AMENDMENT TO ACQUISITION AGREEMENT
AMENDMENT
TO ACQUISITION AGREEMENT
This agreement (the
“Amendment Agreement”)
dated January 19, 2009 amends the Acquisition Agreement dated August 12,
2008 (the "Acquisition Agreement"), made by and
between Minerco Resources, Inc. ("Minerco") and Wisdom
Resources, Inc. (“Wisdom”) as included by
Minerco in its registration statement on Form S-1 filed with the United States
Securities and Exchange Commission on December 10, 2008.
WHEREAS:
A.
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Pursuant to
the Acquisition Agreement, Wisdom assigned 100% of all right and title in
and to a certain unit to Minerco in consideration for a one-time lump sum
cash payment $5,000 and 12,500,000 restricted common shares in the capital
stock of Minerco; and
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B.
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For their
mutual benefit, Minerco and Wisdom wish to modify the consideration paid
between them in respect of the aforementioned unit and shares pursuant to
the Acquisition Agreement.
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THIS AGREEMENT WITNESSES THAT
in consideration of the foregoing and the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendment
1.1
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Section 1.1
of the Acquisition Agreement shall be deleted and replaced with
the following:
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1.1
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On the basis
of the representations and warranties set forth in section 2 of this
Agreement, effective as of the Closing Date (as hereinafter
defined):
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(a)
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the Vendor
assigns to the Purchaser one hundred percent (100%) of all right and title
in and to the Unit and the Purchaser accepts such
assignment;
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(b)
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the Vendor
agrees to pay to the Purchaser a one-time lump sum cash payment of five
thousand dollars ($5,000), in accordance with the Subscription Agreement
(as hereinafter defined); and
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(c)
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the Purchaser
agrees to issue the Vendor 12,500,000 restricted common shares in the
capital stock of the Purchaser (the “Shares”), subject to the
Vendor executing a subscription agreement (the “Subscription Agreement”)
substantially in the form attached hereto as Schedule B, which
Subscription Agreement is hereby pre-approved by the Vendor.
“
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1.2
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In Schedule B
to the Acquisition Agreement (Private Placement
Subscription Agreement for U.S. Residents) the table
labelled “Payment Information” shall be deleted and replaced with the
following:
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Payment
Information
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Payment
Method:
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Wire
Transfer ¨ Check
/ Bank Draft / Money Order þ Services ¨
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||
Number of
Shares Purchased:
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12,500,000
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100% of all right and title in and to the Unit plus $5,000 in accordance with the Acquisition Agreement dated August 12, 2008 | ||
(the “Shares”)
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Subscription
Price
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|||
Signature
of Purchaser:
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2. Affirmation
2.1
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The parties
affirm the Acquisition Agreement in all other
respects.
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2.2
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For
reference, a copy of the Acquisition Agreement, as amended, is attached
hereto as Exhibit A.
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3. General
Provisions
3.1
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Counterparts. This
Amendment Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same agreement. In the event that the document is signed by
one party and faxed to another the parties agree that a faxed signature
shall be binding upon the parties to this Amendment Agreement as though
the signature was an original.
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3.2
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Succession. The
provisions of this Amendment Agreement shall be binding upon the parties
and their respective successors and permitted
assigns.
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3.3
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Currency. All
references to currency in this Amendment Agreement are to U.S. dollars
unless otherwise indicated.
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3.4
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Counsel. The
parties expressly acknowledge that each has been advised to seek separate
counsel for advice in this matter and has been given a reasonable
opportunity to do so.
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IN WITNESS WHEREOF the parties
have executed this Amendment Agreement as of the day and year first written
above.
Per:
/s/
Xxxxxxx Too
Xxxxxxx Too,
President,
Authorized
Signatory
Wisdom
Resources, Inc.
Per:
/s/
Xxxxxxx Too
Xxxxxxx Too,
President,
Authorized
Signatory
EXHIBIT
A
THIS AGREEMENT is
dated for reference the 12th day of August, 2008, as amended on the 19th day of
January, 2009.
