EXHIBIT 2.7
THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE
"AGREEMENT") RELATES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON UNLESS SUCH
SECURITIES ARE REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S.
PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.
FORM OF SUBSCRIPTION AGREEMENT
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TO: LML PAYMENT SYSTEMS INC.
(the "Company")
0000 - 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
1. The undersigned purchaser (the "Purchaser") hereby subscribes for and
agrees to purchase __________ units (the "Units") from the Company at the price
of US$12.00 per Unit, for the total purchase price of US$_______________ (the
"Purchase Price"). Each Unit consists of one common share (the "Share") in the
capital of the Company and one non-transferable share purchase warrant (the
"Warrant") entitling the Purchaser to purchase an additional share (the "Warrant
Share") at a price of US$16.00 at any time beginning on the date of payment of
the Purchase Price through March 31, 2002. This subscription is part of a
private placement of up to US$12,000,000 (the "Private Placement"). A minimum
subscription of CDN$97,000 (approximately US$66,000 based on current exchange
rates) is required.
2. The Purchaser acknowledges that the Company will pay a finder's fee of
ten percent (10%) of the Purchase Price and all other proceeds to the Company
resulting from this Private Placement, including proceeds of Warrant exercise,
to ___________________ (the "Finder") in connection with this subscription and
the other subscriptions forming part of the Private Placement. The finder's fee
will be paid in such number of Units (respecting the Purchase Price) or such
number of Shares (respecting other proceeds under the Private Placement) as
shall be equal to the amount of the finder's fee divided by a deemed issue price
of US$12.00 per Unit or US$16.00 per Share.
3. The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Purchaser the Units.
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4. Subject to the terms hereof, the Subscription will be effective upon
its acceptance by the Company.
5. The Purchase Price shall be paid by wire transfer, certified cheque or
bank draft payable to the Company.
6. The Purchaser must complete, sign and return to the Company one (1)
executed copy of this Agreement.
7. The Purchaser 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, stock exchanges and
applicable law.
8. Closing of the offering of the Units (the "Closing") shall occur on or
before March 31, 2000 or such later date as shall be agreed to in writing by the
Company.
9. The Purchaser confirms that:
(a) the decision to subscribe for the Units was not made as a result of
any material information about the Company's affairs that had not been
publicly disclosed; and
(b) the sale of the Units has not been accompanied by an advertisement.
10. The Purchaser acknowledges and agrees that:
(a) the Units will be sold under an exemption from the prospectus
requirements set out in Section 74(2)(4) of the British Columbia
Securities Act (the "B.C. Act") and with respect to the sale of the
Units, represents and warrants to the Company that the Purchaser is
purchasing the Units as principal for its own account, and not for the
benefit of any other person or company a sufficient number of Units
such that the aggregate acquisition cost to the Purchaser is not less
than CDN$97,000 and this Subscription has been duly and validly
authorized, executed and delivered by and constitutes a legal, valid
and binding agreement of the Purchaser enforceable against it;
(b) neither the Purchaser nor any party on whose behalf it is acting has
been created, established, formed or incorporated solely, or is used
primarily, to acquire securities or to permit the purchase of the
Units without a prospectus in reliance on an exemption from the
prospectus requirements of applicable securities legislation;
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(c) the Purchaser is purchasing the Units pursuant to an exemption under
the B.C. Act on the basis that the Purchaser is sophisticated and, as
a consequence:
(i) is restricted from using most of the civil remedies available
under securities legislation,
(ii) may not receive information that would otherwise be required to
be provided to him under securities legislation, and
(iii) the Company is relieved from certain obligations that would
otherwise apply under securities legislation;
(d) the Units, Shares, Warrants and Warrant Shares (collectively, the
"Securities") are being or will be purchased by the Purchaser as
principal for investment only and not with a view to the distribution
thereof, and the Purchaser is not participating directly or indirectly
in any underwriting of the Securities;
(e) the Securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "1933 Act"), and
may not be offered or sold in the United States or to any U.S. Person
(as such term is defined in Rule 902 of Regulation S of the 1933 Act,
and used herein), unless such securities have been registered under
the 1933 Act or an exemption from the registration requirements
thereof is available;
(f) the Purchaser is a corporation organized under the laws of the
jurisdiction of the British Virgin Islands and has not been formed by
a U.S. Person principally for the purpose of investing in securities
not registered under the 1933 Act. In addition, the Purchaser (i) is
not (and is not purchasing the Units for the account or benefit of) a
U.S. Person, (ii) was not offered the Units in the United States, and
(iii) did not execute or deliver this Agreement in the United States;
(g) the Purchaser agrees not to offer, sell or transfer any Securities
during the 40 day period commencing after the later of (i) the date
the Units were first offered to persons other than distributors in
reliance on Regulation S under the 1933 Act or (ii) the Closing of the
transaction contemplated hereby, except in compliance with Rule 903 or
Rule 904 of Regulation S under the 1933 Act (the "Restricted Period").
