SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of _________,
2005, by and among Canwest Petroleum Corporation, a Colorado corporation (the
"Company"), and the subscribers identified on the signature page hereto (each a
"Subscriber" and collectively "Subscribers").
WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D ("Regulation
D") as 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 Five Million Two Hundred Thousand Dollars ($5,200,000) (the
"Purchase Price") of principal amount of 8% secured convertible promissory notes
of the Company ("Note" or "Notes"), in the form attached hereto as Exhibit A.
The offer, purchase and sale of the Notes pursuant to the terms of this
Agreement are referred to as the "Offering." The Notes will be guaranteed, and
the guarantee on the Notes will be secured by certain property, as described in
the form of Security Agreement attached hereto as Exhibit B. The Notes are
convertible into shares of the Company's common stock, $.001 par value (the
"Common Stock") at a per share conversion price set forth in the Note. Share
purchase warrants (the "Warrants") in the form attached hereto as Exhibit C to
purchase shares of Common Stock (the "Warrant Shares") will be issued in
connection with the Notes, as described below. The Notes, shares of Common Stock
issuable upon conversion of the Notes (the "Shares"), the Warrants and the
Warrant Shares are collectively referred to herein as the "Securities"; and
WHEREAS, the aggregate proceeds of the sale of the Notes contemplated
hereby shall be held in escrow pursuant to the terms of an Escrow Agreement to
be executed by the parties substantially in the form attached hereto as Exhibit
D (the "Escrow Agreement") by and among the Company, Township (as defined
below), Subscribers and Xxxxx, Figa & Will, P.C. (the "Escrow Agent").
Subscribers must sign the Escrow Agreement and wire funds to:
Colorado Business Bank
Routing Number (ABA Number) 000000000
Account Name: Xxxxx, Figa & Will, P.C. COLTAF Trust Account
Account Number: 0000000 (Please note- no Swift Code necessary)
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. The consummation of the transactions contemplated herein
shall take place at the offices of Xxxxx, Figa & Will, P.C., 0000 X. Xxxxxxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, XX 00000 upon the satisfaction of all
conditions to Closing set forth in this Agreement ("Closing Date"). Subject to
the satisfaction or waiver of the terms and conditions of this Agreement, on the
Closing Date, each Subscriber shall purchase and the Company shall sell to each
Subscriber a Note in the principal amount designated on the signature page
hereto for the consideration set forth on the signature page hereto.
2. Use of Proceeds. The proceeds of this Offering will be used by
the Company to attempt to purchase through its wholly owned subsidiary, Township
Petroleum Corporation ("Township"), certain oil sands rights (the "Rights"), as
itemized and as described on Exhibit E.
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(Subscription Agreement)
3. Description of Refund Amount under Notes/Bonus Shares/Issuance of
Warrants.
(a) If Township is not successful on any of its bids to
acquire Rights, then any funds which are not used for the acquisition of Rights
or for the payment of fees in connection with the bidding process (the "Refund
Amount"), will be returned to the Escrow Agent as described in Exhibit D. The
Escrow Agent, pursuant to the Escrow Agreement, will pay the Refund Amount
proportionately to the Subscribers. Such Refund Amount will be deducted from the
Principal Sum owing under the Notes and no interest shall be payable on the
Refund Amount which is deducted from the Principal Sum pursuant to the Notes. In
lieu of interest on the Refund Amount which is deducted from the Principal Sum
the Company will issue to a Subscriber, within 10 days of Subscriber's receipt
of the Refund Amount, 10% of the Refund Amount allocable to Notes held by each
such Subscriber, payable in shares of the Company's common stock at a price per
share of $0.40 (the "Bonus Shares").
(b) Within 10 days of the sale of the Rights to Township, the
Company will issue and deliver the Warrants to the Subscribers. One Warrant will
be issued for each $0.40 of "Adjusted Purchase Price" outstanding on the Notes.
"Adjusted Purchase Price" means all remaining principal on the Notes after
allocation of all Refund Amounts. Each Warrant shall be exercisable to purchase
one Warrant Share at an exercise price of $0.55, subject to reduction as
described in the Warrant. The Warrants shall be exercisable until two years
after the issue date.
