Document:

ex10_4.htm

Exhibit 10.4

METHES ENERGIES INTERNATIONAL LTD.

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

This AGREEMENT is between Methes Energies International Ltd., a Nevada corporation (the “Company”), and ___________________________ (the “Optionee”), pursuant to the Company’s Amended and Restated 2008 Directors, Officers and Employees Stock Option Plan (the “Plan”).  The Company and the
Optionee agree as follows:

 

1.           Option Grant. The Company grants to the Optionee on the terms and conditions of this Agreement the right and the option (the “Option”) to purchase all or any part of ________ shares of the Company’s
Common Stock at a purchase price of $_____ per share.  The terms and conditions of the Option grant set forth in attached Exhibit A are incorporated into and made a part of this Agreement.  The Option will not be treated as an Incentive Stock Option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and is therefore a Non-Statutory Stock Option.

 

2.           Grant Date; Expiration Date. The Grant Date for this Option is _________, 2008.  The Option shall continue in effect until the tenth anniversary of the Grant Date (the “Expiration Date”) unless
earlier terminated as provided in Sections 2, 7 or 8 of Exhibit A.  The Option shall not be exercisable on or after the Expiration Date.

 

3.           Exercise of Option. The Vesting Reference Date of this Option is ________, 2008. The Option will become exercisable in accordance with Section 1 of Exhibit A.

 

The parties have executed this Agreement in duplicate as of the Grant Date.

 

	
Methes Energies International Ltd.
	  	
Optionee

	 	 	 
	 	 	 
	 	 	 
	By:  	 	  	 
	Title:   	 	  	 
	  	  	
[print name]

	 	  	 
	
[address]
	  	
[address]

	  	  
	 	  	 

 

 

 

 

 

Methes Energies International Ltd.

EXHIBIT A TO

STOCK OPTION AGREEMENT

 

1.             Time of Exercise of Option.

 

1.1           Vesting Schedule.  Until it expires or is terminated as provided in Sections 2, 7 or 8 of this Exhibit A, this Option may be exercised from
time to time to purchase whole shares up to the following limits:

 

	
Months After Vesting
	 
	
Reference Date
	
Percentage Exercisable

	 	 
	 	
Less than 3
	
0%
	 
	 	
3 
	12.5%	 
	 	
6 
	25%	 
	 	
9 
	37.5%	 
	 	
12 
	50%	 
	 	
15 
	62.5%	 
	 	
18 
	75%	 
	 	
21 
	87.5%	 
	 	
24 or more 
	100%	 

 

1.2           Special Acceleration Of Option.

(a) This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option shares at the time subject to this option and may be
exercised for any or all of those Option shares as fully vested shares of Common Stock. No such acceleration of this option shall occur, however, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor company (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor company which preserves the spread existing at the time of the Corporate Transaction on the Option shares for which this option is not otherwise
at that time exercisable (the excess of the Fair Market Value of those Option shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same option exercise/vesting schedule set forth in this Agreement.

(b) Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor company (or parent thereof) in connection with the Corporate Transaction.

(c) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, PROVIDED the aggregate Exercise Price shall remain the same.  (d) This Agreement shall not in any way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

 

 

 

(d)  Certain Definitions.

(i)  “Corporate Transaction” shall mean either of the following stockholder-approved transactions to which the Company is a party: (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets in complete liquidation or dissolution of the Company.

(ii) “Exercise Price” shall mean the exercise price per Option Share as specified in this Agreement.

(iii)  “Fair Market Value” per share of Common Stock on any relevant date shall be the closing price of the Common Stock last reported before the time in question if the Common Stock is publicly traded, or another value of the Common Stock as specified by the Board of
Directors.

(iv) “Option Shares” shall mean the number of shares of Common Stock subject to the option as specified in this Agreement.

 

2.             Termination of Employment or Service.

 

2.1           General Rule.  Except as provided in this Section 2, the Option may not be exercised unless at the time of exercise the Optionee is employed by or in the service of the Company and shall have been so employed
or provided such service continuously since the Grant Date.  For purposes of this Exhibit A, the Optionee is considered to be employed by or in the service of the Company if the Optionee is employed by or in the service of the Company or any parent or subsidiary of the Company (an “Employer”).

 

2.2           Termination Generally. If the Optionee’s employment or service with the Company terminates for any reason other than because of total disability or death as provided in Sections 2.3 or 2.4, the Option may be exercised
at any time before the Expiration Date or the expiration of 90 days after the date of termination, whichever is the shorter period, but only if and to the extent the Optionee was entitled to exercise the Option at the date of termination, provided however, if the Optionee's is terminated for Misconduct, then this option shall terminate immediately and cease to remain outstanding on the date of termination. “Misconduct” shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Company (or any parent or subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Company (or any parent or subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or any parent or subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the service of the Company (or any parent or subsidiary).

