Exhibit 99.1
CONFIDENTIAL
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Subscribers Resident Outside of the United States)
TO: Yellow Hill Energy Inc. (the "Company")
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Purchase of Shares
1. SUBSCRIPTION
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for and
agrees to purchase from the Company, on the basis of the representations and
warranties and subject to the terms and conditions set forth herein,
________________ common shares in the capital of the Company (the "Shares") at
the price of US$0.003 per Share (such subscription and agreement to purchase
being the "Subscription") for the total purchase price of $______________ (the
"Subscription Proceeds").
1.2 Subject to the terms hereof, the Subscription will be effective upon its
acceptance by the Company. The Subscriber acknowledges that the offering of the
Shares contemplated hereby is part of an offering of Shares having an aggregate
subscription level of US$ (the "Offering"). The Offering is not subject to any
minimum aggregate subscription level.
2. PAYMENT
2.1 The Subscription Proceeds must accompany this Subscription and shall be paid
by certified cheque or bank draft drawn on a major United States or Canadian
chartered bank, and made payable and delivered to the Company. Alternatively,
the Subscription Proceeds may be wired to the Company or its lawyers pursuant to
wiring instructions that will be provided to the Subscriber upon request. If the
funds are wired to the Company's lawyers, those lawyers are authorized to
immediately deliver the funds to the Company.
2.2 The Subscriber acknowledges and agrees that this Agreement, the Subscription
Proceeds and any other documents delivered in connection herewith will be held
on behalf of the Company. In the event that this Agreement is not accepted by
the Company for whatever reason, which the Company expressly reserves the right
to do, within 30 days of the delivery of an executed Agreement by the
Subscriber, this Agreement, the Subscription Proceeds (without interest thereon)
and any other documents delivered in connection herewith will be returned to the
Subscriber at the address of the Subscriber as set forth in this Agreement.
2.3 Where the Subscription Proceeds are paid to the Company, the Company is
entitled to treat such Subscription Proceeds as an interest free loan to the
Company until such time as the Subscription is accepted and the certificates
representing the Shares have been issued to the Subscriber.
3. DOCUMENTS REQUIRED FROM SUBSCRIBER
3.1 The Subscriber must complete, sign and return to the Company an executed
copy of this Agreement.
3.2 The Subscriber shall complete, sign and return to the Company as soon as
possible, on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, and applicable law.
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4. CLOSING
4.1 Closing of the Offering (the "Closing") shall occur on or before , 2007, or
on such other date as may be determined by the Company (the "Closing Date").
4.2 The Company may, at its discretion, elect to close the Offering in one or
more closings, in which event the Company may agree with one or more subscribers
(including the Subscriber hereunder) to complete delivery of the Shares to such
subscriber(s) against payment therefor at any time on or prior to the Closing
Date.
5. ACKNOWLEDGEMENTS OF SUBSCRIBER
5.1 The Subscriber acknowledges and agrees that:
(a) the Shares may not be offered or sold in the United States or,
directly or indirectly, to U.S. Persons, as that term is defined in
Regulation S under the 1933 Act ("Regulation S"), 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 in accordance with
applicable state and provincial securities laws;
(b) the decision to execute this Agreement and acquire the Shares is based
entirely upon a review of information (the receipt of which is hereby
acknowledged) which has been filed by the Company with the Securities
and Exchange Commission (the "SEC");
(c) neither the SEC nor any other securities commission or similar
regulatory authority has reviewed or passed on the merits of the
Shares;
(d) there is no government or other insurance covering any of the Shares;
(e) there are risks associated with an investment in the Shares;
(f) the Company has advised the Subscriber that the Company is relying on
an exemption from the requirements to provide the Subscriber with a
prospectus and to sell the Shares through a person registered to sell
securities under the SECURITIES ACT (British Columbia) (the "B.C.
