SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "AGREEMENT"), dated as of __________,
2005, by and among CanWest Petroleum Corporation, a Colorado corporation (the
"COMPANY"), and Dynamic Power Hedge Fund, a _________ corporation ("SUBSCRIBER")
WHEREAS, the Company and the Subscriber are executing and delivering this
Agreement in reliance upon certain exemptions from prospectus and registration
requirements in Canada and upon an exemption from securities registration
afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D
("REGULATION D") as well as Regulation S ("REGULATION S"). Both Regulation D and
Regulation S were promulgated by the United States Securities and Exchange
Commission (the "COMMISSION") under the Securities Act of 1933, as amended (the
"1933 Act").
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Subscriber hereby
agree as follows:
1. The Transaction. Subscriber shall tender to the Company 571,428
shares (the "OQI SHARES") of OilSands Quest, Inc., an Alberta, Canada
corporation ("OQI") common stock (the "OQI COMMON STOCK") currently held by
Subscriber, plus 571,428 share purchase warrants exercisable at CDN$2.00 per
share (the "OQI WARRANTS") to purchase shares of OQI Common Stock. The OQI
Shares and OQI Warrants are currently held by Subscriber.
a. Purchase Price. The Company shall pay the Subscriber, as
full purchase price and consideration for the OQI Common Stock and
OQI Warrants $5,714,280 CND plus 1,500,000 share purchase warrants
(the "WARRANTS") in the form attached hereto as EXHIBIT A to
purchase 1,500,000 shares of the Company's common stock, $.001 par
value (the "COMMON STOCK") (the "WARRANT SHARES"). The Warrants and
the Warrant Shares are collectively referred to herein as the
"SECURITIES"..
b. Closing. The consummation of the transactions contemplated
herein shall take place at the offices of the Company upon the
satisfaction of all conditions to Closing set forth in this
Agreement but no later than December 31, 2005 ("THE CLOSING DATE").
Subject to the satisfaction or waiver of the terms and conditions of
this Agreement, on the Closing Date, Company shall purchase the OQI
Shares and OQI Warrants and the Company shall sell the Warrants to
Subscriber. The parties acknowledge that the purchase by Subscriber
(or affiliates of the Subscriber) of a minimum investment of
5,000,000 units in the Company, per the attached Exhibit C, Draft of
Subscription Agreement for Unit Private Placement, is a condition
precedent that must be met by Subscriber in order for closing under
this Agreement to occur.
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2. Acknowledgments by Company and Subscriber. The offer and sale of
the Warrants is directed solely to persons who are not U.S. persons as defined
in Regulation S or who meet the definition of "accredited investor" set forth in
rule 501(a) of Regulation D. The Securities are not currently registered under
the 1933 Act nor the securities laws of any state or other jurisdiction and are
"restricted securities" as defined in Rule 144 under the 1933 Act. The
Securities are offered in an offshore transaction as defined in Regulation S, or
are otherwise being acquired in reliance on an exemption from the registration
provisions of the 1933 Act. The Securities may not be offered or sold in the
United States or to any U.S. person unless the securities are registered under
the 1933 Act or an exemption from the registration requirements of the 1933 Act
is available. Hedging transactions involving the Securities may not be conducted
unless in compliance with the 1933 Act. The delivery of this document does not
constitute an offer or solicitation with respect to the Securities in any
jurisdiction in which such offer or solicitation would be unlawful. The
Subscriber acknowledges that this Subscription Agreement and the Exhibit B
hereto require the Subscriber to provide certain personal information to the
Company. Such information is being collected by the Company for the purposes of
completing the issuance of the Securities, which includes, without limitation,
determining the Subscriber's eligibility to purchase the Securities under
applicable securities legislation, preparing and registering any certificates
representing Securities to be issued to the Subscriber and completing filings
required by any stock exchange or securities regulatory authority. The
Subscriber's personal information may be disclosed by the Company to: (a) stock
exchanges or securities regulatory authorities, (b) the Corporation's registrar
and transfer agent, and (c) any of the other parties involved in the offering,
including legal counsel to the Corporation. By executing this Subscription
Agreement, the Subscriber consents to the foregoing collection, use and
disclosure of the Subscriber's personal information. The Subscriber also
consents to the filing of copies or originals of the Subscriber's representation
letter set out in Exhibit B as may be required to be filed with any stock
exchange or securities regulatory authority in connection with the transactions
contemplated hereby. In connection with the transactions contemplated by this
Subscription Agreement, (d) the Company will deliver to the Ontario Securities
Commission and other applicable securities regulatory authorities information
respecting the Subscriber's name address and telephone number, the number and
type of Securities purchased, the total purchase price, the date of acquisition
of the Securities by the Subscriber and the prospectus and registration
exemptions relied upon by the Company regarding the issuance of the Securities
to the Subscriber, (e) the information described in (d) is being collected
indirectly by the Ontario Securities Commission and other applicable securities
regulatory authorities under the authority granted to it in securities
legislation and for the purposes of the administration and enforcement of the
securities legislation of Ontario and other applicable jurisdictions, and (f) if
the Subscriber has questions or comments regarding the indirect collection of
personal information by the Ontario Securities Commission it should contact:
Administrative Assistant to the Director of Corporate Finance
Ontario Securities Commission
Suite 1903, Box 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone (000) 000-0000.
3. Subscriber's Representations and Warranties. The Subscriber
hereby represents and warrants to and agrees with the Company that:
(a) Organization and Standing of the Subscriber. Subscriber is
a corporation, partnership or other entity duly incorporated or
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization.
(b) Authorization and Power. Subscriber has the requisite
power and authority to enter into and perform this Agreement and to
purchase the Warrants being sold to it hereunder, and to tender the
OQI Shares and OQI Warrants as payment therefor. The execution,
delivery and performance of this Agreement by Subscriber and the
consummation by it of the transactions contemplated hereby thereby
have been duly authorized by all necessary corporate, partnership or
entity action, and no further consent or authorization of Subscriber
or its Board of Directors, stockholders, partners, members, as the
case may be, is required. This Agreement has been duly authorized,
executed and delivered by Subscriber and constitutes, or shall
constitute when executed and delivered, a valid and binding
obligation of the Subscriber enforceable against the Subscriber in
accordance with the terms thereof. Subscriber is the registered and
beneficial owner of the OQI Shares and the OQI Warrants, has good
and marketable title thereto and the OQI Shares and OQI Warrants are
delivered free and clear of all liens and encumbrances. Other than
the consent of OQI to assign the OQI Warrants, there are no
approvals or other restrictions of any nature on the sale and
transfer of the OQI Shares and the OQI Warrants to the Company
pursuant hereto. At Closing Subscriber shall deliver duly executed
share transfers transferring the OQI Shares to the Company, together
with the existing share certificates for the OQI Shares, duly
endorsed in favour of the Company, and all other documents and
instruments, transfers and conveyances as may be reasonably required
by the Company to consummate the transactions contemplated by this
Agreement, including written confirmation from OQI that it has
consented to the assignment of the OQI warrants.
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(c) Information on Company. The Subscriber has been furnished
with or has had access at the XXXXX Website of the Commission to the
Company's Form 10-KSB for the year ended April 30, 2005 as filed
with the Commission, together with all subsequently filed Forms
10-QSB, 8-K, and other filings made with the Commission available at
the XXXXX website (hereinafter referred to collectively as the
"REPORTS"). The Subscriber has had an opportunity to ask questions
and receive answers from representatives of the Company. The
Subscriber has not received or been provided with, nor has it
requested, nor does it have any need to receive, any offering
memorandum, any prospectus, sales or advertising literature, or any
other document (other than Reports) describing or purporting to
describe the business and affairs of the Corporation which has been
prepared for delivery to, and review by, prospective purchasers in
order to assist it in making an investment decision in respect of
the Securities.
