SUBSCRIPTION AGREEMENT
THIS
SUBSCRIPTION AGREEMENT (the “Agreement”)
is made
as of this ___ day of ________, 2006, between Gran Tierra Energy, Inc. f/k/a.
Goldstrike, Inc., a Nevada corporation (the “Company”),
and
the investor identified on the signature page to this Agreement (the
“Investor”).
RECITALS:
WHEREAS,
the Gran Tierra Energy, Inc., a privately held Canadian company (“Gran Tierra”)
and Goldstrike, Inc. (“Goldstrike”) have agreed in principle to enter into a
definitive Agreement of Merger and Plan of Reorganization pursuant to which
it
is expected that a newly organized, wholly-owned Canadian subsidiary of
Goldstrike will merge with and into Gran Tierra (the “Merger”)
and
immediately after which (the “Merger Effective
Date”),
it is
currently expected that the Company will change its name to a name determined
by
Gran Tierra.
WHEREAS,
the Merger closed on and the Merger Effective Date is November 10,
2005.
WHEREAS,
to facilitate the continuing discussions related to the completion of the Merger
and to enable the Company to consummate the acquisition of certain interests
in
producing properties in Argentina (the “Argentine
Acquisition”),
Goldstrike agreed to provide bridge financing to Gran Tierra. The funds required
to provide such financing were derived by Goldstrike from the proceeds received
in a private placement offering (“PPO”)
of
units consisting of one share of Common Stock and a warrant to purchase ½ a
share of Common Stock for an exercise price of $0.625 per one-half share, which
is exercisable for a five year period from the date of issuance.
WHEREAS,
on September 1, 2005 and October 7, 2005, the Company conducted closings on
the
PPO and derived proceeds of $9,353,507 from the sale of 11,691,884 units. On
September 1, 2005, Goldstrike and Gran Tierra completed the bridge financing
providing for the borrowing of Gran Tierra of up to $8,337,916; Gran Tierra
borrowed $6,665,198.30 and Gran Tierra consummated the Argentine Acquisition
for
a cost of approximately $7,000,000. The proceeds derived from the second closing
were used to pay sales commissions aggregating $52,178 incurred in connection
with the PPO and increase the amount available for borrowing by Gran Tierra
under the bridge financing from $8,337,916 to $9,353,492.
WHEREAS,
on October 27, 2005, the Company conducted a closing on its second private
offering and derived proceeds of $1,000,000 from the sale of 1,250,000 units,
and on November 14, 2005, the Company conducted a second closing on its second
private offering and derived proceeds of $1,074,578 from the sale of 1,343,222
units.
WHEREAS,
the Company is offering pursuant to Rule 506 of Regulation D of the Securities
Act of 1933, as amended (the “Securities
Act”),
to
“accredited investors” (as such term is defined in Rule 501(a) of Regulation D,)
800,000 units (the “Units”)
consisting of one share of the Company’s common stock, par value $.001 per share
(the “Common
Stock”),
and a
warrant exercisable for five years to purchase one-half of a share of Common
Stock at an exercise price of $.625 per one-half share (the “Investor
Warrants”)
at the
purchase price of $.80 per Unit (the “Offering”).
WHEREAS,
the Investor desires to subscribe for, purchase and acquire from the Company
and
the Company desires to sell and issue to the Investor the number of Units,
set
forth on the signature page of this Agreement (the “Investor’s
Units”)
upon
the terms and conditions and subject to the provisions hereinafter set
forth.
WHEREAS,
in connection with the purchase of the Investor’s Units, the Company and the
Investor will execute a Registration Rights Agreement dated as of the same
date
as this Agreement pursuant to which the Company will provide certain
registration rights to the Investor (the “Registration
Rights Agreement”).
WHEREAS,
The Company and McGuireWoods LLP (the “Escrow
Agent”)
have
entered into an Escrow Agreement (the “Escrow
Agreement”)
to
provide for the safekeeping of funds received and documents executed in
connection with the Offering.