Act") and, as a consequence of acquiring the Shares pursuant to this
exemption, certain protections, rights and remedies provided by the
B.C. Act, including statutory rights of rescission or damages, will
not be available to the Subscriber;
(g) the Subscriber has not acquired the Shares as a result of, and will
not itself engage in, any "directed selling efforts" (as defined in
Regulation S under the ▇▇▇▇ ▇▇▇) in the United States in respect of
the Shares which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect
of, conditioning the market in the United States for the resale of any
of the Shares; provided, however, that the Subscriber may sell or
otherwise dispose of the Shares pursuant to registration thereof under
the 1933 Act and any applicable state and provincial securities laws
or under an exemption from such registration requirements;
(h) the Subscriber and the Subscriber's advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from the Company
in connection with the distribution of the Shares hereunder, and to
obtain additional information, to the extent possessed or obtainable
without unreasonable effort or expense, necessary to verify the
accuracy of the information about the Company;
(i) the books and records of the Company were 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 all documents, records and books
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in connection with the distribution of the Shares hereunder have been
made available for inspection by the Subscriber, the Subscriber's
lawyer and/or advisor(s);
(j) the Subscriber will indemnify and hold harmless the Company and, where
applicable, its 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 or in any document
furnished by the Subscriber to the Company 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 Company in connection therewith;
(k) the Shares 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 Shares will become listed on any stock exchange or
automated dealer quotation system;
(l) there are additional restrictions on the Subscriber's ability to
resell the Shares under the B.C. Act and Multilateral Instrument
45-102 adopted by the British Columbia Securities Commission;
(m) the Company will refuse to register any transfer of the Shares 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 the registration requirements of the 1933 Act
and in accordance with applicable state and provincial securities
laws;
(n) the Subscriber has been advised to consult the Subscriber's own legal,
tax and other advisors with respect to the merits and risks of an
investment in the Shares and with respect to applicable resale
restrictions, and it is solely responsible (and the Company is not in
any way responsible) for compliance with:
(i) any applicable laws of the jurisdiction in which the Subscriber
is resident in connection with the distribution of the Shares
hereunder, and
(ii) applicable resale restrictions; and
(o) this Agreement is not enforceable by the Subscriber unless it has been
accepted by the Company, and the Subscriber acknowledges and agrees
that the Company reserves the right to reject any subscription for any
reason.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER
6.1 The Subscriber hereby represents and warrants to and covenants with the
Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) the Subscriber has the legal capacity and competence to enter into and
execute this Agreement and to take all actions required pursuant
hereto and, if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction
of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Agreement on behalf of the Subscriber;
(b) the entering into of this Agreement and the transactions contemplated
hereby do not result in the violation of any of the terms and
provisions of any law applicable to 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;
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(c) the Subscriber has duly executed and delivered this Agreement and it
constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber in accordance with its terms;
(d) the Subscriber is (CHECK ONE OR MORE OF THE FOLLOWING BOXES):
(A) a director, executive officer or control person of the [ ]
Company or an affiliate of the Company
(B) a spouse, parent, grandparent, brother, sister or child [ ]
of a director, executive officer or control person of the
Company or an affiliate of the Company
(C) a parent, grandparent, brother, sister or child of the [ ]
spouse of a director, executive officer or control person
of the Company or an affiliate of the Company
(D) a close personal friend of a director, executive officer [ ]
or control person of the Company or an affiliate of the
Company
(E) a close business associate of a director, executive [ ]
officer or control person of the Company or an affiliate
of the Company
(F) a founder of the Company or a spouse, parent, [ ]
grandparent, brother, sister, child, close personal
friend or close business associate of a founder of the
Company
(G) a parent, grandparent, brother, sister or child of the [ ]
spouse of a founder of the Company
(H) a company, partnership or other entity which a majority [ ]
of the voting securities are beneficially owned by, or a
majority of the directors are, persons or companies as
described in paragraphs (A) to (G) above
(I) purchasing as principal Shares with an aggregate value of [ ]
more than CDN$150,000
(J) an accredited investor [ ]
(e) if the Subscriber has checked one or more of boxes B, C, D, E, F, G or
H in paragraph 6.1(d) above, the director(s), executive officer(s),
control person(s) or founder(s) of the Company with whom the
Subscriber has the relationship is:
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(Instructions to Subscriber: fill in the name of each director,
executive officer, founder and control person which you have the
above-mentioned relationship with. If you have checked box H, also
indicate which of A to G describes the securityholders or directors
which qualify you as box H and provide the names of those individuals.
