HALL-HOUSTON EXPLORATION II, L.P. SUBSCRIPTION AGREEMENT
Exhibit
10.7
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Subscriber:
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Petro
Resources Corporation
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dba
PRCT, Inc.
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▇▇▇▇-▇▇▇▇▇▇▇
EXPLORATION II, L.P.
THE
LIMITED PARTNERSHIP INTERESTS OF ▇▇▇▇-▇▇▇▇▇▇▇ EXPLORATION II, L.P. HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
THE SECURITIES LAWS OF ANY STATE OR ANY OTHER SECURITIES LAWS AND ARE BEING
OFFERED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS. SUCH LIMITED PARTNERSHIP INTERESTS MUST BE
ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE
WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND ANY
OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ▇▇▇▇-▇▇▇▇▇▇▇
EXPLORATION II, L.P., AS AMENDED FROM TIME TO TIME. THEREFORE, PURCHASERS OF
SUCH LIMITED PARTNERSHIP INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TABLE
OF CONTENTS
Page
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ARTICLE
I
SUBSCRIPTION
FOR INTERESTS; CLOSING CONDITIONS AND DELIVERIES
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1.1
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DEFINED
TERMS
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1
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1.2
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SUBSCRIPTION
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1
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1.3
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ACCEPTANCE
OF SUBSCRIPTION
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2
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1.4
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CLOSING
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2
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ARTICLE
II
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PARTNERSHIP
AGREEMENT
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2.1
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PARTNERSHIP
AGREEMENT
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2
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ARTICLE
III
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REPRESENTATIONS
AND COVENANTS OF THE SUBSCRIBER
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3.1
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REPRESENTATIONS
AND COVENANTS
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3
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3.2
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EFFECT
AND TIME OF REPRESENTATIONS AND COVENANTS
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8
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ARTICLE
IV
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REPRESENTATIONS
AND COVENANTS OF THE PARTNERSHIP AND GENERAL
PARTNER
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4.1
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REPRESENTATIONS
AND COVENANTS
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8
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4.2
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EFFECT
AND TIME OF REPRESENTATIONS
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10
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ARTICLE
V
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POWER
OF ATTORNEY
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5.1
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POWER
OF ATTORNEY
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10
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5.2
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OTHER
PROVISIONS
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11
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ARTICLE
VI
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MISCELLANEOUS
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6.1
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AMENDMENTS
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12
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6.2
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NOTICES
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12
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6.3
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GOVERNING
LAW; JURISDICTION; VENUE
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12
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6.4
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ASSIGNMENT;
BINDING EFFECT
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13
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6.5
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ENTIRE
AGREEMENT
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13
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6.6
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CONSTRUCTION
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13
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6.7
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COUNTERPARTS;
FACSIMILE
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13
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6.8
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TERMINATION;
EFFECT OF TERMINATION
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13
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Appendices:
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Appendix
I
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-
Accredited Investor Certificate and Forms W-8 and W-9
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SUBSCRIPTION
AGREEMENT
This
Subscription Agreement (this “Agreement”),
effective as of the Closing Date (as defined below), is made by and among
▇▇▇▇-▇▇▇▇▇▇▇ Exploration II, L.P., a Delaware limited partnership (the
“Partnership”),
HHEP
▇▇ ▇▇, L.P., a Delaware limited partnership and the Partnership's general
partner (the “General
Partner”),
and
the subscriber specified on the signature page hereof (the “Subscriber”).
W
I T N E S S E T H:
WHEREAS,
the Subscriber desires to purchase a limited partner interest in, and to become
a limited partner in the Partnership, and the Partnership desires to sell the
Subscriber a limited partner interest in, and to admit the Subscriber as a
limited partner in, the Partnership, in each case, subject to the terms and
conditions of this Agreement;
NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements herein, the parties hereto agree as follows:
AGREEMENTS:
ARTICLE
I
Subscription
for Interests; Closing Conditions and Deliveries
1.1 Defined
Terms.
Capitalized terms used in this Agreement that are not defined herein shall
have
the meanings specified in the Amended and Restated Agreement of Limited
Partnership of the Partnership (as further amended from time to time, the
“Partnership
Agreement”),
a copy
of which has been provided to Subscriber together with this
Agreement.
1.2 Subscription.
Subject
to the terms and conditions set forth in this Agreement, the Subscriber hereby
agrees to (a) subscribe for and purchase from the Partnership an Interest in
the
Partnership, (b) subject to Section 1.3, make a Commitment to the Partnership
with respect to such Interest equal to the “Commitment” set forth on the
signature page hereto, which Commitment shall be at least $1,000,000 (unless
waived by the General Partner in its sole discretion), (c) become a Limited
Partner and (d) subject to the further terms and conditions set forth in the
Partnership Agreement, make Capital Contributions to the Partnership from time
to time. Notwithstanding the foregoing, the Subscriber understands that the
Commitment set forth on the signature page hereto is merely a maximum amount
and
that, in connection with any acceptance of Subscriber’s subscription, the
General Partner may, in its sole discretion, reduce the amount of such
Commitment.
1.3 Acceptance
of Subscription.
The
Subscriber understands and acknowledges that the Partnership and the General
Partner will rely on this Subscription Agreement and that the Subscriber has
no
right to cancel, assign, terminate or revoke this Subscription Agreement
(including as a result of any reduction in the Subscriber’s Commitment as
provided in Section 1.2), but that the General Partner will have a right to
refuse to accept this Subscription Agreement for any reason or no reason,
including if, in its sole discretion, the General Partner believes that (i)
the
Subscriber is not an Accredited Investor (as defined in Rule 501 of the rules
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”)),
(ii)
the issuance of the Partnership Interest to the Subscriber would require the
Partnership to register as an investment company under the Investment Company
Act of 1940, as amended (the “Investment
Company Act”)
(iii)
the issuance of the Partnership Interest to the Subscriber would require the
Partnership, the General Partner or ▇▇▇▇-▇▇▇▇▇▇▇ Exploration Partners, L.L.C.,
the general partner of the General Partner (the “GP
Company”),
to
register as an investment adviser under the Investment Advisers Act of 1940,
as
amended (the “Investment Advisers Act”), (iv) the Subscriber is a “benefit plan
investor,” as such term is defined in 29 C.F.R. §2510.3-101(f)(2) or (v) the
Partnership Interest is otherwise determined not to be a suitable investment
for
the Subscriber. If not accepted, this Subscription Agreement will be null and
void and all funds deposited by the Subscriber will be returned. The Subscriber
also understands that this Subscription Agreement will not be binding on the
Partnership or the General Partner until accepted, that the acceptance or
rejection of subscriptions in whole or in part will be in the sole discretion
of
the General Partner and that subscriptions need not be accepted in the order
received. If the General Partner accepts the Subscriber’s subscription in whole
or in part, the General Partner will execute the two copies of this Subscription
Agreement that the Subscriber executed and submitted to the Partnership and
will
return one executed copy to the Subscriber.
1.4 Closing.
The
closing (the “Closing”)
of the
sale and purchase of the Subscriber’s Partnership Interest will occur as of the
date the Subscriber’s subscription is accepted by the General Partner as
evidenced on the General Partner’s signature page hereto (the “Closing
Date”),
which
acceptance may occur on or before April 30, 2006, subject to the General
Partner’s right to extend such date for up to an additional 60 days in its sole
discretion. The Closing shall be held at the offices of the General Partner
in
Houston, Texas, or at such other place as the General Partner may
designate.
ARTICLE
II
Partnership
Agreement
2.1 Partnership
Agreement.
From and
after the Closing Date, the Subscriber shall be admitted as a Limited Partner
and shall (and hereby does) adopt, accept, and agree to be bound by the terms
and conditions of the Partnership Agreement, including, without limitation,
the
obligation to make Capital Contributions as required by the Partnership
Agreement.
ARTICLE
III
Representations
and Covenants of the Subscriber
3.1 Representations
and Covenants.
The
Subscriber hereby represents and warrants to, and agrees with, the General
Partner and the Partnership as follows:
(a) Power
and Authority.