(d) Information on Subscriber. The Subscriber is, and will be
at the time of the exercise of the Warrants, a Non- U.S. Person as
defined in Regulation S and an accredited investor as defined in
Regulation D, is experienced in investments and business matters,
has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private
placements in the past and, with its representatives, has such
knowledge and experience in financial, tax and other business
matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to
make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. The Subscriber
has the authority and is duly and legally qualified to purchase and
own the Securities. The Subscriber is able to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof. The information set forth on the signature page hereto
regarding the Subscriber is accurate and the Subscriber is resident
in, or otherwise subject to applicable securities laws of, the
Province of Ontario. The Subscriber is not required to be registered
as a broker-dealer under Section 15 of the Securities Exchange Act
of 1934, as amended (the "1934 Act") and the Subscriber is not a
broker-dealer. The Subscriber is an "accredited investor", as such
term is defined in National Instrument 45-106 - "Prospectus and
Registration Exemptions" ("NI 45-106") promulgated under the
securities laws of British Columbia, Alberta and Ontario, it was not
created or used solely to purchase or hold securities as an
"accredited investor" as described in paragraph (m) of the
definition of "accredited investor" in NI 45-106 and has
concurrently executed and delivered a Representation Letter in the
form attached as Exhibit B to this Subscription Agreement and has
initialed in Appendix "1" thereto indicating that the Subscriber
satisfies (and will satisfy at the Closing Time) one of the
categories of "accredited investor" set forth in such definition.
(e) Investment Intent. The Subscriber is purchasing the
Warrants as principal for its own account for investment only and
not with a view toward, or for resale in connection with, the public
sale or any distribution thereof.
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(f) Compliance with Securities Act. The Subscriber understands
and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under
the 1933 Act (based in part on the accuracy of the representations
and warranties of Subscriber contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition
is registered under the 1933 Act or any applicable state securities
laws or is exempt from such registration. The Subscriber has been
independently advised as to restrictions with respect to trading in
the Securities imposed by applicable securities laws, confirms that
no representation (written or oral) has been made to it by or on
behalf of the Company with respect thereto, acknowledges that it is
aware of the characteristics of the Securities, the risks relating
to an investment therein and of the fact that it may not be able to
resell the Securities except in accordance with limited exemptions
under applicable securities laws and regulatory policy until expiry
of the applicable restricted period and compliance with the other
requirements of applicable law; and it agrees that any certificates
representing Securities will bear a legend indicating that the
resale of such Securities is restricted and any other applicable
legends or notations described in this Subscription Agreement. The
Company is not currently a reporting issuer in any Canadian
jurisdiction and therefore the applicable restricted period
restricting resale of the Securities in Canada may extend
indefinitely. The Company has advised the Subscriber that the
Company 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 Securities
Act (Ontario) and other applicable securities laws and, as a
consequence of acquiring securities pursuant to this exemption,
certain protections, rights and remedies provided by the Securities
Act (Ontario) and other applicable securities laws, including
statutory rights of rescission or damages, will not be available to
the Subscriber. If required by applicable securities legislation,
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
Company in filing, such reports, undertakings and other documents
with respect to the issue of the Securities (including a
Representation Letter in the form attached as Exhibit B)
(g) Legend. The Warrants and the Warrant Shares shall bear the
following or similar legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
OFFERED AND SOLD IN AN "OFFSHORE TRANSACTION" IN RELIANCE UPON
REGULATION S AS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE TRANSFERRED
OTHER THAN IN ACCORDANCE WITH REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS
UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE
SECURITIES ACT."
"Unless permitted under securities legislation, the holder of
these securities must not trade the securities before the date
that is four months and a day after the later of (i) December
15, 2005, and (ii) the date the Company became a reporting
issuer in any province or territory of Canada."
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(h) Communication of Offer. The offer to sell the Securities
was directly communicated to the Subscriber by the Company. At no
time was the Subscriber presented with or solicited by any leaflet,
newspaper or magazine article, radio or television advertisement, or
any other form of general advertising or solicited or invited to
attend a promotional meeting otherwise than in connection and
concurrently with such communicated offer.
(i) Authority; Enforceability. This Agreement and other
agreements delivered together with this Agreement or in connection
herewith have been duly authorized, executed and delivered by the
Subscriber and are valid and binding agreements enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity; and Subscriber has
full corporate power and authority necessary to enter into this
Agreement and such other agreements and to perform its obligations
hereunder and under all other agreements entered into by the
Subscriber relating hereto.
(j) Restricted Securities. Subscriber understands that the
Securities have not been registered under the 1933 Act and such
Subscriber will not sell, offer to sell, assign, pledge, hypothecate
or otherwise transfer any of the Securities unless pursuant to an
effective registration statement under the 1933 Act, or unless an
exemption from registration is available.
(k) No Governmental Review. Subscriber understands that no
United States federal or state agency, Canadian federal or
provincial agency or any other governmental, provincial or state
agency has passed on or made recommendations or endorsement of the
Securities or the suitability of the investment in the Securities,
nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.
(l) Correctness of Representations. Each Subscriber represents
that the foregoing representations and warranties are true and
correct as of the date hereof and, unless Subscriber otherwise
notifies the Company prior to the Closing Date shall be true and
correct as of the Closing Date.
(m) Survival. The foregoing representations and warranties
shall survive the Closing Date for a period of three years.
4. Company Representations and Warranties. The Company represents and
warrants to and agrees with each Subscriber that:
(a) Due Incorporation and Relationship to OQI. The Company is
a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Colorado. The Company is a
"founder" of OQI and is a "control person" of OQI, as such terms are
defined in NI 45-106.
(b) Authorization and Power. This Agreement has been duly
authorized, executed and delivered by the Company and is a valid and
binding agreement enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity. The Company has full corporate power and authority necessary
to enter into this Agreement and to perform its obligations
hereunder.
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(c) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests,
liens, claims or other encumbrances, subject to restrictions upon transfer under
the 1933 Act and any applicable state securities laws; and
(ii) have been, or will be, duly and validly authorized and
upon exercise of the Warrants, the Warrant Shares will be duly and validly
issued, fully paid and nonassessable.
(d) No General Solicitation. Neither the Company, nor any of
its Affiliates, nor to its knowledge, any person acting on its or
their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the
0000 Xxx) in connection with the offer or sale of the Securities.
(e) Correctness of Representations. The Company represents
that the foregoing representations and warranties are true and
correct as of the date hereof in all material respects, and, unless
the Company otherwise notifies the Subscribers prior to the Closing
Date, shall be true and correct in all material respects as of the
Closing Date.
(f) Survival. The foregoing representations and warranties
shall survive the Closing Date for a period of three years.
5. Piggyback Registration Rights .
5.1 Piggyback Registration. If the Company at any time proposes to
register any of its securities under the 1933 Act for sale to the public, except
with respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Warrant Shares for sale to the public, whether for
its own account or for the account of other security holders or both, then each
such time the Company will give at least 15 days' prior written notice to the
Subscriber of its intention so to do and the Subscriber may elect to include its
Warrant Shares in such registration statement ("Piggyback Right"). The Warrant
Shares to which the Piggyback Right applies (the "Registrable Shares") include
only those Warrant Shares that are not otherwise registered and have not ever
been registered for resale pursuant to an effective registration statement or
are not eligible for resale pursuant to Rule 144 of the 1933 Act. Upon written
request of the Subscriber, received by the Company within ten days after the
giving of any notice by the Company with respect to a Piggyback Right to
register the Registrable Shares, the Company will cause the Registrable Shares
as to which registration shall have been so requested by the Subscriber to be
included with the securities to be covered by the registration statement
proposed to be filed by the Company. In the event that any registration pursuant
to this paragraph 5.1 shall be, in whole or in part, an underwritten public
offering of common stock of the Company, the number of Registrable Shares to be
included in such underwriting may be reduced by the managing underwriter if and
to the extent that the Company and the underwriter shall reasonably be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein; provided, however, that the
Company shall notify the Subscriber in writing of any such reduction.
Notwithstanding the foregoing provisions, the Company may withdraw or delay or
suffer a delay of any registration statement referred to in this paragraph 5.1
without thereby incurring any liability to the Subscriber.