 

 

2

 

 

2.3           Termination Because of Total Disability. If the Optionee’s employment or service with the Company terminates because of total disability, the Option may be exercised at any time before the Expiration Date or before
the date 12 months after the date of termination, whichever is the shorter period, but only if and to the extent the Optionee was entitled to exercise the Option at the date of termination.  The term “total disability” means a medically determinable mental or physical impairment that is expected to result in death or has lasted or is expected to last for a continuous period of 12 months or more and that, in the opinion of the Company and two independent physicians, causes the Optionee to
be unable to perform duties as an employee, director, officer or consultant of the Employer and unable to be engaged in any substantial gainful activity.  Total disability shall be deemed to have occurred on the first day after the two independent physicians have furnished their written opinion of total disability to the Company and the Company has reached an opinion of total disability.

 

2.4           Termination Because of Death.  If the Optionee dies while employed by or in the service of the Company, the Option may be exercised at any time before the Expiration Date or before the date 12 months
after the date of death, whichever is the shorter period, but only if and to the extent the Optionee was entitled to exercise the Option at the date of death and only by the person or persons to whom the Optionee’s rights under the Option shall pass by the Optionee’s will or by the laws of descent and distribution of the state or country of domicile at the time of death.

 

2.5           Leave of Absence.  Absence on leave approved by the Employer or on account of illness or disability shall not be deemed a termination or interruption of employment or service.  Vesting of the Option
shall continue during a medical, family or military leave of absence, whether paid or unpaid, and vesting of the Option shall be suspended during any other unpaid leave of absence.

 

2.6           Failure to Exercise Option.  To the extent that following termination of employment or service, the Option is not exercised within the applicable periods described above, all further rights to purchase shares
pursuant to the Option shall cease and terminate.

 

3.             Method of Exercise of Option.  The Option may be exercised only by notice in writing from the Optionee to the Company of the Optionee’s
binding commitment to purchase shares, specifying the number of shares the Optionee desires to purchase under the Option and the date on which the Optionee agrees to complete the transaction, which may not be more than 30 days after delivery of the notice, and, if required to comply with the Securities Act of 1933, containing a representation that it is the Optionee’s intention to acquire the shares for investment and not with a view to distribution. On or before the date specified for completion of the
purchase, the Optionee must pay the Company the full purchase price of those shares in cash or by check, or in whole or in part in Common Stock of the Company valued at fair market value provided such Common Stock has been previously acquired and held by the Optionee for at least six months. The fair market value of Common Stock provided in payment of the purchase price shall be the closing price of the Common Stock last reported before the time payment in Common Stock is made or, if earlier, committed to be
made, if the Common Stock is publicly traded, or another value of the Common Stock as specified by the Company.  No shares shall be issued until full payment for the shares has been made, including all amounts owed for tax withholding.  The Optionee shall, immediately upon notification of the amount due, if any, pay to the Company in cash or by check amounts necessary to satisfy any applicable federal, state and local tax withholding requirements.  If additional withholding is or
becomes required (as a result of exercise of the Option or as a result of disposition of shares acquired pursuant to exercise of the Option) beyond any amount deposited before delivery of the certificates, the Optionee shall pay such amount to the Company, in cash or by check, on demand.  If the Optionee fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the Optionee, including salary, subject to applicable law.

 

 

3

 

 

4.             Disqualifying Disposition.  If the Option is an Incentive Stock Option and if within two years after the Grant Date or within 12 months
after the exercise of the Option, the Optionee sells or otherwise disposes of Common Stock acquired on exercise of the Option, the Optionee shall within 30 days of the sale or disposition notify the Company in writing of (i) the date of the sale or disposition, (ii) the amount realized on the sale or disposition and (iii) the nature of the disposition (e.g., sale, gift, etc.).

 

5.             Nontransferability.  The Option is nonassignable and nontransferable by the Optionee, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of the Optionee’s domicile at the time of death, and during the Optionee’s lifetime, the Option is exercisable only by the Optionee.

 

6.             Stock Splits, Stock Dividends.  If the outstanding Common Stock of the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares, dividend payable in shares, recapitalization or reclassification, appropriate adjustment shall be made by the Company in (i) the number and kind of shares subject to the Option, or the unexercised portion thereof, and (ii) the Option price per share, so that the Optionee’s proportionate interest before and after the occurrence of the event is maintained.   Notwithstanding
the foregoing, the Company shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Company.  Any such adjustments made by the Company shall be conclusive.