The
Subscriber has all requisite power, authority and legal capacity (i) to enter
into this Agreement, the Partnership Agreement, any side letters, and such
other
agreements, certificates, or other instruments as are executed and delivered
by
the Subscriber hereunder and thereunder (collectively, the “Subscriber
Agreements”),
(ii)
to perform its obligations under each Subscriber Agreement, and (iii) to
consummate the transactions that are the subjects of any Subscriber Agreement.
This Agreement has been duly authorized, executed and delivered by the
Subscriber and, upon due authorization, execution and delivery by the General
Partner, will constitute the valid and legally binding agreement of the
Subscriber enforceable in accordance with its terms against the Subscriber,
except as such enforceability may be limited by (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws of general
application relating to or affecting the enforcement of creditors’ rights and
remedies, as from time to time may be in effect, (B) application of equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (C) considerations of public
policy.
(b) Compliance
with Laws and Other Instruments.
The
execution and delivery of the Subscriber Agreements by the Subscriber and the
consummation of the transactions contemplated by the Subscriber Agreements
do
not conflict with or result in any violation of or default under any provision
of any charter, bylaws, trust agreement, partnership agreement, or other
organizational document, as the case may be, of the Subscriber or any agreement,
certificate, or other instrument to which the Subscriber is a party or by which
the Subscriber or, to Subscriber’s knowledge, any of its properties is bound, or
any permit, franchise, judgment, decree, statute, rule, regulation, or other
law
applicable to the Subscriber or the business or properties of the
Subscriber.
(c) No
Litigation.
There
is no litigation, investigation or other proceeding pending or, to the
Subscriber’s knowledge, threatened against the Subscriber or any of the
Subscriber’s Affiliates which, if adversely determined, would adversely affect
the Subscriber’s business or financial condition or the Subscriber’s ability to
perform the Subscriber’s obligations under this Agreement or the Partnership
Agreement.
(d) Consents.
No
consent, approval or authorization of, or filing, registration or qualification
with, any court or governmental or regulatory department, agency or authority
having jurisdiction over the Subscriber or its business or properties is
required for the execution and delivery of this Agreement or the Partnership
Agreement by the Subscriber or the performance of the Subscriber’s obligations
and duties hereunder or thereunder.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-3-
(e) Accredited
Investor.
The
Subscriber is an “accredited investor” as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act, and the certifications
made, and information furnished, by the Subscriber in Appendix
I in
connection with this subscription are true and complete.
(f) Investment
Intent.
The
Subscriber is acquiring the Interest for its own account for investment, and
not
with a view to any distribution, resale, subdivision, or fractionalization
thereof in violation of the Securities Act or any other applicable domestic
or
foreign securities law, and the Subscriber has no present plans to enter into
any contract, undertaking, agreement, or arrangement for any such distribution,
resale, subdivision, or fractionalization.
(g) Access.
The
Subscriber has carefully reviewed and is familiar with the terms of each
Subscriber Agreement and the confidential Informational Memorandum relating
to
Interests in the Partnership (the “Informational
Memorandum”),
a
copy of each of which has been provided to the Subscriber. The General Partner
has made available to the Subscriber or its representatives all agreements,
documents, records, and books that the Subscriber or its representatives have
requested relating to an investment in the Partnership. The Subscriber has
had a
full opportunity to ask questions of and receive answers from the Partnership
or
a Person acting on behalf of the Partnership, or the General Partner, concerning
the terms and conditions of this investment, and all questions asked by the
Subscriber have been adequately answered to the full satisfaction of the
Subscriber.
(h) Illiquidity.
The
Subscriber understands that substantial restrictions exist on transferability
of
the Interest and any portion thereof in the Partnership, that no market for
resale of any such interest exists or is expected to develop, and that the
Subscriber may not be able to liquidate its investment in the Partnership.
The
Subscriber represents and warrants further that it has no contract,
understanding, agreement or arrangement with any person to sell or transfer
or
pledge to such person or anyone else any of the Interest for which the
Subscriber hereby subscribes (in whole or in part); and the Subscriber
represents and warrants that it has no present plans to enter into any such
contract, undertaking, agreement or arrangement. The Subscriber understands
that
the Interests cannot be sold or transferred without the prior written consent
of
the General Partner, which consent may be withheld in its sole and absolute
discretion and which consent will be withheld if any such transfer could cause
the Partnership to become subject to regulation under federal law as an
investment company or would subject the Partnership to adverse tax consequences.
The Subscriber understands that any instruments representing the Interest will
bear legends restricting the transfer thereof.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-4-
(i) Awareness
of Risks; Taxes.
The
Subscriber understands that investment in the Partnership entails a very high
degree of risk and understands fully the risks associated with the operation
of
the Partnership and the Subscriber's investment in the Partnership and has
received and carefully reviewed all of the risk factors and other information
contained in the Informational Memorandum. The Subscriber represents and
warrants that it is aware (i) that the Partnership has no operating history;
(ii) that the Interests involve a substantial degree of risk of loss of the
Subscriber’s entire investment and that there is no assurance of any return on
such investment; and (iii) that any federal and/or state income tax benefits
which may be available to the Subscriber may be lost through the adoption of
new
laws or regulations, to changes to existing laws and regulations and to changes
in the interpretation of existing laws and regulations. The Subscriber further
represents that it is relying solely on its own conclusions or the advice of
its
own counsel or investment representative with respect to tax aspects of any
investment in the Partnership.
(j) Capacity
to Contract.
If the
Subscriber is an individual, the Subscriber represents that he or she is over
21
years of age and has the capacity to execute, deliver and perform this
Subscription Agreement and the Partnership Agreement. If the Subscriber is
not
an individual, the Subscriber represents and warrants that it is a corporation,
partnership, association, joint stock company, trust or unincorporated
organization, and was not formed for the specific purpose of acquiring an
Interest.
(k) Economic
Loss, Suitability and Sophistication.
The
Subscriber (i) is able to bear the economic risk of losing its entire investment
in the Partnership and (ii) is able to bear such risk for an indefinite period
of time. The Subscriber has evaluated the risks involved in investing in the
Interest and has determined that the Interest is a suitable investment for
the
Subscriber. The Subscriber's overall commitment to investments which are not
readily marketable is not disproportionate to its net worth. The Subscriber's
investment in the Partnership will not cause such overall commitment to become
excessive. The Subscriber has such knowledge and experience in financial and
business matters that it is capable of evaluating the risks and merits of this
investment.
(l) Transfer
and Transferability.
The
Subscriber acknowledges and agrees that, based in part upon its representations
contained herein and in reliance upon applicable exemptions, the purchase and
sale of the Interest has not been and will not be registered under the
Securities Act or the securities laws of any other domestic or foreign
jurisdiction. Accordingly, the Interest may not be offered for sale, sold,
pledged, hypothecated, or otherwise transferred in whole or in part except
in
compliance with all applicable laws, including securities laws. The Subscriber
acknowledges that it has been advised that the Partnership has no obligation
and
does not intend to cause the Interest to be registered under the Securities
Act
or any other securities laws or to comply with any exemption under the
Securities Act or any other securities law which would permit the Subscriber
to
sell the Subscriber's interest in the Partnership. The Subscriber also
understands that sales or transfers of the Interest are further restricted
by
the provisions of the Partnership Agreement.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-5-
(m) Principal
Place of Business.
The
address set forth on the Subscriber's signature page to this Agreement is the
Subscriber's principal place of business (or residence if a natural Person),
and
the Subscriber has no present intention of moving its principal place of
business (or residence if a natural Person) to any other domestic or foreign
jurisdiction.
(n) Benefit
Plan Investor Status.
The
Subscriber is not a “benefit plan investor” (as such term is defined in 29
C.F.R. §2510.3-101(f)(2)).
(o) Investment
Company Act. (i)
The
Subscriber understands that the Partnership has not been registered as an
investment company under the Investment Company Act in reliance upon an
exemption from registration thereunder, and it agrees that the Interest that
it
is acquiring may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of in any manner that would require the
Partnership to register as an investment company under the Investment Company
Act. The Subscriber has been advised that the Partnership has no obligation
and
does not intend to register any Interests under the Investment Company Act.