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5.4. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Shares under
the 1933 Act pursuant to Section 11, the Company will, to the extent permitted
by law, indemnify and hold harmless the Seller, each officer of the Seller, each
director of the Seller, each underwriter of such Registrable Shares thereunder
and each other person, if any, who controls such Seller or underwriter within
the meaning of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which the Seller, or such underwriter or controlling person
may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such Registrable Shares
was registered under the 1933 Act pursuant to Section 11, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances when made,
and will subject to the provisions of Section 5.4 reimburse the Seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to the Seller to the extent that any such
damages arise out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) the Seller failed to send or deliver a copy of
the final prospectus delivered by the Company to the Seller with or prior to the
delivery of written confirmation of the sale by the Seller to the person
asserting the claim from which such damages arise, (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (iii) to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by any such Seller, or any such controlling person.
(b) In the event of a registration of any of the Registrable Shares
under the 1933 Act pursuant to Section 11, each Seller severally but not jointly
will, to the extent permitted by law, indemnify and hold harmless the Company,
and each person, if any, who controls the Company within the meaning of the 1933
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the 1933 Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such officer,
director, underwriter or controlling person may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Shares were registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished to the
Company by such Seller.
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(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 5.4 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 5.4, except and only if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 5.4(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties, as a group, shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in the
event of joint liability under the 1933 Act in any case in which either (i) a
Seller, or any controlling person of a Seller, makes a claim for indemnification
pursuant to this Section 5.4 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5.4 provides for indemnification in such case, or (ii) contribution
under the 1933 Act may be required on the part of the Seller or controlling
person of the Seller in circumstances for which indemnification is not provided
under this Section 5.4; then, and in each such case, the Company and the Seller
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Seller is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, provided, however, that, in any such case, (y) the
Seller will not be required to contribute any amount in excess of the public
offering price of all such securities sold by it pursuant to such registration
statement; and (z) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 5.4 of the 0000 Xxx) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
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6. Miscellaneous.
(a) Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Canwest Petroleum
Corporation, 000-000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0,
Attn: Xxxxxxxx X. Xxxxxxxxx , CEO, telecopier number: (000) 000-0000, with an
additional copy only to: Xxxxxx Xxx, Suite 000-000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, telecopier number: (000) 000-0000, and (ii) if
to the Subscriber, to:
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(b) Entire Agreement; Assignment. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties. Neither the Company nor the Subscriber
have relied on any representations not contained or referred to in this
Agreement and the documents delivered herewith. No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscriber.
(c) Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
(d) Law Governing this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of Colorado without
regard to conflicts of laws principles that would result in the application of
the substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of Colorado or in the federal courts
located in the state of Colorado. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS
AGREEMENT AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION
HEREWITH ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS AND WAIVE TRIAL BY JURY. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
10
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
CANWEST PETROLEUM CORPORATION
a Colorado corporation
By:_________________________________
Name: Xxxxxxxx X. Xxxxxxxxx
Title: CEO
DYNAMIC POWER HEDGE FUND, a
_____________ corporation
By:_________________________________
Name: __________________
Title: ___________________
Address of Subscriber:
Telephone Number of Subscriber:
11
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Warrant
Exhibit B Form of Representation Letter (for
Canadian Subscribers)
Exhibit C Draft of Subscription Agreement for Unit
Private Placement
12
EXHIBIT A
FORM OF WARRANT
THE WARRANTS AND UNDERLYING SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY. UNLESS PERMITTED UNDER CANADIAN
SECURITIES LEGISLATION, CANADIAN HOLDERS OF THE WARRANTS AND THE UNDERLYING
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MUST NOT TRADE THE
SECURITIES BEFORE THE DATE THAT IS FOUR MONTHS AND A DAY AFTER THE LATER OF (A)
THE ISSUE DATE OF THIS WARRANT AND (B) THE DATE THE COMPANY BECAME A REPORTING
ISSUER IN ANY PROVINCE OR TERRITORY OF CANADA.
Warrant Certificate No. 2005- __
WARRANT TO PURCHASE 1,500,000 SHARES
VOID AFTER 5:00 P.M., MOUNTAIN TIME, ON DECEMBER _____, 2007
CANWEST PETROLEUM CORPORATION
WARRANT AGREEMENT AND CERTIFICATE
This certifies that, for value received, __________________________, the
registered holder hereof (the "Warrantholder" or "Holder")) is entitled to
purchase from CanWest Petroleum Corporation, a Colorado corporation (the
"Company") with its principal office located at, 000-000 Xxxx Xxxxxx, Xxxxxxxxx,
X.X. Xxxxxx X0X-0X0, at any time before 5:00 P.M., Mountain Time, on the date
set forth above, which date is the date two years following the initial issuance
date of this Warrant (the "Termination Date") at the purchase price of $2.00 USD
per share (the "Exercise Price"), the number of Shares of the Company's Common
Stock (the "Shares") set forth above. The number of Shares purchasable upon
exercise of this Warrant and the Exercise Price per Share shall be subject to
adjustment from time to time as set forth in Section 3 below. This Warrant is
issued pursuant to that certain Subscription Agreement dated December ____, 2005
between the Company and the Warrantholder.
Section 1. Transfer or Exchange of Warrant.
(a) The Company shall be entitled to treat the registered owner of any
Warrant as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration of
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to gross negligence or bad faith.
(b) This Warrant may not be sold, transferred, assigned or hypothecated
except pursuant to all applicable federal and state securities laws. This
Warrant is not assignable except with the written consent of the Company.
13
(c) A Warrant shall be transferable only on the books of the Company upon
delivery of this Warrant Certificate duly endorsed by the Warrantholder or by
his duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall deliver a new Warrant Certificate to
the persons entitled thereto.
Section 2. Term of Warrants; Exercise of Warrants.
(a) Subject to the terms of this Agreement and Certificate, the
Warrantholder shall have the right, which may be exercised commencing upon
issuance and ending at 5:00 p.m. Mountain Time on the Termination Date, to
purchase from the Company the number of Shares which the Warrantholder may at
that time be entitled to purchase on exercise of this Warrant.
(b) A Warrant shall be exercised by surrender to the Company, at its
principal office, of this Certificate evidencing the Warrant to be exercised,
together with the form of election to purchase attached hereto as Exhibit A duly
filled in and signed, and payment to the Company of the Exercise Price for the
number of Shares in respect of which such Warrant is then exercised. Payment of
the aggregate Exercise Price shall be made in cash or certified funds.
Section 3. Cashless Exercise.
(a) If a Registration Statement (as defined in the Subscription Agreement)
("Registration Statement") is effective and the Holder may sell its shares of
Common Stock upon exercise hereof pursuant to the Registration Statement and, if
the Holder is a resident of Canada, the Company has been a reporting issuer for
at least four months preceding the exercise hereof, this Warrant may be
exercisable in whole or in part for cash only as set forth in Section 1 above.
If no such Registration Statement is available during the time that such
Registration Statement is required to be effective pursuant to the terms of the
Subscription Agreement (and, if the Holder is a resident of Canada, the Company
has not been a reporting issuer for at least four months preceding the exercise
hereof), then payment upon exercise may be made at the option of the Holder
either in (i) cash, wire transfer or by certified or official bank check payable
to the order of the Company equal to the applicable aggregate Purchase Price,
(ii) by delivery of Common Stock issuable upon exercise of the Warrants in
accordance with Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of Common Stock specified in such form (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this
Warrant) and the holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.
(b) If the Fair Market Value of one share of Common Stock is greater than
the Purchase Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
cancelled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Subscription Form in which event the Company
shall issue to the holder a number of shares of Common Stock computed using the
following formula:
X=Y (A-B)
-----
A
Where X= the number of shares of Common Stock to
be issued to the holder
Y= the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being exercised
(at the date of such calculation)
A= the Fair Market Value of one share of the
Company's Common Stock (at the date of such
calculation)
B= Purchase Price (as adjusted to the date
of such calculation)
14
(c) The Holder may employ the cashless exercise feature described in
Section (b) above only during the pendency of a Non-Registration Event as
described in Section 11 of the Subscription Agreement.
For purposes of Rule 144 promulgated under the 1933 Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Subscription
Agreement.
Section 4. Subject to Section 3 hereof, upon surrender of a Warrant Certificate
and payment of the Exercise Price as aforesaid, the Company shall issue and
cause to be delivered with all reasonable dispatch, to or upon the written order
of the Warrantholder exercising such Warrant and in such name or names as such
Warrantholder may designate, certificates for the number of Shares so purchased
upon the exercise of such Warrant. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of receipt by the Company of such Warrant Certificate and payment of the
Exercise Price. The rights of purchase represented by the Warrants shall be
exercisable, at the election of the Warrantholders thereof, either in full or
from time to time in part and, in the event that a Warrant Certificate is
exercised to purchase less than all of the Shares purchasable on such exercise
at any time prior to the Termination Date, a new Warrant Certificate evidencing
the remaining Warrant or Warrants will be issued.
