TUFFNELL LTD. REGULATION S SUBSCRIPTION AGREEMENT AND INVESTMENT REPRESENTATION
REGULATION S SUBSCRIPTION AGREEMENT AND
INVESTMENT REPRESENTATION
SECTION 1
1.1
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Subscription.
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(a) The undersigned,
intending to be legally bound, hereby irrevocably subscribes for and agrees to
purchase 500,000 Units (hereafter defined) to be issued by Tuffnell Ltd., a
Nevada corporation (the "Company"), in an offshore transaction negotiated
outside the U.S. and to be consummated and closed outside the U.S. The Company
is directly offering for sale 500,000 Units for an aggregate gross proceeds of
$500,000.00. A “Unit” shall consist of the following:
(1)
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one share of Common Stock (a
“Purchased Share”);
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(b)
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For purposes of this Subscription
Agreement:
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(1)
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“Common Stock” means the common
stock of the Company.
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(2)
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“Securities” means the Purchased
Shares, the Warrant[s] and the Warrant
Shares.
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(3)
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“Warrant Shares” means the shares
of Common Stock issuable upon due exercise of the
Warrant[s].
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1.2
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Purchase of
Units.
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The undersigned understands and
acknowledges that the purchase price to be remitted to the Company in exchange
for the Units shall be five hundred thousand dollars ($500,000.00) or $1.00 per
Unit. Simultaneous with the execution and delivery of this Agreement, including
the Investor Questionnaire annexed hereto, the undersigned shall deliver to the
Company the aforementioned purchase price by wire transfer of immediately
available funds. Wire instructions are attached hereto as Appendix
A.
1.3
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Acceptance or
Rejection.
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(a) The undersigned
understands and agrees that the Company reserves the right to reject this
subscription for the Units if, in its reasonable judgment, it deems such action
in the best interest of the Company, at any time prior to the Closing,
notwithstanding prior receipt by the undersigned of notice of acceptance of the
undersigned's subscription.
(b) The undersigned
understands and agrees that its subscription for the Units is
irrevocable.
(c) In the event the sale
of the Units subscribed for by the undersigned is not consummated by the Company
for any reason (in which event this Subscription Agreement shall be deemed to be
rejected), this Subscription Agreement and any other agreement entered into
between the undersigned and the Company relating to this subscription shall
thereafter have no force or effect and the Company shall promptly return or
cause to be returned to the undersigned the purchase price remitted to the
Company by the undersigned, without interest thereon or deduction therefrom, in
exchange for the Units.
SECTION 2
2.1 Closing. The closing
(the "Closing") of the purchase and sale of the Units, shall occur
simultaneously with the acceptance by the Company of the undersigned's
subscription, as evidenced by the Company's execution of this Subscription
Agreement.
SECTION 3
3.1 Investor
Representations and Warranties.
The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company and its affiliates as
follows:
(a) The undersigned is
acquiring the Securities for his own account as principal, not as a nominee or
agent, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof in whole or in part and no other
person has a direct or indirect beneficial interest in such Securities or any
portion thereof. Further, the undersigned does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Securities for which the undersigned is subscribing or any part of the
Securities.
(b) The undersigned has
full power and authority to enter into this Agreement, the execution and
delivery of this Agreement has been duly authorized, if applicable, and this
Agreement constitutes a valid and legally binding obligation of the
undersigned.
(c) The undersigned is
not subscribing for the Securities as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or meeting, or any solicitation of a subscription by
person previously not known to the undersigned in connection with investment
securities generally.
(d) The undersigned
understands that the Company is under no obligation to register the Securities
under the Securities Act of 1933, as amended (the “Securities Act”), or to
assist the undersigned in complying with the Securities Act or the securities
laws of any state of the United States or of any foreign
jurisdiction.