 

7.             Mergers, Reorganizations, Etc.  In the event of a merger, consolidation, plan of exchange, acquisition of property or stock, split-up,
split-off, spin-off, reorganization or liquidation to which the Company is a party or any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the  assets of the Company (each, a “Transaction”), the Company shall, in its sole discretion and to the extent possible under the structure of the Transaction, select one of the following alternatives for treating the Option:

 

7.1           The Option shall remain in effect in accordance with its terms.

 

 

4

 

 

7.2           The Option shall be converted into an option to purchase stock in one or more of the corporations, including the Company, that are the surviving or acquiring corporations in the Transaction.  The amount, type of securities subject thereto and exercise price of
the converted Options shall be determined by the Company, taking into account the relative values of the companies involved in the Transaction and the exchange rate, if any, used in determining shares of the surviving corporation(s) to be held by holders of shares of the Company following the Transaction.  The converted Option shall be vested only to the extent that the vesting requirements relating to the Option have been satisfied.

 

7.3           The Company shall provide a period of 30 days or less before the completion of the Transaction during which the Option may be exercised to the extent then exercisable, and upon the expiration of that period, the Option shall immediately terminate.  The Company
may, in its sole discretion, accelerate the exercisability of the Option so that the Option is exercisable in full during that period.

 

8.             Dissolution.  In the event of the dissolution of the Company, the Company shall provide a period of 30 days or less before the
dissolution of the Company during which the Option may be exercised to the extent then exercisable, and upon the expiration of that period, the Option shall immediately terminate.  The Company may, in its sole discretion, accelerate the exercisability of the Option so that the Option is exercisable in full during that period.

 

9.             Conditions on Obligations.  The Company shall not be obligated to issue shares of Common Stock upon exercise of the Option if the Company
is advised by its legal counsel that such issuance would violate applicable state or federal laws, including securities laws.  The Company will use its best efforts to take steps required by state or federal law or applicable regulations in connection with issuance of shares upon exercise of the Option.

 

10.           No Right to Employment or Service.  Nothing in the Plan or this Agreement shall (i) confer upon the Optionee any right to be continued in
the employment of an Employer or interfere in any way with the Employer’s right to terminate the Optionee’s employment at will at any time, for any reason, with or without cause, or to decrease the Optionee’s compensation or benefits, or (ii) confer upon the Optionee any right to be retained or employed by the Employer or to the continuation, extension, renewal or modification of any compensation, contract or arrangement with or by the Employer.

 

11.           Successors of Company.  This Agreement shall be binding upon and shall inure to the benefit of any successor of the Company but, except as
provided herein, the Option may not be assigned or otherwise transferred by the Optionee.

 

12.           Notices.  Any notices under this Agreement must be in writing and will be effective when actually delivered or, if mailed, three days after
deposit into the United States mail by registered or certified mail, postage prepaid.  Mail shall be directed to the addresses stated on the face page of this Agreement or to such address as a party may certify by notice to the other party.

 

13.           Rights as a Shareholder.  The Optionee shall have no rights as a shareholder with respect to any shares of Common Stock until the date the
Optionee becomes the holder or record of those shares.  No adjustment shall be made for dividends or other rights for which the record date occurs before the date the Optionee becomes the holder of record.

 

 

5

 

 

14.           Amendments.   The Company may at any time amend this Agreement if the amendment does not adversely affect the Optionee.  Otherwise,
this Agreement may not be amended without the written consent of the Optionee and the Company.

 

15.           Governing Law.  This Agreement shall be governed by the laws of the state of Nevada.

 

16.           Complete Agreement.  This Agreement constitutes the entire agreement between the Optionee and the Company, both oral and written concerning
the matters addressed herein, and all prior agreements or representations concerning the matters addressed herein, whether written or oral, express or implied, are terminated and of no further effect.

 

17.           Tax Treatment.  The Optionee is encouraged to consult with his or her attorney to determine the tax treatment of the Options granted to him
or her.  The Company has no responsibility whatsoever of any nature for any treatment the IRS or any state tax authority may apply to the Options.  The Company makes no representations, warranties or covenants regarding the tax status of the Options granted to the Optionee.

 

 

 

 

 

 

6ex10_5.htm

Exhibit 10.5

SUBSCRIPTION AGREEMENT FACE PAGE

(United States Persons)

 

METHES ENERGIES INTERNATIONAL LTD.

 

	
Purchased Security:
	
Common Stock, par value US$0.001 per share (each, a “Share”)

	  	  
	
Subscription Price Per Share:
	
US$____ per share of common stock

	  	  
	
Number of Shares Subscribed for:
	____________________________________ 
	  	  
	
Minimum Investment:
	
_________ Shares (US$________), with additional shares in increments of _______ shares (US$_______).

	  	  

