall mean (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than payables in the ordinary course of business), (f) all Indebtedness of others to the extent secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed by such Person, (g) all guarantees by such Person of Indebtedness of others, (h) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging arrangements and (i) all obligations of such Person, contingent or otherwise, as an account party in respect of letters of credit and bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefore;

 

  

3

  

 

“Intellectual Property” shall have the meaning assigned to such term in Section 3.8;

 

“Interest Period” shall mean, each period commencing on the day after a Quarter End and ending on the next following Quarter End; provided, however, that the first Interest Period shall commence on the Closing Date and end on the next following Quarter End;

 

“Interest Rate” shall mean, with respect to each applicable Interest Period, the applicable LIBOR Rate for such Interest Period plus 5%; provided however that if the applicable LIBOR Rate for such Interest Period plus 5% is less than 7% for such Interest Period, the Interest Rate for such Interest Period shall be 7%;

 

“July 2008 Loan” shall mean the principal amount and all accrued but unpaid interest thereon outstanding from time to time under that certain Loan Agreement between the Borrower and FCD, dated July 1, 2008 (such Loan Agreement, including all of the documents ancillary thereto, the “July 2008 Loan Agreement”).

 

“Lender” shall have the meaning assigned to such term in the preamble or any other Person to whom this Agreement is assigned in accordance with Section 7.2;

 

“LIBOR Rate” shall mean, with respect to the Loan Amount or to any outstanding portion thereof, (i) the six-month London Interbank Offered Rate for deposits in U.S. dollars, as published on the date which is two (2) business days prior to the first day of an Interest Period, in The Wall Street Journal (Eastern Edition) under the caption “Money Rates - London Interbank Offered Rates (LIBOR)”; or (ii) if The Wall Street Journal does not publish such rate, the offered six-month rate for deposits in U.S. dollars which appears on the Reuters Screen LIBOR Page as of 10:00 a.m., New York time, on the date which is two (2) business days prior to the first day of an Interest Period, provided that if at least two rates appear on the Reuters Screen LIBOR Page on any day, the “LIBOR” for such day shall be the arithmetic mean of such rates;

 

“Lien” shall mean with respect to any asset, (a) any mortgage, lien (statutory or other), pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities;

 

  

4

  

 

“Loan Amount” shall mean the aggregate amount of all Disbursed Amounts and all accrued but unpaid interest thereon outstanding from time to time, under this Agreement;

 

“Loan Documents” shall mean this Agreement, the Charge Agreement and the Warrant Certificate, and all exhibits, schedules and appendices hereto and thereto;

 

"Majority Lenders" shall mean Lenders whose Disbursed Amounts aggregate more than 50% of the total Disbursed Amounts.

 

“Origination Fee” shall have the meaning ascribed to such term in Section 5.1

“Permitted Indebtedness” shall mean (i) Indebtedness incurred under this Agreement, the Convertible Note, the Bank Facilities and the July 2008 Loan, (ii) suppliers credit  which is given in the ordinary course of business and (iii) line of credit received from Clal Factoring Ltd in the amount of US$1,100,000.

 

“Permitted Liens” shall mean (i) the existing Liens granted to the Banks, as set out at Part 2 to Exhibit D hereto, (ii) Liens granted to secure any amounts outstanding under the Convertible Note and the Existing Floating Charge; (iii) Liens for taxes, assessments or similar charges and assessments not yet delinquent; (iv) Liens of mechanics, materialmen, warehousemen, carriers or other like liens securing obligations incurred in the ordinary course of business that are not yet due and payable or that are being contested in good faith by appropriate proceedings (v) Liens granted to financial institutions and other credit providers to secure leasing arrangements to finance the purchase or the use of cars and other equipment by the Company in the ordinary course of business provided the amount secured for leasing of equipment does not exceed US$1,000,000.

“Permitted Uses” shall mean the required uses of the Principal Amount as set forth on Exhibit A hereto;

 

“Person” shall mean any natural person, corporation, business trust, joint venture, association, unincorporated association, company, partnership, limited liability company or government, or any agency or political subdivision thereof;

 

“Principal Amount” shall mean the amount set forth opposite each Lender's name in Schedule I hereto (The Lenders) under the header Principal Amount.;

 

“September 2011 Loan” shall mean the principal amount and all accrued but unpaid interest thereon outstanding from time to time under that certain Principal Agreement between the Borrower and FCD, dated September 28, 2011, as amended on November 30, 2011 (such Agreement, as amended, including all of the documents ancillary thereto, the “September 2011 Loan Agreement”).

 

“Quarter Ends” shall mean 31 March, 30 June, 30 September and 31 December in any calendar year and “Quarter End” shall mean any of them;

 

  

5

  

 

“Securities Act” shall mean the US Securities Act of 1933, as amended.

 

“Warrants” shall have the meaning ascribed to such term in Section 5.2.

 

1.2.        Terms Generally.  The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof or thereof, and (b) all terms of an accounting or financial nature shall be construed in accordance with generally accepted accounting principles as in effect from time to time.

 

ARTICLE II

 

The Loan

 

2.1         Payment of Principal Amount.  On the basis of the representations and warranties and covenants made by the Borrower herein, and subject to the satisfaction of all the closing conditions contained in Article IV, on the applicable Closing Date the following amounts shall be disbursed to the Borrower:

(a)         An amount of US$ US$1,710,000 [1,700,000+ $10,000 accrued and not yet paid Interest pursuant to the September Loan Agreement] (the "First Installment") Shall be disbursed by FCD and shall be used to repay in full all of the amounts due and payable under the September Loan Agreement; and

(b)         In addition FCD shall disburse the balance between US$2,000,000 and the First Installment (the "Second Installment")

(c)         Gruber shall disburse his entire Principal Amount in the amount of US$ 300,000.