Section 5. The Warrantholder will pay all documentary stamp taxes, if any,
attributable to the initial issuance of the Shares upon the exercise of
Warrants.
Section 6. Adjustment of Exercise Price and Shares.
(a) If there is any change in the number of shares of outstanding Common
Stock through the declaration of stock dividends, or through a recapitalization
resulting in stock splits or combinations or exchanges of such shares, the
number of shares of Common Stock underlying the Warrants, and the exercise price
per share of the outstanding Warrants, shall be proportionately adjusted by the
Board to reflect any increase or decrease in the number of issued shares of
Common Stock; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation of the
Company, or any corporate separation or division, including, but not limited to,
split-up, split-off or spin-off, or a merger or consolidation of the Company
with another corporation, the Board may provide that each Warrantholder shall
have the right to exercise such Warrant (at its then current Exercise Price)
solely for the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such dissolution,
liquidation, corporate separation or division, or merger or consolidation by a
holder of the number of shares of Common Stock for which such Warrant might have
been exercised immediately prior to such dissolution, liquidation, corporate
separation or division, or merger or consolidation; or, in the alternative the
Board may provide that the Warrants shall terminate as of a date fixed by the
Board; provided, however, that not less than 30 days' written notice of the date
so fixed shall be given to each Warrantholder, who shall have the right, during
the period of 30 days preceding such termination, to exercise the Warrant as to
all or any part of the shares of Common Stock covered thereby.
15
(c) The preceding paragraph shall not apply to a merger or consolidation
in which the Company is the surviving corporation and shares of Common Stock are
not converted into or exchanged for stock, securities of any other corporation,
cash or any other thing of value. Notwithstanding the preceding sentence, in
case of any consolidation or merger of another corporation into the Company in
which the Company is the surviving corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (excluding a change in par value,
or from no par value to par value, or any change as a result of a subdivision or
combination, but including any change in such shares into two or more classes or
series of shares), the Board may provide that the holder of this Warrant shall
have the right to exercise such Warrant solely for the kind and amount of shares
of stock and other securities (including those of any new direct or indirect
Parent of the Company), property, cash or any combination thereof receivable
upon such reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which such Warrant might have been
exercised.
(d) In the event of a change in the Common Stock of the Company as
presently constituted into the same number of shares with a par value, the
shares resulting from any such change shall be deemed to be the Common Stock of
the Company within the meaning of this agreement.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
(f) Except as expressly provided herein, the Warrantholder shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class, or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, or by reason of any dissolution,
liquidation, merger, or consolidation or spin-off of assets or stock of another
corporation; and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to this Warrant. The grant of this
Warrant shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structures, or to merge or consolidate, or to dissolve, liquidate, or
sell or transfer all or any part of its business or assets.
Section 7. Mutilated or Missing Warrant Certificates. In case any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company shall, at
the request of the holder of such Certificate, issue and deliver, in exchange
and substitution for and upon cancellation of the mutilated Certificate, or in
lieu of and substitution for the Certificate, lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, also satisfactory to the Company. An applicant for such a substitute
Warrant Certificate shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Company may prescribe.
Section 8. Reservation of Shares of Common Stock. There has been reserved, and
the Company shall at all times keep reserved so long as any of the Warrants
remain outstanding, out of its authorized Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants and the underlying securities.
Section 9. No Fractional Shares. The Company shall not be required to issue
fractional shares or scrip representing fractional shares upon the exercise of
the Warrants. As to any final fraction of a Share which the Warrantholder would
otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the market price of a share of Common Stock on the business day
preceding the day of exercise.
Section 10. Transfer and Exercise to Comply With the Securities Act of 1933. The
Warrants may not be transferred or exercised except in a transaction exempt from
registration under the Act. The Warrants held by Canadian residents may not be
transferred except in accordance with the provisions of National Instrument
45-102 promulgated by the Canadian Securities Administrators or any applicable
successor instrument in force at the time of such transfer.
16
Section 11. Notices. Any notice pursuant to this Agreement by the Company or by
the Warrantholders shall be in writing and shall be deemed to have been duly
given if delivered or mailed certified mail, return receipt requested to the
Company or the Warrantholder at the addresses set forth above. Each party hereto
may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in accordance herewith to the other
party.
Section 12. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrantholders shall bind and inure to the
benefit of their respective successors and assigns.
Section 13. Applicable Law. This Warrant Agreement and Certificate and any
replacement Certificate issued hereunder shall be governed by the laws of the
State of Colorado.
ISSUE DATE: ___________, 2005 CANWEST PETROLEUM CORPORATION
By:
------------------------------------
Xxxxxxxx Xxxxxxxxx, President
EXHIBIT A
---------
PURCHASE FORM
-------------
DATED _______________, ____
THE UNDERSIGNED HEREBY IRREVOCABLY ELECTS TO EXERCISE THE WARRANT
REPRESENTED BY THIS WARRANT CERTIFICATE TO THE EXTENT OF PURCHASING __________
SHARES OF CANWEST PETROLEUM CORPORATION AND HEREBY MAKES PAYMENT OF $2.00 USD
PER SHARE IN PAYMENT OF THE EXERCISE PRICE THEREOF.
INSTRUCTIONS FOR REGISTRATION OF STOCK
NAME:
--------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT IN BLOCK LETTERS)
ADDRESS:
--------------------------------------------------------------------------------
SIGNATURE______________________________________________________
DATED: ___________________,______
CANADA (BC, AB, SK, MB, ON AND PQ)
EXHIBIT B
REPRESENTATION LETTER
TO: CANWEST PETROLEUM CORPORATION (THE "CORPORATION")
In connection with the purchase of securities of the Corporation by the
undersigned subscriber (the "SUBSCRIBER" for the purposes of this Exhibit B),
the Subscriber hereby represents, warrants, covenants and certifies to the
Corporation that:
1. The Subscriber is (and will be at the Closing Time) an "accredited investor"
within the meaning of National Instrument 45-106 entitled "Prospectus and
Registration Exemptions" by virtue of satisfying the indicated criterion as set
out in Appendix "1" to this Representation Letter; and
2. Upon execution of this Exhibit B by or on behalf of the Subscriber, this
Exhibit B1 shall be incorporated into and form a part of the Subscription
Agreement to which this Exhibit is attached.