Please attach a separate page if necessary).
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(f) If the Subscriber has ticked box J in paragraph 6.1(d) above, the
Subscriber acknowledges and agrees that the Company shall not consider
the Subscriber's Subscription for acceptance unless the undersigned
provides to the Company, along with an executed copy of this
Agreement:
(i) a fully completed and executed Accredited Investor Questionnaire
in the form attached as Exhibit 1 hereto; and
(ii) such other supporting documentation that the Company or its legal
counsel may request to establish the Subscriber's qualification
as an Accredited Investor;
(g) the Subscriber is resident in the jurisdiction set out under the
heading "Name and Address of Subscriber" on the signature page of this
Agreement;
(h) the sale of the Shares to the Subscriber as contemplated in this
Agreement complies with or is exempt from the applicable securities
legislation of the jurisdiction of residence of the Subscriber;
(i) the Subscriber is acquiring the Shares for investment only and not
with a view to resale or distribution;
(j) the Subscriber is acquiring the Shares as principal for the
Subscriber's own account, for investment purposes only, and not with a
view to, or for, resale, distribution or fractionalisation thereof, in
whole or in part, and no other person has a direct or indirect
beneficial interest in such Shares;
(k) the Subscriber is not an underwriter of, or dealer in, the common
shares of the Company, nor is the Subscriber participating, pursuant
to a contractual agreement or otherwise, in the distribution of the
Shares;
(l) the Subscriber (i) is able to fend for him/her/itself in the
Subscription; (ii) has such knowledge and experience in business
matters as to be capable of evaluating the merits and risks of its
prospective investment in the Shares; and (iii) has the ability to
bear the economic risks of its prospective investment and can afford
the complete loss of such investment;
(m) the Subscriber acknowledges that the Subscriber has not acquired the
Shares as a result of, and will not itself engage in, any "directed
selling efforts" (as defined in Regulation S under the ▇▇▇▇ ▇▇▇) in
the United States in respect of the Shares which would include any
activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United
States for the resale of the Shares; provided, however, that the
Subscriber may sell or otherwise dispose of the Shares pursuant to
registration of the Shares pursuant to the 1933 Act and any applicable
state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;
(n) the Subscriber understands and agrees that the Shares 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;
(o) the Subscriber understands and agrees that the Company will refuse to
register any transfer of the Shares 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 the registration requirements of the 1933 Act;
(p) the Subscriber is not aware of any advertisement of any of the Shares
and is not acquiring the Shares as a result of any form of general
solicitation or general advertising including advertisements,
articles, notices or other communications published in any newspaper,
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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
(q) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the Shares;
(ii) that any person will refund the purchase price of any of the
Shares;
(iii) as to the future price or value of any of the Shares; or
(iv) that any of the Shares 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 Shares of
the Company on any stock exchange or automated dealer quotation
system.
7. ACKNOWLEDGEMENT AND WAIVER
7.1 The Subscriber has acknowledged that the decision to purchase the Shares was
solely made on the basis of available information provided to the Subscriber.
The Subscriber hereby waives, to the fullest extent permitted by law, any rights
of withdrawal, rescission or compensation for damages to which the Subscriber
might be entitled in connection with the distribution of the Shares.
8. REPRESENTATIONS AND WARRANTIES WILL BE RELIED UPON BY THE COMPANY
8.1 The Subscriber acknowledges that the representations and warranties
contained herein and, if applicable, in an Accredited Investor Questionnaire,
are made by the undersigned with the intention that they may be relied upon by
the Company and its legal counsel in determining the undersigned's eligibility
to acquire the Shares under relevant Legislation. The undersigned further agrees
that by accepting delivery of the Shares, the undersigned will be representing
and warranting that the foregoing representations and warranties are true and
correct as at the time of delivery of such Shares with the same force and effect
as if they had been made by the undersigned at such time, and that they shall
survive the completion of the transactions contemplated under this Subscription
and remain in full force and effect thereafter for the benefit of the Company
for a period of one year.
8.2 The Subscriber hereby acknowledges and agrees to the Company making a
notation on its records or giving instructions to the registrar and transfer
agent of the Company in order to implement the restrictions on transfer set
forth and described in this Agreement.
9. GOVERNING LAW
9.1 This Agreement is governed by the laws of the Province of British Columbia.
The Subscriber, in its personal or corporate capacity and, if applicable, on
behalf of each beneficial purchaser for whom it is acting, irrevocably attorns
to the jurisdiction of the courts of the Province of British Columbia.
10. SURVIVAL
10.1 This Agreement, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Shares by the Subscriber pursuant hereto.
11. ASSIGNMENT
11.1 This Agreement is not transferable or assignable.
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12. SEVERABILITY
12.1 The invalidity or unenforceability of any particular provision of this
Agreement shall not affect or limit the validity or enforceability of the
remaining provisions of this Agreement.
13. ENTIRE AGREEMENT
13.1 Except as
expressly provided in this Agreement and in the agreements, instruments and
other documents contemplated or provided for herein, this Agreement contains the
entire agreement between the parties with respect to the sale of the Shares and
there are no other terms, conditions, representations or warranties, whether
expressed, implied, oral or written, by statute or common law, by the Company or
by anyone else.
14. NOTICES
14.1 All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Subscriber
shall be directed to the address on the signature page of this Agreement and
notices to the Company shall be directed to it at Yellow Hill Energy Inc., ▇▇▇ -
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇, President.
15. COUNTERPARTS AND ELECTRONIC MEANS
15.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument. Delivery of an executed copy of
this Agreement by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy will be deemed to be execution
and delivery of this Agreement as of the date hereinafter set forth.
IN WITNESS WHEREOF the Subscriber has duly executed this Agreement as of the
date of acceptance by the Company.
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(Name of Subscriber - Please type or print)
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(Signature and, if applicable, Office)
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(Address of Subscriber)
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(City, State or Province, Postal Code of Subscriber)
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(Country of Subscriber)
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A C C E P T A N C E
The above-mentioned Agreement in respect of the Shares is hereby accepted by
Yellow Hill Energy Inc.
DATED at ______________________________, the _____ day of ____________, 2007.
YELLOW HILL ENERGY INC.
Per:
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Authorized Signatory
EXHIBIT 1
NI 45-106 ACCREDITED INVESTOR QUESTIONNAIRE
All capitalized terms herein, unless otherwise defined, have the meanings
ascribed thereto in the Subscription.
The purpose of this Questionnaire is to assure the Company that each Subscriber
will meet certain requirements of National Instrument 45-106 ("NI 45-106"). The
Company will rely on the information contained in this Questionnaire for the
purposes of such determination.
The Subscriber covenants, represents and warrants to the Company that:
1. the Subscriber has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of the transactions detailed in the Subscription and the Subscriber is
able to bear the economic risk of loss arising from such transactions;
2. the Subscriber satisfies one or more of the categories of "accredited
investor" (as that term is defined in NI 45-106) indicated below
(please check the appropriate box):
[ ] (a) a Canadian financial institution as defined in National
Instrument 14-101, or an authorized foreign bank listed in
Schedule III of the BANK ACT (Canada);
[ ] (b) the Business Development Bank of Canada incorporated under
the BUSINESS DEVELOPMENT BANK ACT (Canada);
[ ] (c) a subsidiary of any person referred to in any of the
foregoing categories, if the person owns all of the voting
securities of the subsidiary, except the voting securities
required by law to be owned by directors of that subsidiary;
[ ] (d) an individual registered or formerly registered under
securities legislation in a jurisdiction of Canada, as a
representative of a person or company registered under securities
legislation in a jurisdiction of Canada, as an adviser or dealer,
other than a limited market dealer registered under the
SECURITIES ACT (Ontario) or the SECURITIES ACT (Newfoundland);
[ ] (e) an individual registered or formerly registered under the
securities legislation of a jurisdiction of Canada as a
representative of a person referred to in paragraph (d);
[ ] (f) the government of Canada or a province, or any crown
corporation or agency of the government of Canada or a province;
[ ] (g) a municipality, public board or commission in Canada and a
metropolitan community, school board, the Comite de gestion de la
taxe scholaire de l'ile de Montreal or an intermunicipal
management board in Quebec;
[ ] (h) a national, federal, state, provincial, territorial or
municipal government of or in any foreign jurisdiction, or any
agency thereof;
[ ] (i) a pension fund that is regulated by either the Office of the
Superintendent of Financial Institutions (Canada) or a pension
commission or similar regulatory authority of a jurisdiction of
Canada;
[ ] (j) an individual who either alone or with a spouse beneficially
owns, directly or indirectly, financial assets (as defined in NI
45-106) having an aggregate realizable value that, before taxes
but net of any related liabilities, exceeds CDN$1,000,000;
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[ ] (k) an individual whose net income before taxes exceeded
CDN$200,000 in each of the two more recent calendar years or
whose net income before taxes combined with that of a spouse
exceeded $300,000 in each of those years and who, in either case,
reasonably expects to exceed that net income level in the current
calendar year;
[ ] (l) an individual who, either alone or with a spouse, has net
assets of at least CDN $5,000,000;
[ ] (m) a person, other than a person or investment fund, that had
net assets of at least CDN$5,000,000 as reflected on its most
recently prepared financial statements;
[ ] (n) an investment fund that distributes it securities only to
persons that are accredited investors at the time of
distribution, a person that acquires or acquired a minimum of
CDN$150,000 of value in securities, or a person that acquires or
acquired securities under Sections 2.18 or 2.19 of NI 45-106;
[ ] (o) an investment fund that distributes or has distributed
securities under a prospectus in a jurisdiction of Canada for
which the regulator or, in Quebec, the securities regulatory
authority, has issued a receipt;
[ ] (p) a trust company or trust corporation registered or authorized
to carry on business under the TRUST AND LOAN COMPANIES ACT
(Canada) or under comparable legislation in a jurisdiction of
Canada or a foreign jurisdiction, acting on behalf of a fully
managed account managed by the trust company or trust
corporation, as the case may be;
[ ] (q) a person acting on behalf of a fully managed account managed
by that person, if that person (i) is registered or authorized to
carry on business as an adviser or the equivalent under the
securities legislation of a jurisdiction of Canada or a foreign
jurisdiction, and (ii) in Ontario, is purchasing a security that
is not a security of an investment fund;
[ ] (r) a registered charity under the INCOME TAX ACT (Canada) that,
in regard to the trade, has obtained advice from an eligibility
advisor or an advisor registered under the securities legislation
of the jurisdiction of the registered charity to give advice on
the securities being traded;
[ ] (s) an entity organized in a foreign jurisdiction that is
analogous to any of the entities referred to in paragraphs (a) to
(d) or paragraph (i) in form and function;
[ ] (t) a person in respect of which all of the owners of interests,
direct, indirect or beneficial, except the voting securities
required by law are persons or companies that are accredited
investors.
[ ] (u) an investment funds that is advised by a person registered as
an advisor or a person that is exempt from registration as an
advisor; or
[ ] (v) a person that is recognized or designated by the securities
regulatory authority or, except in Ontario and Quebec, the
regulator as (i) an accredited investor, or (ii) an exempt
purchaser in Alberta or British Columbia after this instrument
comes into force;
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The Subscriber acknowledges and agrees that the Subscriber may be required by
the Company to provide such additional documentation as may be reasonably
required by the Company and its legal counsel in determining the Subscriber's
eligibility to acquire the Shares under relevant Legislation.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of
the ____ day of __________________, 2007.
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If an Individual: If a Corporation, Partnership or
Other Entity:
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Signature Print or Type Name of Entity
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Print or Type Name Signature of Authorized Signatory
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Type of Entity