(d)         In the event the Borrower shall desire to borrow the remaining amount or part thereof of the Principal Amount from FCD it shall provide notice of the same to FCD and FCD shall consider the Borrower’s request. Notwithstanding anything to the contrary herein, the decision to disburse any amount on account of the remaining Principal Amount shall be made by FCD at its sole and absolute discretion, with or without reason, or for no reason at all, without any further obligation or liability to do so, and none of the Borrower or its officers, directors, employees, agents, or affiliates or Gruber shall have any right, claim or demand against FCD, including without limitation a claim of bad faith, breach of contract or other claim under law or theory of torts as a result of not making such disbursement or for making a disbursement in an amount less than the full remaining Principal Amount.  Each of the Borrower and Gruber acknowledges that such an election by FCD not to make any further advance may then, or in the future, have a material adverse effect upon Borrower, including, but not limited to Borrower’s ability to continue its business activities.

 

  

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2.2         Interest.

(a)         Subject to the provisions of Section 2.3, the outstanding Principal Amount shall bear interest for each Interest Period, at a rate equal to the Interest Rate in effect at the time of such calculation.

(b)         On the first business day of each Interest Period, commencing as of the first Interest Period following the Closing Date, and as long as the Principal Amount, or any portion thereof, remains outstanding (and without derogating from Section 2.3), the Borrower shall pay to the Lender an amount equal to the Interest Rate applicable to the immediately preceding Interest Period, with respect to the Principal Amount or any portion thereof that was outstanding during such Interest Period.

2.3         Default Interest.  If the Borrower shall default in the repayment of any portion of the Principal Amount or any interest accrued thereon or any other amount becoming due hereunder, by acceleration or otherwise, the Borrower shall on demand from time to time pay interest on such defaulted amount to the date of actual payment at a rate per annum (computed as provided in Section 2.2) equal to the Default Interest Rate.

2.4         Repayment of Principal Amount.

(a)         Repayment of Principal Amount: The entire outstanding Loan Amount shall be due and payable on January 31, 2014.

(b)         Event of Default.  Notwithstanding the foregoing in subsection (a) above, the entire outstanding Loan Amount shall become due and payable to the Lender without demand upon the occurrence of an Event of Default in accordance with the provisions of Article VI.

(c)         Prepayment:

(i)         The Borrower shall have the right at any time and from time to time to prepay the Loan Amount outstanding at such time, in whole or in part, with no penalty, provided, however, that no such prepayment shall be in an amount less than U.S.$100,000 (one hundred thousand US dollars) and, provided further, that the Borrower shall have delivered written notice to the Lenders at least ten (10) days prior to any such prepayment.

 

(ii)         Section 2.4(a) above notwithstanding, for as long as any of the Principal Amount remains outstanding, immediately following the publication of the annual or half year Financial Statements of the Borrower, the Borrower shall use any Excess Cash available as calculated from such Financial Statements to prepay such of the outstanding Loan Amount as is equal to such Excess Cash and such prepayment shall be made in accordance with the provisions of Section 2.4(c)(i) above.

 

  

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2.5         Manner of Payment.  Each payment hereunder by the Borrower shall be made to the Lenders, only after full payment of any other outstanding loan due to FCD, pro rata to the outstanding portion of the Loan Amount of each Lender, in U.S. Dollars by wire transfer in immediately available funds to such account as each Lender may designate in writing. Any payment made by the Borrower shall be attributed first to be on account of outstanding interest (including Default Interest) and only thereafter to be on account of the Principle Amount. All payments to be made by the Borrower to the Lenders shall be made free and clear of, and without deduction or withholding unless the Borrower is required by law to make such a payment subject to a deduction or withholding, in which case the Borrower shall, promptly on becoming aware of such requirement, notify the applicable Lender of it.  If at any time is or becomes required by law to make any deduction or withholding from any payment to any Lender due under this Agreement, the sum due from the Borrower in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, such Lender receives, on the due date for such payment (and retains free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made. Without derogating from the above, Gruber herby confirms that he holds a valid exemption from withholding tax issued by the Israeli income tax authorities and that he shall make best effort to maintain the validity of such exemption as long as the Loan Amount is outstanding.

ARTICLE III

 

Representations and Warranties of the Borrower

 

The Borrower represents and warrants to the Lenders, as follows:

 

3.1         Organization; Powers. The Borrower (i) is a company validly existing under the laws of the State of Israel and (ii) has all requisite power and authority to execute, deliver and perform the Loan Documents and to consummate the transactions contemplated hereby and thereby.  Schedule 3.1 hereto sets forth (i) the exact legal name of the Borrower and (ii) the registered number of the Borrower.

3.2.        Authorization. Subject to receipt of the consents detailed in Schedule 3.2 hereof (“Required Consents”), which shall be obtained by Closing, the execution, delivery and performance by the Borrower of the Loan Documents (i) have been duly authorized by all necessary action, (ii) do not contravene its memorandum or articles of association or any applicable law or any contractual restriction binding on or otherwise affecting the Borrower or its properties, (iii) do not and, based on current applicable law, will not result in or require the creation of any Lien upon or with respect to any of its properties, and (iv) do not result in any default, breach, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to it or its operations or any of its properties or any agreement to which it or its properties are subject or by which it or its properties are bound, which, in the case of this clause (iv), is reasonably expected to have a material adverse effect on the business, finances, operations or prospects of the Borrower.