Dated: _________________________, 2005
--------------------------------------------
Print name of Subscriber, or person signing
as agent on behalf of Subscriber
By:
-----------------------------------------
Signature
--------------------------------------------
Print name of Signatory (if different from
Subscriber or agent, as applicable)
--------------------------------------------
Title
* If the Subscriber is A FULLY MANAGED ACCOUNT, please complete in the following
format: "Account____ by [insert name of adviser, trust company or trust
corporation]"
** PLEASE INITIAL THE APPLICABLE PROVISION IN APPENDIX "1"
ON THE FOLLOWING PAGES **
APPENDIX "1"
TO EXHIBIT B
NOTE: THE INVESTOR MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION
BELOW. ACCREDITED INVESTOR - (defined in National Instrument 45-106 "Prospectus
and Registration Exemptions" ("NI 45-106")) means:
_____ (a) a Canadian financial institution, or a Schedule III bank; or
_____ (b) the Business Development Bank of Canada incorporated under the
Business Development Bank of Canada Act (Canada); or
_____ (c) a subsidiary of any person referred to in paragraphs (a) or
(b), if the person owns all of the voting securities of the
subsidiary, except the voting securities required by law to be
owned by directors of that subsidiary; or
_____ (d) a person registered under the securities legislation of a
jurisdiction of Canada as an adviser or dealer, other than a
person registered solely as a limited market dealer under one
or both of the Securities Act (Ontario) or the Securities Act
(Newfoundland and Labrador); or
_____ (e) an individual registered or formerly registered under the
securities legislation of a jurisdiction of Canada as a
representative of a person referred to in paragraph (d); or
_____ (f) the Government of Canada or a jurisdiction of Canada, or any
crown corporation, agency or wholly owned entity of the
Government of Canada or a jurisdiction of Canada; or
_____ (g) a municipality, public board or commission in Canada and a
metropolitan community, school board, the Comite de gestion de
la taxe scolaire de l'ile de Montreal or an intermuncipal
management board in Quebec; or
_____ (h) any national, federal, state, provincial, territorial or
municipal government of or in any foreign jurisdiction, or any
agency of that government; or
_____ (i) a pension fund that is regulated by either the Office of the
Superintendent of Financial Institutions (Canada) or a pension
commission or similar regulatory authority of a jurisdiction
of Canada; or
_____ (j) an individual who, either alone or with a spouse, beneficially
owns, directly or indirectly, financial assets having an
aggregate realizable value that before taxes, but net of any
related liabilities, exceeds $1,000,000; or
_____ (k) an individual whose net income before taxes exceeded $200,000
in each of the 2 most recent calendar years or whose net
income before taxes combined with that of a spouse exceeded
$300,000 in each of the 2 most recent calendar years and who,
in either case, reasonably expects to exceed that net income
level in the current calendar year; or
_____ (l) an individual who, either alone or with a spouse, has net
assets of at least $5,000,000; or
_____ (m) a person, other than an individual or investment fund, that
has net assets of at least $5,000,000 as shown on its most
recently prepared financial statements; or
_____ (n) an investment fund that distributes or has distributed its
securities only to:
(i) a person that is or was an accredited investor at the time
of the distribution,
(ii) a person that acquires or acquired securities in the
circumstances referred to in sections 2.10 [Minimum amount
investment] of NI 45-106, and 2.19 [Additional investment in
investment funds] of NI 45-106, or
(iii) a person described in paragraph (i) or (ii) that
acquires or acquired securities under section 2.18 [Investment
fund reinvestment] of NI 45-106; or
_____ (o) an investment fund that distributes or has distributed
securities under a prospectus in a jurisdiction of Canada for
which the regulator or, in Quebec, the securities regulatory
authority, has issued a receipt; or
_____ (p) a trust company or trust corporation registered or authorized
to carry on business under the Trust and Loan Companies Act
(Canada) or under comparable legislation in a jurisdiction of
Canada or a foreign jurisdiction, acting on behalf of a fully
managed account managed by the trust company or trust
corporation, as the case may be; or
_____ (q) a person acting on behalf of a fully managed account managed
by that person, if that person:
(i) is registered or authorized to carry on business as an
adviser or the equivalent under the securities legislation of
a jurisdiction of Canada or a foreign jurisdiction, and
(ii) in Ontario, is purchasing a security that is not a
security of an investment fund; or
_____ (r) a registered charity under the Income Tax Act (Canada) that,
in regard to the trade, has obtained advice from an
eligibility adviser or an adviser registered under the
securities legislation of the jurisdiction of the registered
charity to give advice on the securities being traded; or
_____ (s) an entity organized in a foreign jurisdiction that is
analogous to any of the entities referred to in paragraphs (a)
to (d) or paragraph (i) in form and function; or
_____ (t) a person in respect of which all of the owners of interests,
direct, indirect or beneficial, except the voting securities
required by law to be owned by directors, are persons that are
accredited investors;
_____ (u) an investment fund that is advised by a person registered as
an adviser or a person that is exempt from registration as an
adviser; or
_____ (v) a person that is recognized or designated by the securities
regulatory authority or, except in Ontario and Quebec, the
regulator as:
(i) an accredited investor, or
(ii) an exempt purchaser in Alberta or British Columbia after
National Instrument 45-106 came into force.
FOR THE PURPOSES HEREOF:
an issuer is an "AFFILIATE" of another issuer if
(a) one of them is the subsidiary of the other, or
(b) each of them is controlled by the same person;
"BANK" means a bank named in Schedule I or II of the Bank Act (Canada);
"CANADIAN FINANCIAL INSTITUTION" means
(a) an association governed by the Cooperative Credit Associations Act
(Canada) or a central cooperative credit society for which an order
has been made under section 473(1) of that Act, or
(b) a bank, loan corporation, trust company, trust corporation,
insurance company, treasury branch, credit union, caisse populaire,
financial services cooperative, or league that, in each case, is
authorized by an enactment of Canada or a jurisdiction of Canada to
carry on business in Canada or a jurisdiction in Canada;
a person (first person) is considered to "CONTROL" another person (second
person) if
(a) the first person, directly or indirectly, beneficially owns or
exercises control or direction over securities of the second person
carrying votes which, if exercised, would entitle the first person
to elect a majority of the directors of the second person, unless
that first person holds the voting securities only to secure an
obligation,
(b) the second person is a partnership, other than a limited
partnership, and first person holds more than 50% of the interests
of the partnership, or
(c) the second person is a limited partnership and the general partner
of the limited partnership is the first person;
"DIRECTOR" means
(a) a member of the board of directors of a company or an individual who
performs similar functions for a company, and
(b) with respect to a person that is not a company, an individual who
performs functions similar to those of a director of a company;
"FINANCIAL ASSETS" means
(a) cash,
(b) securities, or
(c) a contract of insurance, a deposit or an evidence of a deposit that
is not a security for the purposes of securities legislation;
"FOREIGN JURISDICTION" means a country other than Canada or a political
subdivision of a country other than Canada;
"FULLY MANAGED ACCOUNT" means an account of a client for which a person makes
the investment decisions if that person has full discretion to trade in
securities for the account without requiring the client's express consent to a
transaction;
"INVESTMENT FUND" means a mutual fund or non-redeemable investment fund, and,
for greater certainty, in British Columbia includes an employee venture capital
corporation that does not have a restricted constitution , and is registered
under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c.
112, and whose business objective is making multiple investments and a venture
capital corporation registered under Part 1 of the Small Business Venture
Capital Act (British Columbia), R.S.B.C. 1996 c.429 whose business objective is
making multiple investments;
"JURISDICTION" means a province or territory of Canada except when used in the
term "foreign jurisdiction";
"INDIVIDUAL" means a natural person, but does not include
(a) a partnership, unincorporated association, unincorporated syndicate,
unincorporated organization or a trust, or
(b) a natural person in the person's capacity as trustee, executor,
administrator or other legal representative;
"NON-REDEEMABLE INVESTMENT FUND" means an issuer,
(a) whose primary purpose is to invest money provided by its
securityholders,
(b) that does not invest,
(A) for the purpose of exercising or seeking to exercise control
of an issuer, other than an issuer that is a mutual fund or a
nonredeemable investment fund, or
(B) for the purpose of being actively involved in the management
of any issuer in which it invests, other than an issuer that
is a mutual fund or a non-redeemable investment fund, and
(c) that is not a mutual fund; "PERSON" includes
(a) an individual,
(b) a corporation,
(c) a partnership, trust, fund and an association, syndicate,
organization or other organized group of persons, whether
incorporated or not, and
(d) an individual or other person in that person's capacity as a
trustee, executor, administrator or personal or other legal
representative;
"REGULATOR" means, for the local jurisdiction, the person referred to in
Appendix D of National Instrument 14-101 "Definitions" ("NI 14-101") opposite
the name of the local jurisdiction;
"RELATED LIABILITIES" means:
(a) liabilities incurred or assumed for the purpose of financing the
acquisition or ownership of financial assets; or
(b) liabilities that are secured by financial assets;
"SCHEDULE III BANK" means an authorized foreign bank named in Schedule III of
the Bank Act (Canada);
"SECURITIES LEGISLATION" means, for the local jurisdiction, the instruments
listed in Appendix B of NI 14-101 opposite the name of the local jurisdiction
"SECURITIES REGULATORY AUTHORITY" means, for the local jurisdiction, the
securities commission or similar regulatory authority listed in Appendix C of NI
14-101 opposite the name of the local jurisdiction;
"SPOUSE" means an individual who,
(a) is married to another individual and is not living separate and
apart within the meaning of the Divorce Act (Canada), from the other
individual,
(b) is living with another individual in a marriage-like relationship,
including a marriage-like relationship between individuals of the
same gender, or
(c) in Alberta, is an individual referred to in paragraph (a) or (b), or
is an adult interdependent partner within the meaning of the Adult
Interdependent Relationships Act (Alberta); and
"SUBSIDIARY" means an issuer that is controlled directly or indirectly by
another issuer and includes a subsidiary of that subsidiary;
EXHIBIT C
SUBSCRIPTION AGREEMENT
INSTRUCTIONS: To properly complete this Subscription Agreement:
(1) All subscribers must complete all boxes on the signature page and sign the
signature page.