NOTE:    THE SUBSCRIBER MUST PROVIDE THE INFORMATION REQUESTED ON THIS SUBSCRIPTION AGREEMENT FACE PAGE, SIGN AND COMPLETE THE ATTACHED SUBSCRIPTION AGREEMENT AND SEND (1) THE COMPLETED FACE PAGE, (2) A FULLY EXECUTED COPY OF THE SUBSCRIPTION
AGREEMENT (INCLUDING SCHEDULE A THERETO), AND (3) THE SUBSCRIPTION PRICE PAYABLE TO “METHES ENERGIES INTERNATIONAL LTD.” TO THE CORPORATION AT 45 MAIN STREET, SUITE 309, BROOKLYN, NEW YORK, USA 11201

 

PARTICULARS OF SUBSCRIBER

 

	
If an Individual:
	  	
If a Corporation:

	  	  	  
	  	  	
 

	
Full Name
	  	
Full Corporate Name

	  	  	  
	 	 	 
	  	  	
 

	
Residential Address
	  	
Head Office Address

	  	  	  
	  	  	
 

	
City                      State    Zip Code
	  	
City                      State    Zip Code

	  	  	  
	  	  	  
	Telephone    	
                                                                      
Fax       
	  	
Attention

	  	  	  
	  	  	  
	
Social Security Number
	  	Telephone   	
                                                                       
Fax      

	  	  	  
	  	  	  
	  	  	
IRS Employer Identification Number

	  	  	  
	  	  	  
	
Registration Instructions:
	  	
Deliver To:

	  	  	  
	  	  	  
	
Name
	  	
Address

	  	  	  
	  	  	  
	
Account reference, if applicable
	  	
Account reference, if applicable

	  	  	  
	  	  	  
	
Address
	  	
Contact Name

	  	  	  
	  	  	  
	  	  	
Telephone Number

 

 

 

 

 

THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS, OF ANY STATE OF THE UNITED STATES.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED IN THE UNITED STATES OR BY
OR ON BEHALF OF U.S. PERSONS (AS DEFINED HEREIN) WITHOUT REGISTRATION UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE.

 

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

(United States Persons)

 

Personal & Confidential

 

TO:           METHES ENERGIES INTERNATIONAL LTD.

 

 

 PURCHASE OF SECURITIES

 

Subscription

 

The undersigned (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase from METHES ENERGIES INTERNATIONAL LTD., a Nevada corporation (the “Corporation”), subject to the terms and conditions set forth herein, that number of Shares (the “Securities”) set forth on the Subscription Agreement
Face Page (the “Face Page”), at the subscription price of US$_____ (the “Subscription Price”) per Share for a total investment as set forth on the Face Page.

 

The Subscriber agrees to pay to the Corporation the Subscription Price for the Securities subscribed for hereunder by delivering to the Corporation, concurrent upon the execution of this private placement subscription agreement (“Agreement”), a wire transfer, a certified cheque, bank draft or money order for the full amount
of the Subscription Price for the Securities subscribed for hereunder.  The Subscriber hereby acknowledges that the acceptance of the subscription is subject to rejection or allotment, in whole or in part, by the Corporation. The Subscriber acknowledges that the Securities subscribed for hereunder forms part of a larger private placement (the “Private Placement”) of up to a maximum of US$6,000,000. Unless otherwise indicated, references in this Agreement to “$” or “dollars”
refer to the currency of the United States of America.  No fractional shares of the Corporation will be issued.

 

The Subscriber acknowledges that the Securities are being sold by the Corporation in the United States of America (the “US”) and in other jurisdictions where it is legal to do so.  Subject to the terms hereof, the subscription will be effective upon its acceptance by the Corporation.  The Private Placement
is not subject to minimum aggregate subscription level and, upon closing, all subscription proceeds will be retained by the Corporation in accordance with the terms hereof.  Subscription proceeds may be accepted in one or more closings of this Private Placement.  The closing of the Private Placement will be subject to receipt of all applicable regulatory approvals.

 

Description of Securities

 

The sale and delivery of the Securities subscribed for hereby is conditional upon such sale being exempt from the prospectus requirements of any applicable statute relating to the sale of such Securities or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of preparing,
filing, or delivering a prospectus.

 

The Securities may only be resold in compliance with applicable securities legislation. Subscribers should note that the Securities will be subject to statutory restrictions upon resale, including hold periods, and that the certificates representing such Shares will bear a legend to that effect. Subscribers are advised to consult with their
legal advisors in respect of restrictions on resale and the suitability of an investment in the Securities offered hereby.

 

 

- 2 -

 

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

 

NASAA UNIFORM LEGEND

 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES
HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

Payment

 

The full amount of the Subscription Price for the Securities subscribed for hereunder must accompany this Agreement and shall be paid by wire transfer, certified cheque, bank draft or money order made payable to “METHES ENERGIES INTERNATIONAL LTD.”,
with a notation that the funds are being provided as a subscription for shares of METHES ENERGIES INTERNATIONAL LTD.