3.3.        Validity. As of the Closing Date, and, subject to receipt of the Required Consents, each of this Agreement, the Charge Agreement and the Warrant Certificate are, and when executed and delivered, will be, legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and principles of equity.

 

  

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3.4.        Litigation. There is no pending or written notice threatening any action, suit, proceeding or claim affecting the Borrower or any of its subsidiaries, before any Governmental Authority or any arbitrator, or any order, judgment or award by any Governmental Authority or arbitrator, that may adversely affect the grant by the Borrower, or the recordation, of the charges purported to be created by the execution delivery and/or performance of any of the Loan Documents by the Borrower, or the exercise by the Lender of any of its rights or remedies hereunder.

3.5.        Tax. All tax returns and other reports required by applicable law to be filed by the Borrower or its subsidiaries have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon the Borrower or any of its subsidiaries or any property of the Borrower or any of its subsidiaries (including, without limitation, all income and other taxes on employees' wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof on the Financial Statements in accordance with general accepted accounting principles.

3.6.        Public Documents.  The Borrower has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve (12) months preceding the date hereof (or such shorter period as the Borrower was required by law to file such reports) (the foregoing materials together with reports on Form 6-K furnished by the Borrower to the Commission being collectively referred to herein as the “SEC Reports”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.7.        Material Changes since Financial Statements.  Since the date of the latest audited Financial Statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a material adverse change in the financial or business condition of the Borrower, (ii) the Borrower has not incurred any Indebtedness (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Borrower’s Financial Statements pursuant to generally accepted accounting principles or required to be disclosed in filings made with the Commission, (iii) the Borrower has not altered its method of accounting or the identity of its auditors, (iv) the Borrower has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any share capital, and (v) the Borrower has not issued any equity securities to any officer, director or affiliate, except pursuant to existing share option plans. The Borrower does not have pending before the Commission any request for confidential treatment of information.

 

  

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3.8.        Intellectual Property.  The Borrower owns and controls, or otherwise possesses adequate rights to use, all trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity (collectively, the “Intellectual Property”) which is the only Intellectual Property necessary to conduct its business in substantially the same manner as conducted and as proposed to be conducted, as of the date hereof.  Schedule 3.8 hereto sets forth a true and complete list of all the registered Intellectual Property owned or used by the Borrower as of the date hereof.  All such Intellectual Property is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part.  Except as set forth on Schedule 3.8, no Intellectual Property is the subject of any licensing or franchising agreement.  The Borrower has no knowledge of any conflict with the rights of others to any Intellectual Property and, to the best knowledge of the Borrower, the Borrower is not now infringing or in conflict with any such rights of others in any material respect, and to the best knowledge of the Borrower, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by the Borrower.  The Borrower has not received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.

3.9.        Location of Charged Assets.  All equipment, fixtures, goods and inventory now existing are, and all equipment, fixtures, goods and inventory hereafter existing will be, located and/or based at the addresses specified therefore on Schedule 3.9(a) hereto, except that the Borrower will give the Lender not less than five days’ prior written notice of any change of the location of any such Charged Assets, other than to locations set forth on Schedule 3.9(a).  The Borrower’s chief place of business and chief executive office, the place where the Borrower keeps its records and all originals of all chattel paper are located at the addresses specified therefore on Schedule 3.9(b) hereto. Set forth on Schedule 3.9(c) hereto is a complete and accurate list, as of the date of this Agreement, of each deposit account, securities account and commodities account of the Borrower, together with the name and address of each institution at which each such account is maintained, the account number for each account.  Set forth on Schedule 3.9(d) hereto is a complete and correct list of each trade name used by the Borrower and the name of, and each trade name used by, each person from which the Borrower has acquired any substantial part of the Charged Assets.

3.10.      Liens. The Borrower is and will be at all times the sole and exclusive owner of, or otherwise have and will have adequate rights in all of the Charged Assets, free and clear of any Liens, except for Permitted Liens. No effective financing statement, recordation of charge or other instrument similar in effect covering all or any part of the Charged Assets is on file in any recording or filing office, except (A) such as may have been filed in favor of the Banks relating to the Bank Facilities, (B) such as may have been filed relating to the Convertible Note and the Existing Floating Charge (C) the Charge Agreement and (D) Charges with respect to Permitted Liens created prior to the date hereof, as listed on Schedule 3.10.

 

  

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3.11.      Compliance with Law and Other Instruments. Except as set forth in Schedule 3.11, the exercise by the Lender of any of its rights and remedies under the Loan Documents will not contravene any law or any contractual restriction binding on or otherwise affecting the Borrower or any of its properties and will not result in or require the creation of any lien, upon or with respect to any of its properties.

3.12.      Governmental or Third Party Consents. Except as disclosed in Schedule 3.12,no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body, or any other Person, is required for the exercise by the Lender of any of its rights and remedies hereunder or under any of the Loan Documents other than the Required Consents, including (1) the consent of the Banks to the grant of the security interest pursuant to the Charge Agreement, and (2) the filing of the Charge Agreement, in accordance with the Israeli Companies Ordinance - 1983 which filings shall be made no later than 21 days of the date hereof.