(c) Subscribers should be aware that, until the Company
increases its authorized capital, the Company is not able to reserve sufficient
shares for the conversion of the Notes and the exercise of the Warrants. The
Company has called for a shareholders meeting to be held September 19, 2005, at
which shareholders will vote on a proposal to increase its authorized capital to
250,000,000 shares of Common Stock. The preliminary proxy statement describing
the proposal was filed with the Securities and Exchange Commission on August 3,
2005. Although management and affiliates of the Company have indicated that they
will be voting in favor of the proposals in the preliminary proxy statement and
the Company believes the proposal will be approved by shareholders, it does not
have proxies in hand to ensure such approval. The Company has been informed that
brokerage houses hold discretionary voting rights as to a substantial block of
shares held by them. The Company also has been advised that an increase in
authorized capital is generally an ordinary resolution by the New York Stock
Exchange (the governing authority for the brokerage houses), and it is the
policy of the brokerage houses to use discretionary voting rights to vote in
favor of the resolutions proposed by management, unless the beneficial
shareholder directs them otherwise.
4. Subscriber's Representations and Warranties. Each Subscriber
hereby represents and warrants to and agrees with the Company only as to such
Subscriber that:
(a) Organization and Standing of the Subscribers. 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.
(b) Authorization and Power. Each Subscriber has the requisite
power and authority to enter into and perform this Agreement and to purchase the
Notes 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 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.
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(Subscription Agreement)
(c) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by Subscriber of the transactions
contemplated hereby or relating hereto do not and will not (i) result in a
violation of such Subscriber's charter documents or bylaws or other
organizational documents or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of any agreement, indenture or instrument or obligation to which
such Subscriber is a party or by which its properties or assets are bound, or
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency applicable to such Subscriber or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on such
Subscriber). Such Subscriber is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Notes or acquire the
Warrants in accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Subscriber is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.
(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. In addition,
the Subscriber has received in writing from the Company such other information
concerning its operations, financial condition and other matters as the
Subscriber has requested in writing (such other information is collectively, the
"Other Written Information"), and considered all factors the Subscriber deems
material in deciding on the advisability of investing in the Securities.
(e) Information on Subscriber. The Subscriber is, and will be
at the time of the conversion of the Notes and exercise of the Warrants, an
"accredited investor", as such term is defined in Regulation D promulgated by
the Commission under the 1933 Act, 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.
(f) Purchase of Notes and Warrants. On the Closing Date, the
Subscriber will purchase the Notes 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.
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(Subscription Agreement)
(g) 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.
(h) Shares Legend. The Shares and the Warrant Shares shall
bear the following or similar legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CANWEST PETROLEUM CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED."
(i) Warrants Legend. The Warrants shall bear the following
or similar legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CANWEST PETROLEUM CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
(j) Note Legend. The Note shall bear the following legend:
"THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO CANWEST PETROLEUM CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
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(Subscription Agreement)
(k) 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.
(l) 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.
(m) 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.
Notwithstanding anything to the contrary contained in this Agreement, such
Subscriber may transfer (without restriction and without the need for an opinion
of counsel) the Securities to its Affiliates (as defined below) provided that
each such Affiliate is an "accredited investor" under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement. For
the purposes of this Agreement, an "Affiliate" of any person or entity means any
other person or entity directly or indirectly controlling, controlled by or
under direct or indirect common control with such person or entity. Affiliate
includes each subsidiary of the Company. For purposes of this definition,
"control" means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.
(n) No Governmental Review. Each Subscriber understands that
no United States federal or state 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.
(o) 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.
(p) Survival. The foregoing representations and warranties
shall survive the Closing Date for a period of three years.
5. Company Representations and Warranties. The Company represents
and warrants to and agrees with each Subscriber that:
(a) Due Incorporation. The Company and each of its
Subsidiaries is a corporation or other entity duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite corporate power to own its
properties and to carry on its business as presently conducted. The Company and
each of its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
a Material Adverse Effect. For purposes of this Agreement, a "Material Adverse
Effect" shall mean a material adverse effect on the financial condition, results
of operations, properties or business of the Company and its Subsidiaries taken
as a whole. For purposes of this Agreement, "Subsidiary" means, with respect to
any entity at any date, any corporation, limited or general partnership, limited
liability company, trust, estate, association, joint venture or other business
entity of which more than 50% of (i) the outstanding capital stock having (in
the absence of contingencies) ordinary voting power to elect a majority of the
board of directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such entity. All the Company's Subsidiaries are listed
in the Reports.