 

Wire transfers are to be sent pursuant to the following wire transfer instructions:

 

US Dollar Account

	
Institution:
	
RBC Centura Bank

	 	
15086 Jog Road

	
 
	
Delray Beach, FL 33446

	  	  
	
ABA:
	
0 6 7 0 1 2 8 8 2

	  	  
	
SWIFT:
	
C N T A U S 3 3

	  	  
	
Account Name:
	
Methes Energies International Ltd.

	  	  
	
Account Number:
	
7 2 7 0 0 0 2 8 8 4

	  	  
	
Notation:
	
For subscription of shares of Methes Energies International Ltd.

 

 

Subscription Procedures

 

The Subscriber undertakes to complete the Face Page and sign and return a fully executed copy of this Subscription Agreement (including Schedule A hereto) to the Corporation.  The Subscriber shall complete, sign and return to the Corporation as soon as possible on
request by the Corporation any documents, questionnaires, notices and undertakings as may be required by regulatory authorities and applicable law.

 

 

- 3 -

 

 

Closing

 

Delivery of and payment for the Securities (the “Closing”) will be completed at the offices of Methes Energies International Ltd., 45 Main Street, Suite 309, Brooklyn, New York, USA 11201, on or before the close of business on ____________ (the “Closing Time”) or such earlier or later date or time as the Corporation
shall determine (the “Closing Date”).  The Closing will only take place in accordance with all related applicable regulatory approvals and requirements.

 

Certificates representing the Securities will be available for delivery against payment to the Corporation of the full amount of the aggregate Subscription Price for the Securities subscribed for hereunder in freely transferable US funds.

 

Representations, Warranties, Acknowledgements and Covenants of the Subscriber

 

The Subscriber hereby represents, warrants, acknowledges and covenants to the Corporation (which representations, warranties, acknowledgments and covenants shall be true and correct on the date thereof and at the Closing Date, with the same force and effect as if they had been made as at the Closing Date and which shall survive Closing)
and acknowledges that the Corporation is relying thereon, that:

 

	
(a)  
	
the Subscriber is a resident of the US and

 

	
   (i)  
	
is either: (i) an “accredited investor” as such term is defined on the Accredited Investor Certificate attached as Schedule A hereto, which is incorporated herein in its entirety; or (ii) the Subscriber either alone or with its “Subscriber representative(s)” (as such
term is defined in Schedule A) has such experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Securities; and

 

	
    (ii)  
	
the Subscriber has properly complied with and duly executed the Accredited Investor Certificate attached to this Agreement as Schedule A and confirms the truth and accuracy of all statements made by the Subscriber in such Certificate.

 

	
(b)  
	
the Subscriber is purchasing the Securities for the undersigned's own account, with the intention of holding the Securities, with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Securities, and shall not make any sale, transfer,
or pledge thereof without registration under the Act and any applicable securities laws of any state or unless an exemption from registration is available under those law;

 

	
(c)  
	
the Subscriber is aware that the purchase of the Securities is a speculative investment involving a high degree of risk and that there is no guarantee that the undersigned will realize any gain from this investment, and that the Subscriber could lose the total amount of the Subscriber's investment:

 

	
(d)  
	
the Subscriber understands that no federal or state agency has made any finding or determination regarding the fairness of this Offering of the Securities for investment, or any recommendation or endorsement of this Offering of the Securities:

 

	
(e)  
	
the Subscriber has been independently advised as to restrictions with respect to trading in the Securities imposed by applicable securities legislation in the jurisdiction in which it resides, confirms that no representation has been made to it by or on behalf of the Corporation with respect thereto, acknowledges that it is aware of the characteristics
of the Securities, the risks relating to an investment therein and of the fact that it may not be able to resell the Securities except pursuant to exemptions under applicable securities legislation and regulatory policy and that the Securities will be subject to resale restrictions and will bear a legend to this effect;

 

	
(g)  
	
the Subscriber understands that the Securities are being offered and sold to it in reliance on specific exemptions or exclusions from the registration requirements of United States federal and state securities laws and applicable Canadian securities laws and that the Corporation is relying in part upon the truth and accuracy of, and such Subscriber’s
compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of such Subscriber to acquire such securities;

 

 

- 4 -

 

 

	
(h)  
	
the decision to execute this Agreement and purchase the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Corporation, and that the decision is based entirely upon its review (the receipt of which is acknowledged) of information which has been filed
by the Corporation with the applicable securities commissions or exchange in compliance, or intended compliance with applicable securities legislation, including any of the Corporation's financial information currently available. The Subscriber has sought such accounting, legal and tax advice, as it has considered necessary, to make an informed investment decision with respect to its acquisition of the Securities;

 

	
(i)  
	
The Subscriber understands that: (i) the Securities have not been registered under the 1933 Act or any applicable state securities laws, and may not be offered for sale, sold, pledged, assigned or otherwise transferred unless (A) subsequently registered thereunder, or (B) such Subscriber shall have delivered to the Corporation an opinion of counsel in
a form reasonably acceptable to the Corporation to the effect that such securities to be sold, assigned, pledged or otherwise transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements. The Corporation reserves the right to place stop transfer instructions against the shares and certificates for the Securities;

 

	
(j)  
	
The Subscriber understands that the certificates or other instruments representing the Securities and all certificates issued in substitution thereof and in exchange therefore shall bear restrictive legends in substantially the following forms (and a stop-transfer order may be placed against transfer of such share certificates), until such time as it is
no longer required under applicable securities laws:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE REGISTERED UNDER
THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR SUCH SECURITIES ARE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAW AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.