3.13.      Effect of Charge Agreement. Subject to receipt of the Required Consents, the Charge Agreement creates in favor of FCD a legal, valid and enforceable second priority floating charge over the Charged Assets, pari passu with the Existing Floating Charge, as security for the obligations of the Borrower under this Agreement second in priority only to the Permitted Liens (other than the Existing Floating Charge).  Such recordings and all other action necessary or desirable to record such security interests have been duly taken or will be taken within 21 days of the grant of the Required Consents.

ARTICLE IV

 

Conditions to Closing

 

The obligation of each of the Lenders to lend the Principal Amount to the Borrower is subject to the satisfaction of the following conditions, on or prior to the applicable Closing Date, any or all of which may be waived by the applicable Lender:

 

4.1         the representations and warranties made by the Borrower in this Agreement shall have been true and correct when made, and shall be true and correct as of the Closing Date as if the Closing Date was substituted for the date set forth in such representations and warranties;

 

4.2         all covenants, agreements, and conditions contained in this Agreement to be performed or complied with by the Borrower prior to the Closing Date shall have been performed or complied with by the Borrower, as the case may be, prior to or at the Closing Date;

 

4.3         from the date hereof until the Closing Date, there will have been no material adverse change in the financial or business condition of the Borrower;

 

  

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4.4         the Lender shall have received a certificate, dated as of the Closing Date and signed by the CEO of the Borrower, confirming compliance with the conditions precedent set forth in Sections 4.1, 4.2 and 4.8 of this Article IV;

 

4.5         the Charge Agreement (subject only to receipt of the Required Consents), and the Warrant Certificate shall have been duly executed and delivered to FCD by the Borrower;

 

4.6         the Lenders shall have received a duly executed legal opinion of S. Friedman & Co, Advocates and Notaries, counsel to the Borrower, in the form attached hereto as Exhibit B;

 

4.7         all corporate and other proceedings taken or required to be taken by the Borrower for the execution, delivery and performance of the Loan Documents by the Borrower shall have been taken and all documents incident thereto shall be reasonably satisfactory in form and substance to the Lenders;

 

4.8         Solely with respect to FCD-this Agreement and the other Loan Documents shall have received the approval of the shareholders of the Borrower in accordance with Section 275 of the Companies Law, 5759-1999; and

 

4.9         The Borrower shall have received the approval of the Office of the Chief Scientist to any change of ownership of its assets which may occur as a result of the enforcement by FCD of the security interest created under the Charge Agreement.

 

ARTICLE V

 

Covenants

 

5.1         Origination Fee. As an inducement to the Lenders to enter into this Loan Agreement, the Borrower shall pay to each of the Lender a one-time disbursement fee equal to five percent (5%) (the “Origination Fee”) of the Disbursed Amount disbursed upon Closing, payable upon Closing. In the event an additional Disbursement Amount is disbursed pursuant to Section 2.1(d) hereof, the Borrower shall pay FCD the Origination Fee calculated based on the additional Disbursement Amount, which shall be paid by way of set-off against each Disbursement Amount.

 

5.2         Warrants. As a further inducement to the Lender to enter into this Loan Agreement, the Borrower shall grant the Lenders warrants to purchase Ordinary Shares, par value NIS 0.015 of the Company, at an exercise price equal to $2.5 per Ordinary Share, with an aggregate exercise price equal to the aggregate amount of all of the Disbursement Amounts disbursed to the Borrower hereunder, all in accordance with the terms of the warrant certificate in the form attached hereto as Exhibit E (the “Warrant Certificate” and the Warrants”, respectively). The Warrants shall be issued within 7 days of each disbursement on account of the Principal Amount and shall be exercisable for a period of three (3) years following the issuance date thereof.

 

  

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5.3         Participation Right.  The Borrower hereby grants FCD the right to participate in an amount of up to fifty (50%) of any post-Closing loan, debt and/or equity funding of the Company occurring prior to the twenty fourth (24th) month anniversary of the Closing Date (as applicable, the “Future Funding”), as follows:

 

5.3.1                 If the Borrower intends to effect a Future Funding, it shall give FCD a written notice of its intention to do so, describing the terms and conditions upon which the Borrower intends to effect the Future Funding (the “Rights Notice”). FCD  shall have thirty (30) days from receipt of the Rights Notice to agree to participate in the Future Funding in an amount of up to fifty percent (50%) thereof on the terms and conditions specified in the Rights Notice and shall give written notice to the Borrower setting forth its decision to participate and the amount of such participation (the “Acceptance Notice”), provided, that FCD shall not be obligated (but shall be entitled) to participate pursuant to the Acceptance Notice if the Borrower does not consummate the balance of the Future Funding, pursuant to the terms described in the Rights Notice.

 

5.3.2                 FCD’s participation right pursuant to this Section 5.3 shall survive the repayment in full of the Loan Amount and/or the termination of this Agreement for any reason whatsoever, including termination due to an Event of Default, Borrower’s failure to timely obtain any Required Consent or otherwise. The Borrower covenants and agrees with the Lender that so long as this Agreement shall remain in effect or any portion of the Principal Amount or interest (including the Default Interest) shall remain unpaid.

 

5.4         Business and Properties. The Borrower will and will cause each of its subsidiaries, to do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises and authorizations material to the conduct of its business as conducted and as proposed to be conducted (the “Business”); maintain and operate such Business in substantially the manner in which it is presently conducted and operated; comply in all material respects with all applicable laws, rules, regulations and orders of any governmental authority, whether now in effect or hereafter enacted; and at all times maintain and preserve all property material to the conduct of the Business and keep its property in good repair, working order and condition and from time to time make, or cause to be made, all required and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the Business carried on in connection therewith may be properly conducted at all times.