NOW,
THEREFORE, for and in consideration of the mutual premises contained herein
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Purchase
and Sale of the Units.
Subject
to the terms and conditions of this Agreement and the satisfaction of the
Closing Conditions, the Investor subscribes for and agrees to purchase and
acquire from the Company and the Company agrees to sell and issue to the
Investor the Investor’s Units at the purchase price of $0.80 per Unit (the
“Purchase
Price”).
2. The
Closing.
The
Offering will terminate on the receipt of acceptable subscriptions representing
800,000 Units, or such earlier time as the Company may determine, (the
“Termination
Date”)
and
will close as soon as practicable thereafter (the “Closing
Date”)
at the
offices of the Escrow Agent. On the Closing Date, the Escrow Agent shall deliver
the funds and Transaction Documents (as defined herein) held in escrow as of
the
Closing Date pursuant to the terms of the Escrow Agreement. As soon as
practicable after the Closing Date, the Company shall issue and deliver, or
shall cause the issuance and delivery of, a stock certificate, registered in
the
name of the Investor and representing the shares of Common Stock underlying
the
Investor’s Units and a warrant registered in the name of the Investor
representing the Investor’s right to purchase the number of shares of Common
Stock underlying the Investor’s Units.
3. Subscription
Procedure.
To
complete a subscription for Units, the Investor must fully comply with the
subscription procedure provided in this Section on or before 5:00 p.m. eastern
time on the Termination Date.
(a) Transaction
Documents.
Prior
to 5:00 p.m. eastern time on the Termination Date, the Investor shall review,
complete and execute this Agreement, the Investor Questionnaire attached hereto
as Appendix A and the Registration Rights Agreement and deliver such agreements
and questionnaire to the Escrow Agent at the address provided below. Executed
agreements and questionnaire may be delivered to the Escrow Agent by facsimile
using the facsimile number provided below if the Investor immediately thereafter
confirms receipt of such transmission with the Escrow Agent and delivers the
original copies of the agreements and questionnaire to the Escrow Agent as
soon
as practicable thereafter.
Escrow
Agent - Mailing Address and Facsimile Number:
McGuireWoods
LLP
00
Xxxxx
Xxxxx Xxxxxx
Xxxxx
0000
Xxxxxxxxxxxx,
Xxxxxxx 00000
Facsimile
Number: (000) 000-0000
Attention:
Xxxxxxxx Xxxxxx
Telephone
Number: (000) 000-0000
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(b) Purchase
Price.
Simultaneously with the delivery of the Transaction Documents to the Escrow
Agent as provided herein, and in any event on or prior to 5:00 p.m. eastern
time
on the Termination Date, the Investor shall deliver to the Escrow Agent the
full
Purchase Price for the Investor’s Units by wire transfer of immediately
available funds pursuant to wire transfer instructions provided
below:
Escrow
Agent - Wire Transfer Instructions:
BANK
OF
AMERICA - Jacksonville, FL
ABA:
000000000 (Domestic Wires)
Swift
Code: XXXXXX0X (International Wires)
Credit:
McGuireWoods LLP IOLTA Account
Account
Number: 2101206537
Reference:
Xxxxx Xxxxx - Gran Tierra Escrow - 2046112-0001
McGuireWoods
Accounting Contact: Xxxxx Xxxxx (000) 000-0000
Bank
Contact: Xxxxxxx Xxxxx (000) 000-0000, Opt. 2, Ext. 2160
(c) Purchaser
Representative.
If the
Investor has retained the services of a purchaser representative to assist
in
evaluating the merits and risks associated with investing in the Units, the
Investor must deliver along with the Transaction Documents a purchaser
representative certificate in a form acceptable to the Company.
4. Representations
and Warranties of the Company.
In
order to induce the Investor to enter into this Agreement, the Company
represents and warrants to the Investor the following:
(a) Authority.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Nevada, and has all requisite right, power,
and
authority to execute, deliver and perform this Agreement.
(b) Subsidiaries.
The
Company has no direct or indirect subsidiaries (each a “Subsidiary”
and
collectively the “Subsidiaries”)
other
than those set forth in the Exchange Act Documents (as defined in Section 3(f)).
Except as disclosed in the Exchange Act Documents, the Company owns, directly
or
indirectly, all of the capital stock of each Subsidiary free and clear of any
and all liens, and all the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights.
(c) Enforceability.
The
execution, delivery, and performance of this Agreement by the Company have
been
duly authorized by all requisite corporate action. This Agreement has been
duly
executed and delivered by the Company, and, upon its execution by the Investor,
shall constitute the legal, valid, and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent that its
enforceability is limited by bankruptcy, insolvency, reorganization, or other
laws relating to or affecting the enforcement of creditors’ rights generally and
by general principles of equity.
(d) No
Violations.
The
execution, delivery, and performance of this Agreement by the Company does
not,
and will not, violate or conflict with any provision of the Company’s
Certificate of Incorporation or Bylaws, or other charter documents, and does
not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default, cause the acceleration of
performance, or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of the Company, pursuant
to, any material instrument or agreement to which the Company, is a party or
by
which the Company, or its properties are bound.
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(e) Capitalization.
The
authorized capital stock of the Company consists of: 75,000,000
shares
of Common Stock, of which as of June 30, 2005, 3,300,000 shares were issued
and
outstanding.
Upon
issuance in accordance with the terms of this Agreement against payment of
the
Purchase Price therefore, the shares of Common Stock underlying the Investor’s
Units will be duly and validly issued, fully paid, and nonassessable and free
and clear of all liens imposed by or through the Company, and, assuming the
accuracy of the representations and warranties of the Investor and all other
purchasers of Units in the Offering, will be issued in accordance with a valid
exemption from the registration or qualification provisions of the Securities
Act, and any applicable state securities laws (the “State
Acts”).
(f) Exchange
Act Filing.
Other
than with respect to the quarterly reports on Form 10-QSB for the six months
ended June 30, 2005, during the 12 calendar months immediately preceding the
date of this Agreement, all reports and statements required to be filed by
the
Company with the Securities and Exchange Commission (the “Commission”)
under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and
the rules and regulations thereunder, have been timely filed. Such filings,
together with all documents incorporated by reference therein, are referred
to
as “Exchange
Act Documents.”
Each
Exchange Act Document, as amended, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations thereunder,
and
no Exchange Act Document, as amended, at the time each such document was filed,
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(g) Company
Financial Statements. The
audited financial statements, together with the related notes of the Company
at
December 31. 2004, included in the Company’s Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2004 as filed with the Commission, and the
unaudited financial statements of the Company at June 30, 2005, for the six
months then ended, (collectively, the “Company
Financial Statements”)
included in the Company’s Quarterly Report on Form 10-QSB, fairly present in all
material respects, on the basis stated therein and on the date thereof, the
financial position of the Company at the respective dates therein specified
and
its results of operations and cash flows for the periods then ended (provided
that the unaudited financial statements are subject to normal year-end audit
adjustments and lack footnotes and other presentation items). Such statements
and related notes have been prepared in accordance with generally accepted
accounting principles in the United States applied on a consistent basis except
as expressly noted therein.
(h) No
Material Liabilities.
Except
for liabilities or obligations not individually in excess of $100,000, and
as
set forth in the Exchange Act Documents, since June 30, 2005, the Company has
not incurred any material liabilities or obligations, direct or contingent,
except in the ordinary course of business and except for liabilities or
obligations reflected or reserved against on the Company’s balance sheet as of
June 30, 2005, and there has not been any change, or to the knowledge of the
Company, development or effect (individually or in the aggregate) that is or
is
reasonably likely to be, materially adverse to the condition (financial or
otherwise), business, prospects, or results of operations of the Company and
the
Subsidiaries considered as a whole (a “Material
Adverse Effect”)
or any
change in the capital or material increase in the long-term debt of the Company,
nor has the Company declared, paid, or made any dividend or distribution of
any
kind on its capital stock.
(i) No
Disputes Against Company.
There is
no material pending or, to the knowledge of the Company, threatened (i) action,
suit, claim, proceeding, or investigation against the Company, at law or in
equity, or before or by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or
foreign, (ii) arbitration proceeding against the Company, (iii) governmental
inquiry against the Company or (iv) any action or suit by or on behalf of the
Company pending or threatened against others.
4
(j) Approvals.
The
execution, delivery, and performance by the Company of this Agreement and the
offer and sale of the Shares require no consent of, action by or in respect
of,
or filing with, any person, governmental body, agency, or official other than
those consents that have been obtained prior to the Closing and those filings
required to be made pursuant to the Securities Act and any State Acts which
the
Company undertakes to file within the applicable time period.
(k) Compliance.
Neither
the Company nor its Subsidiaries, (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company, or any of its
Subsidiaries under), nor has the Company, or any of its Subsidiaries received
notice of a claim that it is in default under or that it is in violation of,
any
indenture, loan or credit agreement, or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) is in violation of any
order of any Court, arbitrator, or governmental body or (iii) is or has been
in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws relating
to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as
could not, individually or in the aggregate, have or reasonably be expected
to
result in a Material Adverse Effect. The Company is in compliance with the
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended, and
the
rules and regulations thereunder, except where such noncompliance could not
have
or reasonably be expected to result in a Material Adverse Effect.
(l) Patents
and Trademarks.
The
Company, or any of its Subsidiaries have, or have rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses, and other similar rights that are necessary or
material for use in connection with their respective businesses as described
in
the Exchange Act Documents and which the failure to so have could, individually
or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect (collectively, the “Intellectual
Property Rights”).
Neither the Company nor any of its Subsidiaries, has received a written notice
that the Intellectual Property Rights used by the Company, or any of its
Subsidiaries, violates or infringes upon the rights of any person. Except as
set
forth in the Exchange Act Documents, to the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another person of any of the Intellectual Property Rights,
except where such infringement could not have or reasonably be expected to
result in a Material Adverse Effect.
(m) Transactions
With Affiliates and Employees.
Except
as set forth in the Exchange Act Documents, none of the officers or directors
of
the Company and, to the knowledge of the Company, none of the employees of
the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any entity
in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee, or partner.
(n) Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures
(as
defined in Exchange Act rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company and its Subsidiaries is made known to the
Company’s certifying officers by others within those entities, particularly
during the period in which the Company’s Form 10-KSB or 10-QSB, as the case may
be, are being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the end of the
reporting period covered by the Company’s Form 10-KSB and each of the Company’s
Forms 10-QSB filed with the Commission (each such date, the “Evaluation
Date”)
and
presented in each such report their conclusions about the effectiveness of
the
Company’s disclosure controls and procedures based on their evaluations as of
the applicable Evaluation Date. Since the Evaluation Date of the Company’s most
recently filed Form 10-KSB or Form 10-QSB, there have been no significant
changes in the Company’s disclosure controls and procedures, the Company’s
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) or 15d-15(f) or, to the Company’s knowledge, in other factors that
could significantly affect the Company’s internal controls over financial
reporting.
5
(o) Solvency.
Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all
of its assets, after taking into account all anticipated uses of the cash,
would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(p) Certain
Fees.
Other
than those finder’s fees payable in shares of common stock of the Company on the
closing of the Offering and the cash commission payable on the closing as
indicated in the Confidential Private Placement Memorandum provided to Investor
in connection with the Offering, no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank, or other person
with respect to the transactions contemplated by this Agreement. The Investor
shall have no obligation with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
the
Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.
(q) Certain
Registration Matters.
Assuming the accuracy of the Investor’s representations and warranties set forth
in this Agreement and the Transaction Documents and the representations and
warranties made by all other purchasers of Units in the Offering, no
registration under the Securities Act is required for the offer and sale of
the
Investor’s Units by the Company to the Investor hereunder.
(r) Listing
and Maintenance Requirements.
Except
as specified in the Exchange Act Documents, the Company has not, in the two
years preceding the date hereof, received notice from any automated dealer
quotation system or stock exchange to the effect that the Company is not in
compliance with the listing or maintenance requirements thereof. The Company
is,
and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the NASD Over the Counter Bulletin
Board.
6
(s) Investment
Company.
The
Company is not, and is not an “affiliate” of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(t) No
Additional Agreements.
The
Company does not have any agreement or understanding with any other purchasers
of the Units in the Offering with respect to the transactions contemplated
by
this Agreement on terms that differ substantially from those set forth in this
Agreement.
(u) Disclosure.
The
Company confirms that neither it nor any person acting on its behalf has
provided the Investor, or its agents or counsel, with any information that
the
Company believes would constitute material, non-public information following
the
announcement of the Closing and the transactions contemplated thereby. The
Company understands and confirms that the Investor will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Investor regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf
of
the Company (including the Company’s representations and warranties set forth in
this Agreement) are true and correct and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were
made, not misleading.
5. Representations
and Warranties of the Investor.
In
order to induce the Company to enter into this Agreement, the Investor
represents and warrants to the Company the following:
(a) Authority.
If a
corporation, partnership, limited partnership, limited liability company, or
other form of entity, the Investor is duly organized or formed, as the case
may
be, validly existing, and in good standing under the laws of its jurisdiction
of
organization or formation, as the case may be. The Investor has all requisite
individual or entity right, power, and authority to execute, deliver, and
perform this Agreement.
(b) Enforceability.
The
execution, delivery, and performance of this Agreement by the Investor have
been
duly authorized by all requisite partnership, corporate or other entity action,
as the case may be. This Agreement has been duly executed and delivered by
the
Investor, and, upon its execution by the Company, shall constitute the legal,
valid, and binding obligation of the Investor, enforceable in accordance with
its terms, except to the extent that its enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium, or other laws relating
to or
affecting the enforcement of creditors’ rights generally and by general
principles of equity.
(c) No
Violations.
The
execution, delivery, and performance of this Agreement by the Investor do not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default, cause the acceleration of
performance, or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of the Investor pursuant
to, any material instrument or agreement to which the Investor is a party or
by
which the Investor or its properties may be bound or affected, and, do not
or
will not violate or conflict with any provision of the articles of incorporation
or bylaws, partnership agreement, operating agreement, trust agreement, or
similar organizational or governing document of the Investor, as applicable.
(d) Knowledge
of Investment and its Risks.
The
Investor has knowledge and experience in financial and business matters as
to be
capable of evaluating the merits and risks of Investor’s investment in the
Units. The Investor understands that an investment in the Company represents
a
high degree of risk and there is no assurance that the Company’s business or
operations will be successful. The Investor has considered carefully the risks
attendant to an investment in the Company, and that, as a consequence of such
risks, the Investor could lose Investor’s entire investment in the
Company.
7
(e) Investment
Intent.
The
Investor hereby represents and warrants that (i) the Investor’s Units are being
acquired for investment for the Investor’s own account, and not as a nominee or
agent and not with a view to the resale or distribution of all or any part
of
the Investor’s Units, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing any of the Investor’s
Units within the meaning of the Securities Act, (ii) the Investor’s Units are
being acquired in the ordinary course of the Investor’s business, and (iii) the
Investor does not have any contracts, understandings, agreements, or
arrangements, directly or indirectly, with any person and/or entity to
distribute, sell, transfer, or grant participations to such person and/or entity
with respect to, any of the Investor’s Units. The Investor is not purchasing the
Investor’s Units as a result of any advertisement, article, notice or other
communication regarding the Investor’s Units published in any newspaper,
magazine or similar media or broadcast over television or radio or presented
at
any seminar or any other general solicitation or general
advertisement.
(f) Investor
Status.
The
Investor is an “accredited investor” as that term is defined by Rule 501 of
Regulation D promulgated under the Securities Act and the information provided
by the Investor in the Investor Questionnaire, attached hereto as Appendix
A,
is
truthful, accurate, and complete. The Investor is not registered as a
broker-dealer under Section 15 of the Exchange Act or an affiliate of such
broker-dealer.
(g) Disclosure.
The
Investor has reviewed the information provided to the Investor by the Company
in
connection with the Investor’s decision to purchase the Investor’s Units,
including the Company’s Confidential Private Placement Memorandum distributed in
connection with the Offering and the Company’s publicly available filings with
the Commission and the information contained therein. The Company has provided
the Investor with all the information that the Investor has requested in
connection with the decision to purchase the Investor’s Units. The Investor
further represents that the Investor has had an opportunity to ask questions
and
receive answers from the Company regarding the business, properties, prospects,
and financial condition of the Company. All such questions have been answered
to
the full satisfaction of the Investor. Neither such inquiries nor any other
investigation conducted by or on behalf of the Investor or its representatives
or counsel shall modify, amend, or affect the Investor’s right to rely on the
truth, accuracy, and completeness of the disclosure materials and the Company’s
representations and warranties contained herein.
(h) No
Registration.
The
Investor understands that Investor may be required to bear the economic risk
of
Investor’s investment in the Company for an indefinite period of time. The
Investor further understands that (i) neither the offering nor the sale of
the Investor’s Units has been registered under the Securities Act or any
applicable State Acts in reliance upon exemptions from the registration
requirements of such laws, (ii) the Investor’s Units must be held by the
Investor indefinitely unless the sale or transfer thereof is subsequently
registered under the Securities Act and any applicable State Acts, or an
exemption from such registration requirements is available, (iii) except as
set
forth in the Registration Rights Agreement, dated as of the date hereof, between
the Company and the Investor, the Company is under no obligation to register
any
of the shares of Common Stock underlying the Investor’s Units on the Investor’s
behalf or to assist the Investor in complying with any exemption from
registration, and (iv) the Company will rely upon the representations and
warranties made by the Investor in this Agreement and the Transaction Documents
in order to establish such exemptions from the registration requirements of
the
Securities Act and any applicable State Acts.
(i) Transfer
Restrictions.
The
Investor will not transfer any of the Investor’s Units or the shares of Common
Stock underlying the Investor’s Units or the Investor Warrants unless such
transfer is registered or exempt from registration under the Securities Act
and
such State Acts, and, if requested by the Company in the case of an exempt
transaction, the Investor has furnished an opinion of counsel reasonably
satisfactory to the Company that such transfer is so exempt. The Investor
understands and agrees that (i) the certificates evidencing the shares of Common
Stock underlying the Investor’s Units and the Investor Warrants will bear
appropriate legends indicating such transfer restrictions placed upon the Units
and shares of Common Stock and Investor Warrants, (ii) the Company shall have
no
obligation to honor transfers of any of the Investor’s Units, Investor Warrants
or shares of Common Stock underlying the Investor’s Units or Investor Warrants
in violation of such transfer restrictions, and (iii) the Company shall be
entitled to instruct any transfer agent or agents for the securities of the
Company to refuse to honor such transfers.
8
(j) Principal
Address.
The
Investor’s principal residence, if an individual, or principal executive office,
if an entity, is set forth on the signature page of this Subscription
Agreement.
(k) Canadian
Investors.