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(Subscription Agreement)
(b) Outstanding Stock. All issued and outstanding shares of
capital stock of the Company has been duly authorized and validly issued and are
fully paid and nonassessable.
(c) Authority; Enforceability. This Agreement, the Note, the
Warrants and the Escrow Agreement, and any other agreements delivered together
with this Agreement or in connection herewith (collectively "Transaction
Documents") have been duly authorized, executed and delivered by the Company 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. The Company has
full corporate power and authority necessary to enter into and deliver the
Transaction Documents and to perform its obligations thereunder.
(d) Additional Issuances. There are no outstanding agreements
or preemptive or similar rights affecting the Company's common stock or equity
and no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any shares of common stock or equity of the
Company or other equity interest in any of the Subsidiaries of the Company
except as described on Schedule 5(d).
(e) Consents. No consent, approval, authorization or order of
any court, governmental agency or body or arbitrator having jurisdiction over
the Company, or any of its Affiliates, the OTC Bulletin Board ("Bulletin Board")
nor the Company's shareholders is required for the execution by the Company of
the Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.
(f) No Violation or Conflict. Assuming the representations and
warranties of the Subscribers in Section 4 are true and correct, neither the
issuance and sale of the Securities nor the performance of the Company's
obligations under this Agreement and all other agreements entered into by the
Company relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a default) under (A)
the articles or certificate of incorporation, charter or bylaws of the Company,
(B) to the Company's knowledge, any decree, judgment, order, law, treaty, rule,
regulation or determination applicable to the Company of any court, governmental
agency or body, or arbitrator having jurisdiction over the Company or over the
properties or assets of the Company or any of its Affiliates, (C) the terms of
any bond, debenture, note or any other evidence of indebtedness, or any
agreement, stock option or other similar plan, indenture, lease, mortgage, deed
of trust or other instrument to which the Company or any of its Affiliates is a
party, by which the Company or any of its Affiliates is bound, or to which any
of the properties of the Company or any of its Affiliates is subject, or (D) the
terms of any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company, or any of its Affiliates is a party except the
violation, conflict, breach, or default of which would not have a Material
Adverse Effect; or
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(Subscription Agreement)
(ii) result in the creation or imposition of any lien,
charge or encumbrance upon the Securities or any of the assets of the Company or
any of its Affiliates except as described herein; or
(iii) result in the activation of any anti-dilution
rights or a reset or repricing of any debt or security instrument of any other
creditor or equity holder of the Company, nor result in the acceleration of the
due date of any obligation of the Company.
(g) 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;
(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 (after the Company's increase in authorized capital becomes
effective) or if registered pursuant to the 1933 Act, and resold pursuant to an
effective registration statement and prospectus delivery requirements are
satisfied, will be free trading and unrestricted);
(iii) will not have been issued or sold in violation of
any preemptive or other similar rights of the holders of any securities of the
Company;
(iv) will not subject the holders thereof to personal
liability by reason of being such holders; and
(v) assuming the representations warranties of the
Subscribers as set forth in Section 4 hereof are true and correct, will not
result in a violation of Section 5 under the 1933 Act.
(h) Litigation. There is no pending or, to the best knowledge
of the Company, threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company, or any of its Affiliates that would affect the execution by the Company
or the performance by the Company of its obligations under the Transaction
Documents. Except as disclosed in the Reports or in the schedules hereto, there
is no pending or, to the best knowledge of the Company, basis for or threatened
action, suit, proceeding or investigation before any court, governmental agency
or body, or arbitrator having jurisdiction over the Company, or any of its
Affiliates which litigation if adversely determined would have a Material
Adverse Effect.
(i) Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to Section 13 of the 1934 Act and has
a class of common shares registered pursuant to Section 12(g) of the 1934 Act.
Pursuant to the provisions of the 1934 Act, the Company has filed all reports
and other materials required to be filed thereunder with the Commission during
the preceding twelve months.