AMONG:
a
company incorporated in the state of
Nevada (the
“Purchaser”)
AND:
Wisdom Resources,
Inc.,
a
company incorporated in the state of
Nevada (the “Vendor”)
WHEREAS, the Vendor purchased a unit
(the “Unit”) from
Plateau Mineral Development LLC (the “Operator”) pursuant to the
Addendum to Unit Acquisition Agreement dated August 1, 2008 (the “Acquisition Agreement”), attached hereto
and incorporated into this Agreement as Schedule “A”; and
WHEREAS the Vendor
has agreed to sell the Unit and the Purchaser has agreed to buy the Unit on the
terms and conditions hereinafter set forth.
NOW THEREFORE in
consideration of the premises, covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Vendor, the Purchaser and the Operator, the parties
hereby agree as follows:
1.
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Purchase
and Sale
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1.1
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On the basis
of the representations and warranties set forth in section 2 of this
Agreement, effective as of the Closing Date (as hereinafter
defined):
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(a)
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the Vendor
assigns to the Purchaser one hundred percent (100%) of all right and title
in and to the Unit and the Purchaser accepts such
assignment;
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(b)
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the Vendor
agrees to pay to the Purchaser a one-time lump sum cash payment of five
thousand dollars ($5,000), in accordance with the Subscription Agreement
(as hereinafter defined); and
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(c)
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the Purchaser
agrees to issue the Vendor 12,500,000 restricted common shares in the
capital stock of the Purchaser (the “Shares”), subject to the
Vendor executing a subscription agreement (the “Subscription Agreement”)
substantially in the form attached hereto as Schedule B, which
Subscription Agreement is hereby pre-approved by the
Vendor.
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1.2
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The “Closing Date” shall
occur on the tenth (10th)
business day following the execution of this Agreement or on such other
date as may be mutually agreed by the Vendor and the Purchaser in
writing.
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2.
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Representations
and Warranties
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2.1
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The Purchaser
represents and warrants to the Vendor
that:
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(a)
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the Purchaser
is a company duly incorporated, organized and validly subsisting under the
laws of the state of Nevada;
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(b)
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the Purchaser
has full power, capacity and authority to carry on its business and to
enter into and perform its obligations under this Agreement and any
agreement or instrument referred to or contemplated
hereby;
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(c)
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all necessary
corporate and shareholder approvals of the Purchaser have been obtained
and are in effect with respect to the transactions contemplated by this
Agreement, and no further action on the part of the directors or
shareholders of the Purchaser is necessary or desirable to make this
Agreement valid and binding; and
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(d)
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neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby conflict with, result in the breach of or
accelerate the performance required by the constating documents of the
Purchaser or any agreement to which it is a
party.
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2.2
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The Vendor
represents and warrants to the Purchaser
that:
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(a)
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the Vendor is
the exclusive beneficial owner of the Unit and it has the exclusive right
to enter into this Agreement;
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(b)
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the Unit is
free and clear of all liens, claims or other
encumbrances;
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(c)
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the Vendor is
a company duly incorporated, organized and validly subsisting under the
laws of the state of Nevada;
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(d)
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the Vendor
has the full power, capacity and authority to carry on its business and to
enter into and perform its obligations under this Agreement and any
agreement or instrument referred to or contemplated
hereby;
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(e)
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all necessary
corporate and shareholder approvals of the Vendor have been obtained and
are in effect with respect to the transactions contemplated by this
Agreement, and no further action on the part of the directors or
shareholders of the Vendor is necessary or desirable to make this
Agreement valid and binding;
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(f)
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neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby conflict with, result in the breach of or
accelerate the performance required by the constating documents of the
Vendor or any agreement to which it is a
party;
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(g)
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the
Acquisition Agreement is and shall continue to be, subsequent to the
Closing Date, (i) in full force and effect, (ii) binding upon the
Operator, and (iii) enforceable against the Operator;
and
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(h)
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the Operator
has consented to the sale of the Unit by the Vendor to the
Purchaser.
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2.3
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The
representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and shall
survive the acquisition of the Unit by the
Purchaser.
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2.4
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Each of the
parties shall indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach
of any representation, warranty, covenant, agreement or condition made by
it and contained in this Agreement.
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3. General
Provisions
3.1
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Relationship Between
the Parties. Nothing contained in this Agreement shall
be construed as creating any relationship (whether by way of employment,
agency, joint venture, association, or partnership) between the
parties. It is expressly understood that the relationship
between the parties shall be that of independent
contractors.