All
Investors who are Canadian residents for Canadian tax purposes acknowledge
that
they have received a Canadian Offering Memorandum in connection with the
Offering and that such memorandum provided that each Canadian Investor
purchasing Units in Canada is deemed to have represented to the
Company that
the
Investor:
(i) is
resident in one of the Private Placement Provinces (as defined in the Canadian
Offering Memorandum) and is entitled under applicable provincial securities
laws
to purchase the Units without the benefit of a prospectus qualified under those
securities laws and, in the case of Investors in provinces other than Ontario,
without the services of a dealer registered pursuant to those securities
laws;
(ii) has
reviewed and acknowledges the terms included in such memorandum under the
heading “Resale Restrictions”;
(iii) if
in
Ontario, is an “accredited investor” as defined in Ontario Securities Commission
Rule 45-501 (“Rule 45-501”), and is not an individual unless purchasing from a
fully registered dealer within the meaning of Section 204 of the Regulation
to
the Securities Act (Ontario);
(iv) if
in
Québec, is (i) a government, department or agency referred to in Section 43 of
the Securities Act (Québec); (ii) a “sophisticated purchaser” within the meaning
of Section 44 of the Securities Act (Québec); or (iii) a “sophisticated
purchaser” within the meaning of Section 45 of the Securities Act (Québec)
purchasing for the portfolio of a person managed solely by it;
(v) if
in
British Columbia, Alberta, Saskatchewan, Manitoba or Xxxxxx Xxxxxx Island,
is an
“accredited investor” as defined in Multilateral Instrument 45-103 (“MI
45-103”); and
(vi) is
either
purchasing Units as principal for its own account, or is deemed to be purchasing
Units as principal for its own account in accordance with the applicable
securities laws of the province in which such purchaser is resident, by virtue
of being either: (i) a designated trust company; (ii) a designated insurance
company; (iii) a portfolio manager; or (iv) another entity similarly deemed
by
those laws to be purchasing as principal for its own account when purchasing
on
behalf of other beneficial purchasers.
(vii) By
purchasing the Units, the Investor further acknowledges that its name and other
specified information, including the number of Units it has purchased, may
be
disclosed to Canadian securities regulatory authorities and become available
to
the public in accordance with the requirements of applicable laws and the
Investor consents to the disclosure of that information.
9
6. Independent
Nature of Investor’s Obligations and Rights.
The
obligations of the Investor under this Agreement and the Transaction Documents
are several and not joint with the obligations of any other purchaser of Units
in the Offering, and the Investor shall not be responsible in any way for the
performance of the obligations of any other purchaser of Units in the Offering
under any Transaction Document. The decision of the Investor to purchase the
Investor’s Units pursuant to the Transaction Documents has been made by the
Investor independently of any other purchaser of Units in the Offering. Nothing
contained herein or in any Transaction Document, and no action taken by any
purchaser of Units pursuant thereto, shall be deemed to constitute such
purchasers as a partnership, an association, a joint venture, or any other
kind
of entity, or create a presumption that the purchasers of Units are in any
way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Investor
acknowledges that no other purchaser of Units has acted as agent for the
Investor in connection with making its investment hereunder and that no other
purchaser of Units will be acting as agent of the Investor in connection with
monitoring its investment in the Units or enforcing its rights under the
Transaction Documents. The Investor shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other purchaser of Units to be joined as an additional party
in any proceeding for such purpose.
7. Prospectus
Delivery Requirement.
The
Investor hereby covenants with the Company not to make any sale of the
Investor’s Units or the shares of Common Stock underlying the Investor’s Units
or the Investor Warrants or the shares of Common Stock underlying the Investor
Warrants without complying with the provisions hereof and of the Registration
Rights Agreement, and without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied (unless the Investor is
selling in a transaction not subject to the prospectus delivery requirement).
8. Shareholder
Approval.
The
Company represents and warrants to the Investor that a vote of the stockholders
of the Company will not be required to approve the issuance of the Investor’s
Units.
9. Indemnification
of Investor.
In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investor and its directors, officers,
shareholders, members, managers, partners, employees and agents (each, an
“Investor
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs, and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”)
that
any such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the cost
of any investigation, preparation, and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.
10. Non-Public
Information.
Subsequent to the Closing, the Company covenants and agrees that neither it
nor
any other person acting on its behalf will provide Investor or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto Investor shall have executed a
written agreement regarding the confidentiality and use of such information.
The
Company understands and confirms that Investor shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.
11. Further
Assurances.
The
parties hereto will, upon reasonable request, execute and deliver all such
further assignments, endorsements and other documents as may be necessary in
order to perfect the purchase by the Investor of the Investor’s
Xxxxx.
00
00. Entire
Agreement; No Oral Modification.
This
Agreement and the other Transaction Documents contain the entire agreement
among
the parties hereto with respect to the subject matter hereof and supersede
all
prior agreements and understandings with respect thereto and this Agreement
may
not be amended or modified except in a writing signed by both of the parties
hereto.
13. Binding
Effect; Benefits.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors and assigns; however, nothing in this
Agreement, expressed or implied, is intended to confer on any other person
other
than the parties hereto, or their respective heirs, successors or assigns,
any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
14. Counterparts.
This
Agreement may be executed in any number of counterparts, for each of which
shall
be deemed to be an original and all of which together shall be deemed to be
one
and the same instrument. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
15. Governing
Law.
This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the United States of America and the State of New York, both
substantive and remedial. Any
judicial proceeding brought against either of the parties to this agreement
or
any dispute arising out of this Agreement or any matter related hereto shall
be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by
its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts.
16. Prevailing
Parties.
In any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the prevailing
party shall be entitled to receive and the nonprevailing party shall pay upon
demand reasonable attorneys’ fees in addition to any other remedy.
17. Notices.
All
communication hereunder shall be in writing and shall be mailed, delivered,
telegraphed or sent by facsimile or electronic mail, and such delivery shall
be
confirmed to the addresses as provided below:
if
to the
Investor:
to
the
address set forth on the signature page of this Agreement
if
to the
Company to:
Xxxxx
Xxxxx
00
- 0xx
Xxxxxx X.X.
Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0
Attention:
Xxxxx Xxxx
Telephone
number (000) 000-0000
with
a
copy to:
McGuireWoods
LLP
Attention:
Xxxxx X. Xxxxx
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone
number (000) 000-0000
11
18. Headings.
The
section headings herein are included for convenience only and are not to be
deemed a part of this Agreement.
[SIGNATURE
PAGES FOLLOW]
12
IN
WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as
of the date first written above.
|
By:
__________________________
|
|
|
Name:
____________________
|
|
|
Its:
______________________
|
[SIGNATURE
PAGE OF INVESTOR FOLLOWS]
13
IN
WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as
of the date first written above.
|
INVESTOR
(individual)
|
INVESTOR
(entity)
|
|
______________________________________
|
____________________________________
|
|
Signature
|
Name
of Entity
|
|
______________________________________
|
____________________________________
|
|
Print
Name
|
Signature
|
|
Address
of Principal Residence:
|
|
|
_____________________________________
|
____________________________________
|
|
_____________________________________
|
Print
Name________________________
|
|
_____________________________________
|
Title:
_____________________________
|
|
Social
Security Number
|
Address
of Executive Offices
|
|
_____________________________________
|
|
|
__________________________________
|
|
|
Telephone
Number
|
___________________________________
|
|
___________________________________
|
__________________________________
|
|
Facsimile
Number
|
IRS
Tax Identification Number
|
|
__________________________________
|
__________________________________
|
|
Telephone
Number
|
|
|
__________________________________
|
|
|
Facsimile
Number
|
|
|
____________________________________
|
|
|
_________________
|
X
|
$.80
|
=
|
$___________________
|
|
Number
of Units
|
Price
per Unit
|
Purchase
Price
|
14
APPENDIX
A
Investor
Questionnaire