The Purchaser acknowledges that the Company will place a legend to
such effect on the Securities and may institute such other procedures
to assure compliance with the foregoing requirements, including,
without limitation, requiring the Purchaser to establish that a
transferee of any of the Securities during any restricted period is
not a U.S. Person and the offer and sale was not made in the United
States (and, after expiration of the Restricted Period, the
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Company will not remove the legend unless Purchaser completes and
delivers to the Company the Purchaser Representation Letter in the
form of Schedule A attached hereto, provided that the Company shall
not be required to remove the legend if the Company reasonably
believes that any of the representations made by the Purchaser in the
Purchaser Representation Letter are false);
(h) the Purchaser acknowledges that at the time of exercise by it of the
Warrants, the Purchaser will be required to provide to the Company
either (i) a written representation that it is not a U.S. Person and
the Warrant is not being exercised on behalf of a U.S. Person, or (ii)
a written opinion of counsel to the effect that the Warrants and the
subject securities have been registered under the 1933 Act and
applicable state securities laws, or are exempt from registration
thereunder and (iii) a written representation the Purchaser is not in
the United States at the time of exercise, and that the securities
being exercised by it are not being so exercised on behalf of a U.S.
Person or person within the United States;
(i) the Purchaser acknowledges that pursuant to the 1933 Act, the
statutory basis for the exemption claimed for the transactions
contemplated by this Agreement, and at the time of the exercise of the
Warrants, would not be present if the offering of Securities, although
in technical compliance with Regulation S of the 1933 Act, were part
of a plan or scheme to evade the registration provisions of the 1933
Act, and the Purchaser represents and warrants that it is acquiring
the Units hereunder for investment purposes and has no present
intention to sell any of the Securities in the United States or to a
U.S. Person, or for the account or benefit of a U.S. Person either now
or promptly after the expiration of the Restricted Period. The
Purchaser hereby confirms that the purposes of including the Purchaser
Representation Letter (Schedule A), is in order to enable the Company
to determine the ongoing availability of the exemption from
registration under Regulation S of the 1933 Act;
(j) the Purchaser has received and reviewed the public information with
respect to the Company and has had an opportunity to ask questions of,
and receive answers from persons acting on behalf of the Company;
(k) the Company is entitled to rely on the representations and warranties
and the statements and answers of the Purchaser contained in this
Agreement, and the Purchaser will hold harmless the Company from any
loss or damage it or they may suffer as a result of the Purchaser's
failure to correctly complete this Agreement;
(l) it will indemnify and hold harmless the Company and, where applicable,
its respective directors, officers, employees, agents, advisors and
shareholders from and against any and all loss, liability, claim,
damage
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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 Purchaser contained herein or in any document
furnished by the Purchaser to the Company in connection herewith being
untrue in any material respect or any breach or failure by the
Purchaser to comply with any covenant or agreement made by the
Purchaser to the Company in connection therewith;
(m) the execution of this Agreement by the Purchaser represents an offer
to the Company to subscribe for the Units, which offer remains subject
to acceptance by the Company;
(n) it has been advised to consult its own legal, tax and other advisors
with respect to the merits and risks of an investment in the Units and
with respect to applicable resale restrictions and it is solely
responsible (and the Company is not in any way responsible) for
compliance with applicable resale restrictions;
(o) the offer to subscribe for the Units made by the Purchaser herein is
irrevocable;
(p) the Company is under no obligation to register or qualify any of the
Securities on behalf of the Purchaser or to assist the Purchaser in
complying with any exemption from registration and qualification under