(2) All Canadian subscribers that are "accredited investors" must complete and
sign Exhibit B.
(3) All completed documents should be returned to CanWest Petroleum
Corporation, c/o F. Xxxxxx Xxx, Suite 000-000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, fax number: (000) 000-0000. Wire
transfers may be made to CanWest per the wire transfer instructions
described below.
THIS SUBSCRIPTION AGREEMENT (this "AGREEMENT"), dated as of the date of
the Company's acceptance set forth on the signature page hereto, by and among
CanWest Petroleum Corporation, a Colorado corporation (the "COMPANY"), and the
subscriber identified on the signature page hereto (the "SUBSCRIBER" and
collectively with other subscribers to this Offering, the "SUBSCRIBERS").
WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from Canadian prospectus and
registration requirements set forth in National Instrument 45-106 ("NI 45-106")
promulgated by the Canadian Securities Administrators and upon an exemption from
securities registration afforded by the provisions of Section 4(2), Section 4(6)
and/or Regulation D ("REGULATION D") as well as Regulation S ("REGULATION S").
Both Regulation D and Regulation S were promulgated by the United States
Securities and Exchange Commission (the "COMMISSION") under the Securities Act
of 1933, as amended (the "1933 Act").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers, in the aggregate, shall
purchase up to 12,000,000 units issued by the Company (the "UNITS"). The price
per Unit is US$1.50 (the "PURCHASE PRICE"). Each Unit consists of one share
("SHARE") of the Company's common stock, $.001 par value (the "COMMON STOCK")
plus a warrant ("WARRANT") to purchase shares of Common Stock (the "WARRANT
SHARES"). Each two Warrants will entitle the holder to purchase one Warrant
Share at a price of US$2.00 per Warrant Share for two years. The form of Warrant
is attached hereto as EXHIBIT A. The Shares, the Warrants and the Warrant Shares
are collectively referred to herein as the "SECURITIES".) The minimum
subscription per Subscriber is US$100,000. The offer, purchase and sale of the
Securities pursuant to the terms of this Agreement are referred to as the
"OFFERING." The Subscriber acknowledges that this subscription is subject to
rejection or allotment by the Company in whole or in part. If this subscription
is rejected or allotted in whole or in part, the Subscriber acknowledges that
the unused portion of the Subscriber's aggregate Purchase Price will be promptly
returned to the Subscriber without interest or deduction.
WHEREAS, the aggregate proceeds of the sale of the Securities contemplated
hereby shall be deposited directly into the Company's operating account.
Subscribers must wire funds to:
Intermediary Bank: Wachovia Bank, N.A. - New York
Account # 2000192009878
Swift Code: XXXXXX0XXXX
ABA Number: 000000000
Beneficiary Bank: Bank of Montreal
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., XXXXXX
Beneficiary: CanWest Petroleum Corporation
Account No.: 00044661643
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscribers hereby agree as
follows:
1. Closing. All proceeds received from Subscribers will be deposited in
the Company's operating account. Within ten business days after the later of:
(i) receipt of this Agreement fully executed by the Subscriber (including
Exhibit B for Canadian Subscribers); and (ii) confirmation that funds have
cleared or a wire transfer is received and such funds are immediately available;
the Company will deliver the Shares and Warrants (the "CLOSING(S)" or "CLOSING
DATE(S)") to the Subscribers; provided, however, that the Company reserves the
right, in its sole discretion, to reject any subscription in whole or in part.
Such Closings shall be held at the discretion of the Company as funds are
received, at reasonable intervals while the Offering is being conducted. Subject
to the satisfaction or waiver of the terms and conditions of this Agreement and
the acceptance by the Company of subscriptions, on the Closing Dates, each
Subscriber shall purchase and the Company shall sell to each Subscriber Units
for the consideration set forth on the signature page hereto. The minimum
subscription amount for each Subscriber is US$100,000, unless the Company
decides, in its sole discretion, to accept a subscription for a lesser amount.
2. Use of Proceeds. A substantial amount of the net proceeds of this
Offering may be used by the Company to purchase additional equity interests in
OilSands Quest, Inc. ("OQI") at a price of Cdn$6.00 per OQI unit. Each OQI unit
consists of one common share of OQI and one-half of an OQI share purchase
warrant. Each OQI share purchase warrant is exercisable for nine months at a
price per share of Cdn$10.00. OQI is a majority owned subsidiary of the Company.
Any net proceeds remaining after the purchase of such OQI units will be used by
the Company for general working capital.
3. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to and agrees with the Company that:
(a) Organization and Standing of the Subscriber. If the Subscriber
is an entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization. If the Subscriber 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.
(b) Authorization and Power. The Subscriber has the requisite power
and authority to enter into and perform this Agreement and to purchase the
Shares and Warrants being sold to it hereunder. The execution, delivery and
performance of this Agreement by such Subscriber and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate or partnership action, and no further consent or
authorization of such Subscriber or its Board of Directors, stockholders,
partners, members, as the case may be, is required. This Agreement has been duly
authorized, executed and delivered by the Subscriber and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Subscriber enforceable against the Subscriber in accordance with the terms
thereof. The entering into of this 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 if the Subscriber is not a natural person,
any of the Subscriber's constating documents, or any agreement to which the
Subscriber is a party or by which it is bound.
(c) Fees and Commissions. The Subscriber represents that there are
no parties entitled to receive fees, commissions, or similar payments in
connection with the Offering except as described on Schedule 3(c).
(d) Information on Company. The Subscriber has been furnished with
or has had access at the XXXXX Website of the Commission to the Company's Form
10-KSB for the year ended April 30, 2005 as filed with the Commission, together
with all subsequently filed Forms 10-QSB, 8-K, and other filings made with the
Commission available at the XXXXX website (hereinafter referred to collectively
as the "REPORTS"). The Subscriber has had an opportunity to ask questions and
receive answers from representatives of the Company. The Subscriber has not
received or been provided with, nor has it requested, nor does it have any need
to receive, any offering memorandum, any prospectus, sales or advertising
literature, or any other document (other than Reports) describing or purporting
to describe the business and affairs of the Company which has been prepared for
delivery to, and review by, prospective purchasers in order to assist it in
making an investment decision in respect of the Securities.
(e) Information on Subscriber. The Subscriber is, and will be at the
time of the exercise of the Warrants, a Non- U.S. Person as defined in
Regulation S or an "accredited investor", as such term is defined in Regulation
D promulgated by the Commission under the 1933 Act, and resident in, or
otherwise subect to applicable securities laws of, the jurisdiction identified
as the Subscriber's address on the signature page of this Agreement, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the information made available by the Company
to evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The Subscriber has the authority and is duly and legally qualified
to purchase and own the Securities. The Subscriber is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.
The information set forth on the signature page hereto regarding the Subscriber
is accurate. The Subscriber is not required to be registered as a broker-dealer
under Section 15 of the Securities Exchange Act of 1934, as amended (the "1934
Act") and the Subscriber is not a broker-dealer. The Subscriber acknowledges
that the income tax considerations applicable to the Subscriber will vary
depending on a number of factors including the Subscriber's jurisdiction of
residence and it has been encouraged to obtain independent legal, income tax and
investment advice with respect to its subscription for the Securities.
(f) Purchase of Shares and Warrants. On the Closing Date, the
Subscriber will purchase the Shares and Warrants as principal for its own
account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof. If a Canadian
resident, the Subscriber is an "accredited investor", as such term is defined in
NI 45-106, it was not created or used solely to purchase or hold securities as
an "accredited investor" as described in paragraph (m) of the definition of
"accredited investor" in NI 45-106 and has concurrently executed and delivered a
Representation Letter in the form attached as Exhibit B to this Subscription
Agreement and has initialed in Appendix "A" thereto indicating that the
Subscriber satisfies (and will satisfy at the Closing Time) one of the
categories of "accredited investor" set forth in such definition.