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3.2
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Time. Time
is of the essence of each provision of this
Agreement.
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3.3
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Presumption. This
Agreement or any section thereof shall not be construed against any party
due to the fact that said Agreement or any section thereof was drafted by
said party.
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3.4
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Further
Action. The parties shall execute and deliver all
documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
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3.5
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Good Faith,
Cooperation and Due Diligence. The Parties covenant,
warrant and represent to each other good faith, complete cooperation, due
diligence and honesty in fact in the performance of all obligations of the
parties pursuant to this Agreement. All promises and covenants
are mutual and dependent.
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3.6
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Savings Clause. If
any provision of this Agreement, or the application of such provision to
any person or circumstance, shall be held invalid, the remainder of this
Agreement, or the application of such provision to persons or
circumstances other than those as to which it is held invalid, shall not
be affected thereby and shall continue in full force and
effect.
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3.7
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Assignment. The
Purchaser may assign any of its rights under this Agreement in its sole
discretion, whether in whole or in part. The Vendor may assign
any of its rights or obligations hereunder without the prior written
consent of the Purchaser.
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3.8
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Notices and
Correspondence. All notices required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given for all purposes thereof when mailed by certified
mail to the party to be notified or faxed with evidence of receipt to the
applicable party or parties at the applicable addresse(s) first written
above, or to such other person(s) or addresses as either party may
designate upon at least ten (10) days written notice to the other
party.
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3.9
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Entire
Agreement. This Agreement, including all attached
schedules which are hereby incorporated by reference, sets forth the
entire understanding and agreement among the parties relating to the
subject matter contained herein and merges all prior discussions and
agreements between them, and none of the parties shall be bound by any
definition, condition, warranty or representation other than expressly
stated in this Agreement. Any amendment to this Agreement shall
not be effective unless it is in writing and signed by the duly authorized
signing officers or attorney in fact of each
party.
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3.10
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Waiver. A delay or failure
by any party to exercise in whole or in part a right, power or remedy
under this Agreement shall not constitute a waiver of that or any other
right, power or remedy.
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3.11
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Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Agreement. In the event that the document is signed by one
party and faxed to another the parties agree that a faxed signature shall
be binding upon the parties to this Agreement as though the signature was
an original.
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3.12
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Succession. The
provisions of this Agreement shall be binding upon the parties and their
respective successors and permitted
assigns.
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3.13
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Currency. All
references to currency in this Agreement are to U.S. dollars unless
otherwise indicated.
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3.14
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Counsel. The
Parties expressly acknowledge that each has been advised to seek separate
counsel for advice in this matter and has been given a reasonable
opportunity to do so.
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IN WITNESS WHEREOF the parties
hereto have executed this Agreement as of the day and year first written
above.
Per:
/s/
Xxxxxx XxXxxxx
Xxxxxx XxXxxxx,
President,
Authorized
Signatory
Wisdom
Resources, Inc.
Per:
/s/
Xxxxxxx Too
Xxxxxxx
Too, President,
Authorized
Signatory
SCHEDULE
A
ADDENDUM
TO UNIT ACQUISITION AGREEMENT
THIS ADDENDUM
AGREEMENT (the “Agreement”) is dated for
reference the 1st day of August, 2008.
BETWEEN:
Wisdom Resources,
Inc.,
a
company incorporated in the state of
Nevada (“Wisdom”)
AND
Plateau Mineral Development,
LLC,
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxxxx Xxxxx, XX
00000 (“Plateau”)
WHEREAS Wisdom and
Plateau entered into a Unit Subscription Agreement (the “Unit Subscription Agreement”)
regarding that certain natural gas pipeline owned by Plateau known as the
PMD-Duke (the “Pipeline”) located in Xxxxxx
County, Tennessee;
WHEREAS the Unit
Subscription Agreement consisted of: (i) a promissory note (the “Promissory Note”) dated May
15, 2008 (incorporated into this Agreement and attached hereto as Schedule 1);
and (ii) the “Financing the Completion of the PMD-Duke Pipeline” document dated
May 7, 2007 (collectively, the “Unit”);
WHEREAS, by this
Agreement, the parties wish to clarify and affirm certain of their respective
representations, warranties, rights and obligations as contained in the Unit
Subscription Agreement;
NOW THEREFORE in
consideration of the premises, covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Wisdom and by Plateau, the parties agree as
follows
1.