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(Subscription Agreement)
(j) No Market Manipulation. The Company and its Affiliates
have not taken, and will not take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities or affect the price at which the Securities may be issued or
resold.
(k) Information Concerning Company. The Reports contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein. Since the date of the financial statements included in the
Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no Material Adverse Event relating to the
Company's business, financial condition or affairs not disclosed in the Reports.
The Reports do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.
(l) Stop Transfer. The Company will not issue any stop
transfer order or other order impeding the sale, resale or delivery of any of
the Securities, except as may be required by any applicable federal or state
securities laws and unless contemporaneous notice of such instruction is given
to the Subscriber.
(m) Defaults. The Company is not in violation of its articles
of incorporation or bylaws. The Company is (i) not in default under or in
violation of any other material agreement or instrument to which it is a party
or by which it or any of its properties are bound or affected, which default or
violation would have a Material Adverse Effect, (ii) not in default with respect
to any order of any court, arbitrator or governmental body or subject to or
party to any order of any court or governmental authority arising out of any
action, suit or proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii) to
the Company's knowledge not in violation of any statute, rule or regulation of
any governmental authority which violation would have a Material Adverse Effect.
(n) 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.
(o) Listing. The Common Stock is quoted on the Bulletin Board.
The Company has not received any oral or written notice that the Common Stock is
not eligible nor will become ineligible for quotation on the Bulletin Board nor
that the Common Stock does not meet all requirements for the continuation of
such quotation and the Company satisfies all the requirements for the continued
quotation of the Common Stock on the Bulletin Board.
(p) No Undisclosed Liabilities. The Company has no liabilities
or obligations which are material, individually or in the aggregate, which are
not disclosed in the Reports and Other Written Information, other than those
incurred in the ordinary course of the Company's businesses since April 30, 2005
and which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
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(Subscription Agreement)
(q) Capitalization. The authorized and outstanding capital
stock of the Company as of the date of this Agreement and the Closing Date (not
including the Securities) are set forth on Schedule 5(d). Except as set forth on
Schedule 5(d), there are no options, warrants, or rights to subscribe to,
securities, rights or obligations convertible into or exchangeable for or giving
any right to subscribe for any shares of capital stock of the Company. All of
the outstanding shares of Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable.
(r) Dilution. The Company's executive officers and directors
understand the nature of the Securities being sold hereby and recognize that the
issuance of the Securities will have a potential dilutive effect on the equity
holdings of other holders of the Company's equity or rights to receive equity of
the Company. The board of directors of the Company has concluded, in its good
faith business judgment that the issuance of the Securities is in the best
interests of the Company. The Company specifically acknowledges that its
obligation to issue the Shares upon conversion of the Notes, and the Warrant
Shares upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company or parties entitled to receive equity of the
Company.
(s) 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.
(t) Survival. The foregoing representations and warranties
shall survive the Closing Date for a period of three years.
6. Regulation D Offering. The offer and issuance of the Securities
to the Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.
7.1. Conversion of Note.
(a) Upon the conversion of a Note or part thereof, the Company
shall, at its own cost and expense, take all necessary action to assure that the
Company's transfer agent shall issue stock certificates in the name of
Subscriber (or its nominee) or such other persons as designated by Subscriber
and in such denominations to be specified at conversion representing the number
of shares of Common Stock issuable upon such conversion.
(b) Subscriber will give notice of its decision to exercise
its right to convert the Note, interest, any sum due to the Subscriber under the
Transaction Documents, or part thereof by telecopying an executed and completed
Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to
the Company via confirmed telecopier transmission or otherwise pursuant to
Section 13(a) of this Agreement. The Subscriber will not be required to
surrender the Note until the Note has been fully converted or satisfied. Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof shall be deemed a Conversion Date. The Company will
itself or cause the Company's transfer agent to transmit the Company's Common
Stock certificates representing the Shares issuable upon conversion of the Note
to the Subscriber via express courier for receipt by such Subscriber within ten
business days after receipt by the Company of the Notice of Conversion (such
tenth day being the "Delivery Date"). A Note representing the balance of the
Note not so converted will be provided by the Company to the Subscriber if
requested by Subscriber, provided the Subscriber delivers the original Note to
the Company. In the event that a Subscriber elects not to surrender a Note for
reissuance upon partial payment or conversion, the Subscriber hereby indemnifies
the Company against any and all loss or damage attributable to a third-party
claim in an amount in excess of the actual amount then due under the Note.