 

	 	

The legends set forth above shall be removed and the Corporation shall issue a certificate without such legend to the holder, unless the legend is otherwise required by state securities laws, (i) in connection with a sale transaction, provided the Securities are registered under the 1933 Act and applicable state securities laws or
(ii) in connection with a sale transaction, after such holder provides the Corporation with an opinion of counsel, which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and reasonably acceptable to the Corporation, to the effect that a public sale, assignment or transfer of the Securities may be made without registration under the 1933 Act;

 

	
(k)  
	
the Subscriber has not purchased the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation
or general advertising;

 

	
(l)  
	
this Agreement is not enforceable by the Subscriber unless and until it has been accepted by the Corporation;

 

	
(m)  
	
is resident at the address set out on the Face Page as the Subscriber’s “Residential Address” or “Head Office Address”;

 

	
(n)  
	
will not resell any part of the Securities, except in accordance with the provisions of applicable securities legislation;

 

 

- 5 -

 

 

	
(o)  
	
if an individual, the Subscriber is of full age of majority and is legally competent to execute this Agreement and take all action pursuant thereto;

 

	
(p)  
	
this Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Subscriber;

 

	
(q)  
	
understands that the sale and delivery of the Securities is conditional upon such sale being exempt from the requirements as to the filing of a prospectus or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus;

 

	
(r)  
	
if the Subscriber is a corporation, syndicate, partnership or other form of unincorporated organization, the person executing this Agreement on behalf of the Subscriber has the necessary power and authority to do so and the investment contemplated hereby has been duly authorized by all necessary action of the undersigned;

 

	
(s)  
	
if required by applicable securities legislation, policy or order or securities commission, or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing such reports, undertakings and other documents with respect to the issue of the Securities;

 

	
(t)  
	
it has had access to such additional information and has made such investigations, if any, concerning the Corporation as it has considered necessary so as to make an informed investment decision in connection with an investment in the Securities and it has not received, nor has it requested, nor does it have any need to receive, any other document describing
the business and affairs of the Corporation which has been prepared for delivery to, and review by, prospective Subscribers in order to assist them in making an investment decision with respect to the Securities;

 

	
(u)  
	
it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and is able, by virtue of its net worth and knowledge and experience in financial and business matters, to protect its own interests in connection with the investment and bear the economic loss of
such investment without substantially affecting its assets or business affairs;

 

	
(v)  
	
it consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Securities and any Shares issuable in exchange therefore or in substitution thereof in order to implement the restrictions on transfer set forth herein;

 

	
(w)  
	
as the Securities are subject to resale restrictions under applicable securities legislation and policies the Subscriber shall comply with all relevant securities legislation and policies concerning any resale of the Securities and shall consult with its own legal advisers with respect to such compliance; and

 

	
(x)  
	
the Subscriber acknowledges that the foregoing representations, warranties and acknowledgments and covenants are made by it with the intent that they may be relied upon in determining its eligibility to purchase the Securities under relevant securities legislation. The Subscriber further agrees that by accepting the Securities subscribed for pursuant hereto,
at Closing Time, it shall be representing and warranting that the foregoing representations, warranties and acknowledgments and covenants are true as at the Closing Time with the same force and effect as if they had been made by it as at the Closing Time and will survive the completion of the sale of such Shares. The Corporation shall be entitled to rely on the representations, warranties, acknowledgments and covenants of the Subscriber contained hereto and the Subscriber shall indemnify and hold harmless the
Corporation for any loss or damage it may suffer as a result of any misrepresentation by the Subscriber.