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Confirmation
of Purchase and Sale of Unit
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1.1
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Effective as
of May 15, 2008 (the “Closing Date”), Plateau
hereby confirms that it has assigned to Wisdom one hundred
percent (100%) of all right and title in and to the Unit and Wisdom
confirms that it has accepted such
assignment.
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1.2
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The parties
hereby represent, warrant and agree that the Unit consists of the
following:
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(a)
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the
Promissory Note between the Wisdom and Plateau pursuant to which Plateau
undertakes to pay to Wisdom the principal amount of twenty thousand
dollars ($20,000) plus interest calculated annually at the rate of ten
percent (10%) (the “Interest”) on any unpaid
and outstanding principal to be paid as
follows:
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a.
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Plateau shall
pay to Wisdom Interest on any unpaid and outstanding principal each March
31, June 30, September 30 and December 30 commencing within 60 days of
completion of the Pipeline compressor station;
and
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b.
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Plateau shall
pay to Wisdom amounts in respect of outstanding principal as
follows:
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i.
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$4,000 on
December 31, 2007;
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ii.
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$6,000 on
December 31, 2008; and
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iii.
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$10,000 on
December 31, 2009
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(b)
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a continuous
right of Wisdom to receive from Plateau and an obligation of Plateau to
pay to Wisdom a royalty (the “Royalty”), payable
semi-annually by December 31 and June 30, equaling two cents ($0.02) per
each one thousand (1000) cubic feet/MCF of gas flowing through the
Pipeline, for as long as Plateau or its successors operates the
Pipeline. With regard to the Royalty, Plateau agrees that
Wisdom’s twenty thousand dollar ($20,000) investment constitutes two (2)
units of a maximum possible twenty-two (22) investment units in the
Pipeline. Each investment unit shall be valued at ten thousand
dollars ($10,000) payable in cash only, with each unit holder being
entitled to receive the Royalty on a pro-rated basis according to the
number of units held by them. Wisdom’s share of the Royalty may
not be diluted by any additional investments in the
Pipeline. Also, no Unit holder may participate in the royalty
or investment recoupment on terms more favorable than those granted to
Wisdom.
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1.3
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The parties
acknowledge and agree that the Unit shall be fully assignable by Wisdom,
in whole or in part, by providing written notice of any such assignment to
Plateau.
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2.
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Representations
and Warranties
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2.1
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Plateau
represents, warrants and covenant to Wisdom
that:
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(a)
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the
Promissory Note is and shall continue to be, as of the date of this
Agreement, in full force and effect, binding on and enforceable against
Plateau;
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(b)
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pursuant to
the agreement between Plateau and Wisdom dated on or about May 7, 2007,
Wisdom is entitled to receive or assign, and Plateau has agreed to pay to
Wisdom or Wisdom’s assignee, the
Royalty;
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(c)
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as of the
date of this Agreement, twenty thousand dollars ($20,000) of principal and
at least nine hundred and twenty dollars and fifty-five cents ($920.55) of
interest remains payable in respect of the Promissory
Note;
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(d)
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Plateau shall
not assign its obligations in relation to the Royalty or the Promissory
Note to any party without the prior written consent of
Wisdom;
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(e)
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Plateau owns
one hundred percent (100%) of all right and title in and to the
Pipeline;
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(f)
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Plateau has
established an accountable operating division known as PMD Pipeline, L.P.,
with its own bank account (the “Pipeline Account”), to
monitor the business of the
Pipeline;
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(g)
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all funds
received or paid by or on behalf of Plateau in relation to the operation
of the Pipeline shall be paid to or from the Pipeline
Account. No funds received by or on behalf of Plateau in
relation to the operation of the Pipeline shall be commingled with other
revenue sources;
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(h)
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Plateau
agrees to maintain accurate and normal books of account and records with
reference to the Pipeline to meet tax reporting
requirements;
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(i)
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Plateau is a
limited liability company duly incorporated, organized and validly
subsisting under the laws of the State of Tennessee, with a registered
records office located at 000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxx,
00000;
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(j)
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Plateau has
the full power, capacity and authority to carry on its business and to
enter into and perform its obligations under the Unit Subscription
Agreement, under this Agreement and under any instrument referred to or
contemplated hereby;
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(k)
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all necessary
partnership and member approvals of Plateau have been obtained and are in
effect with respect to the transactions contemplated by the Unit
Subscription Agreement, and no further action is necessary to maintain the
Unit Subscription Agreement as valid and
binding;
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(l)
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neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby conflict with, result in the breach of or
accelerate the performance required by the constating documents of Plateau
or any agreement to which it is a
party;
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(m)
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Plateau
hereby acknowledges and agrees that the rights of Wisdom in the Promissory
Note and the Royalty shall be secured against a collateral assignment of
the Pipeline.