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(Subscription Agreement)
(c) Nothing contained herein or in any document referred to
herein or delivered in connection herewith shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest or
dividends required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to the Subscriber and thus refunded to the
Company.
7.2. Maximum Conversion. The Subscriber shall not be entitled to
convert on a Conversion Date that amount of the Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of common stock beneficially owned by the Subscriber and its
Affiliates on a Conversion Date, and (ii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Subscriber and its Affiliates of more than 4.99% of
the outstanding shares of common stock of the Company on such Conversion Date.
For the purposes of the provision to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Subscriber shall not be limited to aggregate
conversions of only 4.99% and aggregate conversions by the Subscriber may exceed
4.99%. The Subscriber may waive the conversion limitation described in this
Section 7.2, in whole or in part, or increase the permitted beneficial ownership
amount upon and effective after 61 days prior written notice to the Company. The
Subscriber may allocate which of the equity of the Company deemed beneficially
owned by the Subscriber shall be included in the 4.99% amount described above
and which shall be allocated to the excess above 4.99%.
7.3. No Conversion Until Increase in Authorized Capital. The
Subscriber understands and acknowledges that none of the principal or interest
under the Notes may be converted until the Company has increased its authorized
capital.
8. Finder's Fee. The Company on the one hand, and each Subscriber
(for himself only) on the other hand, agree to indemnify the other against and
hold the other harmless from any and all liabilities to any persons claiming
brokerage commissions or finder's fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby and arising out of such
party's actions. The Company represents that there are no other parties entitled
to receive fees, commissions, or similar payments in connection with the
Offering except as described on Schedule 8(a) hereto.
9. Registration Rights.
9.1 Mandatory Registration. If Township acquires any Rights to
Posted Lands (as described on Exhibit E), then the Company shall prepare and
file with the Securities and Exchange Commission (the "Commission"), no later
than 60 days after the date the first Rights are acquired by Township (the
"Filing Date"), a registration statement covering the resale of the following
securities under the Securities Act (the "Registration Statement"): (i) the
number of shares of Common Stock into which the Notes could be converted
(whether as conversion of the principal sum under the Notes or any Bonus Shares
issuable thereunder and as defined thereunder); plus (ii) the number of shares
issuable as interest on the Notes for one year from issuance of the Notes; plus
(iii) the number of shares of Common Stock underlying the Warrants; plus (iv)
any Initial Penalty Shares and Periodic Penalty Shares (both as defined below).
The shares described in (i) thru (iv) 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 principal sum and accrued interest, for each
30 day period thereafter (or pro rata based upon the date that the Registration
Statement is filed) in the same manner as the Periodic Penalty Shares are paid,
as described below. Such penalty will be paid in shares of the Common Stock (the
"Initial Penalty Shares"), with the price per share determined by reference to
the date such Initial Penalty Shares are accrued. 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.
10
(Subscription Agreement)
9.2 Piggyback Rights for Bonus Shares. In the event no Rights are
acquired by Township, and therefore section 9.1 mandatory registration does not
apply, then the Bonus Shares shall have piggyback registration rights pursuant
to which Can West will register the Bonus Shares for resale, as follows: If
CanWest files a resale registration statement on Form SB-2 at any time 60 days
after the issuance of the Bonus Shares, then CanWest shall include the Bonus
Shares in such registration statement, subject to customary underwriter cutbacks
and receipt by CanWest of appropriate information and representations from
holders of the Bonus Shares. This piggyback registration right shall expire once
holders of the Bonus Shares are eligible to sell the Bonus Shares pursuant to
Rule 144 under the Securities Act of 1933.