 

5.5         Location of Charged Assets.  The Borrower will keep the Charged Assets at the locations specified therefor on Schedule 3.9(a) hereof or, upon not less than five (5) days’ prior written notice to the Lenders accompanied by a new Schedule 3.9(a) hereto indicating the new location of such Charged Assets, at such other locations as set forth on such amended Schedule 3.9(a).

 

5.6         Condition of Charged Assets.  The Borrower will maintain or cause the Charged Assets to be maintained and preserved in good condition, repair and working order, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any equipment within a reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are reasonably necessary or desirable, consistent with past practice or which FCD may reasonably request to such end.  The Borrower will promptly furnish to the Lenders a statement describing in reasonable detail any loss or damage in excess of $100,000 to any of the Charged Assets.

 

  

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5.7         Taxes, Etc.  The Borrower agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Charged Assets, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with general accepted accounting principles have been set aside for the payment thereof.

 

5.8         Insurance.

 

	
  

	
5.8.1

	
The Borrower will insure the Charged Assets at all times with a licensed insurer under the Insurance Business Control Law, 5741-1981, at the full value of the assets charged against reasonable and usual risks in respect of properties of the same type, and also against such other risks as FCD may from time to time indicate, if any, and in accordance with terms and conditions FCD will agree upon with insurance companies (the “Insurance Policy”), and the Borrower will pay all insurance fees on due date and deliver to FCD copies of all the insurance certificates and the receipts in respect of payment of the insurance premiums.

	
  

	
5.8.2

	
The Borrower will use best efforts to procure that each Insurance Policy shall provide for all losses to be paid on behalf of FCD and the Borrower as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and, subject to the rights of the Banks under the Permitted Liens, paid directly to, FCD.  The Borrower will use best efforts to procure that each such policy shall, in addition, (A) contain an agreement by the insurer that any loss thereunder shall be payable to FCD on its own account notwithstanding any action, inaction or breach of representation or warranty by the Borrower, (B) provide that there shall be no recourse against FCD for payment of premiums or other amounts with respect thereto and (C) provide that at least 10 days' prior written notice of cancellation, lapse, expiration or other adverse change shall be given to FCD by the insurer.  The Borrower will, if so requested by FCD, deliver to FCD original or duplicate policies of such insurance.  The Borrower will also, at the request of FCD, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

	
  

	
5.8.3

	
Reimbursement under any liability insurance maintained by the Borrower pursuant to this Section 5.8 may be paid directly to the Person who shall have incurred liability covered by such insurance.  In the case of any loss involving damage to equipment or inventory, and subject to the prior rights of the Banks under the Permitted Liens, any proceeds of insurance maintained by the Borrower pursuant to this Section 5.8 shall be paid to FCD and the Borrower will make or cause to be made the necessary repairs to or replacements of such equipment or inventory, and any proceeds of insurance maintained by the Borrower pursuant to this Section 5.8 shall be paid by the Purchaser to the Borrower as reimbursement for the costs of such repairs or replacements.

 

  

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5.8.4

	
All insurance payments in respect of such equipment or inventory shall be paid to FCD and applied as specified in Section 7(b) of the Charge Agreement.

5.9         Inspection and Reporting.  The Borrower shall permit any Lender or representatives thereof or such professionals or other Persons as a Lender may designate not more than twice a year in the absence of an Event of Default, upon prior notice and during reasonable business hours: (i) to examine and make copies of and abstracts from the Borrower's records and books of account, (ii) to visit and inspect the properties at which the Charged Assets are located, and (iii) to conduct audits, appraisals and/or valuations in respect of the Charged Assets.  The Borrower shall also permit a Lender or any representatives thereof or such professionals or other Persons as a Lender may designate to discuss the Borrower's affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives, during reasonable hours and subject to the execution of customary confidentiality and non disclosure undertaking.

 

5.10       Use of Proceeds.  The Borrower shall use the Principal Amount exclusively and directly for the Permitted Uses.

 

5.11       Indebtedness; Liens.  The Borrower shall not and shall cause its subsidiaries not to (i) incur, create, assume or permit to exist any Indebtedness other than the Permitted Indebtedness;(ii) subject any of its assets to any Liens, other than the Permitted Liens; in each case without the Majority Lenders prior written consent, which may or may not be given at the Majority Lenders’ absolute and sole discretion.

 

5.12       Dividends and Distributions. The Borrower shall not declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof with respect to any of its share capital or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any of its subsidiaries to purchase or acquire) any of its share capital or set aside any amount for any such purpose; provided, however, that any subsidiary of the Borrower may declare and pay dividends or make other distributions to the Borrower.

 

5.13       Further Assurance.  The Borrower shall cooperate with the Lenders and take such further actions and execute and deliver such further instruments and documents as the Lenders may reasonably request to effect to the Lenders’ reasonable satisfaction the transactions contemplated by the Loan Documents including, without limitation, the perfection of the security interest created by the Charge Agreement over the Charged Assets.

 

5.14       Occurrence of Event of Default.  The Borrower shall immediately notify the Lender on becoming aware of the occurrence or likely occurrence of an Event of Default.

 

  

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ARTICLE VI

 

Events of Default

 

In case of the happening of any of the following events (“Events of Default”):

 

6.1         Non Compliance. The Borrower fails to comply with any of its representations, covenants or undertakings pursuant to the Loan Documents.