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2.2
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The
representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and the Unit
Subscription Agreement and shall survive the acquisition or assignment of
the Unit by Wisdom.
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2.3
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Each of the
parties shall indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach
of any representation, warranty, covenant, agreement or condition made by
it and contained in this Agreement.
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3. General
Provisions
3.1
|
Relationship Between
the Parties. Nothing contained in this Agreement shall
be construed as creating any relationship (whether by way of employment,
agency, joint venture, association, or partnership) between the
parties. It is expressly understood that the relationship
between the parties shall be that of independent
contractors.
|
3.2
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Time. Time
is of the essence of each provision of this
Agreement.
|
3.3
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Presumption. This
Agreement or any section thereof shall not be construed against any party
due to the fact that said Agreement or any section thereof was drafted by
said party.
|
3.4
|
Further
Action. The parties shall execute and deliver all
documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
|
3.5
|
Good Faith,
Cooperation and Due Diligence. The Parties covenant,
warrant and represent to each other good faith, complete cooperation, due
diligence and honesty in fact in the performance of all obligations of the
parties pursuant to this Agreement. All promises and covenants
are mutual and dependent.
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3.6
|
Savings Clause. If
any provision of this Agreement or of the Unit Subscription Agreement, or
the application of such provision to any person or circumstance, shall be
held invalid, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is
held invalid, shall not be affected thereby and shall continue in full
force and effect.
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3.7
|
Notices and
Correspondence. All notices required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given for all purposes thereof when mailed by certified
mail to the party to be notified or faxed with evidence of receipt to the
applicable party or parties at the applicable addresse(s) first written
above, or to such other person(s) or addresses as either party may
designate upon at least ten (10) days written notice to the other
party.
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3.9
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Entire
Agreement. This Agreement, together with the Unit
Subscription Agreement, sets forth the entire understanding and agreement
among the parties relating to the subject matter contained herein and
merges all prior discussions and agreements between them, and none of the
parties shall be bound by any definition, condition, warranty or
representation other than expressly stated in this Agreement or in the
Unit Subscription Agreement. Any amendment to this Agreement
shall not be effective unless it is in writing and signed by the duly
authorized signing officers or attorney in fact of each
party. In the event of any conflict between this Agreement and
the Unit Subscription Agreement, this Agreement shall
govern.
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3.10
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Waiver. A delay or failure
by any party to exercise in whole or in part a right, power or remedy
under this Agreement shall not constitute a waiver of that or any other
right, power or remedy.
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3.11
|
Signatures. This
Agreement may not be executed in counterparts. Each party shall provide
the other with a signed original copy of this Agreement by mail or
delivery service within a reasonable time following its
execution.
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3.12
|
Succession. The
provisions of this Agreement and the Unit Subscription Agreement shall be
binding upon the parties and their respective successors and permitted
assigns.
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3.13
|
Currency. All
references to currency in this Agreement are to U.S. dollars unless
otherwise indicated.
|
IN WITNESS WHEREOF the parties
hereto have executed this Agreement as of the day and year first written
above.
Wisdom
Resources, Inc.
Per:
/s/
Xxxxxxx Too
Authorized
Signatory
Plateau
Mineral Development, LLC
Per:
/s/
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx,
Manager
Authorized
Signatory
SCHEDULE
1
SCHEDULE
B
Private
Placement Subscription Agreement for U.S. Residents
Purchaser
Information
|
Name:
|
Wisdom
Resources, Inc.
|
(the “Purchaser”)
|
|
Address:
|
000 X.
Xxxxxxxxx Xx., Xxx 0000
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SSN /
Passport /
Tax ID
#:
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||
City:
|
Xxxxxxxxx
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State:
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Nevada
|
|
Country:
|
U.S.A.
|
Zip
Code:
|
89014
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|
Telephone:
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Date:
|
August 12,
2008
|
Payment
Information
|
Payment
Method:
|
Wire
Transfer ¨ Check
/ Bank Draft / Money Order ¨ Services þ
|
||
Number of
Shares Purchased:
|
12,500,000
|
100% of all right and title in and to the Unit plus $5,000 in accordance with the Acquisition Agreement dated August 12, 2008 | ||
(the “Shares”)
|
Subscription
Price
|
|||
Signature
of Purchaser:
|
* Please make
cheques payable to Minerco Resources, Inc.
These
Securities may be repurchased in accordance with Section 5 of this
Agreement.
These securities
have not been registered under the Securities Act of 1933 (the "U.S. Securities Act") and may not
be offered or sold in the United States or to U.S. persons (other than
distributors) unless the securities are registered under the U.S. Securities
Act, or an exemption from the registration requirements of the U.S. Securities
Act is available. Hedging transactions involving these securities may
not be conducted unless in compliance with the U.S. Securities Act.
The
foregoing Subscription is accepted for and on behalf of Minerco Resources,
Inc.
By:
|
/s/
Xxxxxx XxXxxxx
|
Date:
|
August 12,
2008
|
Xxxxxx
XxXxxxx, President
|
1. Purchase
and Sale of Shares
1.1
|
The Purchaser
subscribes for and agrees to purchase common shares (the "Shares") of Minerco
Resources, Inc. (the "Issuer"), a Nevada
corporation, in the amount set out above, to be recorded in the name of
the Purchaser at the address set out
above.
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2.
|
Acknowledgements,
Representations and Warranties of the
Purchaser
|
2.1
|
The Purchaser
acknowledges, represents and warrants as of the date of this Agreement
that the Purchaser is (check at least
one):
|
¨
|
a director,
officer, controlling shareholder or founder of the
Issuer;
|
¨
|
a close
personal friend or close business associate of a director, executive
officer, controlling shareholder or founder of the Issuer;
Length of
Relationship: __________________________
Details of
Relationship (attach additional sheets if necessary):
________________________________________________________
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¨
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a spouse,
parent, grandparent, brother, sister or child of a director, executive
officer, founder or controlling shareholder of the
Issuer;
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¨
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a parent,
grandparent, brother, sister, or child of a spouse of a director,
executive officer, founder or controlling shareholder of the
Issuer;
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¨
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a company of
which a majority of the voting securities are beneficially owned by, or a
majority of the directors are, persons described above in this
section;
Length of
Relationship: __________________________
Details of
Relationship (attach additional sheets if necessary):
________________________________________________________
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¨
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a person or
entity that qualifies as an "accredited investor" as that term is defined
in Canadian National Instrument 45-106 because he or she
possesses:
o either alone
or with a spouse, net assets of at least $5,000,000
o an annual net
income before taxes of more than $200,000 (or $300,000 together with a
spouse) in each of the last 2 calendar years, and who reasonably expects
to exceed that net income level this year
o either alone
or with a spouse, net financial assets exceeding
$1,000,000;
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¨
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a person or
entity that otherwise qualifies as an "accredited investor" as that term
is defined in Canadian National Instrument 45-106; or
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¨
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is investing
a minimum amount of $150,000, paid in
cash.
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2.2
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If the
Purchaser is a corporation, the Purchaser acknowledges, represents and
warrants as of the date of this Agreement that the following information
is true (attach additional sheets if
necessary):
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Person or persons
with sole or joint voting and investment control of the Purchaser:
_____________________________________________________________________
List of all
Directors of the Purchaser:
_____________________________________________________________________
List of all
Officers of the Purchaser and their titles:
_____________________________________________________________________
List of all
majority shareholders of the Purchaser (20% or greater):
_____________________________________________________________________
2.3
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The Purchaser
understands and acknowledges that (a) the Shares are being offered and
sold under one or more of the exemptions from registration provided for in
Section 4(2) of the U.S. Securities Act and any applicable state
securities laws; (b) the Purchaser has reviewed the confidential business
plan of the Issuer or such other material documents of the
Issuer as the Purchaser has deemed necessary or appropriate for the
purposes of purchasing the Shares, including this subscription agreement
(collectively, the "Offering Documents");
and (c) this transaction has not been reviewed or approved by the United
States Securities and Exchange Commission or by any regulatory authority
charged with the administration of the securities laws of any state or
foreign country.
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2.4
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The Purchaser
represents the following:
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(a)
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Sophistication of
Purchaser. The Purchaser either (i) has a preexisting
personal or business relationship with the Issuer or its controlling
persons, such as would enable a reasonably prudent purchaser to be aware
of the character and general business and financial circumstances of the
Issuer or its controlling persons, or (ii) by reason of the Purchaser's
business or financial experience, individually or in conjunction with the
Purchaser's unaffiliated professional advisors, who are not compensated by
the Issuer or any affiliate or selling agent of the Issuer, directly or
indirectly, is capable of evaluating the merits and risks of an investment
in the Shares, making an informed investment decision and protecting the
Purchaser's own interests in connection with the transactions contemplated
by this Agreement.
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(b)
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Suitability. The
Purchaser understands and has fully considered for the purposes of this
investment the risks of an investment in the Shares and understands that:
(i) this investment is suitable only for a Purchaser who is able to bear
the economic consequences of losing his or her entire investment; (ii) the
Issuer is a start-up enterprise with no significant operating history;
(iii) the purchase of the Shares is a speculative investment which
involves a high degree of risk of loss of the Purchaser's entire
investment, and (iv) there are substantial restrictions on the
transferability of, and there may not be a public market for, the Shares,
and accordingly, it may not be possible for the Purchaser to liquidate the
his or her investment in the
Shares.
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(c)
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Lack of
Liquidity. The Purchaser is able to: (i) bear the
economic risk of this investment, (ii) hold the Shares for an indefinite
period of time, and (iii) afford a complete loss of his or her investment;
and represents that the he or she has sufficient liquid assets so that the
lack of liquidity associated with this investment will not cause any undue
financial difficulties or affect his or her ability to provide for current
needs and possible financial
contingencies.
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(d)
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Investment
Information. The Purchaser
acknowledges that the Offering Documents contain the views of the
management of the Issuer, and that any analysis of the market or of the
Issuer’s strategy contained therein represents a subjective assessment
about which reasonable persons could
disagree.
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(e)
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Access to
Information. The Purchaser, in making his or her decision to
purchase the Shares, has relied solely upon independent investigations
made by the Purchaser and the representations and warranties of the Issuer
contained in this Agreement and the Purchaser has been given (i) access to
all material books and records of the Issuer; (ii) access to all material
contracts and documents relating to this offering; and (iii) an
opportunity to ask questions of, and to receive answers from, the
appropriate executive officers and other persons acting on behalf of the
Issuer concerning the Issuer and the terms and conditions of this
offering, and to obtain any additional information, to the extent such
persons possess such information or can acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the information set
forth in the Offering Documents. The Purchaser acknowledges
that no valid request to the Issuer by the Purchaser for information of
any kind about the Issuer has been refused or denied by the Issuer or
remains unfulfilled as of the date of this
Agreement.
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(f)
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Review of Offering
Documents. The Purchaser has carefully reviewed this
Agreement. In evaluating the suitability of an investment in the Issuer,
the Purchaser has not relied upon any representations or other information
(whether oral or written) other than as set forth in this Agreement or as
contained in any documents or answers to questions furnished by the
Company.
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(g)
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Accuracy of
Information. All of the information set forth on the cover page of
this Agreement indicated as applicable to the Purchaser is true and
correct in all respects.
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(h)
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Investment
Intent. The Shares are
being acquired by the Purchaser solely for the Purchaser's own personal
account, for investment purposes only, and not with a view to, or in
connection with, any resale or distribution thereof. The
Purchaser has no contract, undertaking, understanding, agreement or
arrangement, formal or informal, with any person to sell, transfer or
pledge to any person the Shares, any part thereof, any interest therein or
any rights thereto. The Purchaser has no present plans to enter
into any such contract, undertaking, agreement or
arrangement.
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(i)
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Control of
Funds. The Purchaser
represents that the funds provided for this investment are the property of
the Purchaser or are otherwise funds as to which the Purchaser has the
sole right of management.