the 1933 Act and applicable state securities laws, or any form of
exemption therefrom; provided, however, that the Purchaser shall have
the following rights:
(i) if while the Purchaser holds any Shares or Warrants, the Company
proposes to file a registration statement under the 1933 Act with
respect to an underwritten public offering of any class of equity
securities for its own account (other than a registration
statement (x) on Forms F-4, X-0, X-0, X-0 or any successor form
thereto or (y) filed solely in connection with an offering made
solely to employees of the Company), then the Company will give
written notice of such proposed filing to the Purchaser at least
thirty (30) days before the anticipated filing date. Such notice
will set forth the aggregate number of securities proposed to be
included in the registration and offer the Purchaser the
opportunity to register such amount of Warrants or Shares as the
Purchaser may request (a "Piggyback Registration"). The Company
will use commercially reasonable efforts to include in each such
Piggyback Registration all Shares and Warrants with respect to
which the Company has received
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written requests for inclusion therein from the Purchaser within
fifteen (15) days after the mailing date of the notice; provided,
however, that Purchaser acknowledges that the Company may elect
to not proceed with the offering at any time. The Purchaser will
be permitted to withdraw all or part of the Shares or Warrants
from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration.
(ii) The Company will use commercially reasonable efforts to cause the
underwriters of a proposed underwritten offering to permit the
Purchaser to include in the Piggyback Registration all such
Shares and Warrants requested to be so included on the same terms
and conditions as any similar securities included therein.
Notwithstanding the foregoing, if in the opinion (which need not
be in writing) of the managing underwriter or underwriters, the
total amount of securities which the Purchaser, the Company and
any other persons having rights to participate in such
registration propose to include in such offering is such as to
materially and adversely affect the success of such offering,
then the amount of securities to be included therein (x) for the
account of the Purchaser on the one hand, and (y) for the account
of all other shareholders having rights to participate (exclusive
of the Company and any shareholders exercising demand
registration rights), on the other hand, will be reduced (to zero
if necessary) pro rata in proportion to the respective amounts of
securities requested to be included therein to the extent
necessary to reduce the total amount of securities to be included
in such offering to the amount recommended by such managing
underwriter or underwriters.
(q) this Agreement is not enforceable by the Purchaser unless it has been
accepted by the Company;
(r) the Purchaser (i) is able to fend for 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 Units; and (iii) has the ability to bear the economic risks of the
Purchaser's prospective investment and can afford the complete loss of
such investment;
11. The Purchaser hereby acknowledges that in lieu of the Company placing
a legend on the certificates representing any of the Securities pursuant to
Section 132(2) of the rules under the B.C. Act, the Purchaser must file a report
with the British Columbia Securities Commission in the form attached as Schedule
"B" hereto within 10 days of the initial trade of any of the Securities.
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12. The Purchaser acknowledges and agrees that all costs and expenses
incurred by the Purchaser (including any fees and disbursements of any special
counsel retained by the Purchaser) relating to the purchase of the Units shall
be borne by the Purchaser.
13. This Subscription, 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 Units by the Purchaser pursuant hereto.
14. This Subscription is not transferable or assignable.
15. The Purchaser warrants that it is acquiring the Units under exemptions
from securities filing requirements in its jurisdiction of domicile.
16. Upon acceptance of this subscription, and payment by the Purchaser of
the full Purchase Price, the Company will promptly take the necessary steps to
have the Shares and Warrants issued and allotted as fully paid and non-
assessable and to deliver such Shares and Warrants to the Purchaser.
