FINAL, DATED OCTOBER 22, 2004
SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT
WESTSIDE ENERGY CORPORATION
Private Offering
of up to 10,000,000 Shares of
Common Stock
This Subscription and Registration Rights Agreement (this "Agreement"),
made as of the date set forth below by and between Westside Energy Corporation,
a Nevada corporation (the "Company"), and the undersigned (the "Subscriber"), is
intended to set forth certain representations, covenants and agreements between
the Company and the Subscriber, with respect to the offering (the "Offering")
for sale by the Company of shares (the "Shares") of Common Stock, par value
$0.01 per share (the "Common Stock"), as described in the Company's Private
Placement Memorandum dated October 22, 2004 (the "Memorandum"), a copy of which
has been delivered to the Subscriber. The Shares are being offered by the
Company through Sterne, Agee & ▇▇▇▇▇, Inc., as placement agent (the "Placement
Agent").
1. Subscription. Subject to the terms and conditions hereof, the Subscriber
hereby irrevocably subscribes for and agrees to purchase from the Company the
number of Shares set forth under the Subscriber's name on the signature page
hereto at a purchase price of $2.00 per Share (the "Offering Price"), and the
Company agrees to sell such Shares to the Subscriber at the Offering Price,
subject to the Company's right to sell to the Subscriber such lesser number of
Shares as the Company may, in its sole discretion, deem necessary or desirable.
2. Delivery of Subscription Amount; Acceptance of Subscription; Delivery of
Shares. The Subscriber understands and agrees that this subscription is made
subject to the following terms and conditions:
(a) The Subscriber understands that separate Subscription and Registration
Rights Agreements will be executed with other subscribers for up to 10,000,000
shares of Common Stock to be sold in the Offering;
(b) Contemporaneously with the completion, execution and delivery of this
Agreement, the Subscriber shall complete, execute and deliver the Certificate of
Accredited Investor Status attached as Exhibit B hereto, and shall submit to the
Company payment in the form of a wire of immediately available United States
funds in the amount equal to the Offering Price multiplied by the number of
Shares for which the Subscriber has subscribed (the "Subscription Amount") in
accordance with the Subscription Instructions set forth on Exhibit A hereto;
(c) The subscription for Shares shall be deemed to be accepted only when this
Agreement has been signed by an authorized officer of the Company, and the
deposit of the Subscription Amount for clearance will not be deemed an
acceptance of this Agreement;
(d) The Company shall have the right to reject this subscription, in whole or in
part, and shall have the right to allocate Shares among subscribers in any
manner it may desire;
(e) The payment representing the Subscription Amount (or, in the case of
rejection of a portion of the Subscriber's subscription, the part of the payment
relating to such rejected portion) will be returned promptly to the Subscriber,
without interest, if the Subscriber's subscription is rejected in whole or in
part or if the Offering is withdrawn or canceled;
(f) The Placement Agent and the Company may conduct one or more closings of the
Offering (each a "Closing") until all 10,000,000 Shares offered hereby are sold;
(g) The Company may, in its sole discretion, terminate the Offering at any time
and accept any subscriptions then in its receipt;
(h) Certificates representing the Shares purchased will be issued in the name of
each Subscriber within 14 days following each Closing;
(i) The minimum Subscription Amount is $100,000, provided, however, that the
Company reserves the right to accept subscriptions for less than the minimum
Subscription Amount;
(j) The Offering is being conducted on a "best efforts" basis, and the Company
is not required to accept any minimum amount of subscriptions before conducting
a Closing; and
(k) The representations and warranties of the Company and the Subscriber set
forth herein shall be true and correct as of the date that the Company accepts
this subscription.
3. Terms of Subscription.
(a) The subscription period will begin as of October 22, 2004, and will continue
until such time as the Company terminates it in its sole discretion.
(b) The Placement Agent will receive a placement management fee equal to seven
percent (7.0%) of the aggregate purchase price of the Shares sold. The Placement
Agent will also receive warrants to purchase a number of shares of the Company's
common stock equal to three percent (3%) of the number of Shares sold in the
Offering. The per-share purchase price for these warrant shares will be $2.00,
and the warrants will be exercisable for five years after they are issued. The
Company shall also pay all expenses in connection with the Offering, except for
those expenses that the Placement Agent has agreed to pay.
(c) If the Subscriber is not a United States person, the Subscriber hereby
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for the Shares
or any use of this Agreement, including, without limitation, (i) the legal
requirements within its jurisdiction for the purchase of the Shares, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Shares. The Subscriber represents
and warrants that the Subscriber's subscription and payment for, and the
Subscriber's continued beneficial ownership of, the Shares will not violate any
applicable securities or other laws of the Subscriber's jurisdiction.
4. Registration Rights.
(a) The Subscriber acknowledges that it is acquiring the Shares for its own
account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). The Subscriber further agrees that it will
not sell, assign or transfer the Shares at any time in violation of the
Securities Act and acknowledges that, in taking unregistered securities, it must
continue to bear the economic risk of its investment for an indefinite period of
time because of the fact that the Shares have not been registered under the
Securities Act, and further realizes that the Shares cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available. The Subscriber also acknowledges that appropriate
legends reflecting the status of the Shares under the Securities Act may be
placed on the face of the certificates for such Shares at the time of their
transfer and delivery to the holder thereof.
(b) The Shares may not be transferred except in a transaction that is in
compliance with the Securities Act. Except as provided hereafter with respect to
registration of the Shares, it shall be a condition to any such transfer that
the Company shall be furnished with an opinion of counsel to the holder of such
Shares, reasonably satisfactory to the Company, to the effect that the proposed
transfer would be in compliance with the Securities Act.
(c) Within 30 days following the earlier to occur of (i) the sale of all of the
Shares in the Offering or (ii) the termination of the Offering following any
sale of Shares as reflected in a written notice given by the Company to the
Placement Agent, the Company shall prepare and file with the Securities and
Exchange Commission (the "SEC"), a registration statement on Form SB-2 and such
other documents as may be necessary in the opinion of counsel for the Company,
and use its commercially reasonable efforts to have such registration statement
declared effective as soon as reasonably practicable after such filing in order
to comply with the provisions of the Securities Act, so as to permit the
registered resale of the Shares for a period of two (2) years following the last
sale of Shares in the Offering by each and every holder of Shares, except for
those holders who designate on the signature page hereto that they do not wish
to have their Shares included in the registration statement. The Subscriber
acknowledges that certain shares of the Company's Common Stock sold in past
private placements as well as certain shares of the Company's Common Stock that
may be sold pursuant to the exercise of warrants issued in past private
placements will be included in the registration statement. The Shares that are
registered for resale under such registration statement are referred to herein
as the "Offering Shares," and the Subscribers who are eligible to sell their
Offering Shares under such registration statement, together with their
affiliates, are hereafter referred to as "Offering Holders." The Company will
include in such registration statement (i) the information required under the
Securities Act to be so included concerning the Offering Holders, as provided by
the Offering Holders on the signature pages to this Agreement and the other
Subscription and Registration Rights Agreements entered into in connection with
the Offering, including any changes in such information that may be provided by
the Offering Holders in writing to the Company from time to time, and (ii) a
section entitled "Plan of Distribution," substantially in the form of Exhibit C
hereto, that describes the various procedures that may be used by the Offering
Holders in the sale of their Offering Shares.
(d) In the event that the Company does not file a registration statement to
register the Offering Shares with the SEC within the time period specified in
Section 4(c), the Company will be required to pay a penalty to each Offering
Holder equal to one percent (1%) of such Offering Holder's purchase price for
the Offering Shares, and an additional one percent (1%) for each additional
30-day period during which such registration statement is not filed.
(e) Notwithstanding the foregoing provisions of this Section 4, the Company may
voluntarily suspend the effectiveness of any such registration statement for a
limited time, which in no event shall be longer than 60 days in any three-month
period and no longer than 120 days in any twelve-month period, if the Company
has been advised in writing by counsel or underwriters to the Company that the
offering of any Offering Shares pursuant to the registration statement would
materially adversely affect, or would be improper in view of (or improper
without disclosure in a prospectus), a proposed financing, reorganization,
recapitalization, merger, consolidation, or similar transaction involving the
Company. The Company shall notify all Offering Holders to such effect, and, upon
receipt of such notice, each such Offering Holder shall immediately discontinue
any sales of Offering Shares pursuant to such registration statement until such
Offering Holder has received copies of a supplemented or amended prospectus or
until such Offering Holder is advised in writing by the Company that the then
current prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus.
(f) If any event occurs that would cause any such registration statement to
contain a material misstatement or omission or not to be effective and usable
during the period that such registration statement is required to be effective
and usable, the Company shall promptly notify the Offering Holders of such event
and, if requested, the Offering Holders shall immediately cease making offers of
Offering Shares and return all prospectuses to the Company. The Company shall
promptly file an amendment to the registration statement to correct such
misstatement or omission and use its commercially reasonable efforts to cause
such amendment to be declared effective as soon as practicable thereafter. The
Company shall promptly provide the Offering Holders with revised prospectuses
and, following receipt of the revised prospectuses, the Offering Holders shall
be free to resume making offers of the Offering Shares.
(g) Notwithstanding any provision contained herein to the contrary, the
Company's obligation to include, or continue to include, Offering Shares in any
such registration statement under this Section 4 shall terminate to the extent
such Offering Shares are eligible for resale under Rule 144(k) promulgated under
the Securities Act.
(h) If and whenever the Company is required by the provisions of this
Agreement to use its commercially reasonable efforts to effect the registration
of the Offering Shares under the Securities Act for the account of an Offering
Holder, the Company will, as promptly as possible:
(i) prepare and file with the SEC a registration statement, on Form SB-2,
complying with applicable requirements under the Securities Act, with
respect to such securities and use its commercially reasonable efforts
to cause such registration statement to become and remain effective for
a period of two (2) years following the last sale of Shares in the
Offering;
(ii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the requirements of the Securities Act and the rules and
regulations promulgated by the SEC thereunder relating to the sale or
other disposition of the securities covered by such registration
statement; and
(iii) furnish to each Offering Holder such numbers of copies of a prospectus,
including a preliminary prospectus, complying with the requirements of
the Securities Act, and such other documents as such Offering Holder
may reasonably request in order to facilitate the public sale or other
disposition of the Offering Shares owned by such Offering Holder, but
such Offering Holder shall not be entitled to use any selling materials
other than a prospectus and such other materials as may be approved by
the Company, which approval will not be unreasonably withheld.
(i) Except as provided below in this Section 4, the expenses incurred
by the Company in connection with action taken by the Company to comply with
this Section 4, including, without limitation, all registration and filing fees,
printing and delivery expenses, accounting fees, fees and disbursements of
counsel to the Company, consultant and expert fees, premiums for liability
insurance, if the Company chooses to obtain such insurance, obtained in
connection with a registration statement filed to effect such compliance and all
expenses, including counsel fees, of complying with any state securities laws,
shall be paid by the Company. All fees and disbursements of any counsel,
experts, or consultants employed by any Offering Holder shall be borne by such
Offering Holder. The Company shall not be obligated in any way in connection
with any registration pursuant to this Section 4 for any selling commissions or
discounts payable by any Offering Holder to any underwriter or broker of
securities to be sold by such Offering Holder. The Subscriber agrees that any
such selling commissions or discounts shall be borne by such Offering Holder.
(j) In the event of any registration of Shares pursuant to this Section
4, the Company will indemnify and hold harmless each Offering Holder, its
officers, directors, attorneys, partners, agents, employees and consultants and
each underwriter of such securities, and any person who controls such Offering
Holder or underwriter within the meaning of Section 15 of the Securities Act
(collectively, the "Indemnified Parties"), against all claims, actions, losses,
damages, liabilities and expenses, joint or several, to which any of such
Indemnified Parties may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any actual or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the actual or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and will reimburse each of such Indemnified Parties for any legal
and any other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises directly out of or is based primarily upon an untrue statement or
omission of a material fact made in said registration statement, said
preliminary prospectus or said prospectus, or said amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Offering Holder or such underwriter specifically for use in the
preparation thereof; and provided further, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability or action arises directly out of or is based primarily upon an untrue
statement or omission of a material fact made in any preliminary prospectus or
final prospectus if (i) such Offering Holder failed to send or deliver the copy
of the final prospectus or prospectus supplement which such Offering Holder
shall have been previously provided by the Company, with or prior to the
delivery of written confirmation of the sale of the Offering Shares, and (ii)
the final prospectus or prospectus supplement would have corrected such untrue
statement or omission.
(k) At any time when a prospectus relating to the Offering is required
to be delivered under the Securities Act, the Company will notify the Offering
Holder of the happening of any event, upon the notification or awareness of such
event by an executive officer of the Company, as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing.
(l) In the event of any registration of any securities under the
Securities Act pursuant to this Section 4, the Subscriber agrees to indemnify
and hold harmless the Company, its officers, directors, attorneys, partners,
agents, employees and consultants and any person who controls the Company within
the meaning of Section 15 of the Securities Act (collectively, the "Indemnified
Persons"), against any losses, claims, damages, liabilities, or actions, joint
or several, to which any of such Indemnified Persons may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, or actions arise out of or are based upon any actual or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the actual or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent and only to the extent that any such loss, claim, damage, liability, or
action arises out of or is based upon an untrue statement or omission of a
material fact made in said registration statement, said preliminary prospectus
or said prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Subscriber
or any affiliate (as defined in the Securities Act) of the Subscriber
specifically for use in the preparation thereof.
(m) Any party entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (which consent may not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(n) With a view to making available to the Offering Holder the benefits
of Rule 144 promulgated under the Securities Act, the Company agrees that it
will use its commercially reasonable efforts to maintain registration of its
Common Stock under Section 12 or 15 of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), and to file with the SEC in a timely manner all
reports and other documents required to be filed by an issuer of securities
registered under the Exchange Act so as to maintain the availability of Rule
144. Upon the request of any record owner, the Company will deliver to such
owner a written statement as to whether it has complied with the reporting
requirements of Rule 144.
5. Representations and Warranties of the Subscriber. The Subscriber hereby
represents and warrants to the Company and the Placement Agent as follows:
(a) The Subscriber is acquiring the Shares for its own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act, and applicable
state securities laws. The Subscriber understands that (A) the Shares (1) have
not been registered under the Securities Act or any state securities laws, (2)
will be issued in reliance upon an exemption from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
and/or Regulation D thereof, and (3) will be issued in reliance upon exemptions
from the registration and prospectus delivery requirements of state securities
laws which relate to private offerings, and (B) the Subscriber must therefore
bear the economic risk of such investment indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable state
securities laws or is exempt therefrom. The Subscriber further understands that
such exemptions depend upon, among other things, the bona fide nature of the
investment intent of the Subscriber expressed herein. Pursuant to the foregoing,
the Subscriber acknowledges that the certificates representing the Shares
acquired by the Subscriber shall bear a restrictive legend substantially as
follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS (I) REGISTERED UNDER THE APPLICABLE SECURITIES LAWS OR
(II) AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE BOTH
REASONABLY SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE
COMPANY AND SUCH OPINION STATES THAT THE SHARES MAY BE
TRANSFERRED WITHOUT SUCH REGISTRATION."
(b) The Subscriber has knowledge, skill and experience in financial, business
and investment matters relating to an investment of this type and is capable of
evaluating the merits and risks of such investment and protecting the
Subscriber's interest in connection with the acquisition of the Shares. The
Subscriber understands that the acquisition of the Shares is a speculative
investment and involves substantial risks and that the Subscriber could lose the
Subscriber's entire investment in the Shares. Further, the Subscriber has
carefully read and considered the matters set forth under the section entitled
"Risk Factors" in the Memorandum, and has taken full cognizance of and
understands all of the risks related to the purchase of the Shares. To the
extent deemed necessary by the Subscriber, the Subscriber has retained, at its
own expense, and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of purchasing and owning the
Shares. The Subscriber has the ability to bear the economic risks of the
Subscriber's investment in the Company, including a complete loss of the
investment, and the Subscriber has no need for liquidity in such investment.
(c) The Subscriber has been furnished by the Company all information (or
provided access to all information) regarding the business and financial
condition of the Company, its expected plans for future business activities, the
attributes of the Shares and the merits and risks of an investment in the Shares
which the Subscriber has requested or otherwise believes that the Subscriber
needs to evaluate the investment in the Company.
(d) The Subscriber is in receipt of and has carefully read and understands the
following items:
o The Memorandum;
o Annual Report on Form 10-KSB for Fiscal Year ended December 31, 2003;
o Quarterly Report on Form 10-QSB for the Quarter ended March 31, 2004;
o Quarterly Report on Form 10-QSB for the Quarter ended June 30, 2004;
o Definitive Information Statement on Schedule 14C filed with the SEC on May 17,
2004;
o Current Report on Form 8-K, dated September 16, 2004, filed with the SEC on
September 22, 2004; and
o Current Report on Form 8-K, dated October 13, 2004, filed with the SEC on
October 18, 2004.
(e) In making the Subscriber's investment decision, the Subscriber is relying
solely on investigations made by the Subscriber and the Subscriber's
representative(s), if any. The offer to sell the Shares was communicated to the
Subscriber in such a manner that the Subscriber was able to ask questions of and
receive answers from the management of the Company concerning the terms and
conditions of the proposed transaction. At no time was the Subscriber presented
with or solicited by or through any advertisement, article, leaflet, public
promotional meeting, notice or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or meeting or any other form of general or public advertising or
solicitation.
(f) The Subscriber acknowledges that the Subscriber has been advised that:
(i) The Shares offered hereby have not been approved or disapproved by the
SEC or any state securities commission nor has the SEC or any state
securities commission passed upon the accuracy or adequacy of any
representations by the Company. Any representation to the contrary is a
criminal offense.
(ii) In making an investment decision, the Subscriber must rely on its own
examination of the Company and the terms of the Offering, including the merits
and risks involved. The Shares have not been recommended by any federal or
state securities commission or other regulatory authority. Furthermore, the
foregoing authorities have not confirmed the accuracy or determined the adequacy
of any representation by the Company. Any representation to the contrary is a
criminal offense
(iii) The Shares will be "restricted securities" within the meaning of Rule
144 under the Securities Act, are subject to restrictions on transferability
and resale and may not be transferred or resold except as permitted under the
Securities Act and applicable state securities laws, pursuant to registration
or exemption therefrom. The Subscriber is aware that the Subscriber may be
required to bear the financial risks of this investment for an indefinite period
of time.
(g) The Subscriber acknowledges and is aware that there has never been any
representation, guarantee or warranty made by the Company or any
officer, director, employee or agent or representative of the Company,
expressly or by implication, as to (i) the approximate or exact length
of time that the Subscriber will be required to remain an owner of the
Shares; (ii) the percentage of profit and/or amount of or type of
consideration, profit or loss to be realized, if any, as a result of
this investment; or (iii) that the limited past performance (if any) or
experience on the part of the Company, or any future expectations
regarding the Company's business or operations, will in any way
indicate the predictable results of the ownership of Shares or of the
overall financial performance of the Company.
(h) The Subscriber agrees to furnish the Company such other information
as the Company may reasonably request in order to verify the accuracy of
the information contained herein and agrees to notify the Company immediately
of any material change in the information provided herein that occurs
prior to the Company's acceptance of this Agreement.
(i) The Subscriber further represents and warrants that the Subscriber is an
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act, and the Subscriber has executed the Certificate of Accredited
Investor Status, attached hereto as Exhibit B.
(j) If the Subscriber is a natural person, the Subscriber has reached the
age of majority in the state in which the Subscriber resides, has adequate
means of providing for the Subscriber's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and, at the present time, could afford a complete loss of
such investment.
(k) If this Agreement is executed and delivered on behalf of a partnership,
corporation, trust, estate or other entity (an "Entity"): (i) such Entity
has the full legal right and power and all authority and approval required
(a) to execute and deliver, or authorize execution and delivery of, this
Agreement and all other instruments executed and delivered by or on behalf of
such Entity in connection with the purchase of the Shares, (b) to delegate
authority pursuant to power of attorney and (c) to purchase and hold such
Shares, (ii) the signature of the party signing on behalf of such Entity is
binding upon such Entity; and (iii) such Entity has not been formed for the
specific purpose of acquiring such Shares, unless each beneficial owner of
such Entity is qualified as an accredited investor within the meaning of
Rule 501(a) of Regulation D promulgated under the Securities Act and has
submitted information substantiating such individual qualification.
(l) If the Subscriber is a retirement plan or is investing on behalf of a
retirement plan, the Subscriber acknowledges that investment in the Common
Stock poses additional risks, including, without limitation, the
inability to use losses generated by an investment in the Common Stock to offset
taxable income.
(m) The Subscriber represents and warrants that it is not a broker-dealer or an
affiliate of a broker-dealer, except as follows:_____________________________.
If the Subscriber is a broker-dealer, the Subscriber acknowledges
that the Subscriber will be deemed to be an underwriter with respect to the
resale of its Shares. If the Subscriber is an affiliate of a broker-dealer,
the Subscriber acknowledges that the Subscriber will be deemed to be an
underwriter with respect to the resale of its Shares to the extent that such
Shares are sold through its affiliated broker-dealer. To the extent that the
Subscriber is affiliated in any manner with a broker-dealer, the Subscriber
further represents and warrants that it is purchasing the Shares in the
ordinary course of its business and that as of the date hereof it has
no agreements or understandings, directly or indirectly, with any person to
distribute the Shares.
The foregoing representations and warranties and undertakings are made
by the Subscriber with the intent that they be relied upon by the Company and
the Placement Agent in determining the Subscriber's suitability as an investor,
and the Subscriber hereby agrees that such representations and warranties shall
survive the Subscriber's purchase of the Shares.
6. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Subscriber as follows:
(a) The Company is duly incorporated, validly existing and in good standing
under the laws of the State of Nevada, and is duly qualified to do business as a
foreign corporation in all jurisdictions in which the failure to be so qualified
would materially and adversely affect the business or financial condition,
properties or operations of the Company.
(b) The Company has duly authorized the issuance and sale of the Shares in
accordance with the terms of this Agreement (as described herein) by all
requisite corporate action, including the authorization of the Company's
Board of Directors of the issuance and sale of the Shares in accordance
herewith, and the execution, delivery and performance of any other agreements
and instruments executed in connection herewith. This Agreement constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, and (iii) to the extent the indemnification
provisions contained herein may be limited by applicable federal or state
securities laws.
(c) As of the date of this Agreement, the Memorandum does not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(d) The documents incorporated by reference or included with the Memorandum,
at the time they were filed with the SEC, complied in all material respects
with the requirements of the Exchange Act, and, when read together and
with the other information in the Memorandum, did not contain, at the time
they were filed with the SEC, any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
7. Understandings. The Subscriber understands, acknowledges and agrees with the
Company as follows:
(a) This Subscription may be rejected, in whole or in part, by the Company in
its sole and absolute discretion, at any time before the Closing,
notwithstanding prior receipt by the undersigned of notice of acceptance of the
undersigned's Subscription. The Company may terminate this Offering at any time
in its sole discretion. Neither the execution of this Agreement nor the
solicitation of the investment contemplated hereby shall create any obligation
of the Company to accept any subscription or complete the Offering. The Company
is not required to accept any minimum amount of subscriptions before conducting
a Closing.
(b) The Subscriber hereby acknowledges and agrees that the subscription
hereunder is irrevocable by the Subscriber, that, except as required by law,
the Subscriber is not entitled to cancel, terminate or revoke this Agreement
or any agreements of the Subscriber hereunder and that this Agreement and such
other agreements shall survive the death or disability of the Subscriber
and shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives and
permitted assigns. If the Subscriber is more than one person, the obligations
of the Subscriber hereunder shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and his/her
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
(c) No federal or state agency has made any finding or determination as to the
accuracy or adequacy of the Memorandum or as to the suitability of the Offering
for investment nor any recommendation or endorsement of the Shares.
(d) The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the Subscriber
herein.
(e) There can be no assurance that the Subscriber will be able to sell or
dispose of the Shares. It is understood that in order not to jeopardize the
Offering's exempt status under Section 4(2) of the Securities Act and Regulation
D, any transferee will, at a minimum, be required to fulfill the investor
suitability requirements thereunder.
(f) The Subscriber acknowledges that the information contained in the
Memorandum is confidential and non-public and agrees that all such
information shall be kept in confidence by the Subscriber and neither used
for the Subscriber's personal benefit (other than in connection with this
subscription) nor disclosed to any third party for any reason; provided,
however, that this confidentiality obligation shall not apply to any such
information that (i) is part of the public knowledge or literature, (ii)
becomes part of the public knowledge or literature (except as a result of a
breach of this provision) or (iii) is received from third parties (except
third parties who disclose such information in violation of any
confidentiality agreements or obligations, including, without limitation,
any subscription agreement entered into with the Company). In addition, the
Subscriber may disclose any information as may be required by law or applicable
legal process; provided, however, to the extent permitted by law or applicable
legal process, the Subscriber shall provide the Company at least five
business days prior written notice before making any such disclosure.
(g) The representations, warranties and agreements of the Subscriber
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects
on and as of the date of the Closing of the sale of the Shares as if made on
and as of such date and shall survive the execution and delivery of this
Agreement and the purchase of the Shares.
8. Survival; Indemnification. All representations, warranties and covenants
contained in this Agreement and the indemnification obligations contained in
this Section 8 shall survive (i) the acceptance of this Agreement by the
Company, (ii) changes in the transactions, documents and instruments described
herein which are not material or which are to the benefit of the Subscriber, and
(iii) the death or disability of the Subscriber. The Subscriber understands the
meaning and legal consequences of the representations, warranties and covenants
contained in this Agreement and that the Company and the Placement Agent have
relied upon such representations, warranties and covenants in determining the
Subscriber's qualification and suitability to purchase the Shares. The
Subscriber hereby agrees to indemnify, defend and hold harmless the Company, the
Placement Agent and their respective officers, directors, employees, agents and
controlling persons, from and against any and all losses, claims, damages,
liabilities, expenses (including attorneys' fees and disbursements), judgments
or amounts paid in settlement of actions arising out of or resulting from the
untruth of any representation of the Subscriber herein or the breach of any
warranty or covenant herein by the Subscriber. Notwithstanding the foregoing,
however, no representation, warranty, covenant or acknowledgment made herein by
the Subscriber shall in any manner be deemed to constitute a waiver of any
rights granted to it under the Securities Act or state securities laws.
9. Notices. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or sent by reputable overnight courier, charges
prepaid:
(a) if to the Company, to the following address:
Westside Energy Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Subscriber, to the address set forth on the signature page
hereto; or at such other address as any party shall have specified by notice in
writing to the other.
10. Notification of Changes. The Subscriber agrees and covenants to notify the
Company immediately upon the occurrence of any event prior to the consummation
of the Offering that would cause any representation, warranty, covenant or other
statement contained in this Agreement to be false or incorrect or of any change
in any statement made herein occurring prior to the consummation of the
Offering.
11. Assignability; Modification. This Agreement is not assignable by the
Subscriber, and may not be modified, waived or terminated except by an
instrument in writing signed by the party against whom enforcement of such
modification, waiver or termination is sought.
12. Binding Effect. Except as otherwise provided herein, this Agreement shall
be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns, and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon such heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
13. Obligations Irrevocable. The obligations of the Subscriber shall be
irrevocable, except with the written consent of the Company, until the
consummation or termination of the Offering.
14. Entire Agreement. This Agreement constitutes the entire agreement of the
Subscriber and the Company relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the principles
of conflicts of law thereof that would require the application of the laws of
any jurisdiction other than Texas.
16. Severability. If any provision of this Agreement or the application
thereof to the Subscriber or any circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other subscriptions or circumstances shall
not be affected thereby and shall be enforced to the greatest extent permitted
by law.
17. Headings. The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define,
or limit the scope, extent or intent of this Agreement or any provision
hereof.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which together shall be deemed to be one and the
same agreement.
19. Counsel. The Subscriber hereby acknowledges that the Company and its counsel
represent the interests of the Company and not those of the Subscriber in any
agreement (including this Agreement) to which the Company is a party.
[SIGNATURES TO FOLLOW]
IN WITNESS WHEREOF, the Subscriber has executed this Subscription
and Registration Rights Agreement as of ____________ ___, 2004.
SUBSCRIBER
----------------------------
Number of Shares: ____________________
Offering Price per Share: $2.00
Subscription Amount: $___________________
By: _____________________________________
Name:_____________________________________
Title:____________________________________
Address: ________________________________
================================================================================
Please designate
name in which
stock
certificate(s)
representing
Shares purchased
are to be
registered.
--------------------------------------------------------------------------------
Please designate
address for
delivery of stock
certificate(s)
representing
Shares purchased
(if different from
above).
-------------------------------------------------------------------------------
Please designate
the individual to
whom all
correspondence
concerning the
Subscriber's
subscription for
Shares should be
sent, along with
such individual's
requested contact
information.
Name:_____________________________________
Address:_________________________________
-----------------------------------
Telephone: (____)_____________________
E-mail:___________________________________
The name(s) of the natural person(s) who will have voting and investment power
over the Shares purchased are as follows (please print legibly, as the name(s)
must be disclosed in the registration statement):
--------------------------------------------
Please indicate the number of shares of the Company's Common Stock currently
owned by the Subscriber in addition to those being subscribed for in this
Agreement (this must also be disclosed in the registration statement).
------------------
The Company hereby accepts the foregoing subscription subject to the
terms and conditions hereof as of ____________ ___, 2004.
Westside Energy Corporation,
a Nevada corporation
By:______________________________
Name:
Title:
Exhibit A
SUBSCRIPTION INSTRUCTIONS
(1) If you are subscribing for the purchase of Shares, please complete,
date and sign the signature page to this Subscription and Registration Rights
Agreement in the applicable spaces. Please signify the amount of Shares for
which you are subscribing by inserting such amount in the space provided for on
the signature page to the Agreement.
(2) Complete, date and sign the accompanying Certificate of Accredited
Investor Status (Exhibit B).
(3) Send all completed documents to:
Westside Energy Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(4) Fax the signature pages for all completed documents to:
Sterne, Agee & ▇▇▇▇▇, Inc.
Attn: W. ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(5) Transmit funds (in an amount equal to the number of Shares for
which you are subscribing multiplied by the Offering Price) via wire to the
following account of Westside Energy Corporation:
Domestic Transfers
Legal Name: Westside Energy Corporation
Bank Name: Bank of Texas, NA
Contact: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
ABA / Routing Number: ▇▇▇▇▇▇▇▇▇
Account Number: 2902608289
Tax ID Number: ▇▇-▇▇▇▇▇▇▇
International Transfers
Send to: Bank of Oklahoma, NA
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▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Swift Code: ▇▇▇▇▇▇▇▇
For Credit to: Bank of Texas, NA
Contact: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone Number: 713/706-1417
Beneficiary: Westside Energy Corporation
Account Number: 2902608289
Tax ID Number: ▇▇-▇▇▇▇▇▇▇
ATTENTION SUBSCRIBERS: NO SUBSCRIPTION WILL BE ACCEPTED UNLESS ALL
DOCUMENTATION PRESCRIBED HEREIN IS FULLY COMPLETED AND EXECUTED. ANY
MATERIALS RECEIVED THAT ARE INCOMPLETE IN ANY RESPECT WILL BE RETURNED BY
THE COMPANY.
2
Exhibit B
CERTIFICATE OF ACCREDITED INVESTOR STATUS
The undersigned is an "accredited investor," as that term is defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"). The undersigned has checked the box below indicating the basis on which
the undersigned is representing the undersigned's status as an "accredited
investor":
O a bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended; an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment
Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; a small business investment company
licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958; 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, and such
plan has total assets in excess of $5,000,000; an employee benefit
plan within the meaning of the Employee Retirement Income Security
Act of 1974, if the investment decision is made by a plan fiduciary,
as defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are "accredited investors";
O a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
O an organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
O a natural person whose individual net worth, or joint net worth with
the undersigned's spouse, at the time of this purchase exceeds
$1,000,000;
O a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with the
undersigned'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;
O a trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a person who has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and
risks of the prospective investment;
O an entity in which all of the equity holders are "accredited investors"
by virtue of their meeting one or more of the above standards; or
O an individual who is a director or executive officer of Westside Energy
Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
of Accredited Investor Status effective as of the ___ day of ____________, 2004.
--------------------------------------------
Name of Subscriber
By: ________________________
Name: ______________________
Title: _______________________
2
Exhibit C
PLAN OF DISTRIBUTION
As of the date of this prospectus, we have not been advised by the
selling stockholders as to any plan of distribution. Shares owned by the selling
stockholders, or by their partners, pledgees, donees (including charitable
organizations), transferees or other successors in interest, may from time to
time be offered for sale either directly by such individual, or through
underwriters, dealers or agents or on any exchange on which the shares may from
time to time be traded, in the over-the-counter market, or in independently
negotiated transactions or otherwise. The methods by which the shares may be
sold include:
o a block trade (which may involve crosses) in which the broker
or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by
such broker or dealer for its own account pursuant to this
prospectus;
o exchange distributions and/or secondary distributions;
o sales in the over-the-counter market;
o underwritten transactions;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
Such transactions may be effected by the selling stockholders at market
prices prevailing at the time of sale or at negotiated prices. The selling
stockholders may effect such transactions by selling the common stock to
underwriters or to or through broker-dealers, and such underwriters or
broker-dealers may receive compensations in the form of discounts or commissions
from the selling stockholders and may receive commissions from the purchasers of
the common stock for whom they may act as agent. The selling stockholders may
agree to indemnify any underwriter, broker-dealer or agent that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. We have agreed to
register the shares for sale under the Securities Act and to indemnify the
selling stockholders, certain representatives of the selling stockholders and
each person who participates as an underwriter in the offering of the shares
against certain civil liabilities, including certain liabilities under the
Securities Act.
In connection with sales of the common stock under this prospectus, the
selling stockholders may enter into hedging transactions with broker-dealers,
who may in turn engage in short sales of the common stock in the course of
hedging the positions they assume. The selling stockholders also may sell shares
of common stock short and deliver them to close out the short positions, or loan
or pledge the shares of common stock to broker-dealers that in turn may sell
them.
The selling stockholders and any underwriters, dealers or agents that
participate in distribution of the shares may be deemed to be underwriters, and
any profit on sale of the shares by them and any discounts, commissions or
concessions received by any underwriter, dealer or agent may be deemed to be
underwriting discounts and commissions under the Securities Act.
There can be no assurances that the selling stockholders will sell any
or all of the shares offered under this prospectus.