9.3 Payments by the Company. If the Registration Statement covering
the Registrable Securities required to be filed by the Company pursuant to
Section 9.1 hereof is not effective within 120 days after the Filing Date (the
"Initial Date"), then the Company will make periodic penalty payments to the
Investor as described below. The amount to be paid by the Company to the
Investor shall be determined as of each Computation Date (as defined below), and
such amount shall be equal to2% of the principal sum and the accrued interest on
the Notes (the "Outstanding Balance") for the period from the first Computation
Date to the second Computation Date, and 2% of the Outstanding Balance for each
Computation Date thereafter, pro rata to the date that the Registration
Statement is declared effective by the Commission. Such penalty will be paid in
shares of Common Stock (the "Periodic Penalty Shares"), with the price per share
determined by reference to each date the Periodic Penalty Shares are accrued.
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 Investor or its counsel.
"Computation Date" means the date which is 120 days after the Filing
Date, if the Registration Statement has not theretofore been declared effective
by the Commission, each date which is 30 days after the previous Computation
Date until such Registration Statement is so declared effective.
9.3 Registration Procedures. The Company shall use its best efforts
to:
(a) Prepare and file with the Commission the Registration
Statement, cause the Registration Statement to become effective under the
Securities Act as soon as practicable after the filing thereof, and keep the
Registration Statement effective under the Securities 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.
11
(Subscription Agreement)
(b) 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
Securities Act at all times 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, and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement.
(c) Furnish promptly to the Subscribers such numbers of copies
of a prospectus, including a preliminary prospectus, and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as the Subscribers may reasonably request in order to
facilitate the disposition of Registrable Securities.
(d) Register and qualify the securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Subscribers, and prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements and take such other actions as may be necessary to
maintain such registration and qualification in effect at all times 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,
and to take all other actions necessary or advisable to enable the disposition
of such securities in such jurisdictions; provided, however, that the Company
shall be required to file only in such states where such registration would not
be unreasonably expensive or burdensome; and provided further that the Company
shall not be required in connection therewith, or as a condition thereto, to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions or to provide any undertaking or make any change in
its charter or by-laws which the Board of Directors determines to be contrary to
the best interest of the Company and its stockholders.
(e) Notify the Subscribers, at any time when a prospectus
relating to Registrable Securities covered by the Registration Statement is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Company shall promptly amend or
supplement the Registration Statement to correct any such untrue statement or
omission.
(f) Notify the Subscribers of the issuance by the Commission
or any state securities commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for such purpose. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time.
(g) Permit a single firm of counsel designated by the holders
of a majority in interest of the Registrable Securities to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time prior to their filing, and not file any document in a form to
which such counsel reasonably objects.
(h) If the Common Stock is then listed on a national
securities exchange, cause the Registrable Securities to be listed on such
exchange. If the Common Stock is not then listed on a national securities
exchange, facilitate the reporting of the Registrable Securities on the Nasdaq
Over the Counter Bulletin Board, the Nasdaq SmallCap Market, or the Nasdaq
National Market, as applicable.
(i) Provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement under the Securities Act.
12
(Subscription Agreement)
(j) Take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates bearing, as provided in the
Subscription Agreement, representing the Registrable Securities to be sold
pursuant to the Registration Statement and to enable such certificates to be in
such denominations and registered in such names as the Subscribers or any
underwriters may reasonably request.
(k) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Subscribers of the Registrable Securities
pursuant to the Registration Statement.
9.4. 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 11.4 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
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.
13
(Subscription Agreement)
(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 9.4 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 9.4, 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 11.6(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 9.4 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 9.4 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 9.4; 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 9.4 of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
14
(Subscription Agreement)
10. Participation Rights
Except for Excepted Issuances (as defined below), if the Company shall
offer, issue or agree to issue (at any time while the Notes or Warrants are
outstanding) any common stock or securities convertible into or exercisable for
shares of common stock (or modify any of the foregoing which may be outstanding)
to any person or entity at a price per share or conversion or exercise price per
share which shall be less than the Conversion Price in respect of the Shares, or
if less than the Warrant exercise price in respect of the Warrant Shares,
without the consent of each Subscriber holding Notes or Warrants then the
Conversion Price and Warrant Exercise Price shall automatically be reduced to
such other lower price per share. If as a result of the reduction in Conversion
Price more shares are issued than covered in a registration statement, then the
shares not covered by the registration statement shall have piggy-back
registration rights.