(e) The undersigned is
(i) experienced in making investments of the kind described in this Agreement
and the related documents, (ii) able, by reason of the business and financial
experience of its officers (if an entity) and professional advisors (who are not
affiliated with or compensated in any way by the Company or any of its
affiliates or selling agents), to protect its own interests in connection with
the transactions described in this Agreement, and the related documents, and
(iii) able to afford the entire loss of its investment in the Securities. The
undersigned further understands that the Company currently has no business or
operations and although it is contemplating entering the field of clean energy
technologies, the Company currently has no agreements or arrangements with any
persons in connection therewith.
(f) The undersigned
acknowledges his understanding that the offering and sale of the Purchased
Shares, Warrants and the issuance of the Warrant Shares upon due exercise of the
Warrants is intended to be exempt from registration under the Securities Act. In
furtherance thereof, in addition to the other representations and warranties of
the undersigned made herein, the undersigned further represents and warrants to
and agrees with the Company and its affiliates as follows:
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(i)
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The undersigned realizes that the
basis for the exemption may not be present if, notwithstanding such
representations, the undersigned has in mind merely acquiring the
Securities for a fixed or determinable period in the future, or for a
market rise, or for sale if the market does not rise. The undersigned does not have any
such intention;
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(ii)
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The undersigned has the financial
ability to bear the economic risk of his investment, has adequate means
for providing for his current needs and personal contingencies and has no
need for liquidity with respect to his investment in the
Company;
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(iii)
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The undersigned has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities. The undersigned also represents it
has not been organized for the purpose of acquiring the
Securities;
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(iv)
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The undersigned has been provided
an opportunity for a reasonable period of time prior to the date hereof to
obtain additional information concerning the offering of the Securities,
the Company and all other information to the extent the Company possesses
such information or can acquire it without unreasonable effort or
expense; and
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(v)
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The undersigned has carefully
reviewed all of the Company’s filings under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”).
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(g) The undersigned is
not relying on the Company, or its affiliates or agents with respect to economic
considerations involved in this investment. The undersigned has relied solely on
its own advisors.
(h) No representations or
warranties have been made to the undersigned by the Company, or any officer,
employee, agent, affiliate or subsidiary of the Company, other than the
representations of the Company contained herein, and in subscribing for Units
the undersigned is not relying upon any representations other than those
contained herein.
(i) Any resale of the
Securities during the ‘distribution compliance period’ as defined in Rule 902(f)
to Regulation S shall only be made in compliance with exemptions from
registration afforded by Regulation S. Further, any such sale of the Securities
in any jurisdiction outside of the United States will be made in compliance with
the securities laws of such jurisdiction. The Investor will not offer to sell or
sell the Securities in any jurisdiction unless the Investor obtains all required
consents, if any.
(j) The undersigned
understands that the Securities are being offered and sold in reliance on an
exemption from the registration requirements of United States federal and state
securities laws under Regulation S promulgated under the Securities Act and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Investor set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Investor to acquire the Securities. In this regard, the
undersigned represents, warrants and agrees that:
1.
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The undersigned is not an U.S.
Person (as defined below) and is not an affiliate (as defined in Rule
501(b) under the Securities Act) of the Company and is not acquiring the
Securities for the account or benefit of a U.S. Person. A U.S. Person means any one of the
following:
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·
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any natural person resident in the
United States of America;
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·
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any partnership or corporation
organized or incorporated under the laws of the United States of
America;
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·
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any estate of which any executor
or administrator is a U.S.
person;
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·
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any trust of which any trustee is
a U.S. person;
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·
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any agency or branch of a foreign
entity located in the United States of
America;
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·
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any non-discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S.
person;
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·
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any discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual) resident in the
United States of America;
and
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·
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any partnership or corporation
if:
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(A) organized or incorporated under the
laws of any foreign jurisdiction; and
(B) formed by a U.S. person principally
for the purpose of investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) under the
Securities Act) who are not natural persons, estates or
trusts.
2.
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At the time of the origination of
contact concerning this Agreement and the date of the execution and
delivery of this Agreement, the undersigned was outside of the United
States.
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3.
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The undersigned will not, during
the period commencing on the date of issuance of the Purchased Shares or
Warrants and ending on the first anniversary of such date, or such shorter
period as may be permitted by Regulation S or other applicable securities
law (the “Restricted Period”), offer, sell, pledge or otherwise transfer
the Purchased Shares or the Warrants in the United States, or to a U.S.