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(j)
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No
Brokers. The Purchaser has not engaged any broker,
dealer, finder, commission agent or other similar person in connection
with the offer or sale of the Shares and is not under any obligation to
pay any broker's fee or commission in connection with his or her
investment.
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2.5
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The Purchaser
agrees that the acknowledgements, representations, warranties of the
Purchaser contained herein will survive the Closing (as hereinafter
defined).
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2.6
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The Purchaser
agrees not to engage in hedging transactions with regard to the Shares
unless in compliance with the U.S. Securities
Act.
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3. Acknowledgements,
Representations and Warranties of the Issuer
3.1
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The Issuer
acknowledges, represents and warrants as of the date of this Agreement
that the Shares, when issued, will be fully paid and non-assessable shares
of the Issuer and will be issued free and clear of all liens, charges and
encumbrances of any kind whatsoever, subject only to the resale
restrictions under applicable securities
laws.
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4. Registration
and Restriction of the Shares
4.1
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No
Registration. The Purchaser acknowledges and understands
that the Shares have not been registered under the U.S. Securities Act or
applicable state securities laws, are not qualified for resale in the
U.S., and that the Shares must be held indefinitely unless subsequently
registered under the U.S. Securities Act or applicable state securities
laws (which the Issuer is not obligated, and has no current intention, to
do), or an exemption from such registration is
available.
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4.2
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Restrictions on
Transfer. The Issuer shall refuse to register any
transfer of the Shares not made in accordance with the provisions of
Regulation S of the U.S. Securities Act, pursuant to registration under
the U.S. Securities Act or pursuant to an available exemption from
registration.
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The Purchaser
acknowledges that the Shares will be subject to a number of resale
restrictions in Canada including a restriction on trading, and until the
restriction on trading expires the Purchaser will not be able to trade the
Shares unless the Purchaser complies with an exemption from the prospectus
and registration requirements under securities
legislation.
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4.3
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Legend. The
Purchaser acknowledges and understands that the certificates representing
the Shares will be stamped with the following legends (or substantially
equivalent language) restricting transfer in the following
manner:
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“The shares
represented by this certificate have not been registered under the Securities
Act of 1933, as amended. The shares have been acquired for investment
and may not be offered, sold or otherwise transferred in the absence of an
effective registration statement with the respect to the shares or an exemption
from the registration requirements of said act that is then applicable to the
shares, as to which a prior opinion of counsel may be required by the issuer or
the transfer agent.”
The Purchaser
hereby consents to the Issuer making a notation on its records or giving
instructions to any transfer agent of the Shares in order to implement the
restrictions on transfer described in this Agreement.
4.4
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Additional
Restrictions. The Purchaser agrees that he or she shall
not sell or otherwise dispose of the Shares for a period of four months
from the date of this Agreement.
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5.
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Closing
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5.1
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The Issuer
will confirm whether or not the Agreement is acceptable, whereupon the
Issuer will deliver to the Purchaser a signed copy of this Agreement (the
“Closing”) and shall deliver within a reasonable time a certificate
representing the Shares, registered in the name of the
Purchaser.
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6.
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Withdrawal
of Subscription
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6.1
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The Purchaser
has a two day cancellation right and may withdraw his or her subscription
by sending notice to the Issuer by midnight on the second business day
after the Purchaser signs this
Agreement.
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7.
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Miscellaneous
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7.1
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The Purchaser
acknowledges that at present the Issuer is not a reporting issuer in any
jurisdiction in Canada.
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7.2
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Except as
expressly provided in this Agreement, this Agreement contains the entire
agreement between the parties with respect to the Shares and there are no
other terms, conditions, representations or warranties whether expressed,
implied, or written by statute, by common law, by the Issuer, by the
Purchaser or by anyone else.
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7.3
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This
Agreement may not be amended without the express written consent of each
of the parties hereto.
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7.4
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This
Agreement shall inure to the benefit of the successors and assigns of the
Issuer and, subject to the restrictions on transfer herein set forth, be
binding upon the Purchaser, the Purchaser’s successors, and the
Purchaser’s assigns.
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7.5
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All
references to currency in this Agreement are to U.S.
dollars.
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7.6
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This
Agreement may be executed by facsimile and in counterparts, each of which
so signed shall be deemed to be an original, and all such counterparts
together shall constitute one and the same
instrument.
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