Excepted Issuances is defined as and includes: (A) the conversion of the
Notes or the exercise of the Warrants (B) the exercise of any warrants, options,
convertible notes or other derivative securities outstanding on the Closing
Date, (C) the issuance (at issuance or exercise prices at or above fair market
value) of Common Stock, stock awards or options under, or the exercise of any
options granted pursuant to, any Board-approved employee stock option or bonus
or similar plan for the issuance of options or capital stock of the Corporation,
(D) the issuance of shares of Common Stock in connection with a bona-fide
strategic transaction, partnership or acquisition, (E) the issuance of shares of
Common Stock in connection with a bona-fide public offering or (F) the issuance
of shares of Common Stock pursuant to a stock split, combination or subdivision
of the outstanding shares of Common Stock.
11. 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 Subscribers, 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
Subscribers 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 Subscribers.
15
(Subscription Agreement)
(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) Specific Enforcement, Consent to Jurisdiction. The Company
and Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to one or more preliminary
and final injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity. Subject to Section 10(d) hereof, each of the Company, Subscriber
and any signator hereto in his personal capacity hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section shall affect
or limit any right to serve process in any other manner permitted by law.
16
(Subscription Agreement)
(f) Independent Nature of Subscribers. The Company
acknowledges that the obligations of each Subscriber under the Transaction
Documents 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 the Transaction
Documents. The Company acknowledges that each Subscriber has represented that
the decision of each Subscriber to purchase Securities has been made by such
Subscriber independently of any other Subscriber and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Subscriber or by any agent or employee of any other
Subscriber, and no Subscriber or any of its agents or employees shall have any
liability to any Subscriber (or any other person) relating to or arising from
any such information, materials, statements or opinions. The Company
acknowledges that nothing contained in any Transaction Document, and no action
taken by any Subscriber pursuant hereto or thereto (including, but not limited
to, the (i) inclusion of a Subscriber in the Registration Statement and (ii)
review by, and consent to, such Registration Statement by a Subscriber) shall be
deemed to constitute the Subscribers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the
Subscribers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. The
Company acknowledges that each Subscriber shall be entitled to independently
protect and enforce its rights, including without limitation, the rights arising
out of the Transaction Documents, and it shall not be necessary for any other
Subscriber to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that it has elected to provide all Subscribers
with the same terms and Transaction Documents for the convenience of the Company
and not because Company was required or requested to do so by the Subscribers.
The Company acknowledges that such procedure with respect to the Transaction
Documents in no way creates a presumption that the Subscribers are in any way
acting in concert or as a group with respect to the Transaction Documents or the
transactions contemplated thereby.
[THIS SPACE INTENTIONALLY LEFT BLANK]
17
(Subscription Agreement)
SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT
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
Dated: __________, 2005
--------------------------------------------------------------------------------
SUBSCRIBER NOTE PRINCIPAL
--------------------------------------------------------------------------------
$____________
_____________________________________
(Signature)
By:
--------------------------------------------------------------------------------
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Note
Exhibit B Form of Security Agreement
Exhibit C Form of Warrant
Exhibit D Escrow Agreement
Exhibit E Use of Proceeds
Schedule 5(d) Additional Issuances / Capitalization
Schedule 8(a) Finder's Fee and Recipients
SCHEDULE 8(a)
FINDERS
The Company may pay finder's fees on the introduction by a finder of Subscribers
in this Offering to the Company. The maximum finder's fee to be paid on
subscriptions shall be 7.5% on funds actually used to purchase Rights (and not
refunded as a Refund Amount). The maximum finder's fee to be paid on
subscriptions that are returned to Subscribers in the form of a Refund Amount
shall be 3.75%. All finder's fees shall be paid in shares of CanWest common
stock at a price per share of $0.45, and will be issued after the Refund Amount
is received by the Escrow Agent (once the Refund Amount and number of Bonus
Shares are determined and distributed). All shares issued as finder's fees shall
have the same registration rights as Bonus Shares under Section 9.
In addition, each finder has been granted a royalty of $0.01 Canadian per Barrel
(as defined below) on each US$1,000,000 introduced to the Company by that finder
and used by the Company (through Township) to purchase Rights, and not returned
to Subscribers in the form of a Refund Amount. A Barrel is defined as each
barrel of crude bitumen produced, saved and sold from the oil sands leases
acquired by Township under the Rights.