Person for the account or for the benefit of a U.S. Person, or otherwise
in a manner that is not in compliance with Regulation
S.
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4.
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The undersigned will, after
expiration of the Restricted Period, offer, sell, pledge or otherwise
transfer the Purchased Shares or Warrants only pursuant to registration
under the Securities Act or an available exemption therefrom and, in
accordance with all applicable state and foreign securities
laws.
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5.
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The undersigned was not in the
United States, engaged in, and prior to the expiration of the Restricted
Period will not engage in, any short selling of or any hedging transaction
with respect to the Securities, including without limitation, any put,
call or other option transaction, option writing or equity
swap.
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6.
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Neither the undersigned nor or any
person acting on his behalf has engaged, nor will engage, in any directed
selling efforts to a U.S. Person with respect to the Securities and the
Investor and any person acting on his behalf have complied and will comply
with the “offering restrictions” requirements of Regulation S under the
Securities Act.
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7.
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The transactions contemplated by
this Agreement have not been pre-arranged with a buyer located in the
United States or with a U.S. Person, and are not part of a plan or scheme
to evade the registration requirements of the Securities
Act.
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8.
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Neither the undersigned nor any
person acting on his behalf has undertaken or carried out any activity for
the purpose of, or that could reasonably be expected to have the effect
of, conditioning the market in the United States, its territories or
possessions, for any of the Securities. The undersigned agrees not to
cause any advertisement of the Securities to be published in any newspaper
or periodical or posted in any public place and not to issue any circular
relating to the Securities, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only
offshore and not in the U.S. or its territories, and only in compliance
with any local applicable securities
laws.
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9.
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Each certificate representing the
Securities shall be endorsed with the following legends, in addition to
any other legend required to be placed thereon by applicable federal or
state securities laws:
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“THE SECURITIESARE BEING OFFERED TO
INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT
REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES
ACT.”
“TRANSFER OF THESE SECURITIES IS
PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT
TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION
FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.”
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10.
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The undersigned consents to the
Company making a notation on its records or giving instructions to any
transfer agent of the Company in order to implement the restrictions on
transfer of the Securities set forth in this Section
2.
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Cross out if
inapplicable
(k) The undersigned is an
“accredited investor” as that term is defined in Rule 501 of the General Rules
and Regulations under the Securities Act by reason of Rule
501(a)(3).
(l) The undersigned
understands that an investment in the Securities is a speculative investment
which involves a high degree of risk and the potential loss of his entire
investment.
(m) The undersigned's
overall commitment to investments which are not readily marketable is not
disproportionate to the undersigned's net worth, and an investment in the
Securities will not cause such overall commitment to become
excessive.
(n) The undersigned has
received all documents, records, books and other information pertaining to the
undersigned’s investment in the Company that has been requested by the
undersigned. The undersigned has reviewed all reports and other documents filed
by the Company with the Securities and Exchange Commission (the “SEC
Documents”).
(o) The undersigned
represents and warrants to the Company that all information that the undersigned
has provided to the Company, including, without limitation, the information in
the Investor Questionnaire attached hereto or previously provided to the Company
(the “Investor Questionnaire”), is correct and complete as of the date
hereof.
(p) Other than as set
forth herein, the undersigned is not relying upon any other information,
representation or warranty by the Company or any officer, director, stockholder,
agent or representative of the Company in determining to invest in the
Securities. The undersigned has consulted, to the extent deemed appropriate by
the undersigned, with the undersigned’s own advisers as to the financial, tax,
legal and related matters concerning an investment in the Securities and on that
basis believes that his or its investment in the Securities is suitable and
appropriate for the undersigned.
(q) The undersigned is
aware that no federal or state agency has (i) made any finding or determination
as to the fairness of this investment, (ii) made any recommendation or
endorsement of the Securities or the Company, or (iii) guaranteed or insured any
investment in the Securities or any investment made by the
Company.