The
investment of the Subscriber in the Partnership will not represent more than
40%
of the Subscriber’s total assets or its committed capital. The Subscriber will
not maintain a separate investment account with respect to its investment in
the
Partnership whereby each of its partners, shareholders, trustees or other owners
will have the right to elect not to participate in such investment, except
where
such election will require the consent of all persons or the consent of the
Subscriber’s general partner (or other controlling person).
(ii) Beneficial
ownership by the Subscriber of its Interest does not constitute beneficial
ownership by more than one person for purposes of Section 3(c)(1) of the
Investment Company Act. The Subscriber shall deliver promptly to the General
Partner any information or documents that the General Partner may reasonably
request to verify the foregoing and to ensure compliance with the Investment
Company Act and the availability of an exemption of the Partnership from
registration thereunder.
(p) Investment
Advisers Act.
The
Subscriber understands that neither the Partnership, the General Partner nor
the
GP Company has registered as an investment adviser under the Investment Advisers
Act in reliance upon an exemption from registration provided by Section
203(b)(3) thereunder. In particular and without limitation, the Subscriber
is
not an investment company registered under the Investment Company Act or any
entity that has elected to be a business development company (as defined in
Section 202(a)(22) of the Investment Advisers Act) pursuant to Section 54
of the Investment Company Act (and has not withdrawn such election), and the
Subscriber covenants that it will not transfer, pledge, hypothecate or otherwise
dispose of its Interest to any such investment company or business development
company.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-6-
(q) No
Investment Advice.
The
Subscriber acknowledges and agrees that, pursuant to the Partnership Agreement,
the General Partner has the exclusive power and discretion to make all
investment decisions on behalf of the Partnership, subject to the terms of
the
Partnership Agreement. Accordingly, the Subscriber acknowledges that neither
the
General Partner nor any Affiliate thereof has rendered or will render any
investment advice or securities valuation advice to the Subscriber, and that
the
Subscriber is neither subscribing for nor acquiring any interest in the
Partnership in reliance upon, or with the expectation of, any such
advice.
(r) Tax
Year.
Unless
otherwise specified on the Subscriber's signature page to this Agreement, the
Subscriber's tax year ends on December 31 of each year.
(s) Withholding.
The
information provided by the Subscriber on Form W-8 or Form W-9, as applicable,
in Appendix
I
and
delivered to the General Partner in connection with this Agreement is true
and
complete.
(t) Publicly
Traded Partnerships.
Either
the Subscriber is not a partnership, S corporation, or grantor trust for U.S.
federal income tax purposes, or, if the Subscriber is a partnership, S
corporation, or grantor trust, the Subscriber was not formed with, and will
not
be used for, a principal purpose of permitting the Partnership to satisfy the
100 partner limitation contained in Section 1.7704-1(h)(1)(ii) of the Treasury
Regulations promulgated under the Code.
(u) Compliance
with Anti-Terrorism and Anti-Money Laundering Laws and
Regulations.
The
Subscriber does hereby represent and warrant to the Partnership and to the
General Partner that it and all of its beneficial owners (if the Subscriber
is
an entity) are in compliance with all laws, statutes, rules and regulations
relating to anti-terrorism or anti-money laundering laws of any federal, state
or local government in the United States of America applicable to such person(s)
or entity(ies), including without limitation, the USA PATRIOT Act, Pub. L,
No.
107-56 (October 26, 2001), Executive Order No. 13224, 66 Fed. Reg. 49079
(Sept. 23, 2001) and all other similar requirements contained in the rules
and regulations of the Office of Foreign Asset Control (“OFAC”),
the
Department of Treasury and in any enabling legislation or other Executive Orders
in respect thereof. The Subscriber further represents and warrants to the
Partnership and the General Partner that neither it nor any of its beneficial
owners (if the Subscriber is an entity) is listed on the Specially Designated
Nationals and Blocked Persons List maintained by OFAC and/or on any other lists
of terrorists or terrorist organizations maintained and made publicly available
by any governmental department, agency, or other entity.
(v) Eligibility
and compliance with federal oil and gas lease
regulation. The
Subscriber is eligible to acquire and hold an interest in federal oil and gas
leases and is in compliance with the certification requirements under 43 CFR
Parts 12 and 18 to the extent applicable to it.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-7-
3.2 Effect
and Time of Representations and Covenants.
The
Subscriber's representations and agreements set forth in this Agreement herein
(including the information set forth on the signature page hereto) and the
representations and information furnished in Appendix I
are
true, and have been complied with, as of the date of the Subscriber's execution
of this Agreement and shall be true, and shall have been complied with, as
of
the Closing Date. The Subscriber acknowledges that the Partnership, the General
Partner and each respective partner thereof, has relied and will rely upon
the
representations and agreements of, and information furnished by, the Subscriber
set forth in this Agreement and Appendix
I
and that
all such representations, agreements, and furnished information shall survive
the Closing Date and the execution of the Partnership Agreement.
ARTICLE
IV
Representations
and Covenants of the Partnership and General Partner
4.1 Representations
and Covenants.
The
Partnership and the General Partner hereby jointly and severally represent
and
warrant to, and agree with, the Subscriber as of the Closing Date as
follows:
(a) Power
and Authority.
The
Partnership and the General Partner have all requisite power, authority and
legal capacity to enter into each Subscriber Agreement to which it is a party,
to perform its respective obligations under each such Subscriber Agreement,
and to consummate the transactions that are the respective subjects of each
such Subscriber Agreement. The signature of the respective individual signing
any Subscriber Agreement on behalf of the Partnership or the General Partner
is
binding upon the Partnership or the General Partner, as the case may be. All
actions required hereunder to be taken by the General Partner and the
Partnership as a condition to the issuance and sale of the limited partnership
interests purchased by the Subscriber have been taken; and each Limited Partner
has been admitted as a limited partner of the Partnership in compliance with
the
Act and is entitled to all the benefits of a limited partner under the
Partnership Agreement on the terms set forth in the Partnership Agreement.
This
Agreement has been duly authorized, executed and delivered by the Partnership
and the General Partner and, upon due authorization, execution and delivery
by
the Subscriber, will constitute the valid and legally binding agreement of
the
Partnership and the General Partner, enforceable in accordance with its terms
against the Partnership and the General Partner, except as such enforceability
may be limited by (A) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws of general application relating to or
affecting the enforcement of creditors’ rights and remedies, as from time to
time may be in effect, (B) application of equitable principles (regardless
of
whether such enforceability is considered in a proceeding in equity or at law)
and (C) considerations of public policy.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-8-
(b) Compliance
with Laws and Other Instruments.
Neither
the General Partner nor the Partnership is in violation or in default (nor
has
any event occurred that with notice, lapse of time, or both, would constitute
a
default) in the performance of any obligation, agreement or condition contained
in the Subscriber Agreements, or any other agreement or any license, permit,
franchise, certificate or mortgage to which any of them is a party or by which
any of them is bound or to which the properties of any of them are subject.
The
execution and delivery of the Subscriber Agreements by or on behalf of the
Partnership or the General Partner and the consummation by the Partnership
or
the General Partner of the transactions contemplated by the Subscriber
Agreements (including without limitation the offer and sale of Interests) do
not
and will not (i)
conflict with or result in any violation of or default under any provision
of
the respective certificate of limited partnership, partnership agreement, or
other organization document of the Partnership or the General Partner or any
agreement, certificate, or other instrument (including without limitation any
indenture, mortgage, deed of trust, credit agreement, note or other evidence
of
indebtedness, lease, or license) to which the Partnership or the General Partner
is a party or by which the Partnership or any of its properties is bound, or
any
permit, franchise, order, writ, judgment, decree, statute, rule, regulation,
or
other law applicable to the Partnership or the General Partner or their
respective business or properties, (ii)
except
as provided under the terms of the Partnership Agreement, result in the creation
of any mortgage, lien, encumbrance or charge upon any of the properties or
assets of the General Partner or the Partnership or (iii) assuming the
representations set forth in Section 3.1 and those made by any other
subscriber in any other subscription agreement for the purchase of an Interest
are true, require the filing or registration with, or the approval,
authorization, license, or consent of, any court or governmental or regulatory
department, agency, or authority having jurisdiction over the Partnership or
its
business or properties which has not already been duly and validly given or
obtained or which is required in accordance with the next sentence. As soon
as
practicable following the Closing Date, but in all events within the periods
prescribed by applicable law, the Partnership and the General Partner will
file
a Form D with the Securities and Exchange Commission and any applicable state
securities regulatory authorities and will file such other notices and reports
as are required to be filed under applicable state securities laws in order
to
qualify for exemptions applicable to the offer or sale of interests in the
Partnership.