(g) Acknowledgements of Subscriber. The Subscriber understands and
agrees that:
i. The offer and sale of the Shares and Warrants is directed
solely to persons who are not U.S. persons as defined in Regulation
S or who meet the definition of "accredited investor" set forth in
rule 501(a) of Regulation D.
ii. The Securities are not currently registered under the 1933
Act nor the securities laws of any state or other jurisdiction and
are "restricted securities" as defined in Rule 144 under the 1933
Act.
iii. The Securities are offered in an offshore transaction as
defined in Regulation S, or are otherwise being acquired in reliance
on an exemption from the registration provisions of the 1933 Act
(based in part on the accuracy of the representations and warranties
of Subscriber contained herein).
iv. The Securities may not be offered or sold in the United
States or to any U.S. person unless the securities are registered
under the 1933 Act (and any applicable state securities laws) or an
exemption from such registration requirements is available.
v. Hedging transactions involving the Securities may not be
conducted unless in compliance with the 1933 Act.
vi. The delivery of this document does not constitute an offer
or solicitation with respect to the Securities in any jurisdiction
in which such offer or solicitation would be unlawful.The Subscriber
has been independently advised as to restrictions with respect to
trading in the Securities imposed by applicable securities laws in
Canada, confirms that no representation (written or oral) has been
made to it by or on behalf of the Company with respect thereto,
acknowledges that it is aware of the characteristics of the
Securities, the risks relating to an investment therein and of the
fact that it may not be able to resell the Securities except in
accordance with limited exemptions under applicable securities laws
and regulatory policy in Canada until expiry of the applicable
restricted period and compliance with the other requirements of
applicable law in Canada; and it agrees that any certificates
representing Securities will bear a legend indicating that the
resale of such Securities is restricted and any other applicable
legends or notations described in this Subscription Agreement. The
Company is not currently a reporting issuer in any Canadian
jurisdiction and therefore the applicable restricted period
restricting resale of the Securities in Canada may extend
indefinitely. The Company has advised the Subscriber that the
Company 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 applicable
securities laws in Canada and, as a consequence of acquiring
securities pursuant to this exemption, certain protections, rights
and remedies provided by applicable securities laws in Canada,
including statutory rights of rescission or damages, will not be
available to the Subscriber. If required by applicable securities
legislation, 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
Company in filing, such reports, undertakings and other documents
with respect to the issue of the Securities (including a
Representation Letter in the form attached as Exhibit B).
vii. The Subscriber acknowledges that the Company will pay a
finders fee or commission as described on Schedule 3(c).
viii. The Subscriber acknowledges that it has consented to and
requested that all documents evidencing or relating in any way to
the sale of the Securities be drawn up in the English language only.
LE SOUSSIGNE RECONNAIT PAR LES PRESENTES AVOIR CONSENTI ET EXIGE QUE
TOUS LES DOCUMENTS FAISANT FOI OU SE REPPORTANT DE QUELQUE MANIERE A
LA VENTE DE CES ACTIONS SOIENT REDIGES EN ANGLAIS SEULEMENT.
ix. This Subscription Agreement and Exhibit B hereto require
the Subscriber to provide certain personal information to the
Company. Such information is being collected by the Company for the
purposes of completing the issuance of the Securities, which
includes, without limitation, determining the Subscriber's
eligibility to purchase the Securities under applicable securities
legislation, preparing and registering any certificates representing
Securities to be issued to the Subscriber and completing filings
required by any stock exchange or securities regulatory authority.
The Subscriber's personal information may be disclosed by the
Company to: (a) stock exchanges or securities regulatory
authorities, (b) the Company's registrar and transfer agent, and (c)
any of the other parties involved in the offering, including legal
counsel to the Company. By executing this Subscription Agreement,
the Subscriber consents to the foregoing collection, use and
disclosure of the Subscriber's personal information. The Subscriber
also consents to the filing of copies or originals of the
Subscriber's representation letter set out in Exhibit B as may be
required to be filed with any stock exchange or securities
regulatory authority in connection with the transactions
contemplated hereby. In connection with the transactions
contemplated by this Subscription Agreement, (A) the Company will
deliver to the Ontario Securities Commission and other applicable
securities regulatory authorities information respecting the
Subscriber's name address and telephone number, the number and type
of Securities purchased, the total purchase price, the date of
acquisition of the Securities by the Subscriber and the prospectus
and registration exemptions relied upon by the Company regarding the
issuance of the Securities to the Subscriber, (B) the information
described in (A) is being collected indirectly by the Ontario
Securities Commission and other applicable securities regulatory
authorities under the authority granted to it in securities
legislation and for the purposes of the administration and
enforcement of the securities legislation of Ontario and other
applicable jurisdictions, and (C) if the Subscriber has questions or
comments regarding the indirect collection of personal information
by the Ontario Securities Commission it should contact:
Administrative Assistant to the Director of Corporate Finance
Ontario Securities Commission
Suite 1903, Box 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0 Telephone (000) 000-0000.
(h) Legends on Certificates. The Shares, Warrants and the Warrant
Shares shall bear the following or similar legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
OFFERED AND SOLD IN AN "OFFSHORE TRANSACTION" IN RELIANCE UPON
REGULATION S AS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE TRANSFERRED
OTHER THAN IN ACCORDANCE WITH REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS
UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE
SECURITIES ACT."
"Unless permitted under securities legislation, the holder of
these securities must not trade the securities before the date
that is four months and a day after the later of (i) [insert
the date the securities represented by the certificate are
issued], and (ii) the date the Company became a reporting
issuer in any province or territory of Canada."
(i) Communication of Offer. The offer to sell the Securities was
directly communicated to the Subscriber by the Company. At no time was the
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
(j) Authority; Enforceability. This Agreement and other agreements
delivered together with this Agreement or in connection herewith have been duly
authorized, executed and delivered by the Subscriber and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity; and Subscriber has full corporate power and
authority necessary to enter into this Agreement and such other agreements and
to perform its obligations hereunder and under all other agreements entered into
by the Subscriber relating hereto.
(k) Restricted Securities. Subscriber understands that the
Securities have not been registered under the 1933 Act and such Subscriber will
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Securities unless pursuant to an effective registration statement under
the 1933 Act, or unless an exemption from registration is available.
(l) No Governmental Review. Each Subscriber understands that no
United States federal or state agency, Canadian federal, provincial or
territorial agency or any other governmental or state agency has passed on or
made recommendations or endorsement of the Securities or the suitability of the
investment in the Securities, nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.
(m) The funds representing the aggregate Purchase Price which will
be advanced by the Subscriber hereunder will not represent proceeds of crime for
the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (Canada) and the Subscriber acknowledges that the Company 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 Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) and to the best of the
Subscriber's knowledge (i) none of the subscription funds to be provided by the
Subscriber (A) have been or will be derived from or related to any activity that
is deemed criminal under the law of Canada, the United States of America, or any
other jurisdiction, or (B) are being tendered on behalf of a person or entity
who has not been identified to the Subscriber, and (ii) it shall promptly notify
the Company if the Subscriber discovers that any of such representations ceases
to be true, and to provide the Company with appropriate information in
connection therewith.
(n) Correctness of Representations. Each Subscriber represents as to
such Subscriber that the foregoing representations and warranties are true and
correct as of the date hereof and, unless a Subscriber otherwise notifies the
Company prior to the Closing Date shall be true and correct as of the Closing
Date.
(o) Survival. The foregoing representations and warranties shall
survive the Closing Date for a period of three years.
4. Company Representations and Warranties. The Company represents and
warrants to and agrees with each Subscriber that:
(a) Due Incorporation. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Colorado.
(b) Authorization and Power. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity. The Company has full corporate power and authority
necessary to enter into this Agreement and to perform its obligations hereunder.
(c) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests,
liens, claims or other encumbrances, subject to restrictions upon transfer under
the 1933 Act and any applicable state securities laws; and
(ii) have been, or will be, duly and validly authorized and on the
date of issuance of the Shares and upon exercise of the Warrants, the Shares and
Warrant Shares will be duly and validly issued, fully paid and nonassessable.