 

Representations and Warranties of the Corporation

 

The Corporation represents and warrants to the Subscriber that, as of the date of this Agreement and at the Closing:

 

	
(y)  
	
it has been duly incorporated and organized and is a valid and subsisting corporation under the laws of the State of Nevada, and is duly qualified to carry on business in the State of Nevada and in each other jurisdiction, if any, wherein the carrying out of the activities contemplated makes such qualifications necessary;

 

 

- 6 -

 

 

	
(z)  
	
it has the full corporate right, power and authority to execute this Agreement, and to issue the Securities to the Subscriber pursuant to the terms of this Agreement;

 

	
(aa)  
	
the execution and delivery of and the performance by the Corporation of this Agreement will not constitute a breach of or default under the organizational documents of the Corporation or any agreement, contract or indenture to which the Corporation is a party or by which it is bound;

 

	
(bb)  
	
the Shares will be fully paid and non-assessable upon receipt and acceptance of the full consideration therefor; and

 

	
(cc)  
	
there is no suit, action, claim, investigation or inquiry by any person or entity or any administrative agency or governmental body, and no legal, administrative or arbitration proceeding pending, or to the Corporation's knowledge, threatened against the Corporation which has or will materially affect the Corporation's ability to consummate the transactions
herein contemplated.

 

Costs

 

The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the purchase of the Securities shall be borne by the Subscriber.

 

Appointment of the Corporation as Agent 

 

The Subscriber hereby irrevocably authorizes the Corporation to:

 

	
(a)  
	
negotiate and settle the form of any other agreement to be entered into in connection with this Private Placement and to waive in whole or in part, or extend the time for compliance with, any of the closing conditions in such manner and on such terms and conditions as the Corporation may determine, acting reasonably, without in any way affecting the Subscriber's
obligations or the obligations of others;

 

	
(b)  
	
swear, execute, file and record on its behalf, this Agreement and any documents necessary to accept delivery of the Securities on the Closing Date, and to terminate this subscription on behalf of the Subscriber in the event that any condition precedent to this Private Placement has not been satisfied;

 

	
(c)  
	
act as its representative at the Closing, to release the funds representing the Total Subscription Price, and to execute in its name and on its behalf all closing receipts and documents required;

 

	
(d)  
	
complete or correct any errors or omissions in any form or document provided by the Subscriber;

 

	
(e)  
	
approve any opinions, certificates or other documents addressed to the Subscriber; and

 

	
(f)  
	
receive on its behalf certificates representing the Securities subscribed.

 

Governing Law

 

This Subscription Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Nevada applicable thereto.  Any and all disputes arising under this Subscription Agreement, whether as to interpretation, performance or otherwise, shall be subject to the
jurisdiction of the courts of the State of Nevada and each of the parties hereto hereby irrevocably submits to the jurisdiction of the courts of such State.

 

 

- 7 -

 

 

Survival

 

This Agreement including, without limitation, the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties notwithstanding the completion of the purchase of the Securities by the Subscriber pursuant hereto, the completion of the issue of Shares and any
subsequent disposition by the Subscriber of any of the Securities.

 

Assignment

 

This Agreement is not transferable or assignable.

 

Execution

 

The Corporation shall be entitled to rely on delivery by facsimile machine of an executed copy of this Agreement and acceptance by the Corporation of such facsimile copy shall be equally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms hereof.

 

Counterparts

 

This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  In the event any signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause one set of originally executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof.

 

Severability

 

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

 

Entire Agreement

 

Except as expressly provided in this Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Agreement contains the entire agreement between the parties with respect to the sale of the Securities and there are no other terms, conditions, representations or warranties, whether expressed,
implied, oral or written, by statute, by common law, by the Corporation, by the Subscriber or by any third party.

 

[signature page follows]

 

 

 

 

- 8 -

 

 

IN WITNESS WHEREOF the Subscriber has duly executed this Agreement as of: ___________________________

                    (Date)

 

	  	  	  
	  	  	  
	
(Name of Subscriber - Please type or print)
	  	
(Signature and, if applicable, Office)

	  	  	  
	
If the Subscriber is signing, as agent for a principal and the Subscriber is not a trust company signing as trustee or as an agent for a fully managed account, please complete the following:

	  	  	  
	  	  	  
	
(Name of Beneficial Subscriber - Please type or print)
	  	
(Address of Subscriber)

	  	  	  
	
(Signature and, if applicable, Office)
	  	
(City, State, Zip code of Subscriber)

 

 

 

ACCEPTANCE

 

The Corporation hereby accepts the above-mentioned Agreement.

 

DATED at                                           , as of the ______ day of                                                                           ,
200_.

 

 

	 	METHES ENERGIES INTERNATIONAL LTD.	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
 
	
By: 
	 	 
	 	 	          Authorized Signatory	 

 

 

                               

 

- 9 -

 

 

SCHEDULE A

 

ACCREDITED INVESTOR CERTIFICATE

 

The Subscriber covenants, represents and warrants to METHES ENERGIES INTERNATIONAL LTD. (the “Issuer”) that, by initialling one of the categories below, (i) the Subscriber an “accredited investor” (as defined by Regulation D promulgated under the Securities Act of 1933, as amended), or (ii) if not an accredited investor,
the Subscriber either alone or with its “purchaser representative(s)” (as defined by Regulation D) has such experience in financial and business matters that Subscriber is capable of evaluating the merits and risks of an investment in the Securities:

 

Accredited Individuals:

 

	
______ (a)  
	
Subscriber is an individual with a net worth, or a joint net worth together with his or her spouse, in excess of $1,000,000.  (Note: In calculating net worth, you may include equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities.  Equity in personal property
and real estate should be based on the fair market value of such property minus debt secured by such property.)