(c) Offer
of Interests.
Assuming the representations set forth in Section 3.1 and those made by any
other subscriber in any other subscription agreement for the purchase of an
Interest are true, neither the Partnership nor the General Partner nor anyone
acting on their respective behalves has taken or will take any action that
would
subject the issuance or sale of any interest in the Partnership acquired by
the
Subscriber to the registration and prospectus delivery provisions of the
Securities Act.
(d) Investment
Company Act.
Assuming the representations set forth in Section 3.1 and those made by any
other subscriber in any other subscription agreement for the purchase of an
Interest are true, the Partnership is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-9-
(e) Jurisdictions.
Each of
the Partnership and the General Partner is duly qualified to transact business,
and is in good standing, in every jurisdiction in which the character of the
business respectively conducted by it or permitted to be conducted by it makes
such qualification necessary, except where the failure to be so qualified would
not have a material adverse effect on the operations, business, or affairs
of
the Partnership.
(f) Proceedings.
No
action, proceeding, or investigation is pending or, to the knowledge of the
General Partner, threatened against the Partnership, the General Partner, any
Affiliate of the General Partner, or the Management Principal that
(i) questions or challenges the validity or purpose of the Partnership,
(ii) could reasonably be expected to have a material adverse effect on the
operations, business, or affairs of the Partnership, or (iii) claims or
alleges any fraud or misrepresentation under, or any violation of, any federal
or state securities law, rule, or regulation. There are no other actions,
proceedings, or investigations pending or, to the knowledge of the General
Partner, threatened against or affecting the Partnership or the General
Partner.
4.2 Effect
and Time of Representations.
The
representations and agreements of the Partnership and the General Partner set
forth in this Agreement are true, and have been complied with, as of the Closing
Date. The Partnership and the General Partner acknowledge that the Subscriber
has relied and will rely upon the representations and agreements of the
Partnership or the General Partner set forth in this Agreement, and that all
such representations and agreements shall survive the Closing Date and the
execution of the Partnership Agreement.
ARTICLE
V
Power
of Attorney
5.1 Power
of Attorney.
The
Subscriber hereby irrevocably constitutes and appoints the General Partner,
with
full power of substitution, the true and lawful attorney-in-fact and agent
of
the Subscriber, to execute, acknowledge, verify, swear to, deliver, record
and
file, in its or its assignee’s name, place and stead, all in accordance with the
terms of this Agreement, all instruments, documents and certificates that may
from time to time be required by the laws of the United States of America,
the
State of Delaware, any other jurisdiction in which the Partnership conducts
or
may conduct its affairs in the future, or any political subdivision or agency
thereof to effectuate, implement and continue the valid existence and affairs
of
the Partnership, including, without limitation, the power and authority to
verify, swear to, acknowledge, deliver, record and file:
(a) all
certificates and other instruments, including any amendments to the Certificate
of Limited Partnership, that the General Partner deems necessary or appropriate
to form, qualify or continue the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and all other jurisdictions in which the Partnership conducts or
plans to conduct its affairs;
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-10-
(b) the
Partnership Agreement and any amendments to the Partnership Agreement or any
other agreement or instrument that the General Partner deems necessary or
appropriate to (i) effect the addition, substitution or removal of any
Limited Partner or General Partner pursuant to the Partnership Agreement or
(ii) effect any other amendment or modification to the Partnership
Agreement, but only if such amendment or modification is duly adopted in
accordance with the terms of the Partnership Agreement;
(c) all
conveyances and other instruments that the General Partner deems necessary
or
appropriate to reflect the dissolution and termination of the Partnership
pursuant to the terms of the Partnership Agreement, including the writing
required by the Act to cancel the Certificate of Limited
Partnership;
(d) all
instruments relating to Transfers of Interests of Limited Partners or to the
admission of any substitute Limited Partner;
(e) certificates
of assumed name and such other certificates and instruments as may be necessary
or appropriate under the fictitious or assumed name statutes from time to time
in effect in the State of Delaware and all other jurisdictions in which the
Partnership conducts or plans to conduct its affairs;
(f) any
amendment to or modification or restatement of the Partnership Agreement, and
any other action, agreement, certificate, report, consent, instrument, filing,
or writing made by or relating to the Partnership, as the General Partner or
its
legal counsel deems reasonably necessary to ensure that the Partnership remains
qualified for any applicable exemption under the Investment Company Act,
provided such actions are taken in compliance with the terms and conditions
of
the Partnership Agreement; and
(g) any
agreement, certificate, report, consent, instrument, filing, or writing that
the
General Partner or its legal counsel deems necessary, desirable or appropriate
for pursuing or effecting any rights or remedies available under the Partnership
Agreement or otherwise with respect to a Defaulting Limited
Partner.
5.2 Other
Provisions.
This
power of attorney shall terminate upon the bankruptcy or dissolution of the
General Partner. The power of attorney granted herein shall be deemed to be
coupled with an interest, shall be irrevocable, shall survive and not be
affected by the death, liquidation, dissolution, bankruptcy or legal disability
of the Subscriber or the transfer of all or any part of the Subscriber’s
interest in the Partnership and shall extend to its successors and assigns;
and
may be exercisable by such attorney-in-fact and agent for the Subscriber by
listing the Subscriber’s name on any such instrument and executing such
instrument acting as attorney-in-fact. Any person dealing with the Partnership
may conclusively presume and rely upon the fact that any instrument referred
to
above, executed by such attorney-in-fact and agent, is authorized, regular
and
binding, without further inquiry. If required, the Subscriber shall execute
and
deliver to the General Partner within five days after the receipt of a request
therefor, such further designations, powers of attorney or other instruments
as
the General Partner shall reasonably deem necessary to accomplish the purposes
of this Article ▇.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-11-
ARTICLE
VI
Miscellaneous
6.1 Amendments.
Except
as provided in Section 1.2 hereof with respect to a reduction of the
Subscriber’s Commitment by the General Partner, this Agreement may be modified
or amended only with the written consent of the Partnership, the General
Partner, and the Subscriber.
6.2 Notices.
All
notices,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given to any party when delivered in person,
by registered or certified mail, overnight mail or courier or by facsimile
or
other electronic means (i) to the Subscriber to such Subscriber’s address,
electronic mail address or telecopy number set forth on the signature page
of
this Subscription Agreement, or to such other address, electronic mail address
or telecopy number as the Subscriber shall have furnished to the Partnership
in
writing, with copies to such other address or addresses or telecopy number
or
numbers as the Subscriber shall have furnished to the General Partner in
writing, and (ii) to the Partnership to the General Partner at ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇, telecopy number
(▇▇▇) ▇▇▇-▇▇▇▇, or to such other address or addresses, telecopy number or
numbers, as the Partnership shall have furnished to the Subscriber in writing,
provided that any notice to either party shall be effective only if and when
received by such party.
6.3 Governing
Law; Jurisdiction; Venue.
This
Agreement shall be enforced, governed, and construed in all respects in
accordance with the laws of the State of Delaware , excluding any
conflict-of-laws rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another State. Any action or
proceeding against the parties relating in any way to this Agreement may be
brought and enforced in the courts of the State of Texas located in ▇▇▇▇▇▇
County and, to the extent subject matter jurisdiction exists therefor, in the
courts of the United States for the Southern District of Texas, and the parties
irrevocably submit to the exclusive jurisdiction of the foregoing courts in
respect of any such action or proceeding. The parties irrevocably waive, to
the
fullest extent permitted by law, any objection that they may now or hereafter
have to the laying of venue of any such action or proceeding in the courts
of
the State of Texas located in ▇▇▇▇▇▇ County or the United States District Court
for the Southern District of Texas, and any claim that any such action or
proceeding brought in any such court has been brought in an inconvenient
forum.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-12-
6.4 Assignment;
Binding Effect.