(d) No General Solicitation. Neither the Company, nor any of its
Affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the 0000 Xxx) in connection with the offer or sale
of the Securities.
(e) Fees and Commissions. The Company represents that there are no parties
entitled to receive fees, commissions, or similar payments in connection with
the Offering except as described on Schedule 3(c).
(f) Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date.
(g) Survival. The foregoing representations and warranties shall survive
the Closing Date for a period of three years.
5. Registration Rights & Filing for Senior Listing.
(a) Mandatory Registration & Penalties. The Company shall prepare and file
with the Commission, no later than 60 days after the final Closing Date of this
Offering (the "Filing Date"), a registration statement covering the resale of
the following securities under the 1933 Act (the "Registration Statement"): (i)
the Shares; plus (ii) the Warrant Shares; plus (iii) any Initial Penalty Shares
and Periodic Penalty Shares (both as defined below). The shares described in (i)
thru (iii) are collectively referred to as the Registrable Securities. In the
event that the Company does not file the Registration Statement by the Filing
Date, the Company shall pay to the Subscriber a penalty of 2% of the Registrable
Securities (the "Initial Penalty Shares"), for each month or part thereof beyond
the Filing Date that the Company has failed to file the Registration Statement.
The Initial Penalty Shares may be paid in cash or shares of Common Stock, at
Subscriber's option, with the cash calculated at the rate of $1.75 per share.
Notwithstanding the foregoing, the amounts payable by the Company pursuant to
this provision shall not be payable to the extent any delay in the effectiveness
of the Registration Statement occurs because of an act of, or a failure to act,
or a failure to act timely by the Subscriber or its counsel.
(b) Additional Penalties. After the initial filing of the Registration
Statement, if the Company fails to respond to any comments issued by the
Commission within two weeks of receipt of such comments (the "Response Date"),
then the Company shall pay to the Subscriber a penalty of 2% of the Registrable
Securities (the "Periodic Penalty Shares"), for each additional two week period
beyond the Response Date that the Company fails to respond to such comments. The
Periodic Penalty Shares may be paid in cash or shares of Common Stock, at
Subscriber's option, with the cash calculated at the rate of $1.75 per share.
Notwithstanding the foregoing, the amounts payable by the Company pursuant to
this provision shall not be payable to the extent any delay in the responding to
comments occurs because of an act of, or a failure to act, or a failure to act
timely by the Subscriber or its counsel.
(c) Registration Procedures & Senior Listing Application. The Company
shall use its best efforts to:
(i) Prepare and file with the Commission the Registration Statement,
cause the Registration Statement to become effective under the 1933 Act as soon
as practicable after the filing thereof, and keep the Registration Statement
effective under the 1933 Act until the date on which all Subscribers can sell
the Registrable Securities pursuant to Rule 144 of the Securities Act without
restriction under Rule 144(e) thereof.
(ii) Prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective under the 1933 Act at all
times until the date on which all Subscribers can sell the Registrable
Securities pursuant to Rule 144 of the 1933 Act without restriction under Rule
144(e) thereof, and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement.
(iii) File an application for listing the Common Stock on a national
securities exchange; provided, however, that the Company is only required to
file such application if it meets the eligibility requirements for listing on
such an exchange.
(iv) Become a reporting issuer in the Province of Alberta by,
concurrently with, or promptly following the filing of the Registration
Statement, either (A) applying to the Alberta Securities Commission for an order
declaring the Company to be a reporting issuer for the purposes of the
Securities Act (Alberta), or (B) filing a prospectus with the Alberta Securities
Commission and using its best efforts to obtain a receipt therefor concurrently
with, or promptly following, the effectiveness of the Registration Statement.
6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities
under the 1933 Act pursuant to Section 11, the Company will, to the extent
permitted by law, indemnify and hold harmless the Seller, each officer of the
Seller, each director of the Seller, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 6 reimburse the Seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable to the Seller to
the extent that any such damages arise out of or are based upon an untrue
statement or omission made in any preliminary prospectus if (i) the Seller
failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller, or
any such controlling person.
(b) In the event of a registration of any of the Registrable
Securities under the 1933 Act pursuant to Section 11, each Seller severally but
not jointly will, to the extent permitted by law, indemnify and hold harmless
the Company, and each person, if any, who controls the Company within the
meaning of the 1933 Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the 1933 Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished to the Company by such Seller.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 6 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section6, except and only if and to the extent the indemnifying party is
prejudiced by such omission. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 6(c) for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties, as a group, shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution in the
event of joint liability under the 1933 Act in any case in which either (i) a
Seller, or any controlling person of a Seller, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 6 provides for indemnification in such case, or (ii) contribution
under the 1933 Act may be required on the part of the Seller or controlling
person of the Seller in circumstances for which indemnification is not provided
under this Section6; then, and in each such case, the Company and the Seller
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Seller is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, provided, however, that, in any such case, (y) the
Seller will not be required to contribute any amount in excess of the public
offering price of all such securities sold by it pursuant to such registration
statement; and (z) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the 0000 Xxx) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
7. Miscellaneous.
(a) Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Canwest Petroleum
Corporation, 000-000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0,
Attn: Xxxxxxxx X. Xxxxxxxxx , CEO, telecopier number: (000) 000-0000, with an
additional copy only to: Xxxxxx Xxx, Suite 000-000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, telecopier number: (000) 000-0000, and (ii) if
to the Subscriber, to: the one or more addresses and telecopier numbers
indicated on the signature pages hereto.
(b) Entire Agreement; Assignment. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by both parties. Neither the Company nor the Subscriber
have relied on any representations not contained or referred to in this
Agreement and the documents delivered herewith. No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscriber.
(c) Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
(d) Law Governing this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of Colorado without
regard to conflicts of laws principles that would result in the application of
the substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of Colorado or in the federal courts
located in the state of Colorado. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS
AGREEMENT AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION
HEREWITH ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS AND WAIVE TRIAL BY JURY. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.
(e) Independent Nature of Subscribers. The Company acknowledges that
the obligations of the Subscriber under this Agreement are several and not joint
with the obligations of any other Subscriber, and no Subscriber shall be
responsible in any way for the performance of the obligations of any other
Subscriber under this Agreement or in connection with the Offering.
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
Please acknowledge your acceptance of the foregoing Subscription Agreement
by signing and returning a copy to the Company. Upon the Company's acceptance,
it shall become a binding agreement between Subscriber and the Company. The
Company may, in its sole discretion, reject any subscription.
SUBSCRIBER INFORMATION
(PLEASE PRINT LEGIBLY)
INVESTMENT
AMOUNT: US$________ (MINIMUM INVESTMENT PER SUBSCRIBER IS US$100,000.)
FULL NAME OF SUBSCRIBER: ____________________________________________________
If the subscriber is A FULLY MANAGED ACCOUNT, please complete the "Name of
Subscriber" above in the following format: "Account ___ by [insert name of
adviser, trust company or trust corporation]".
EXACT NAME IN WHICH SHARES AND WARRANTS ARE TO BE ISSUED:
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SIGNING PRINCIPAL'S TITLE (IF AN ENTITY):
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SUBSCRIBER'S STREET ADDRESS:
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SUBSCRIBER'S P.O. BOX/MAILING ADDRESS:
-----------------------------------------
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TELEPHONE #:
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FAX #:
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TAX IDENTIFICATION #:
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EMAIL ADDRESS:
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SUBSCRIBER'S SIGNATURE
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TITLE (IF AN ENTITY):
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COMPANY ACCEPTANCE
ACCEPTED THIS ______ DAY OF ___________, 200__
CANWEST PETROLEUM CORPORATION
A COLORADO CORPORATION
BY:_________________________________
NAME: XXXXXXXX X. XXXXXXXXX
TITLE: CEO
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibit A Form of Warrant
Exhibit B Form of Representation Letter (for Canadian Subscribers)
SCHEDULE 3C
FEES AND COMMISSIONS
The Company may pay a finders fee in connection with this Offering. The finders
fee may be as much as: (i) 6% cash on gross proceeds; plus (ii) 6% warrants on
total Units sold, with each warrant exercisable to purchase one share of common
stock at an exercise price of US$1.75 per share.