17. This Agreement is to be governed and interpreted according to the laws
of the Province of British Columbia and the federal laws of Canada applicable
herein. The Purchaser irrevocably attorns to the jurisdiction of the Province of
British Columbia.
18. This Agreement may be executed in counterpart and such counterparts
together shall constitute one and the same instrument.
19. Delivery of an executed copy of this Agreement by telecopy, telex or
other means of electronic communication producing a printed copy will be deemed
to be execution and delivery of this Agreement on the date of such communication
by the party so delivering such copy.
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DATED this _______ day of February, 2000.
__________________________________
Signature of Purchaser
__________________________________
Purchaser's Name
__________________________________
Complete Mailing Address
__________________________________
__________________________________
The Company accepts the subscription
set forth above this ______ day of
February, 2000.
LML PAYMENT SYSTEMS INC.
__________________________________
Director
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SCHEDULE "A"
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PURCHASER REPRESENTATION LETTER
LML Payment Systems, Inc.
0000 - 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
The undersigned purchased on the ____ day of ______________, 2000, ____________
securities (the "Securities") of LML Payment Systems, Inc. (the "Company") and,
in connection with such purchase, has executed and delivered a subscription
agreement ("Subscription Agreement") to the Company. The undersigned hereby
requests that the legend on the Securities be removed.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Securities was made to it outside of the
United States, and the undersigned was, at the time the Subscription Agreement
was executed and delivered, and is now, outside the United States;
(2) The undersigned is not a U.S. Person (as such term is defined in
Section 902(a) of Regulation S ("Regulation S")) promulgated under the
Securities Act of 1933 (the "Securities Act"); and has purchased the Securities
for the undersigned's own account and not for the account or benefit of any U.S.
person;
(3) All offers and sales by the undersigned of the Securities acquired
pursuant to the Subscription Agreement shall be made pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act;
(4) The undersigned is familiar with and understands the terms and
conditions and requirements contained in Regulation S; and
(5) The undersigned has not engaged in any "directed selling efforts" (as
such term is defined in Regulation S) with respect to the Securities.
Dated this ____ day of the month of __________, 2000
______________________________
By: ______________________________
Title:____________________________
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Country of Execution: ____________________
Schedule "B"
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Securities Act
INITIAL TRADE REPORT
1. Name and address of seller
_________________________________________________________________________
_________________________________________________________________________
2. Name and address of the issuer whose securities were traded by the seller
_________________________________________________________________________
_________________________________________________________________________
3. Name and address of the party from whom the seller acquired the securities
_________________________________________________________________________
_________________________________________________________________________
4. Description of securities sold
(a) Number and description of securities ____________________
(b) Date of acquisition of securities by the seller ____________________
(c) Exemption under which securities were
acquired by the seller ____________________
(d) Exemption under which securities were
traded by the seller ____________________
(e) Date of sale of securities ____________________
(f) Sale Price ____________________
5. Certificate of seller
The undersigned seller hereby certifies that the information given in this
report relating to the seller is true and that, to the best of the seller's
information and belief,
(a) the information given in this report relating to any other party is
true,
(b) no unusual effort has been made to prepare the market or create a
demand for the securities, and
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(c) no extraordinary commission or other consideration has been paid in
respect of the trade to which this report relates.
DATED at ________________ this _____ day of __________ ,_________
______________________________
Signature of the seller or, if
the seller is a company,
signature of authorized
signatory
______________________________
Name of the seller or, if the
seller is a company, name and
office of authorized signatory
INSTRUCTIONS:
1. If the space provided for any answer is insufficient, additional sheets may
be used. Each sheet must be cross-referenced to the relevant item, properly
identified and signed by the person whose signature appears on the report.
2. File this report with the required fee and completed Fee Checklist. In
order to determine the fee payable, consult section 22 of the Securities
Regulation, B.C. Reg. 478/95. Cheques should be made payable to the
"British Columbia Securities Commission".
IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE
FILED OR FURNISHED UNDER THE SECURITIES ACT THAT, AT THE TIME AND IN LIGHT OF
CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION