Document:

focus_8k-ex1001.htm

 Exhibit 10.1

 

Fairfields Gold S.A. de CV

 

a Wholly-Owned subsidiary of Focus Gold Mexico Limied

 

a Wholly-Owned subsidiary of Focus Gold Corporation

 

 

(Collectively the “Vendor”)

 

- and -

 

l

(the “Purchaser”)

 

	
ASSET PURCHASE AGREEMENT

 

 

Dated as of the 20th day of December, 2011.

 

 

  

  

  

 

 

	
ARTICLE 1 DEFINITIONS

	
2

	
1.1

	
DEFINITIONS

	
2

	
1.2

	
KNOWLEDGE

	
4

	
ARTICLE 2 PURCHASE OF ASSETS

	
4

	
2.1

	
PURCHASE AND SALE OF ASSETS

	
4

	
2.2

	
PURCHASE PRICE

	
4

	
2.3

	
PAYMENT OF PURCHASE PRICE

	
4

	
ARTICLE 3 REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY OF VENDOR

	
4

	
3.1

	
REPRESENTATIONS AND WARRANTIES

	
4

	
ARTICLE 4 REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY OF PURCHASER

	
5

	
4.1

	
REPRESENTATIONS AND WARRANTIES

	
5

	
ARTICLE 5 CLOSING ARRANGEMENTS

	
5

	
5.1

	
CLOSING

	
5

	
5.2

	
VENDOR’S CLOSING DELIVERIES

	
5

	
5.3

	
PURCHASER’S CLOSING DELIVERIES

	
6

	
5.4

	
POSSESSION

	
6

	
5.5

	
APPROVALS, CONSENTS OR WAIVERS

	
6

	
ARTICLE 6 PURCHASER’S COVENANT

	
6

	
6.1

	
COVENANT

	
6

	
ARTICLE 7 GENERAL

	
6

	
7.1

	
TIME OF ESSENCE

	
6

	
7.2

	
SURVIVAL OF REPRESENTATIONS AND WARRANTIES

	
7

	
7.3

	
ENTIRE AGREEMENT

	
7

	
7.4

	
COUNTERPARTS

	
7

	
7.5

	
SEVERABILITY

	
7

	
7.6

	
FURTHER ASSURANCES

	
7

	
7.7

	
GOVERNING LAW

	
7

	
7.8

	
SUCCESSORS AND ASSIGNS

	
7

	
7.9

	
AMENDMENTS AND WAIVERS

	
8

	
7.10

	
CURRENCY

	
8

 

 

 

  

  

  

THIS AGREEMENT is made as of the 20th day of December, 2011.

 

BETWEEN:

 

Fairfields Gold S.A. de CV

a corporation existing under the laws of Mexico

and

 

Focus Gold Mexico Limited.

a corporation existing under the laws of Delaware

and

Focus Gold Corporation

a corporation existing under the laws of Nevada

 

(Collectively the “Vendor”)

 

- and -

 

Ing. Jesus Mario López Fabián

 

(the “Purchaser”)

 

 

WHEREAS the Purchaser is unrelated to the Vendor;

 

AND WHEREAS subject to the terms and conditions contained in this Agreement, the Vendor wishes to sell the Assets (as defined herein) to the Purchaser, and the Purchaser wishes to purchase the Assets from the Vendor;

 

NOW THEREFORE that in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree with each other as follows:

 

ARTICLE 1

DEFINITIONS

 

	
1.1

	
Definitions

 

Where used in this Agreement and in the schedules attached hereto, unless the context or subject matter or context is inconsistent therewith, the following terms and expressions have the meanings set forth below:

 

“Applicable Law” means any law, rule, statute, regulation, order, judgment, decree, treaty or other requirement having the force of law in Mexico applicable herein.

 

  

-2-

  

 

“Assets” means the rights to take and process the waste stockpiles from historical mining present on the Vendor’s 4 Cilas claims (Cila1, Cila2, Cila3 and Cila4).For the avoidance of doubt Assets does not include any mineral or mining rights on the Cilas claims.

 

“Business Day” means any day except Saturday, Sunday or any day on which banks are generally not open for business in the Country of Mexico.

 

“Closing” means the completion of the purchase and sale of the Assets, as contemplated by this Agreement.

 

“Closing Date” means the date on which all conditions precedent have been met or waived by both parties expected to be in less than a week from the date of this Agreement.

 

“Closing Time” means the time on the Closing Date when the transaction contemplated by this Agreement has been completed.

 

“Encumbrance” means any lien, mortgage, charge, pledge, security interest, prior assignment, option, warrant, lease, sublease, right to possession, encumbrance, claim, right or restriction which affects, by way of a conflicting ownership interest or otherwise, the right, title or interest in or to any particular property.

 

“including” means “including without limitation” and “includes” means “includes without limitation”.

 

“Legal Proceeding” means any litigation, action, application, suit, investigation, hearing, claim, complaint, grievance, civil, administrative, regulatory or criminal, arbitration proceeding or other similar proceeding, before or by any court or other tribunal and includes any appeal or review thereof and any application for leave for appeal or review.

 

“Liabilities” means, in respect of the Vendor, all costs, expenses, charges, debts, liabilities, claims, demands and obligations, whether primary or secondary, direct or indirect, fixed, contingent, absolute or otherwise, under or in respect of any contract, applicable law, taxes or otherwise, provided however, that “Liabilities” shall specifically exclude the Surviving Debt.

 

“Party” means a party to the Agreement and any reference to a Party includes its heirs, executors, administrators, successors and assigns; and “Parties” means every Party.

 

“Person” means any individual, partnership, limited partnership, joint venture, syndicate, firm, sole proprietorship, company, corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator, other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity, however designated or constituted.

 

“Purchase Price” has the meaning attributed to it in Section 2.2.

 

  

-3-

  

 

 

	
1.2

	
Knowledge

 

Where any representation, warranty or other statement in this Agreement is expressed to be made by the Vendor to its knowledge or is otherwise expressed to be limited in scope to facts or matters known to the Vendor or of which the Vendor is aware.

 

ARTICLE 2

PURCHASE OF ASSETS

 

	
2.1

	
Purchase and Sale of Assets

 

At the Closing Time, on and subject to the terms and conditions of this Agreement, the Vendor shall sell the Assets to the Purchaser, and the Purchaser shall purchase the Assets from the Vendor.

 

	
2.2

	
Purchase Price

 

The purchase price for the Assets purchased and sold pursuant to this Agreement shall be comprised of (i) US$1,000,000 (the “Purchase Price”).

 

	
2.3

	
Payment of Purchase Price

 

At the Closing Time, the Purchaser shall satisfy the Purchase Price to the Vendor by wiring US$1 million to the accounts directed in Schedule A attached hereto.

 

ARTICLE 3

REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY OF VENDOR

 

	
3.1

	
Representations and Warranties

 

The Vendor represents and warrants to the Purchaser as follows, and acknowledges that the Purchaser is relying on such representations and warranties in connection with the purchase by the Purchaser of the Assets:

 

	
  

	
(a)

	
Incorporation and Power.  The Vendor is a corporation that is organized and validly existing under the laws of the jurisdiction of its incorporation, and has the corporate power to enter into this Agreement and all other agreements and instruments contemplated by this Agreement and to perform its obligations under this Agreement and such other agreements and instruments.

 

	
  

	
(b)

	
Authorization and Enforceability.  This Agreement has been duly authorized, executed and delivered by the Vendor. This Agreement constitutes a valid and binding obligation of the Vendor enforceable against the Vendor in accordance with its terms and conditions subject, however to limitations on enforcement imposed by bankruptcy, insolvency, reorganization or other laws affecting the enforcement of the rights of creditors and others and to the extent that equitable remedies such as specific performance and injunctions are only available in the discretion of the court from which they are sought.

 

  

-4-

  

 

	
  

	
(c)

	
Title to Assets.  The Vendor has good and marketable legal and beneficial title to all of the Assets, free and clear of any and all Encumbrances.

 

	
  

	
(d)

	
Bankruptcy.  The Vendor is not an insolvent person within the meaning of the Bankruptcy and Insolvency Act (Canada).

 

ARTICLE 4

REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITY OF PURCHASER

 

	
4.1

	
Representations and Warranties

 

The Purchaser represents and warrants to the Vendor as follows, and acknowledges that the Vendor is relying upon such representations and warranties in connection with the sale of the Assets.

 

	
  

	
(a)

	
Incorporation and Power.  The Purchaser is a corporation that is organized and validly existing under the laws of the jurisdiction of its incorporation, and has the corporate power to enter into this Agreement and all other agreements and instruments contemplated by this Agreement and to perform its obligations under this Agreement and such other agreements and instruments.

 

	
  

	
(b)

	
Authorization and Enforceability.  This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser in accordance with its terms and conditions, subject, however, to limitations on enforcement imposed by bankruptcy, insolvency, reorganization or other laws affecting the enforcement of the rights of creditors and others and to the extent that equitable remedies such as specific performance and injunctions are only available in the discretion of the court from which they are sought.

 

	
  

	
(c)

	
Bankruptcy.  The Purchaser is not an insolvent person.

 

ARTICLE 5

CLOSING ARRANGEMENTS

	
5.1

	
Closing

 

The Closing shall take place at 10:00 a.m. on the Closing Date at the offices of the Vendor’s legal counsel in Mexico City, Mexico, or at such other time, such other date or such other place as may be agreed in writing by the Vendor and the Purchaser.

 

	
5.2

	
Vendor’s Closing Deliveries

 

At the Closing, the Vendor shall deliver or cause to be delivered to the Purchaser the following documents:

 

	
  

	
(a)

	
a General Conveyance in a form acceptable to the Purchaser;

 

  

-5-

  

 

	
  

	
(b)

	
a certified copy of the resolution of the Board of Directors of the Vendor parent approving the sale of the Assets; and

 

	
  

	
(c)

	
a certified copy of the resolution of the Board of Directors of Fairfields approving the sale of the Assets

 

	
5.3

	
Purchaser’s Closing Deliveries

 

At the Closing, the Purchaser shall deliver or cause to be delivered to the Vendor the following documents:

 

	
  

	
(a)

	
Proof of wire directions as outlined in Schedule A;

 

	
5.4

	
Possession

 

On the Closing Date, the Vendor shall provide access to the Purchaser to the Assets to the Assets.

 

	
5.5

	
Approvals, Consents or Waivers

 

To the extent not obtained prior to the date hereof, the Parties hereto shall cooperate in good faith and each shall use reasonable efforts to obtain all approvals, consents or waivers in respect of any interest, right or benefit relating to the Assets that is not capable of being transferred without the approval, consent or waiver of any third party or if the transfer of any of the Assets would constitute a breach of any obligation under, or a violation of, any Applicable Law unless the approval, consent or waiver of such third party is obtained.  To the extent any such approval, consent or waiver has not been obtained prior to the Closing Date, the Parties hereto shall cooperate in
any reasonable and lawful arrangements which will have the effect of providing the benefit of all such interests, rights or benefits in respect of which any such approval, consent or waiver is required to be obtained to the Purchaser.

 

ARTICLE 6

PURCHASER’S COVENANT

	
6.1

	
Covenant

 

The Purchaser hereby expressly agrees to cause the Vendor to honour each of its obligations (the “Vendor Obligations”) existing at the Closing Time, including but not limited to, all indemnification agreements entered into by the Vendor with its directors.  For greater certainty, the Purchaser unconditionally agrees to ensure the Vendor has sufficient funds to pay any amounts owing or payable by the Vendor in respect of the Vendor Obligations whether or not such amounts are owing or payable prior to or after the Closing Time.

 

ARTICLE 7

GENERAL

 

	
7.1

	
Time of Essence

 

Time shall be of the essence of this Agreement.

 

  

-6-

  

 

	
7.2

	
Survival of Representations and Warranties

 

The representations and warranties contained in this Agreement shall survive the Closing and notwithstanding such Closing, shall continue in full force and effect for the benefit of the Purchaser and Vendor (as applicable) for a period of one year from the date of this Agreement.

 

	
7.3

	
Entire Agreement

 

This Agreement constitutes the entire agreement between the Parties with respect to the sale of the Assets and supersedes all prior agreements, and discussions, whether oral or written, of the Parties.  There are no warranties, representations, covenants or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth herein.

 

	
7.4

	
Counterparts

 

This Agreement may be executed in counterparts and such counterparts together shall constitute a single instrument.  Delivery of an executed counterpart of this Agreement by electronic means, including, without limitation, by facsimile transmission or by electronic delivery in portable document format (“.pdf”) or tagged image file format (“.tif”), shall be equally effective as delivery of a manually executed counterpart hereof.  Any party delivering an executed counterpart of this Agreement by electronic means shall also
deliver a manually executed counterpart hereof by mail or courier.

 

	
7.5

	
Severability

 

If any provision of this Agreement is determined by a court to be invalid, illegal or unenforceable, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct and the Parties shall co-operate to give effect to any invalid, illegal or unenforceable provision to the extent permitted by Applicable Law.

 

	
7.6

	
Further Assurances

 

Each Party shall promptly do, execute, deliver or cause to be done, executed and delivered all further acts, documents and things in connection with this Agreement that the other Party may reasonably require for the purposes of giving effect to this Agreement.

 

	
7.7

	
Governing Law

 

This Agreement shall be construed, interpreted and enforced in accordance with the laws of Mexico applicable therein.

 

	
7.8

	
Successors and Assigns

 

All of the terms, conditions and provisions in this Agreement shall be binding upon and shall enure to the benefit of the Parties hereto and their respective successors and permitted assigns, including any successors as a result of amalgamation, change of control or reorganization.  Without the prior written consent of each of the parties hereto, this Agreement shall not be assigned.

 

  

-7-

  

 

	
7.9

	
Amendments and Waivers

 

No amendment or waiver of any provision of this Agreement shall be binding on any Party unless consented to in writing by such Party.  No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise provided.

 

	
7.10

	
Currency

 

All references to currency herein are deemed to mean the lawful money of the United States.

 

 [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

 

 

 

 

 

 

 

 

 

 

  

-8-

  

IN WITNESS WHEREOF this Agreement has been executed by the Parties hereto on the date first written above.

 

	
Fairfields Gold S.A. de CV

 

 

	  
	
/s/ Eduardo Zayas

	
Name:   Eduardo Zayas

	
Title: President

	
I have authority to bind the corporation

 

	
Focus Gold Mexico Limited

 

 

	  
	
/s/ Grant White

	
Name: Grant White

	
Title: President

	
I have authority to bind the corporation

 

 

	
Focus Gold Corporation

 

 

	  
	
/s/ Grant White

	
Name:   Grant White

	
Title: President

	
I have authority to bind the corporation

 

 

	
By:

	
/s/ Jesus Mario Lopez Fabian

	  	
Name:   Ing. Jesus Mario López Fabián

	  	  
	  	  

 

 

 

-9-ex10-1.htm

  

  

  

  

(U.S. ACCREDITED SUBSCRIBERS ONLY)

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

LIBERTY STAR URANIUM & METALS CORP.

 

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

UNITS

 

INSTRUCTIONS TO PURCHASER

 

	
1.  

	
This Subscription form is for use by United States accredited investors.

	
2.  

	
COMPLETE the information on page 2 of this Subscription Agreement.

 

	
3.  

	
COMPLETE the Questionnaire attached on pages 5 and 6 to this Subscription Agreement (the “Questionnaire”).

	
4.

	
You may wire the total purchase price to the lawyers of Liberty Star Uranium & Metals Corp. pursuant to the wiring instructions previously provided. The lawyers are authorized to  immediately release the funds to the Issuer upon the Units being issued.

 

	
5.

	
All other information must be filled in where appropriate.

 

 

  

  

  

This is Page 2  of 13  pages of a subscription agreement and related appendices, schedules and forms. Collectively, these pages together are referred to as the “Subscription Agreement”.

PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT

 

	
TO:

	
Liberty Star Uranium & Metals Corp. (the “Issuer”), of 5610 E Sutler Lane, Tucson, Arizona 85712

 

Subject and pursuant to the terms set out in the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices attached which are hereby incorporated by reference, the undersigned subscriber (“Subscriber”) hereby irrevocably subscribes for, and on Closing will purchase from the Issuer, the following securities at the following price:

 

	
________ Units

	
US$      0.0264         per Unit

	
The Subscriber or the Beneficial Purchaser owns, directly or indirectly, the following securities of the Issuer:

	  
	
[Check if applicable]  The Subscriber or the Beneficial Purchaser is an insider of the Issuer.

 

The Subscriber directs the Issuer to issue, register and deliver the certificates representing the Units as follows:

 

	
REGISTRATION INSTRUCTIONS

	  	
DELIVERY INSTRUCTIONS

	  	  	  
	
Name to appear on certificate

	  	
Name and account reference, if applicable

	  	  	  
	
Account reference if applicable

	  	
Contact name

	  	  	  
	
Address

	  	
Address

	  	  	  
	  	  	
Telephone Number

 

EXECUTED by the Subscriber this 13th day of December, 2011.  By executing this Subscription Agreement, the Subscriber certifies that the Subscriber and any beneficial purchaser for whom the Subscriber is acting are resident in the jurisdiction shown as the “Address of Subscriber” or “Address of Beneficial Purchaser”, respectively.

 

	
EXECUTION BY SUBSCRIBER:

	  	
DETAILS OF BENEFICIAL PURCHASER

	
X

	  	
(IF NOT THE SAME AS SUBSCRIBER)

	
Signature of individual (if Subscriber is an individual)

	  	  
	
X

	  	  
	
Authorized signatory (if Subscriber is not an individual)

	  	
Name of Beneficial Purchaser (please print)

	  	  	  
	
Name of Subscriber (please print)

	  	
Address of Beneficial Purchaser (residence)

	  	  	  
	
Name of authorized signatory (please print)

	  	
Telephone Number of Beneficial Purchaser

	  	  	  
	
Address of Subscriber

	  	
E-mail address of Beneficial Purchaser

	  	  	  
	
Telephone Number of Subscriber

	  	
Accepted this       day of ___________, 2011

	  	  	
LIBERTY STAR URANIUM & METALS CORP.

	
E-mail address of Subscriber

	  	
Per:

	  	  	  
	
Social Security/Tax I.D. No. of Subscriber

	  	
Authorized Signatory

By signing this acceptance, the Issuer agrees to be bound by the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices incorporated by reference. If funds are delivered to the Issuer’s lawyers, they are authorized to  immediately release the funds to the Issuer upon the Units being issued.

 

  

  

  

Page 3 of 13

TERMS

 

	
Reference date of this Subscription Agreement

	
December 13, 2011 (the “Agreement Date”).

The Offering

 

	
The Issuer

	
Liberty Star Uranium & Metals Corp. (the “Issuer”).

	
Offering

	
The offering consists of up to $_____________ in value of Units (“Units”) of the Issuer. Each Unit consists of one share (“Share”) of common stock (“Common Stock”) of the Issuer and one warrant (“Warrant”) of the Issuer.

	
Warrants

	
Each Warrant may be exercised for 36 months following the Closing Date for one Share (a “Warrant Share”) at an exercise price of US$0.03696. The Warrants are non-transferrable.

	
Issue Price

	
US $0.0264  per Unit.

	
Total Amount

	
Up to US $______________ from the sale of Units.

	
Selling Jurisdictions

	
The Units may be sold in jurisdictions where they may be lawfully sold (the “Selling Jurisdictions”).

	
Exemptions

	
The offering will be made in accordance with the following exemptions:

(a)the Accredited Investor exemption as provided by Regulation D promulgated under the 1933 Act; and

(b)such other exemptions as may be available the securities laws of the Selling Jurisdictions.

	
Registration of Securities

	
The Shares and Warrants will not be registered with the United States Securities and Exchange Commission and will be tradable in compliance with Rule 144 restricted periods.

	
Resale restrictions and legends

	
The Subscriber acknowledges that any resale of any of the Securities will be subject to resale restrictions contained in the securities legislation applicable to the Subscriber or proposed transferee.  The Subscriber acknowledges that none of the Securities have been registered under the 1933 Act or the securities laws of any state of the United States.  The Securities may not be offered or sold in the United States unless registered in accordance with federal securities laws and all applicable state securities laws or exemptions from such registration requirements are available.

The Subscriber acknowledges that the certificates representing the Shares and the Warrant Shares will bear the following legends:

“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

The Subscriber acknowledges that the certificate(s) representing the Warrants will bear the following legends:

“THESE WARRANTS AND THE SECURITIES THAT MAY BE ISSUED UPON THE EXERCISE OF THESE WARRANTS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

The Subscriber and any Beneficial Purchaser are advised to consult with their own legal counsel or advisors to determine the resale restrictions that may be applicable to them.

	
Closing Date

	
The completion of the sale and purchase of the Units will take place in one or more closings, on a date or dates as agreed to by the Issuer and the Subscriber. Payment for, and delivery of the Units, is scheduled to occur on or about December 13, 2011 or such later date as may be agreed upon by the Issuer and the Subscriber (the “Closing Date”).

 

  

  

  

Page 4 of 13

 

 

The Issuer

	
Jurisdiction of organization

	
The Issuer is incorporated under the laws of the State of Nevada.

	
Market

	
Certain market makers make market in the Issuer’s shares of common stock on the Financial Industry Regulatory Authority’s OTC Bulletin Board.

	
Commissions with Jurisdiction Over the Issuer

	
The “Commissions with Jurisdiction Over the Issuer” is the United States Securities and Exchange Commission and any applicable state securities regulators.

	
Securities Legislation Applicable to the Issuer

	
The “Securities Legislation Applicable to the Issuer” is the U.S. Securities Act of 1933, U.S. Securities Exchange Act of 1934, and any applicable state securities laws.

 

End of Terms

 

 

  

  

  

Page 5 of 13

UNITED STATES

ACCREDITED INVESTOR QUESTIONNAIRE

 

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Subscription Agreement.

 

This Questionnaire is for use by each Subscriber who is a US person (as that term is defined Regulation S of the United States Securities Act of 1933 (the “1933 Act”)) and has indicated an interest in purchasing Securities of the Issuer.  The purpose of this Questionnaire is to assure the Issuer that each Subscriber will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws.  The Issuer will rely on the information contained in this Questionnaire for the purposes of such determination.  The Securities will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act.  This Questionnaire is not an offer of the Securities or any other securities of the Issuer in any state other than those specifically authorized by the Issuer.

 

All information contained in this Questionnaire will be treated as confidential.  However, by signing and returning this Questionnaire, each Subscriber agrees that, if necessary, this Questionnaire may be presented to such parties as the Issuer deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Securities hereunder.

 

The Subscriber covenants, represents and warrants to the Issuer that it and the Beneficial Purchaser satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the 1933 Act, as indicated below:  (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Subscriber satisfies.)

 

	
  _____

	
  Category 1

	
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of US $5,000,000.

 

	
_____

	
  Category 2

	
A natural person whose individual net worth, or joint net worth with that person’s spouse, on the date of purchase exceeds US$1,000,000 excluding the value of the primary residence of such person(s) and the related amount of indebtedness secured by the primary residence up to its fair market value.

 

	
  _____

	
  Category 3

	
A natural person who had an individual income in excess of US$200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

 

	
  _____

	
  Category 4

	
A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; 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 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are 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 if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.

  

  

  

Page 6 of`13

 

	
  _____

	
  Category 5

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States).

 

	
  _____

	
  Category 6

	
A director or executive officer of the Issuer.

 

	
  _____

	
  Category 7

	
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act.

 

	
  _____

	
  Category 8

	
An entity in which all of the equity owners satisfy the requirements of Category 2 or 3.

 

Note that prospective Subscribers claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Issuer with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Subscriber’s status as an Accredited Investor.

 

The Subscriber hereby certifies that the information contained in this Questionnaire is complete and accurate and the Subscriber will notify the Issuer promptly of any change in any such information.  If this Questionnaire is being completed on behalf of a corporation, partnership, trust, estate or other entity, the person executing on behalf of the Subscriber represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _____ day of _________, 2011.

 

	
If a Corporation, Partnership or Other Entity:

 

	
If an Individual:

	
 

__________________________________________

Print of Type Name of Entity

 

__________________________________________

Signature of Authorized Signatory

 

__________________________________________

Type of Entity

	
 

_______________________________________

Signature

 

_______________________________________

Print or Type Name

 

_______________________________________

Social Security/Tax I.D. No.

 

 

 

  

  

  

Page 7 of 13

GENERAL PROVISIONS

 

 

	
1.  

	
DEFINITIONS

 

1.1           In the Subscription Agreement (including the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices incorporated by reference), the following words have the following meanings unless otherwise indicated:

 

	
(a)  

	
“1933 Act” means the United States Securities Act of 1933, as amended;

 

	
(b)  

	
“Applicable Legislation” means the Securities Legislation Applicable to the Issuer (as defined on page 4) and all legislation incorporated in the definition of this term in other parts of the Subscription Agreement, together with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by the Commissions;

 

	
(c)  

	
“Beneficial Purchaser” means a person for whom the Subscriber is acting in purchasing the Units who will be the beneficial owner of the Securities within the meaning attributed to it by Rule 13d-3 adopted by the SEC under the 1934 Act;

 

	
(d)  

	
“Closing” means the completion of the sale and purchase of the Units;

 

	
(e)  

	
“Closing Date” has the meaning assigned in the Terms;

 

	
(f)  

	
“Commissions” means the Commissions with Jurisdiction over the Issuer (as defined on page 4) and the securities commissions incorporated in the definition of this term in other parts of the Subscription Agreement;

 

	
(g)  

	
“General Provisions” means those portions of the Subscription Agreement headed “General Provisions” and contained on pages 7 to 13;

 

	
(h)  

	
“Private Placement” means the offering of the Securities on the terms and conditions of this Subscription Agreement;

 

	
(i)  

	
“Securities” means the Shares, the Warrants and the Warrant Shares, as defined in the Terms;

 

	
(j)  

	
“Subscription Agreement” means the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices incorporated by reference; and

 

	
(k)  

	
“Terms” means those portions of the Subscription Agreement headed “Terms” and contained on pages 3 to 4.

 

1.2           In the Subscription Agreement, the following terms have the meanings defined in Regulation S of the 1933 Act (“Regulation S”): “Directed Selling Efforts”, “Foreign Issuer”, “Substantial U.S. Market Interest”, “U.S. Person” and “United States”.

 

1.3           In the Subscription Agreement, unless otherwise specified, currencies are indicated in US dollars.

 

1.4           In the Subscription Agreement, other words and phrases that are capitalized have the meanings assigned to them in the body hereof.

 

  

  

  

Page 8 of 13

Acknowledgements, REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER

 

2.1           Acknowledgements concerning Offering

 

The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each Beneficial Purchaser for whom the Subscriber is contracting hereunder) that:

 

	
(a)  

	
the Securities have not been registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with Applicable Legislation;

 

	
(b)  

	
the Issuer will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

 

	
(c)  

	
the Issuer has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

 

	
(d)  

	
the Subscriber and the Subscriber’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Issuer regarding the Offering, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the public information which has been filed by the Issuer with the U.S. Securities and Exchange Commission, or any business plan, corporate profile or any other document provided to the Subscriber;

 

	
(e)  

	
the books and records of the Issuer are available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Subscriber during reasonable business hours at its principal place of business and that all documents, records and books pertaining to this Offering have been made available for inspection by the Subscriber, the Subscriber’s attorney and/or advisor(s);

 

	
(f)  

	
by execution hereof the Subscriber has waived the need for the Issuer to communicate its acceptance of the purchase of the Securities pursuant to this Subscription Agreement;

 

	
(g)  

	
the Issuer is entitled to rely on the representations and warranties and the statements and answers of the Subscriber contained in this Subscription Agreement and in the Questionnaire, and the Subscriber will hold harmless the Issuer from any loss or damage it may suffer as a result of the Subscriber’s failure to correctly complete this Subscription Agreement or the Questionnaire;

 

	
(h)  

	
the Subscriber shall indemnify and hold harmless the Issuer and, where applicable, its respective directors, officers, employees, agents, advisors and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Subscriber contained herein, the Questionnaire or in any other document furnished by the Subscriber to the Issuer in connection herewith, being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber to the Issuer in connection therewith;

  

  

  

Page 9 of 13

 

	
(i)  

	
the issuance and sale of the Securities to the Subscriber will not be completed if it would be unlawful or if, in the discretion of the Issuer acting reasonably, it is not in the best interests of the Issuer;

 

	
(j)  

	
the Subscriber has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions and it is solely responsible (and the Issuer is not in any way responsible) for compliance with applicable resale restrictions;

 

	
(k)  

	
the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Subscriber that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in shares of common stock the Issuer on the Financial Industry Regulatory Authority’s OTC Bulletin Board;

 

	
(l)  

	
neither the Commissions or similar regulatory authority has reviewed or passed on the merits of the Securities;

 

	
(m)  

	
no documents in connection with this Offering have been reviewed by the SEC or any state securities administrators;

 

	
(n)  

	
there is no government or other insurance covering any of the Securities; and

 

	
(o)  

	
this Subscription Agreement is not enforceable by the Subscriber unless it has been accepted by the Issuer, and the Subscriber acknowledges and agrees that the Issuer reserves the right to reject any subscription for any reason.

2.2           Representations by the Subscriber

 

The Subscriber represents and warrants to (on its own behalf and, if applicable, on behalf of the Beneficial Purchaser from whom the Subscriber is contracting hereunder) the Issuer that, as at the Agreement Date and at the Closing:

 

	
(a)  

	
the Subscriber and any Beneficial Purchaser are U.S. Persons;

 

	
(b)  

	
the Subscriber has received and carefully read this Subscription Agreement;

 

	
(c)  

	
the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is an entity, it is duly incorporated or organized and validly subsisting under the laws of its jurisdiction of incorporation or organization and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Subscriber;

 

	
(d)  

	
the Subscriber and any Beneficial Purchaser (i) have adequate net worth and means of providing for their current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) are able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

 

	
(e)  

	
the Subscriber and any Beneficial Purchaser are aware that an investment in the Issuer is speculative and involves certain risks, including the possible loss of the investment;

 

	
(f)  

	
the decision to execute this Subscription Agreement and purchase the Securities agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or

  

  

  

Page 10 of 13

 

	
(g)  

	
otherwise made by or on behalf of the Issuer and such decision is based entirely upon a review of any public information which has been filed by the Issuer with the U.S. Securities and Exchange Commission in compliance, or intended compliance, with applicable securities legislation;

 

	
(h)  

	
the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Subscriber, or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;

 

	
(i)  

	
the Subscriber has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber;

 

	
(j)  

	
the Subscriber and any Beneficial Purchaser have the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Issuer, and the Subscriber is providing evidence of such knowledge and experience in these matters through the information requested in the Questionnaire;

 

	
(k)  

	
the Subscriber understands and agrees that the Issuer and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Issuer;

 

	
(l)  

	
all information contained in the Questionnaire is complete and accurate and may be relied upon by the Issuer, and the Subscriber will notify the Issuer immediately of any material change in any such information occurring prior to the closing of the purchase of the Securities;

 

	
(m)  

	
Except for any Beneficial Purchaser disclosed on page 2 of this Subscription Agreement, the Subscriber is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest in such Securities, and the Subscriber has not subdivided its interest in the Securities with any other person;

 

	
(n)  

	
the Subscriber is not an underwriter of, or dealer in, the shares of common stock of the Issuer, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

	
(o)  

	
the Subscriber understands and agrees that none of the Securities have been registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws;

 

	
(p)  

	
the Subscriber understands and agrees that the Issuer will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933Act or pursuant to an available exemption from the registration requirements of the 1933 Act;

 

	
(q)  

	
the Subscriber has made an independent examination and investigation of an investment in the Securities and the Issuer and has depended on the advice of its legal and financial advisors and agrees that the Issuer will not be responsible in any way whatsoever for the Subscriber’s decision to invest in the Securities of the Issuer;

  

  

  

Page  11 of 13

 

	
(r)  

	
if the Subscriber is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the investor accounts for which the Subscriber acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined under Regulation D of the 1933 Act;

 

	
(s)  

	
if the Subscriber is acquiring the Securities as a fiduciary or agent for one or more investor accounts, the Subscriber has sole investment discretion with respect to each such account, and the Subscriber has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account;

 

	
(t)  

	
the Subscriber and any Beneficial Purchaser are not aware of any advertisement of any of the Securities and is not acquiring 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; and

 

	
(u)  

	
no person has made to the Subscriber or any Beneficial Purchaser any written or oral representations:

 

	
(i)  

	
that any person will resell or repurchase any of the Securities;

 

	
(ii)  

	
that any person will refund the purchase price of any of the Securities;

 

	
(iii)  

	
as to the future price or value of any of the Securities; or

 

	
(iv)  

	
that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Issuer on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in shares of common stock of the Issuer on the Financial Industry Regulatory Authority’s OTC Bulletin Board.

 

2.3           Reliance, indemnity and notification of changes

 

The representations and warranties in the Subscription Agreement (including the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices incorporated by reference) are made by the Subscriber with the intent that they be relied upon by the Issuer in determining its suitability as a purchaser of Securities, and the Subscriber hereby agrees to indemnify the Issuer against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur as a result of reliance thereon. The Subscriber undertakes to notify the Issuer immediately of any change in any representation, warranty or other information relating to the Subscriber set forth in the Subscription Agreement (including the first (cover) page, the Terms on pages 3 to 4, the General Provisions on pages 7 to 13 and the other schedules and appendices incorporated by reference) which takes place prior to the Closing.

 

2.4           Survival of representations and warranties

 

The representations and warranties contained in this Section will survive the Closing.

 

3.   ISSUER’S ACCEPTANCE

 

The Subscription Agreement, when executed by the Subscriber, and delivered to the Issuer, will constitute a subscription for the Units which will not be binding on the Issuer until accepted by the Issuer by executing the Subscription Agreement in the space provided on the face page(s) of the Subscription Agreement and, notwithstanding the Agreement Date, if the Issuer accepts the subscription by the Subscriber, the Subscription Agreement will be entered into on the date of such execution by the Issuer.

  

  

  

Page 12 of 13

 

4.    CLOSING

 

4.1           On or before the end of the business day before the Closing Date, the Subscriber shall deliver to the Issuer or the Issuer’s lawyers the Subscription Agreement and all applicable schedules and required forms, duly executed, and wire payment in full for the total price of the Units to be purchased by the Subscriber to the Issuer’s lawyers pursuant to the wiring instruction provided by the Issuer or the Issuer’s lawyers. After the funds are delivered to the Issuer’s lawyers, those lawyers are authorized to immediately release the funds to the Issuer.

 

4.2           At Closing, the Issuer will deliver to the Subscriber the certificates representing the Units purchased by the Subscriber registered in the name of the Subscriber or its nominee, or as directed by the Subscriber.

 

4.3           Where the funds for the purchase of the Units are delivered to the Issuer’s lawyers, the Issuer is entitled to treat such funds as an interest free loan to the Issuer until such time as the subscription for the Units is accepted and the certificates representing the Units have been issued to the Subscriber.

 

5.   MISCELLANEOUS

 

5.1           The Subscriber agrees to sell, assign or transfer the Securities only in accordance with the requirements of applicable securities laws and any legends placed on the Securities as contemplated by the Subscription Agreement.

 

5.2           The Subscriber hereby authorizes the Issuer to correct any minor errors in, or complete any minor information missing from any part of the Subscription Agreement and any other schedules, forms, certificates or documents executed by the Subscriber and delivered to the Issuer in connection with the Private Placement.

 

5.3           The Issuer will be entitled to rely on delivery by facsimile machine or e-mail of an executed copy of this Subscription Agreement, and acceptance by the Issuer of such facsimile or e-mail copy shall be equally effective to create a valid and binding agreement between the Subscriber and the Issuer in accordance with the terms hereof. If less than a complete copy of this Subscription Agreement is delivered to the Issuer at Closing, the Issuer and its counsel are entitled to assume that the Subscriber accepts and agrees to all of the terms and conditions of the pages not delivered at Closing unaltered. This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Subscription Agreement.

 

5.4           Without limitation, this subscription and the transactions contemplated by this Subscription Agreement are conditional upon and subject to the Issuer’s having obtained such regulatory approval of this subscription and the transactions contemplated by this Subscription Agreement as the Issuer considers necessary.

 

5.5           This Subscription Agreement is not assignable or transferable by the parties hereto without the express written consent of the other party to this Subscription Agreement.

 

5.6           Time is of the essence of this Subscription Agreement.

 

5.7           Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for in this Subscription Agreement, this Subscription Agreement contains the entire agreement between the parties with respect to 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 Issuer, or by anyone else.

 

5.8           The parties to this Subscription Agreement may amend this Subscription Agreement only in writing.

 

5.9           This Subscription Agreement enures to the benefit of and is binding upon the parties to this Subscription Agreement and their successors and permitted assigns.

  

  

  

Page 13 of 13

 

5.10           A party to this Subscription Agreement will give all notices to or other written communications with the other party to this Subscription Agreement concerning this Subscription Agreement by hand or by registered mail addressed to the address given on page 1.

 

5.11           This Subscription Agreement is to be read with all changes in gender or number as required by the context.

 

5.12           This Subscription Agreement will be governed by and construed in accordance with the internal laws of State of Nevada (without reference to its rules governing the choice or conflict of laws).

 

End of General Provisions

 

End of Subscription Agreement

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