This
Agreement and the rights and obligations set forth herein shall be binding
upon,
and shall inure to the benefit of, the Subscriber, the Partnership, the General
Partner, and their respective successors and permitted assigns. Each provision
of this Agreement shall be considered severable and if for any reason any
provision that is not essential to the effectuation of the basic purposes of
this Agreement is determined by a court of competent jurisdiction to be invalid
or unenforceable under applicable law, such invalidity shall not impair the
operation of or affect those provisions of this Agreement that are valid. In
that case, this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
any
applicable law, and in the event such term or provision cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions. The Subscriber may not assign any of its rights or obligations
under
this Agreement without the prior written consent of the General
Partner.
6.5 Entire
Agreement.
This
Agreement, Appendix
I
hereto,
and any other agreements between the General Partner or the Partnership and
the
Subscriber constitute the entire agreement, and supersedes all prior agreements
or understandings, among the parties hereto with respect to the subject matter
hereof.
6.6 Construction.
(a) Headings.
Unless
the context requires otherwise: (i) references to Articles and Sections
refer to Articles and Sections of this Agreement; and (ii) references to
Appendices are to the Appendices attached to this Agreement, each of which
is
made a part hereof for all purposes. As used in this Agreement, the words
“herein,” “hereof,” “hereto,” or derivatives shall refer to this entire
Agreement.
(b) Gender
and Number.
Wherever from the context it appears appropriate, each term stated in either
the
singular or the plural shall include the singular and the plural, and pronouns
stated in either the masculine or the neuter gender shall include the masculine,
the feminine and the neuter. As used in this Agreement, the word “or” shall mean
“and/or.”
6.7 Counterparts;
Facsimile.
This
Agreement may be executed in one or more counterparts, all of which shall
constitute one and the same instrument. Any counterparts of this Agreement
or
any signatures thereon delivered by facsimile transmission shall be deemed
an
original executed document for all purposes hereof.
6.8 Termination;
Effect of Termination.
At
Subscriber’s election, the obligations of Subscriber will terminate if the
Closing Date has not occurred on or before April 30, 2006; provided, Subscriber
will be deemed to have waived its right to terminate under this Section 6.8
unless the General Partner has received Subscriber’s written election to
terminate within the 30-day period following such date. Notwithstanding the
foregoing, termination will not affect any obligation or liability arising
from
a willful breach of representation or breach of covenant that exists or occurs
prior to such termination.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-13-
IN
WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement as
of
this 6 day of April, 2006.
|
Commitment:
|
|
|
PETRO
RESOURCES CORPORATION
|
|
|
U.S.$8,000,000
|
dba
PRCT, Inc.
|
|
By: /s/
▇▇▇▇▇ ▇.
▇▇▇▇
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇
|
|
|
President
& Chief Executive Officer
|
|
|
Address
of Subscriber:
|
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
|
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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|
|
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇
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|
|
Name
and address of trustee, if applicable:
|
|
|
_______________________________________
_______________________________________
_______________________________________
_______________________________________ |
|
Tax
year end if not December 31
__________________________________________
|
|
|
Check
box if Subscriber is not
a
resident of the United States:
|
o
|
|
If
Subscriber is not a resident of the United States, state the residence
of
the Subscriber:
__________________________________
|
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-14-
IN
WITNESS WHEREOF, the undersigned have executed and accepted this Subscription
Agreement as of this 21st
day of
April, 2006.
The
Partnership:
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
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|||
|
By:
|
HHEP
▇▇ ▇▇, L.P.,
|
||
|
its
General Partner
|
|||
|
By:
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration Partners,
|
||
|
L.L.C.,
its
General Partner
|
|||
|
By:
|
/s/
▇▇▇▇ ▇. ▇▇▇▇
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||
|
Name:
|
▇▇▇▇
▇. ▇▇▇▇
|
||
|
Title:
|
President
|
||
The
General Partner:
|
HHEP
▇▇ ▇▇, L.P.
|
|||
|
By:
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration Partners, L.L.C.,
|
||
|
its
General Partner
|
|||
|
By:
|
/s/
▇▇▇▇ ▇. ▇▇▇▇
|
||
|
Name:
|
▇▇▇▇
▇. ▇▇▇▇
|
||
|
Title:
|
President
|
||
Address
of the Partnership and General Partner:
▇▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇ ▇▇▇▇▇
With
copy
to:
▇▇▇▇▇▇
& ▇▇▇▇▇▇ L.L.P.
1001
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
T.
▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
-15-
APPENDIX
I
Accredited
Investor Certificate
and
Forms W-8 and W-9
PETRO
RESOURCES CORPORATION dba PRCT, INC.
(Print
or
Type Subscriber's Name)
CERTIFICATION
OF STATUS
The
undersigned (“Undersigned”)
is a
party to the Subscription Agreement (the “Subscription
Agreement”)
among
▇▇▇▇-▇▇▇▇▇▇▇ Exploration II, L.P.
(the
“Partnership”),
HHEP
▇▇ ▇▇, L.P.
(the
“General
Partner”),
and
the subscriber identified above (“Subscriber”)
and
hereby certifies, that1 :
1. Regulation
D Matters
Undersigned
is an “Accredited Investor” as such term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, (the
“Act”).
Undersigned meets each of the following “Accredited Investor” categories marked
with an “X”:
|
_____
|
(i)
|
a
bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A)
of the
Act, whether acting in its individual or fiduciary
capacity;
|
|
_____
|
(ii)
|
a
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;
|
|
_____
|
(iii)
|
an
insurance company as defined in Section 2(13) of the
Act;
|
|
_____
|
(iv)
|
an
investment company registered under the Investment Company Act of
1940
(the “Investment
Company Act”);
|
|
_____
|
(v)
|
a
business development company as defined in Section 2(a)(48) of the
Investment Company Act;
|
|
_____
|
(vi)
|
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, as amended;
|
______________
1Terms
not
otherwise defined herein shall have the same meanings specified in the
Subscription Agreement.
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-1
|
_____
|
(vii)
|
a
plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
|
_____
|
(viii)
|
an
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
if either
|
|
_____
|
(A)
|
the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of ERISA, which is either a bank, savings and loan association,
insurance company or registered investment
adviser,
|
|
_____
|
(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 that are Accredited
Investors;
|
|
_____
|
(ix)
|
a
private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of
1940;
|
|
X
|
(x)
|
an
organization described in Section 501(c)(3) of the Internal Revenue
Code
of 1986, as amended (the “Code”),
a corporation, a Massachusetts or similar business trust, or a
partnership, in each case, not formed for the specific purpose of
making
an investment in the Partnership, and in each case, with total assets
in
excess of $5,000,000;
|
|
_____
|
(xi)
|
a
director, executive officer, or general partner of the issuer of
the
limited partnership interests being offered or sold, or a director,
executive officer, or general partner of a general partner of that
issuer;
|
|
_____
|
(xii)
|
a
natural Person whose individual net worth, or joint net worth with
his or
her spouse, at the time of his or her purchase exceeds
$1,000,000;
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-2
|
_____
|
(xiii)
|
a
natural Person who has an individual income in excess of $200,000
in each
of the two most recent years or joint income with that Person's spouse
in
excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current
year;
|
|
_____
|
(xiv)
|
a
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of making an investment in the Partnership whose
purchase
of the limited partnership interests offered is directed by a
sophisticated Person as described in Rule 506(b)(2)(ii) of
Regulation D; or
|
|
_____
|
(xv)
|
an
entity in which all of the equity owners are Accredited
Investors.
|
2. Qualified
Purchaser Status.
(Please
check either (a) or (b) below).
|
_____
|
(a)
|
Undersigned
is a "Qualified Purchaser" as such term is defined in Section 2(a)(51)
of
the Investment Company Act and the rules thereunder. Undersigned
meets
each of the following "Qualified Purchaser" categories marked with
an "X"
(please ▇▇▇▇ all
categories that apply):
|
|
_____
|
(i)
|
a
natural person (including any person who holds a joint, community
property, or other similar shared ownership interest in an issuer
that is
excepted under Section 3(c)(7) of the Investment Company Act with
that
person's Qualified Purchaser spouse) who owns not less than $5,000,000
in
investments2 ;
|
________________
2The
term
"investments" means:
|
(1)
|
Securities
(as defined in Section 2(a)(1) of the Securities Act), other than
securities of an issuer that controls, is controlled by, or is
under
common control with, the Undersigned that owns such securities,
unless the
issuer of such securities is:
|
|
(a)
|
an
investment company, a company that would be an investment company
but for
the exclusion provided by Sections 3(c)(1) through 3(c)(9) of the
Investment Company Act or Rule 3a-6 or 3a-7 under the Investment
Company
Act, or a commodity pool;
|
|
(b)
|
a
company that files periodic reports under Section 13 or 15(d) of
the
Exchange Act, or has a class of securities listed on a "designated
offshore securities market" as defined in Regulation S under the
Securities Act; or
|
|
(c)
|
a
company with shareholders' equity of not less than $50,000,000
(determined
in accordance with generally accepted accounting principles) as
reflected
on the company's most recent financial statements, provided that
such
financial statements present the information as of a date within
16 months
preceding the date on which the Subscriber acquires an interest
in the
Partnership.
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-3
_________________
|
(2)
|
Real
estate held for investment purposes. Real estate shall not be considered
to be held for investment purposes if it is used by the Undersigned
or a
sibling, spouse or former spouse, or a direct lineal descendant
or
ancestor by birth or adoption of the Undersigned, or a spouse of
the
descendent or ancestor (a "Related
Person"),
or by any owner of the Undersigned if the Undersigned is a company
described in item 2(a)(ii) of this Appendix or any Related Person
of such
owner, for personal purposes or as a place of business, or in connection
with the conduct of the trade or business of the Undersigned or
a Related
Person (including an owner of the Undersigned or any Related Person
of
such owner), provided
that real estate owned by the Undersigned may be deemed to be held
for
investment purposes if the Undersigned is engaged primarily in
the
business of investing, trading or developing real estate. Residential
real
estate shall not be deemed to be used for personal purposes if
deductions
with respect to such real estate are not disallowed by Section
280A of the
Code.
|
|
(3)
|
Commodity
futures contracts, options on commodity futures contracts, and
options on
physical commodities that are traded on or subject to the rules
of any
contract market designated for trading such transactions under
the
Commodity Exchange Act or of any board of trade or exchange outside
the
United States contemplated in Part 30 of the rules under the Commodity
Exchange Act ("Commodity
Interests")
that are held for investment purposes. A Commodity Interest owned,
or a
financial contract entered into, by the Undersigned may be deemed
to be
held for investment purposes if the Undersigned is engaged primarily
in
the business of investing, reinvesting or trading in Commodity
Interests,
Physical Commodities or financial contracts in connection with
such
business.
|
|
(4)
|
Physical
commodities with respect to which a Commodity Interest is traded
on a
contract market designated as specified in the preceding paragraph
(3)
("Physical
Commodities")
and that are held for investment purposes. Physical Commodities
owned, or
a financial contract entered into, by the Undersigned may be deemed
to be
held for investment purposes if the Undersigned is engaged primarily
in
the business of investing, reinvesting or trading in Commodity
Interests,
Physical Commodities or financial contracts in connection with
such
business.
|
|
(5)
|
To
the extent not securities, financial contracts (as defined in Section
3(c)(2)(B)(i) of the Securities Act) entered into for investment
purposes.
|
|
(6)
|
Any
amounts payable to the Undersigned pursuant to a firm agreement
or similar
binding commitment pursuant to which a person has agreed to acquire
an
interest in, or make capital contributions to, the Undersigned
upon demand
of the Undersigned, but only if the Undersigned is a company that
would be
an investment company but for the exclusion provided by Section
3(c)(1) or
Section 3(c)(7) of the Investment Company Act, or if the Undersigned
is a
commodity pool.
|
|
(7)
|
Cash
and cash equivalents (including non-U.S. currencies) held for investment
purposes. Cash and cash equivalent include bank deposits, certificates
of
deposit, bankers acceptances and similar bank instruments held
for
investment purposes and the net cash surrender value of an insurance
policy.
|
Valuation
of Investments:
The
value of an investment is its fair market value on the most recent practicable
date or its cost, provided
that the
value of Commodity Interests shall be the value of the initial margin or
option
premium deposited in connection with the Commodity Interest.
Deductions
from Valuation:
The
amount of any outstanding indebtedness incurred to acquire or for the purpose
of
acquiring the investments of the Undersigned shall be deducted from the amounts
of the Undersigned's investments. In addition, with respect to companies
described in item 2(a)(ii) of this Appendix, the amount of any outstanding
indebtedness incurred by an owner of the company to acquire company's
investments shall be deducted.
Special
Rules:
Joint
Investments:
If the
Undersigned is a natural person, the Undersigned may include in the amount
of
his or her investments any investments held jointly with the Undersigned's
spouse, or investments in which the Undersigned shares with his or her spouse
a
community property or similar shared ownership interest. In determining whether
spouses who are making a joint investment in the Partnership are Qualified
Purchasers, there may be included in the amount of each spouse's investments
any
investments owned by the other spouse (whether or not such investments are
held
jointly). In each case, there shall be deducted from the amount of any such
investments the amounts specified in the first sentence of "Deductions from
Valuation" incurred by each spouse.
Subsidiary
Investments:
If the
Undersigned is a company, then for purposes of determining the amount of
investments owned by the Undersigned under item 2(a)(iv) of this Appendix,
there
may be included investments owned by majority-owned subsidiaries of the
Undersigned and investments owned by a company (a parent company) of which
the
Undersigned is a majority-owned subsidiary, or by a majority-owned subsidiary
of
the Undersigned and other majority owned subsidiaries of the parent
company.
Certain
Retirement Plans and Trusts:
If the
Undersigned is a natural person, he or she may include in the amounts of
his or
her investments any investments held in an individual retirement account
or
similar account, the investments of which are directed by and held for the
benefit of the Undersigned.
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-4
|
_____
|
(ii)
|
a
company that owns not less than $5,000,000 in investments3
and that is owned directly or indirectly by or for two or more natural
persons who are related as siblings or spouse (including former spouses),
or direct lineal descendants by birth or adoption, spouses of such
persons, the estates of such persons, or foundations, charitable
organizations, or trusts established by or for the benefit of such
persons;
|
|
_____
|
(iii)
|
a
trust that is not covered by clause (ii) of this Section 2(a) and
that was
not formed for the specific purpose of making an investment in the
Partnership, as to which the trustee or other person authorized to
make
decisions with respect to the trust, and each settlor or other person
who
has contributed assets to the trust, is a person described in clause
(i),
(ii), or (iv) of this Section 2(a);
|
|
_____
|
(iv)
|
a
person (entity or natural person), acting for its own account or
the
accounts of other Qualified Purchasers, who in the aggregate owns
and
invests on a discretionary basis, not less than $25,000,000 in
investments3;
or
|
|
_____
|
(v)
|
a
"qualified institutional buyer" as defined in paragraph (a) of Rule
144A
of the Securities Act, acting for its own account,3
the account of another qualified institutional buyer, or the account
of a
Qualified Purchaser; provided
that if the Undersigned is a dealer, it also owns and invests on
a
discretionary basis not less than $25,000,000 in securities of issuers
that are not affiliated with the
dealer.
|
|
X
|
(b)
|
Undersigned
is not a "Qualified Purchaser" as that term is defined in Section
2(a)(51)
of the Investment Company Act and the rules
thereunder.
|
3. Investment
Company Status.
(Please
check all applicable statements if the Undersigned is an “issuer” as defined in
Section 11 of the Investment Company Act.)
________________
3Each of the following plans will not be deemed to be acting for its own account if investment decisions with respect to the plan are made by the beneficiaries of the plan, except with respect to investment decisions made solely by the fiduciary, trustee or sponsor of such plan: (a) Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of state or its political subdivisions, for the benefit of its employees; (b) any employee benefit plan within the meaning of Title I of ERISA; or (c) any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in the preceding clauses (a) and (b) (except trust funds that include as participants individual retirement accounts or H.R. 10 plans) that holds the assets of such a plan.
3Each of the following plans will not be deemed to be acting for its own account if investment decisions with respect to the plan are made by the beneficiaries of the plan, except with respect to investment decisions made solely by the fiduciary, trustee or sponsor of such plan: (a) Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of state or its political subdivisions, for the benefit of its employees; (b) any employee benefit plan within the meaning of Title I of ERISA; or (c) any trust fund whose trustee is a bank or trust company and whose participants are exclusively plans of the types identified in the preceding clauses (a) and (b) (except trust funds that include as participants individual retirement accounts or H.R. 10 plans) that holds the assets of such a plan.
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-5
|
_____
|
(a)
|
Undersigned
is an “investment
company”
as defined in Section 3 of the Investment Company Act. [Answer
item 5.]
|
|
_____
|
(b)
|
Undersigned
is not an “investment
company”
as defined in Section 3 of the Investment Company Act because it
is
relying on the exception from the definition of an “investment company” in
Section 3(c)(1) of the Investment Company Act. [Answer
item 5.]
|
|
_____
|
(c)
|
Undersigned
is not an “investment
company”
as defined in Section 3 of the Investment Company Act because it
is relying
on the exception from the definition of an “investment company” in Section
3(c)(7) of the Investment Company Act. [Answer
item 5.]
|
|
X
|
(d)
|
Undersigned
is not an “investment
company”
as defined in Section 3 of the Investment Company Act for reasons
other
than the exceptions from the definition of an “investment company” in
Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act.
If
applicable, please discuss the exception relied on with the General
Partner.
|
4. Non-U.S.
Companies.
(Please
check all applicable items if the Undersigned is a company, plan or other entity
(but not a natural person) organized under the laws of a jurisdiction other
than
the United States of America or one of its states.)
|
_____
|
(a)
|
The
Undersigned is or holds itself out as being engaged primarily, or
proposed
to engage primarily, in the business of investing, reinvesting, or
trading
in securities. [Answer
item 5.]
|
|
_____
|
(b)
|
The
Undersigned is engaged or proposes to engage in the business of issuing
face-amount certificates of the installment type, or has been engaged
in
such business and has any such certificate outstanding. [Answer
Item 5.]
|
|
_____
|
(c)
|
The
Undersigned owns or proposes to acquire investment securities4
having a value exceeding 40 per centum of the value of the Undersigned’s
total assets (exclusive of government securities5
and cash items (on an unconsolidated basis). [Answer
item 5.]
|
________________
4As
used in this question, "investment securities" includes all securities except
(a) government securities, (b) securities issued by employees' securities
companies, and (c) securities issued by majority-owned subsidiaries of the
Undersigned which are not investment companies.
5"Government
security" means any security issued or guaranteed as to principal or interest
by
the United States, or by a person controlled or supervised by and acting as
an
instrumentality of the government of the United States pursuant to authority
granted by the Congress of the United States; or any certificate of deposit
for
any of the foregoing.
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-6
|
_____
|
(d)
|
The
Undersigned is primarily engaged, directly or through a wholly-owned
subsidiary or subsidiaries, in a business or businesses other than
that of
investing, reinvesting, owning, holding or trading in
securities.
|
5. Ownership
Information.
(If the
Undersigned checked any of items 3(a), 3(b), 3(c), 4(a), 4(b), or 4(c), please
provide the following information.)
|
(a)
|
The
Undersigned has the following number of beneficial owners6
of
its outstanding securities (other than short-term paper):
________
|
|
(b)
|
The
following number of companies beneficially own at least 10% of the
Undersigned’s outstanding securities (other than short-term paper):
________
|
(c) The
Undersigned is (please check applicable box):
|
_____
|
(i)
|
a
company organized under the laws of the United States or any state
thereof.
|
|
_____
|
(ii)
|
a
company organized under the laws of a country, territory, or other
jurisdiction other than the United States or a state thereof, and
no
beneficial owner of the Undersigned’s outstanding securities (other than
short-term paper) is a U.S. person.7
|
________________
6Beneficial
ownership means the right to vote or dispose of a security. In determining
the
number of beneficial owners, the Undersigned should deem beneficial ownership
by
a company to be beneficial ownership by one person, except that, if such
company
owns 10 per centum or more of the outstanding voting securities of the
Undersigned, and is or, but for the exception provided for in Section 3(c)(1)
or
Section 3(c)(7) of the Investment Company Act, would be an investment company,
then the beneficial ownership shall be deemed to be that of the holders of
such
company's outstanding securities (other than short-term
paper).
7A
"U.S. person" generally means (i) any natural person resident in the United
States; (ii) any partnership or corporation organized or incorporated under
the
laws of the United States; (iii) any estate of which any executor or
administrator is a U.S. person; (iv) any trust of which the trustee is a
U.S.
person; (v) any agency or branch of a foreign entity located in the United
States; (vi) any non-discretionary account or similar account (other than
an
estate or trust) held by a dealer or other fiduciary for the benefit or account
of a U.S. person; (vii) any discretionary account or similar account (other
than
an estate or trust) held by a dealer or other fiduciary organized, incorporated,
or (if a natural person) resident in the United States; and (viii) any
partnership or corporation if (a) organized or incorporated under the laws
of
any non-U.S. jurisdiction and (b) formed by a U.S. person principally for
the
purpose of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by Accredited Investors
who
are not natural persons, estates or trusts.
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-7
|
_____
|
(iii)
|
a
company organized under the laws of a country, territory, or other
jurisdiction other than the United States or a state thereof, and
the
Undersigned has the following number of U.S. persons who beneficially
own
outstanding securities (other than short-term paper) of the Undersigned
(please provide
number):_________________
|
6. Qualified
Client.
(Please
check all applicable statements.)
|
_____
|
(a)
|
Undersigned
is a natural person whose net worth (together with assets held jointly
with a spouse) exceeds $1,500,000.
|
|
_____
|
(b)
|
Undersigned
is an entity whose ultimate equity owners each, individually, has
a net
worth (together with assets held jointly with a spouse) of more than
$1,500,000.
|
|
X
|
(c)
|
Undersigned
is an entity that has a net worth of more than $1,500,000 and that
is not
(1) an investment company registered under the Investment Company
Act, or
(2) a business development company as defined in Section 202(a)(22)
of the
Investment Company Act, or (3) a company that would be defined as
an
investment company under Section 3(a) of the Investment Company Act,
but
for the exception provided from that definition by Section 3(c)(1)
of the
Investment Company Act.
|
|
_____
|
(d)
|
Undersigned
is a natural person who is (1) an executive officer, director, trustee,
general partner, or person serving in a similar capacity of the General
Partner; or (2) an employee of the General Partner (other than an
employee
performing solely clerical, secretarial or administrative functions
with
regard to the General Partner) who, in connection with his or her
regular
functions or duties, participates in the investment activities of
the
General Partner, and has been performing such functions and duties
for or
on behalf of the General Partner, or substantially similar functions
or
duties for or on behalf of another similar company, for at least
12
months.
|
Undersigned
hereby represents and warrants that all statements and information set forth
in
this Certificate are true and correct on the date hereof and will be true and
correct on the Closing Date of the purchase of the limited partnership interest
in the Partnership in connection with which this Certificate is being executed.
Undersigned will notify the Partnership promptly (but in all events within
10
days after the applicable change) of any change in the information set forth
herein.
*
* * *
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-8
IN
WITNESS WHEREOF, the Undersigned has executed this Certificate on the date
set
forth below.
Dated:
April 6, 2006
PETRO
RESOURCES CORPORATION
dba
PRCT, INC.
(Print
or
type Undersigned's name)
By: /s/
▇▇▇▇▇ ▇.
▇▇▇▇
▇▇▇▇▇
▇.
▇▇▇▇
President
& Chief Executive Officer
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
A-9
FORM
W-8
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
FORM
W-9
|
SUBSTITUTE
Form
W-9
Department
of the Treasury
Internal
Revenue Service
Request
for Taxpayer
Identification
Number (TIN)
and
Certification
|
Name:
Petro
Resources Corporation
dba
PRCT, Inc.
Address:
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
Individual
o
Partnership
o
Corporation
x
Other
(specify) o
|
||
|
Part
I.
|
Please
provide your taxpayer identification number in the space at right
and
certify
by signing and dating below. If awaiting TIN, write “Applied
For.”
|
SSN:____________________
or
EIN:
▇▇-▇▇▇▇▇▇▇
|
|
Part
II.
|
For
Payees exempt from backup withholding, see the enclosed “Guidelines for
Certification of Taxpayer Identification Number on Substitute
Form
W-9.”
|
|
|
CERTIFICATION
-- Under
penalties of perjury, I certify
that:
|
|
(1)
|
The
number shown on this form is my correct Taxpayer Identification
Number (or
I am waiting for a number to be issued to me);
and
|
|||
|
(2)
|
I
am not subject to backup withholding either because: (a) I am
exempt from
backup withholding, or (b) I have not been notified by the IRS
that I am
subject to backup withholding as a result of a failure to report
all
interest
or
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding; and
|
|||
|
(3)
|
I
am a U.S. person (including a U.S. resident alien).
|
|||
|
CERTIFICATION
INSTRUCTIONS
--
You must cross out item (2) above if you have been notified by
the IRS
that you are subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being
notified
by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject
to backup
withholding, do not cross out item (2).
The
IRS does not require your consent to any provision of this document
other
than the certifications required to avoid backup
withholding.
Signature
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Date:
4/6/06
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
|
CERTIFICATE
OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I
certify under penalties of perjury that a taxpayer identification
number
has not been issued to me, and either (i) I have mailed or delivered
an
application to receive a taxpayer identification number to the
appropriate
Internal Revenue Service Center or Social Security Administration
Office,
or (ii) I intend to mail or deliver an application in the near
future. I
understand that if I do not provide a taxpayer identification number
by
the time of payment, 30% percent of all reportable payments made
to me
will be withheld until I provide a taxpayer identification number
to the
Depositary.
__________________________________
Signature
_______________________________________
Date: _______________________
Name
(Please Print)
|
▇▇▇▇-▇▇▇▇▇▇▇
Exploration II, L.P.
Subscription
Agreement
Appendix
I
GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER
ON SUBSTITUTE FORM W-9
Guidelines
for Determining the Proper Identification Number for the Payee (You) to Give
the
Payer.-Social
Security numbers have nine digits separated by two hyphens: e.g., 000-00-0000.
Employer identification numbers have nine digits separated by only one hyphen:
e.g., 00-0000000. The table below will help determine the number to give the
payer.
|
For
this type of account:
|
Give
the
SOCIAL
SECURITY
number
of-
|
For
this type of account:
|
Give
the
EMPLOYER
IDENTIFICATION
number
of-
|
|||
|
1. Individual
|
The
individual
|
6. Sole
proprietorship
|
The
owner (3)
|
|||
|
2. Two
or more individuals (joint account)
|
The
actual owner of the account or, if combined funds, the first individual
on
the account (1)
|
7. A
valid trust, estate, or pension trust
|
Legal
entity (4)
|
|||
|
3. Custodian
account of a minor (Uniform Gift to Minors Act)
|
The
minor (2)
|
8. Corporate
|
The
corporation
|
|||
|
4. a.
The usual revocable savings trust (grantor is also trustee)
b.
So-called trust account that is not a legal or valid trust under
state
law
|
The
grantor-trustee (1)
The
actual owner (1)
|
9. Association,
club, religious, charitable, educational, or other tax-exempt organization
|
The
organization
|
|||
|
5. Sole
proprietorship
|
The
owner (3)
|
10. Partnership
|
The
partnership
|
|||
|
11. A
broker or registered nominee
|
The
broker or nominee
|
|||||
|
12. Account
with the Department of Agriculture in the name of a public entity
(such as
a state or local government, school district, or prison) that receives
agricultural program payments
|
The
public entity
|
__________________
|
(1)
|
List
first and circle the name of the person whose number you furnish.
If only
one person on a joint account has a social security number, that
person’s
number must be furnished.
|
|
(2)
|
Circle
the minor’s name and furnish the minor’s social security number.
|
|
(3)
|
You
must show your individual name,
but you may also enter your business or “DBA” name. You may use either
your social security number or employer identification number (if
you have
one).
|
|
(4)
|
List
first and circle the name of the legal trust, estate, or pension
trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
|
|
Note:
|
If
no name is circled when more than one name is listed, the number
will be
considered to be that of the first name listed.
|
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Exploration II, L.P.
Subscription
Agreement
Appendix
I
GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER
ON SUBSTITUTE FORM W-9
Page
2
|
Obtaining
a Number
If
you don’t have a taxpayer identification number (“TIN”) or you don’t know
your number, obtain Form SS-5, Application for a Social Security
Number
Card, or Form SS-4, Application for Employer Identification Number,
at the
local office of the Social Security Administration or the Internal
Revenue
Service and apply for a number.
Payees
Exempt From Backup Withholding
Payees
specifically exempted from backup withholding on all dividend and
interest
payments and on broker transactions include the
following:
·
A
corporation.
·
A
financial institution.
·
An
organization exempt from tax under Section 501(a) of the Internal
Revenue
Code of 1986, as amended (the “Code”),
or
an individual retirement plan or a custodial account
under
Section 403(b)(7), if the account satisfies the
requirements
of Section 401(f)(2).
·
The
United States or any of its agencies or instrumentalities.
·
A
state, the District of Columbia, a possession of the United States,
or any
of their political subdivisions or instrumentalities.
·
A
foreign government or any of its political subdivisions, agencies,
or
instrumentalities.
·
An
international organization or any of its agencies or instrumentalities.
·
A
dealer in securities or commodities registered in the United States,
the
district of Columbia, or a possession of the United States.
·
A
real estate investment trust.
·
A
common trust fund operated by a bank under Section 584(a) of the
Code.
·
An
entity registered at all times during the tax year under the Investment
Company Act of 1940.
·
A
foreign central bank of issue.
Payments
of dividends and patronage dividends not generally subject to backup
withholding include the following:
·
Payments
to nonresident aliens subject to withholding under Section 1441
of the
Code.
Note:
You may be subject to backup withholding if this interest is $600
or more
and is paid in the course of the payer’s trade or business and you have
not provided your correct taxpayer identification number to the
payer.
· Payments
of tax-exempt interest (including exempt-interest
dividends
under Section 852 of the Code).
|
· Payments
described in Section 6049(b)(5) of the Code to
nonresident
aliens. · Payments
on tax-free covenant bonds under Section 1451of
the Code.
· Payments
made by certain foreign organizations.
· Mortgage
or student loan interest paid to you.
Exempt
payees described above should file the substitute Form W-9 to avoid
possible erroneous backup withholding. Complete
the substitute Form W-9 as follows:
Enter
your Taxpayer Identification Number in Part I, write “EXEMPT” in Part II,
and sign and date the form.
Certain
payments that are not subject to information reporting are also
not
subject to backup withholding. For details, see Sections 6041,
6041A,
6042, 6044, 6045, 6050A and 6050N of the Code and their regulations.
Privacy
Act Notice.-Section
6109 of the Code requires you to provide your correct taxpayer
identification number to payers who must report the payments to
the IRS.
The IRS uses the number for identification purposes and may also
provide
this information to various government agencies for tax enforcement
or
litigation purposes. Payers must be given the numbers whether or
not
recipients are required to file tax returns. Payers must generally
withhold 30% of taxable interest, dividend, and certain other payments
to
a payee who does not furnish a taxpayer identification number to
a payer.
Certain penalties may also apply.
Penalties
(1)
Penalty for Failure to Furnish Taxpayer Identification
Number.-If
you fail to furnish your correct taxpayer identification number
to a
payer, you are subject to a penalty of $50 for each such failure
unless
your failure is due to reasonable cause and not to willful
neglect.
(2)
Civil Penalty for False Information with Respect to
Withholding.-If
you make a false statement with no reasonable basis which results
in no
imposition of backup withholding, you are subject to a penalty
of $500.
(3)
Criminal Penalty for Falsifying Information.-Willfully
falsifying certifications or affirmations may subject you to criminal
penalties including fines and/or imprisonment.
(4)
Misuse of Taxpayer Identification Numbers.-If
the payer discloses or uses taxpayer identification numbers in
violation
of Federal law, the payer may be subject to civil and criminal
penalties.
FOR
ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE
SERVICE.
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Exploration II, L.P.
Subscription
Agreement
Appendix
I