 

	
______ (b)  
	
Subscriber is an individual that had an individual income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess of $200,000 in the current year.

 

	
______ (c)  
	
Subscriber is an individual that had with his/her spouse joint income in excess of $300,000 in each of the prior two years and reasonably expects joint income in excess of $300,000 in the current year.

 

	
______ (d)  
	
Subscriber is a director or executive officer of the Issuer.

Accredited Entities:

 

	
______ (e)  
	
Subscriber is an entity all of whose equity owners meet one of the tests set forth in (a) through (d) above. (If relying on this category alone, each equity owner must complete a separate copy of this Schedule A to the Subscription Agreement.)

 

	
______ (f)  
	
Subscriber is an entity, and is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act.  This representation is based on the following (check one or more, as applicable):

 

	
_______       (i)  
	
Subscriber (or, in the case of a trust, the undersigned trustee) is a bank or savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A), respectively, of the Act acting either in its individual or fiduciary capacity.

 

	
_______      (ii)  
	
Subscriber is an insurance company as defined in Section 2(13) of the Securities Act.

 

	
_______      (iii)  
	
Subscriber is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act.

 

	
_______      (iv)  
	
Subscriber is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

 

	
_______      (v)  
	
Subscriber is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one or more, as applicable):

 

	
_______                  (a)  
	
the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser; or

 

	
_______                  (b)  
	
the employee benefit plan has total assets in excess of $5,000,000; or

 

	
_______                  (c)  
	
the plan is a self-directed plan with investment decisions made solely by persons who are “Accredited Investors” as defined under the Securities Act.

 

	
_______      (vi)  
	
Subscriber is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

 

	
_______      (vii)  
	
Subscriber has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring securities of the Issuer and is one or more of the following (check one or more, as appropriate):

 

	
_______                  (a)  
	
an organization described in Section 501(c)(3) of the Internal Revenue Code; or

 

	
_______                  (b)  
	
a corporation; or

 

	
_______                  (c)  
	
a Massachusetts or similar business trust; or

 

	
_______                  (d)  
	
a partnership. 

 

 

- 10 -

 

 

	
_______      (viii)  
	
Subscriber is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of acquiring securities of the Issuer and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the investment in the Issuer.

 

Non-Accredited Investors:

 

	
______ (g)  
	
Subscriber is not an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act, but certifies that, either alone or with its “purchaser representative(s),” Subscriber as such experience in financial and business matters that Subscriber is capable of evaluating
the merits and risks of an investment in the Securities.  For purposes hereof, “purchaser representative” means any person who satisfies all of the following conditions or who the issuer reasonably believes satisfies all of the following conditions:

 

	
_______         (i)  
	
Is not an affiliate, director, officer or other employee of the Issuer, or beneficial owner of 10 percent or more of any class of the equity securities or 10 percent or more of the equity interest in the Issuer, except where the Subscriber is: 

 

	
(a)  
	
A relative of the purchaser representative by blood, marriage or adoption and not more remote than a first cousin; 

 

	
(b)  
	
A trust or estate in which the purchaser representative and any persons related to him have more than 50 percent of the beneficial interest (excluding contingent interest) or of which the purchaser representative serves as trustee, executor, or in any similar capacity; or 

 

	
(c)  
	
A corporation or other organization of which the Subscriber representative and any persons related collectively are the beneficial owners of more than 50 percent of the equity securities (excluding directors qualifying shares) or equity interests; 

 

	
  
	 	
(ii)
	
Has such knowledge and experience in financial and business matters that he or she is capable of evaluating, alone, or together with other purchaser representatives of the Subscriber, or together with the Subscriber, the merits and risks of the prospective investment;

 

	
  
	 	
(iii)
	
Is acknowledged by the Subscriber in writing, during the course of the transaction, to be Subscriber’s purchaser representative in connection with evaluating the merits and risks of the prospective investment; and

 

	
  
	 	
(iv)
	
Discloses to the Subscriber in writing a reasonable time prior to the sale of securities to that Subscriber any material relationship between the purchaser representative and his, her or its affiliates and the issuer or its affiliates that then exists, that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a
result of such relationship.

 

 

	
Date:                                                                                                            
	  	  
	  	  	
Duly authorized signatory for Subscriber

	  	  	  
	  	  	
(Print name of Subscriber)

	  	  	  
	  	  	
Duly authorize signature for Subscriber Representative, if any

	  	  	  
	  	  	
(Print name of Subscriber Representative, if any)

 

 

 

- 11 -

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