(p) The undersigned
understands that the price of the Securities offered hereby bear no relation to
the assets, book value or net worth of the Company and were determined
arbitrarily by the Company. The undersigned further understands that there is a
substantial risk of further dilution on his or its investment in the
Company.
SECTION 4
The Company represents and warrants to
the undersigned as follows:
4.1 Organization of the
Company. The Company is a corporation duly organized and validly existing and in
good standing under the laws of the State of Nevada, and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
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4.2 Authority. (a) The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to issue the Securities; (b)
the execution and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors is required; and (c) this
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
4.3 SEC Documents. To the
best of Company's knowledge, the Company has not provided to the undersigned any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and other federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission (the “SEC”) or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (a) as may be otherwise
indicated in such financial statements or the notes thereto or (b) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit
adjustments).
4.4 Exemption from
Registration; Valid Issuances. The sale and issuance of the Securities, in
accordance with the terms and on the bases of the representations and warranties
of the undersigned set forth herein, may and shall be properly issued by the
Company to the undersigned pursuant to Section 4(2), Regulation S and/or any
applicable U.S state law. When issued and paid for as herein provided, the
Securities shall be duly and validly issued, fully paid, and nonassessable.
Neither the sales of the Securities pursuant to, nor the Company's performance
of its obligations under, this Agreement shall (a) result in the creation or
imposition of any liens, charges, claims or other encumbrances upon the
Securities or any of the assets of the Company, or (b) entitle the other holders
of the Common Stock of the Company to preemptive or other rights to subscribe to
or acquire the Common Stock or other securities of the Company. The Securities
shall not subject the undersigned to personal liability by reason of the
ownership thereof.
4.5 No General
Solicitation or Advertising in Regard to this Transaction. Neither the Company
nor any of its affiliates nor any person acting on its or their behalf (a) has
conducted or will conduct any general solicitation (as that term is used in Rule
502(c) of Regulation D) or general advertising with respect to any of the
Securities, or (b) made any offers or sales of any security or solicited any
offers to buy any security under any circumstances that would require
registration of the Common Stock under the Securities Act.
4.6 No Conflicts. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby, including
without limitation the issuance of the Securities, do not and will not (a)
result in a violation of the Certificate or By-Laws of the Company or (b)
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture, instrument or any "lock-up" or similar provision
of any underwriting or similar agreement to which the Company is a party, or (c)
result in a violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations)applicable to the Company or by which any property or asset
of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a material adverse effect on the
business, operations, properties, prospects or condition (financial or
otherwise) of the Company) nor is the Company otherwise in violation of,
conflict with or in default under any of the foregoing. The Company is not
required under U.S. federal, state or local law, rule or regulation 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 issue and sell the Common Stock
in accordance with the terms hereof (other than any SEC, NASD or state
securities filings that may be required to be made by the Company subsequent to
the Closing); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the undersigned herein.
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SECTION 5
5.1 Indemnity. The
undersigned agrees to indemnify and hold harmless the Company, its officers and
directors, employees and its affiliates and their respective successors and
assigns and each other person, if any, who controls any thereof, against any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the undersigned to comply
with any covenant or agreement made by the undersigned herein or in any other
document furnished by the undersigned to any of the foregoing in connection with
this transaction.
5.2 Modification.
Neither this Agreement nor any provisions hereof shall be modified, discharged
or terminated except by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
5.3 Notices. Any notice,
demand or other communication which any party hereto may be required, or may
elect, to give to anyone interested hereunder shall be sufficiently given if (a)
deposited, postage prepaid, in a United States mail letter box, registered or
certified mail, return receipt requested, addressed to such address as may be
given herein, or (b) delivered personally at such address.
5.4 Counterparts. This
Agreement may be executed through the use of separate signature pages or in any
number of counterparts and by facsimile, and each of such counterparts shall,
for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
Signatures may be facsimiles.
5.5 Binding Effect.
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and assigns. If the undersigned is more than
one person, the obligation of the undersigned shall be joint and several and the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his
heirs, executors, administrators and successors.
5.6 Entire Agreement.
This Agreement and the documents referenced herein contain the entire agreement
of the parties and there are no representations, covenants or other agreements
except as stated or referred to herein and therein.
5.7 Assignability. This
Agreement is not transferable or assignable by the
undersigned.
5.8 Applicable Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada, without giving effect to conflicts of law
principles.
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5.9 Pronouns. The use
herein of the masculine pronouns "him" or "his" or similar terms shall be deemed
to include the feminine and neuter genders as well and the use herein of the
singular pronoun shall be deemed to include the plural as
well.
IN WITNESS WHEREOF, the undersigned has
executed this Agreement on the 23 day of April, 2010.
Amount of
Investment:
$500,000.00
INDIVIDUAL INVESTOR:
______________________
Name:
PARTNERSHIP, CORPORATION,
TRUST,
CUSTODIAL ACCOUNT, OTHER
INVESTOR
___________________________
(Print Name of
Entity)
By:
__________________
Name:
Title:
Address:
Taxpayer Identification
Number:_____________
ACCEPTANCE OF
SUBSCRIPTION
(to be filed out only by the
Company)
The Company hereby accepts the above
application for subscription for Units on behalf of the
Company.
TUFFNELL LTD. | Dated: April 23, 2010 |
By:__/s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Chief Executive Office,
President, Secretary, and Treasurer
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Appendix A
Wiring Instructions
For Payment of Purchase
Price
The following are the wire instructions
for the account into which the payment of the purchase price for the Units
subscribed for should be wired.
The bank account of Tuffnell Ltd. at
_________ is as follows:
__________
__________
__________
__________
In case the entity on behalf of which
the transfer is taking place is different from the transferor, please make sure
that the wire includes in the comments the name of the
entity.
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INVESTOR
QUESTIONNAIRE
A.
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General
Information
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1.
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Print Full Name of
Investor:
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Individual:
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First, Middle,
Last
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Partnership, Corporation, Trust,
Custodial Account, Other:
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Name of
Entity
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2.
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Address for
Notices:
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3.
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Name of Primary Contact
Person:
Title:
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4.
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Telephone
Number:
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5.
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E-Mail
Address:
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6.
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Facsimile
Number:
Permanent
Address:
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7.
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Permanent
Address:
(if different from Address for
Notices above)
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8. | Authorized Signatory: | ||
Title:
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Telephone
Number:
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Facsimile
Number:
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9.
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U.S. Investors
Only:
U.S. Taxpayer Identification or
Social
Security
Number:
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B. | Accredited Investor Status |
The Investor represents and warrants
that the Investor is an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the “Securities
Act”), and has checked the box or boxes below which are next to the categories
under which the Investor qualifies as an accredited
investor:
FOR
INDIVIDUALS:
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o
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A natural person with individual
net worth (or joint net worth with spouse) in excess of $1 million. For
purposes of this item, “net worth” means the excess of total assets at
fair market value, including home, home furnishings and automobiles (and
including property owned by a spouse), over total
liabilities.
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o
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A natural person with individual
income (without including any income of the Investor’s spouse) in excess
of $200,000, or joint income with spouse of $300,000, in each of the two
most recent years and who reasonably expects to reach the same income
level in the current year.
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FOR
ENTITIES:
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A bank as defined in Section
3(a)(2) of the Securities Act or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act,
whether acting in its individual or fiduciary
capacity.
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o
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An insurance company as defined in
Section 2(13) of the Securities Act.
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o
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A broker-dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934.
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o
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An investment company registered
under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). If an Investor has checked this box, please contact _______
for additional information that will be required.
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o
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A business development company as
defined in Section 2(a)(48) of the Investment Company
Act.
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o
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A small business investment
company licensed by the Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of
1958.
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o
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A private business development
company as defined in Section 202(a)(22) of the Investment Advisers Act of
1940. If an Investor has checked this box, please contact ______ for
additional information that will be required.
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o
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An organization described in
Section 501(c)(3) of the Internal Revenue Code, a corporation,
Massachusetts or similar business trust, or partnership, not formed for
the specific purpose of acquiring the Units, with total assets in excess
of $5 million.
|
|
o
|
A trust with total assets in
excess of $5 million not formed for the specific purpose of acquiring the
Units, whose purchase is directed by a person with such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company and the
purchase of the Units.
|
|
o
|
An employee benefit plan within
the meaning of ERISA if the decision to invest in the Units is made by a
plan fiduciary, as defined in Section 3(21) of ERISA, which is either a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5 million or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors.
|
|
o
|
A plan established and maintained
by a state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefit of its
employees, if the plan has total assets in excess of $5
million.
|
|
o
|
An entity, including a grantor
trust, in which all of the equity owners are accredited investors as
determined under any of the foregoing paragraphs (for this purpose, a
beneficiary of a trust is not an equity owner, but the grantor of a
grantor trust is an equity owner).
|
C. Supplemental Data for
Entities
1. If the Investor is
not a natural person, furnish the following supplemental data (natural persons
may skip this Section C of the Investor Questionnaire):
Legal form of entity (trust,
corporation, partnership, etc.): _________________________
Jurisdiction of organization:
________________________________________________
2. Was the Investor
organized for the specific purpose of acquiring the Units?
o Yes
|
o No
|
If the answer to the above question is
“Yes,” please contact _______, ________, at _______ or ________ for additional
information that will be required.
3. Are shareholders,
partners or other holders of equity or beneficial interest in the Investor able
to decide individually whether to participate, or the extent of their
participation, in the Investor’s investment in the Company (i.e., can
shareholders, partners or other holders of equity or beneficial interest in the
Investor determine whether their capital will form part of the capital invested
by the Investor in the Company)?
o Yes
|
o No
|
If the answer to the above question is
“Yes,” please contact the company for additional information that will be
required.
13
4(a). Please indicate
whether or not the Investor is, or is acting on behalf of, (i) an employee
benefit plan within the meaning of Section 3(3) of ERISA, whether or not such
plan is subject to ERISA, or (ii) an entity which is deemed to hold the assets
of any such employee benefit plan pursuant to 29 C.F.R. § 2510.3-101. For
example, a plan which is maintained by a foreign corporation, governmental
entity or church, a Xxxxx plan covering no common-law employees and an
individual retirement account are employee benefit plans within the meaning of
Section 3(3) of ERISA but generally are not subject to ERISA (collectively, “
Non-ERISA Plans ”). In general, a foreign or US entity which is not an operating
company and which is not publicly traded or registered as an investment company
under the Investment Company Act of 1940, as amended, and in which 25% or more
of the value of any class of equity interest is held by employee pension or
welfare plans (including an entity which is deemed to hold the assets of any
such plan), would be deemed to hold the assets of one or more employee benefit
plans pursuant to 29 C.F.R. § 2510.3-101. However, if only Non-ERISA Plans were
invested in such an entity, the entity generally would not be subject to ERISA.
For purposes of determining whether this 25% threshold has been met or exceeded,
the value of any equity interest held by a person (other than such a plan or
entity) who has discretionary authority or control with respect to the assets of
the entity, or any person who provides investment advice for a fee (direct or
indirect) with respect to such assets, or any affiliate of such a person, is
disregarded.
o Yes
|
o No
|
4(b). If the Investor is,
or is acting on behalf of, such an employee benefit plan, or is an entity deemed
to hold the assets of any such plan or plans, please indicate whether or not the
Investor is subject to ERISA.
o Yes
|
o No
|
4(c.) If the Investor
answered “Yes” to question 4.(b) and the Investor is investing the assets of an
insurance company general account, please indicate what percentage of the
Investor’s assets the purchase of the Units is subject to ERISA.
___________%.
5.
Does the amount of the Investor’s subscription for the Units in the Company
exceed 40% of the total assets (on a consolidated basis with its subsidiaries)
of the Investor?
o Yes
|
o No
|
If the question above was answered
“Yes,” please contact the company for additional information that will be
required.
6(a). Is the Investor a
private investment company which is not registered under the Investment Company
Act, in reliance on Section 3(c)(1) or Section 3(c)(7)
thereof?
o Yes
|
o No
|
6(b). If the question above
was answered “Yes,” was the Investor formed prior to April 30,
1996?
o Yes
|
o No
|
If the questions set forth in (a) and
(b) above were both answered “Yes,” please contact the company for additional
information that will be required.
7(a). Is the Investor a
grantor trust, a partnership or an S-Corporation for US federal income tax
purposes?
o Yes
|
o No
|
14
7(b). If the question above
was answered “Yes,” please indicate whether or not:
(i) more than 50 percent of the value of
the ownership interest of any beneficial owner in the Investor is (or may at any
time during the term of the Company be) attributable to the Investor’s (direct
or indirect) interest in the Company; or
o Yes
|
o No
|
(ii) it is a principal purpose of the
Investor’s participation in the Company to permit the Partnership to satisfy the
100 partner limitation contained in US Treasury Regulation Section
1.7704-1(h)(3).
o Yes
|
o No
|
If either question above was answered
“Yes,” please contact the company for additional information that will be
required.
8. If the Investor’s tax year ends on a
date other than December 31, please indicate such date
below:
(Date)
|
D.
|
Related
Parties
|
1. To the best of the Investor’s
knowledge, does the Investor control, or is the Investor controlled by or under
common control with, any other investor in the Company?
o Yes
|
o No
|
If the answer above was answered “Yes”,
please identify such related investor(s) below.
Name(s) of related investor(s):
_______________________________-
2. Will any other person or persons have
a beneficial interest in the Units to be acquired hereunder (other than as a
shareholder, partner, or other beneficial owner of equity interest in the
Investor)?
o Yes
|
o No
|
If either question above was answered
“Yes”, please contact The company for additional information that will be
required.
15
Annex 1
DEFINITION OF
“INVESTMENTS”
The term “investments”
means:
1)
|
Securities, other than securities
of an issuer that controls, is controlled by, or is under common control
with, the Investor that owns such securities, unless the issuer of such
securities is:
|
(i)
|
An investment company or a company
that would be an investment company but for the exclusions or exemptions
provided by the Investment Company Act, or a commodity pool;
or
|
(ii)
|
a Public Company (as defined
below);
|
(iii)
|
A company with shareholders’
equity of not less than $50 million (determined in accordance with
generally accepted accounting principles) as reflected on the company’s
most recent financial statements, provided that such financial statements
present the information as of a date within 16 months preceding the date
on which the Investor acquires
Units;
|
2)
|
Real estate held for investment
purposes;
|
3)
|
Commodity Shares (as defined
below) held for investment
purposes;
|
4)
|
Physical Commodities (as defined
below) held for investment
purposes;
|
5)
|
To the extent not securities,
Financial Contracts (as defined below) entered into for investment
purposes;
|
6)
|
In the case of an Investor that is
a company that would be an investment company but for the exclusions
provided by Section 3(c)(1) or 3(c)(7) of the Investment Company Act, or a
commodity pool, any amounts payable to such Investor pursuant to a firm
agreement or similar binding commitment pursuant to which a person has
agreed to acquire an interest in, or make capital contributions to, the
Investor upon the demand of the Investor;
and
|
7)
|
Cash and cash equivalents held for
investment purposes.
|
Real Estate that is used by the owner or
a Related Person (as defined below) of the owner for personal purposes, or as a
place of business, or in connection with the conduct of the trade or business of
such owner or a Related Person of the owner, will NOT be considered Real Estate
held for investment purposes, provided that real estate owned by an Investor who
is engaged primarily in the business of investing, trading or developing real
estate in connection with such business may be deemed to be held for investment
purposes. However, residential real estate will not be deemed to be used for
personal purposes if deductions with respect to such real estate are not
disallowed by section 280A of the Internal Revenue Code of 1986, as
amended.
16
A Commodity Interest or Physical
Commodity owned, or a Financial Contract entered into, by the Investor who is
engaged primarily in the business of investing, reinvesting, or trading in
Commodity Shares, Physical Commodities or Financial Contracts in connection with
such business may be deemed to be held for investment
purposes.
“Commodity Shares” means commodity
futures contracts, options on commodity futures contracts, and options on
physical commodities traded on or subject to the rules of:
(i)
|
Any contract market designated for
trading such transactions under the Commodity Exchange Act and the rules
thereunder; or
|
(ii)
|
Any board of trade or exchange
outside the United States, as contemplated in Part 30 of the rules under
the Commodity Exchange Act.
|
“Public Company” means a company
that:
(i)
|
files reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended;
or
|
(ii)
|
has a class of securities that are
listed on a Designated Offshore Securities Market, as defined by
Regulation S of the Securities
Act.
|
“Financial Contract” means any
arrangement that:
(i)
|
takes the form of an individually
negotiated contract, agreement, or option to buy, sell, lend, swap, or
repurchase, or other similar individually negotiated transaction commonly
entered into by participants in the financial
markets;
|
(ii)
|
is in respect of securities,
commodities, currencies, interest or other rates, other measures of value,
or any other financial or economic interest similar in purpose or function
to any of the foregoing; and
|
(iii)
|
is entered into in response to a
request from a counter party for a quotation, or is otherwise entered into
and structured to accommodate the objectives of the counterparty to such
arrangement.
|
“Physical Commodities” means any
physical commodity with respect to which a Commodity Interest is traded on a
market specified in the definition of Commodity Shares
above.
“Related Person” means a person who is
related to the Investor as a sibling, spouse or former spouse, or is a direct
lineal descendant or ancestor by birth or adoption of the Investor, or is a
spouse of such descendant or ancestor, provided that, in the case of a Family
Company, a Related Person includes any owner of the Family Company and any
person who is a Related Person of such an owner. “Family Company” means a
company that is owned directly or indirectly by or for two or more natural
persons who are related as siblings or spouse (including former spouses), or
direct lineal descendants by birth or adoption, spouses of such persons, the
estates of such persons, or foundations, charitable organizations or trusts
established for the benefit of such persons.
For purposes of determining the amount
of investments owned by a company, there may be included investments owned by
majority-owned subsidiaries of the company and investments owned by a company
(“Parent Company”) of which the company is a majority-owned subsidiary, or by a
majority-owned subsidiary of the company and other majority-owned subsidiaries
of the Parent Company.
17
In determining whether a natural person
is a qualified purchaser, there may be included in the amount of such person’s
investments any investment held jointly with such person’s spouse, or
investments in which such person shares with such person’s spouse a community
property or similar shared ownership interest. In determining whether spouses
who are making a joint investment in the Partnership are qualified purchasers,
there may be included in the amount of each spouse’s investments any investments
owned by the other spouse (whether or not such investments are held jointly).
There shall be deducted from the amount of any such investments any amounts
specified by paragraph 2(a) of Annex 2 incurred by such
spouse.
In determining whether a natural person
is a qualified purchaser, there may be included in the amount of such person’s
investments any investments held in an individual retirement account or similar
account the investments of which are directed by and held for the benefit of
such person.
18
Annex 2
VALUATIONS OF
INVESTMENTS
The general rule for determining the
value of investments in order to ascertain whether a person is a qualified
purchaser is that the value of the aggregate amount of investments owned and
invested on a discretionary basis by such person shall be their fair market
value on the most recent practicable date or their cost. This general rule is
subject to the following provisos:
1)
|
In the case of Commodity Shares,
the amount of investments shall be the value of the initial margin or
option premium deposited in connection with such Commodity Shares;
and
|
2)
|
In each case, there shall be
deducted from the amount of investments owned by such person the following
amounts:
|
(i)
|
The amount of any outstanding
indebtedness incurred to acquire the investments owned by such
person.
|
(ii)
|
A Family Company, in addition to
the amounts specified in paragraph (a) above, shall have deducted from the
value of such Family Company’s investments any outstanding indebtedness
incurred by an owner of the Family Company to acquire such
investments.
|
19