 

6.2         Misrepresentation. Any representation, warranty or statement made, repeated or deemed made by the Borrower in or pursuant to the Loan Documents is or proves to have been incorrect or misleading in any material respect when made, repeated or deemed made.

 

6.3         Cross Default.

 

(a)         Any Indebtedness (including a contingent obligation) of the Borrower to any Person, including without limitation to any of the Banks or FCD, pursuant to any agreement or instrument, is not paid when due and such creditor has commenced execution proceedings in order to collect such Indebtedness.

 

(b)         Any Indebtedness of the Borrower to any Person, including without limitation to any of the Banks or FCD, pursuant to any agreement or instrument, becomes due or capable of being declared due prior to its stated maturity by reason of default.

 

(c)         Any expropriation, attachment, sequestration, distress, execution or enforcement of a security affects any of the Borrower's assets.

 

6.4         Insolvency.

 

(a)        The Borrower stops or suspends payment of any of its debts, or is unable to or admits inability to pay its debts as they fall due.

 

(b)        The Borrower commences negotiations (by reason of actual or anticipated financial difficulties), enters into any composition or arrangement with one or more of its creditors with a view to rescheduling any of its Indebtedness.

 

(c)        Any of the following events occurs in relation to the Borrower:

 

(i)           a moratorium of any indebtedness, winding-up, dissolution, suspension of payments, administration, reorganization (by way of voluntary arrangement, scheme of arrangement or otherwise), petition for bankruptcy, composition, compromise, assignment or arrangement with any creditor;

(ii)          any liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer is appointed in respect of the Borrower or any of its assets;

(iii)         any event occurs in relation to the Borrower that is analogous to those listed in this subsection (c).

  

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6.5         Distress. A distress, attachment, execution or other legal process is levied, enforced or sued out on or against the assets of the Borrower.

 

6.6         Enforcement of Security. Any security on or over the assets of the Borrower becomes enforceable.

 

6.7         Illegality. Any or all of the Loan Documents becomes invalid, unlawful, unenforceable, terminated, disputed or ceases to have full force and effect.

 

6.8         Repudiation. The Borrower repudiates or evidences an intention to repudiate any of the Loan Documents.

 

6.9         Material Adverse Change. Any event occurs or circumstances arise which, in the opinion of the Lenders, is likely to materially and adversely affect the ability of the Borrower to perform all or any of its obligations under, or otherwise comply with, the terms of the Loan Documents.

 

6.10       SEC Filing Breach.  Following the Closing: (i) the Borrower does not timely file an SEC Report; (ii) an SEC Report filed by the Borrower does not comply in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder; or (iii) an SEC Report, when filed by the Borrower, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

6.11       Change of Control Event.   A Change of Control Event occurs or is about to occur.

 

6.12       Failure to Close. The Borrower was unable to timely obtain any Required Consent or to otherwise fulfill its covenants and undertaking required to be fulfilled by it in order to consummate the Closing within sixty (60) days following the Effective Date.

 

6.13       Termination or Material Breach under Customer Agreements. The termination or material breach by the Borrower under any present or future agreement, which agreement individually or in the aggregate represent gross income to the Borrower of more than U.S. $2,000,000 (two million US dollars).

 

then, and in every such event, (i) at any time thereafter during the continuance of such event, the Majority Lenders may, by notice to the Borrower, take any and all of the following actions, at the same time or different times: (x) declare the Loan Amount then outstanding to be forthwith due and payable in whole or in part, whereupon the outstanding Loan Amount so declared to be due and payable, together with any and all other liabilities of the Borrower accrued hereunder or under any other Loan Document, shall forthwith become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding, and (y) exercise remedies available under the Charge Agreement or otherwise; and (ii) in any event with respect to the Borrower described in Sections 6.4, 6.5 or 6.6 above, the Loan Amount then outstanding, together with any and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein to the contrary notwithstanding. On the occurrence of an Event of Default the Borrower shall be liable for all of the Lender's costs and expenses (including reasonable attorney's fees and expenses) incurred in connection with recovery of the outstanding Loan Amount by the Lenders.

 

  

17

  

 

ARTICLE VII

 

Miscellaneous

 

7.1         Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or courier service and sent by telecopy as follows (or to such other address or addresses as any party shall have specified to the other in writing):

 

	 	
if to the Borrower, to:

	
RADA Electronic Industries Ltd.

	 	  	
7 Giborei Israel Street

	 	  	
Netanya

	 	  	
42504

	  
	 	  	
Israel

	  
	 	  	
Telephone:

	
+ 972-9-892-1109

	 	  	
Facsimile:

	
+ 972-9-885-5885

	 	  	
Attention:

	
Zvika Alon and

	 	  	 	
Shiri Lazarovich

with a copy (which shall not constitute notice) to S. Friedman & Co, Advocates and Notaries, Europe - Israel Tower, 2 Weitzman Street, Tel Aviv, Israel Fax: + 972-3-693-1930 Attention:  Sarit Molcho, Adv.;

	
(a)

	
if to FCD, to:

	
Faith Content Development Limited

	  	  	
1/F King Fook Building

	  	  	
30-32 Des Voeux Road C

	  	  	
Hong Kong

	  	  	
Telephone: + 852-2822 8678

	  	  	
Fax: + 852-2845 9289

	  	  	
Attention: Ms. Mina Chan

with a copy (which shall not constitute notice) to Shaked & Co., Law Offices, 98 Yigal Alon St., 15th Fl. Tel Aviv 67891, Israel, Tel:  972-3-372-1114, Fax:  972-3-372-1115, Attention: Lillian Safran Shaked, Adv.

	
(b)

	
if to Gruber, to :

	  
	  	  	
11(a) HaGeffen St.

	  	  	
P.O. Box 1447

	  	  	
90435

	  	  	
Fax: + 97237255964

	  	  	
Attention: Mr. Benzion Gruber

 

  

18

  

 

7.2         Successors and Assigns.

 

(a)         Neither party shall be entitled to assign or transfer any of its rights or obligations hereunder in the absence of specific written consent of the other, provided that the Lender shall be permitted to assign or transfer any of its rights or obligations hereunder to an entity controlled by, controlling or under common control with the Lender.

(b)         Except as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns, of the parties hereto.

7.3         Waivers; Amendments.

 

(a)         This Agreement may not be amended, supplemented, discharged, terminated or altered except by writing signed by the parties hereto.

(b)         No failure or delay by any party to this Agreement to enforce at any time any of the provisions hereof, or to exercise any power or right thereunder, shall operate as or be construed to be, a waiver of any such provision, power or right. Any waiver of any provision hereof or any power or right thereunder shall be in writing, and shall be effective only in the specific instance and for the purpose for which given. All remedies, either under this Agreement or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

7.4         Exercise of Lenders' rights.  Anything to the contrary hereunder notwithstanding, any right, power authority or discretion granted to, or vested in, the Lenders hereunder, shall be exercised, used or otherwise taken only by FCD or with FCD's prior written consent. Each of the Lenders hereby covenants and undertakes towards each other to abide by the foregoing provision.

 

7.5         Payments to the Lenders.  Any payments to the Lenders hereunder shall be made by the Borrower pro –rata to the outstanding portion of the Loan Amount of each Lender. FCD undertakes that in the event FCD shall receive monies by virtue of this Agreement, solely as result of exercising the Charge Agreement, FCD shall transfer to Gruber its respective portion of such monies.

 

7.6         Entire Agreement.  This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents, other than the Convertible Note, the July 2008 Loan Agreement and the September 2011 Loan Agreement, which shall continue to be in full force and effect.  Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

7.7         Governing Law; Jurisdiction.  This Agreement shall be governed for all purposes exclusively by the laws of the State of Israel to the exclusion of conflict of law rules. Any dispute arising under or in relation to this Agreement shall be resolved in the competent court for the Tel Aviv-Jaffa district, and each of the parties hereby submits irrevocably to the exclusive jurisdiction of such court.

 

  

19

  

 

7.8         Severability.  In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

7.9         Survival of Agreement.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the loan hereunder, regardless of any investigation made by the Lenders or on its behalf, and shall continue in full force and effect as long as any Loan Amount any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid.

 

7.10       Right of Setoff.  If an Event of Default shall have occurred and be continuing, the Lenders are hereby authorized at any time and from time to time, to the fullest extent permitted bylaw, to setoff and apply any and all obligations at any time owing by the Lenders to the Borrower or any of its subsidiaries against any of and all the obligations of the Borrower or any of its subsidiaries now or hereafter existing under this Agreement and other Loan Documents to the Lenders, irrespective of whether or not the Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. The rights of the Lender under this Section 7.10 are in addition to other rights and remedies (including other rights of setoff) that the Lender may have.

 

7.11       Expenses.  The Borrower shall pay FCD's expenses in connection with this Agreement and the transactions contemplated hereby, including, without limitation, any legal and accounting fees, whether or not the transactions contemplated hereby are consummated.  The Borrower agrees to pay, and save FCD harmless against liability for the payment of, the costs and expenses, including attorney’s fees, incurred by FCD in enforcing any rights under this Agreement or in responding to any subpoena or other legal process issued in connection with this Agreement or the transactions contemplated hereby or by reason of FCD's having provided the loans hereunder, including costs and expenses incurred in any bankruptcy case.

 

7.12       Headings.  Article and Section headings herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

7.13       Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.

 

  

20

  

 

7.14       Undertaking. The Borrower undertakes to the Lenders that for as long as any amount of the Loan remains outstanding, it will and will continue to use its best efforts to obtain, as soon reasonably practicable following the Closing Date, the Required Consents required in connection with the entering into of the Charge Agreement and the creation of the security interest thereunder, in favour of the Lender.

 

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT

INTENTIONALLY BLANK]

 

  

21

  

 

IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

  

22

  

SCHEDULES AND EXHIBIT

	
Schedule I -

	
Principal Amount

	
Schedule 3.1 –

	
Exact legal name and organizational identification number

	
Schedule 3.2-

	
Required Consents

	
Schedule 3.8 –

	
Intellectual Property

	
Schedule 3.9 -

	
Description of location of Charged Assets: (a) equipment, fixtures, goods or inventory, (b) chief place of business and chief executive office, (c) records concerning accounts and originals of chattel paper, and (d) trade names of Borrower and others used in connection with the Charged Assets.

	
Schedule 3.10

	
Permitted Liens

	
Schedule 3.11 -

	
Compliance with other laws and instruments

	
Schedule 3.12 -

	
Governmental or Third Party Consents

	  	  
	
Exhibit A -

	
Permitted Uses

	
Exhibit B-

	
Legal Opinion

	
Exhibit C-

	
Charge Agreement

	
Exhibit D-

	
Permitted Liens

	
Exhibit E-

	
Warrant Certificate

 

  

23

  

 

Schedule I – Principal Amount

 

	
Lender

	
Principal Amount (in US$)

	
FCD

	
2,700,000

	
Gruber

	
300,000

  

24

  

 

Schedule 3.1 – Exact legal name and organizational identification number

RADA Electronic Industries Ltd. Company No. 52 0035320

  

25

  

 

Schedule 3.2- Required Consents

The transaction with FCD contemplated under the Loan Agreement requires the approval of the shareholders of the Borrower pursuant to the requirements of Section 270(4) and 275 of the Companies Law.

The creation and registration of the Charge Agreement is subject to: (i) the approval of the Banks; and (ii) the approval of the Office of the Chief Scientist.

The transaction with FCD contemplated under the Loan Agreement requires the approval of the Office of the Chief Scientist

The validity of the Charge Agreement is subject to it being filed with the Registrar of Companies within 21 days of its signing.

In the event that FCD exercises the security granted pursuant to the Charge Agreement, as amended hereunder, such exercise will be subject to: (i) the approval of the Israeli Ministry of Defense as required by applicable law; and (ii) in the event such exercise would result in the transfer of the equipment for the INS technology outside of the State of Israel, the approval of the US Government.

According to Section 3(b) of the Pledges Law, 1967, a restriction or condition applicable according to law or agreement on the transfer of ownership of an asset will also apply to a charge of such asset.

  

26

  

 

Schedule 3.8 – Intellectual Property

The Borrower uses CATSTM, ACETM and FACETM as trade names.  The Borrower owns the rights to the Israeli trademark VDS® and to the U.S. trademark application for the same trademark.

 

Other than a patent that relates to the Borrower's ACETM System (Patent No. 5467274), the Borrower does not own any patents and did not file any patent application.

Other then off-the shelf software the Borrower does not use any other third-party’s software.

  

27

  

 

Schedule 3.9

Description of location of Charged Assets: (a) equipment, fixtures, goods or inventory, (b) chief place of business and chief executive office, (c) records concerning accounts and originals of chattel paper, and (d) trade names of Borrower and others used in connection with the Charged Assets

	
  

	
(a)

	
All the equipment is located in the Borrower’s premises either in Netanya or Beit Shean.

 

	
  

	
(b)

	
The chief place of business and chief executive office of the Borrower is located at 7 Giborei Israel Netanya, Israel.

 

	
  

	
(c)

	
list, as of the date of this Agreement, of each deposit account, securities account and commodities account of the Borrower, together with the name and address of each institution at which each such account is maintained, the account number for each account:

 

	 	
·

	
Bank Leumi le Israel B.M, Hazouran st. 1-a New Ind. Zone, Natanya, Israel branch 717, account 22000/33.

 

	 	
·

	
Bank Leumi le Israel B.M, Hazouran st. 1-a, New Ind. Zone, Natanya, Israel branch 717, account 10474/04 (a trustee account for RADA's employees options plans).8.

 

	 	
·

	
State Bank of India, Diamond Exchange Branch, 3, Jabotinsky Road, Ramat Gan, Israel, Branch No. 193, Account No. 000260401 and 000260501

 

	 	
·

	
HSBC BANK account no. 610-79707-7 (Checking  account) and account no.610-64037-2  (saving account) , 452 FIFTH AVENUE NEW YORK, NY 10018

 

	
  

	
(d)

	
None

 

  

28

  

 

Schedule 3.11 - Compliance with other laws and instruments

 

NONE

 

  

29

  

 

 Schedule 3.12 - Governmental or Third Party Consents

None except for the Required Consents

  

30

  

 

Exhibit A

 

Permitted Uses

 

The Principal Amount shall be used for the following Permitted Uses:

	
  

	
1.

	
Repayment of the US$1,710,000 principal and all accrued but unpaid interest thereon outstanding under the September 2011 Loan.

 

	
  

	
2.

	
Payment of the Origination Fee.

 

	
  

	
3.

	
Working capital

  

31

  

Exhibit B

 

Legal Opinion

 

  

32

  

 

Exhibit C

 

Charge Agreement

 

  

33

  

 

Exhibit D

 

Part 1 – Bank Facilities

	
1.

	
Facilities

	
Bank Leumi Le-Israel B.M.

	
approximately US$3,200,000 to be utilized by Factoring of invoices only

	
The State Bank of India

	
US$ 2,000,000

	
Clal Factoring Ltd.

	
US$ 1,000,000 to be utilized by Factoring of invoices only

	
2.

	
Guarantees

	
Bank Leumi Le-Israel B.M.

	
US$1,200,000

	
The State Bank of India

	
US$450,000

Part 2 – Permitted Liens

	
1.

	
Floating charge granted to Bank Leumi Le-Israel B.M., in respect of the facilities and guarantees listed in Part 1 of this Exhibit C

	
2.

	
Deposit of US$560,000 with the State Bank of India, in connection with the credit facility and guaranty listed in Part 1 of this Exhibit D

 

3.

 

	
4.

	
Deposit of US$1,200,000 with the Bank Leumi Le-Israel B.M., in connection with the guaranty listed in Part 1 of this Exhibit D

	
5.

	
Existing Floating Charge

 

	
6.

	
Liens detailed in the printout of the Company's Liens with the Registrar of the Companies dated January 30, 2012 and attached hereto as Exhibit D1

  

34

  

Exhibit E

 

Warrant Certificate

 

35

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