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FUNDING AGREEMENT
THIS AGREEMENT dated for reference this 24th day of October, 2001
BETWEEN:
COOL CAN TECHNOLOGIES, INC.,
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a Minnesota corporation having an address at
4505 Las Virgenes Road, Suite 206, Calabasas, California 91302
(hereinafter "CCTI")
OF THE FIRST PART
AND:
BAY FINANCIAL S.A.
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a Turks & Caicos corporation having an address at
Suite A375, PO Box N-1836, East Bay Street, Nassau, Bahamas
(hereinafter "Bay")
OF THE SECOND PART
WHEREAS
A. Cool Can is seeking financing to fund the development of its patented
InstacoolTM Technology and for working capital purposes.
B. Bay is in the business of providing Venture Capital Financing.
NOW THEREFORE, in consideration of the sum of $1.00 now paid by each of the
parties to the other (the receipt of which is hereby acknowledged), and the
premises and the mutual covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
1. CCTI agrees to grant Bay the right to provide up to $1,000,000 of funding
to CCTI pursuant to the terms of this Agreement, during the 12 month period
following the date of this Agreement (the "Funding Period").
2. Bay may provide the funding in tranches, during the Funding Period, with
each tranche consisting of not less than $50,000 US.
3. Bay shall provide written notice of its intention to provide each tranche
of funding by delivery to CCTI at its principal place of business, Notice in the
form set out in Schedule "A" hereto. The delivery of a notice shall obligate
Bay to provide the funding set out in the Notice against delivery of the number
of shares to be purchased, calculated in accordance with the terms of this
Agreement.
4. In respect of each tranche of funding, Bay shall purchase on a private
placement basis, such number of common shares of Cool Can as shall be equal to
the dollar amount of the tranche of funding divided by 75% of the average
closing price of CCTI's common shares for the 10 trading
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days immediately
preceding delivery of the Notice in respect of the tranche of funding (the
"Shares").
5. Bay's right to provide up to $1,000,000 of funding pursuant to the terms
of the Agreement shall be conditional on Bay providing the a tranche of funding
equal to not less than $50,000 US on or before October 31, 2001.
6. Bay represents and warrants to CCTI and acknowledges that CCTI is relying
upon Bay's representations and warranties in agreeing to sell the Shares to Bay
that:
(1) Bay is not a "U.S. Person" as defined by Regulation S of the Act and is
not acquiring the Shares for the account or benefit of a U.S. Person.
A "U.S. Person" is defined by Regulation S of the Act to be any person who is:
(a) any natural person resident in the United States;
(b) any partnership or corporation organized or incorporated under the laws
of the United States;
(c) any estate of which any executor or administrator is a U.S. person;
(d) any trust of which any trustee is a U.S. person;
(e) any agency or branch of a foreign entity located in the United States;
(f) any non-discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary organized, incorporate, or (if an
individual) resident in the United States; and
(g) any partnership or corporation if:
1. organized or incorporated under the laws of any foreign jurisdiction; and
2. formed by a U.S. person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or incorporated,
and owned, by accredited investors [as defined in Section 230.501(a) of the Act]
who are not natural persons, estates or trusts.
(2) Bay recognizes that the purchase of Shares involves a high degree of
risk in that CCTI is in the early stages of developing its business and product
and will require substantial funds in addition to the proceeds of this
transaction.
(3) An investment in CCTI is highly speculative and Bay can afford the loss
of its entire investment.
(4) Bay has such knowledge and experience in finance, securities,
investments, including investment in speculative securities, and other business
matters so as to be able to protect its interests in connection with this
transaction.
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(5) Bay hereby acknowledges that the Shares are being issued by CCTI
pursuant to an exemption from registration provided by Regulation S promulgated
pursuant to the United States Securities Act of 1933 (the "Act").
(6) Bay acknowledges and agrees that all certificates representing the
Shares will be endorsed with the following legend in accordance with Regulation
S of the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S
PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR
RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT"
(7) Bay will resell the Shares only in accordance with the provisions of
Regulation S of the Act pursuant to registration under the Act, or pursuant to
an available exemption from registration pursuant to the Act.
(8) Bay is not aware of any advertisement of the Shares.
(9) Bay is acquiring the Shares subscribed to hereunder as an investment for
Bay's own account, not as a nominee or agent, and not with a view toward the
resale or distribution of any part thereof, and Bay has no present intention of
selling, granting any participation in, or otherwise distributing the same. Bay
has agreed not to engage in hedging transactions with regard to the Shares
unless in compliance with the Act.
(10) Bay does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such person, or to
any third person, with respect to any of the Shares sold hereby.
(11) Bay has full power and authority to enter into this Agreement which
constitutes a valid and legally binding obligation, enforceable in accordance
with its terms.
(12) Bay has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the Shares
and/or any use of this Agreement, including (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.
7. CCTI represents and warrants to Bay that:
(1) CCTI is a corporation duly organized, existing and in good standing
under the laws of the State of Minnesota and has the corporate power to conduct
the business which it conducts and proposes to conduct.
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(2) Upon issue, the Shares will be duly and validly issued, fully paid and
non-assessable common shares in the capital of CCTI.
(3) The issued and outstanding shares of CCTI consists of 18,627,966 shares
of CCTI's common stock prior to the completion of the issue of any shares of
CCTI's common stock pursuant to this Agreement.
8. Nothing in this Agreement shall be construed as obligating Bay to provide
any funding prior to delivery of a Notice in respect of such funding pursuant to
this Agreement.
9. All funds paid hereunder shall be deposited by CCTI and immediately
available to CCTI for the purposes set forth herein.
10. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to CCTI, at Suite 311, 698 Seymour Street,
Vancouver, BC V6B 3K6, and to Bay at Suite A375, PO Box N-1836, East Bay Street,
Nassau, Bahamas. Notices shall be deemed to have been given on the date of
mailing, except notices of change of address, which shall be deemed to have been
given when received.
11. Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed in accordance with and governed by the laws
of the State of Nevada.
12. The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
13. This Agreement has been prepared by O'Neill & Company acting solely on
behalf of the CCTI and the Bay acknowledges that it has been advised to obtain
independent legal advice.
14. Time is of the essence of this Agreement.
15. This agreement may be executed in one or more counter-parts, each of
which so executed shall constitute an original and all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
COOL CAN TECHNOLOGIES, INC.
By its authorized signatory:
/s/ Bruce Leitch
_______________________________
BRUCE LEITCH, President
BAY FINANCIAL S.A.
By its authorized signatory:
/s/ Richard Donaldson
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Richard W. Donaldson
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SCHEDULE "A"
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to that Funding Agreement dated as of the 24th day of October, 2001
NOTICE OF FUNDING