EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
GCA Strategic Investment Fund Limited
c/o Prime Management Limited
Mechanics Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx XX 00
Xxxxxxx
Xxxxxxxxx Group, LLC
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
Dear Sirs:
RE: 4% CONVERTIBLE NOTES AND COMMON
SHARE PURCHASE WARRANTS OF CRYSTALLEX
INTERNATIONAL CORPORATION
-------------------------------------------------
This letter sets out the terms of a financing by which you (the
"Investor") have irrevocably agreed to subscribe, subject to the terms and
conditions set forth herein, for an aggregate of up to U.S. $10,800,000
principal amount of 4% convertible notes ("Convertible Notes") and that number
of warrants ("Warrants") to purchase common shares of the Company ("Common
Shares") as set out herein, for an aggregate subscription price of up to U.S.
$10,800,000.
In this agreement "business day" means any day that is not a Saturday,
Sunday or statutory holiday in Toronto, Ontario, Vancouver, British Columbia or
the State of New York. If the day on or before which any action that would
otherwise be required to be taken hereunder is not a business day, that action
will be required to be taken on or before the requisite time on the next
succeeding day that is a business day.
Wherever in this agreement reference is made to generally accepted
accounting principles or to "GAAP", such reference shall be deemed to be to the
generally accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor institute, as at
the date on which such calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this agreement, such determination or calculation
shall, to the extent applicable and except as otherwise specified herein or as
otherwise agreed in writing by the parties, be made in accordance with generally
accepted accounting principles applied on a consistent basis.
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1. DETAILS OF OFFERING
-------------------
Subject to the terms hereof, the closing shall take place on or before
September 25, 2002 (the "Closing Date"). The securities to be purchased
hereunder on the Closing Date shall consist of up to U.S. $10,800,000 principal
amount of Convertible Notes, to be issued by the Company under and governed in
accordance with the provisions of a note indenture (the "Note Indenture") to be
entered into between the Company and CIBC Mellon Trust Company ("CIBC Mellon"),
as trustee, and (ii) a number of Warrants of the Company, to be issued by the
Company under and governed in accordance with the provisions of a warrant
indenture (the "Warrant Indenture") to be entered into between the Company and
CIBC Mellon, as warrant agent (each of such indentures are collectively referred
to as the "Indentures"). The number of Warrants to be issued on the Closing Date
shall be equal to 25% of the number of Common Shares that would be issued on
conversion of the principal amount of Convertible Notes subscribed for if such
Convertible Notes were converted in full on the Closing Date.
2. RESALE RESTRICTIONS
-------------------
The Common Shares issuable upon conversion of the Convertible Notes and
exercise of the Warrants will be subject to resale restrictions under the United
States Securities Act of 1933, as amended (the "1933 Act") until the date upon
which a resale registration statement on Form F-3 (the "Registration Statement")
is declared effective (the "Effective Date") under the 1933 Act.
The Convertible Notes, the Warrants and the Common Shares issuable upon
conversion or exercise thereof are subject to resale restrictions under the
applicable securities legislation of Canada and under the rules of The Toronto
Stock Exchange. The Common Shares issued on conversion of the Convertible Notes
or exercise of the Warrants may not be resold by the Investor on The Toronto
Stock Exchange for a period of four months from the date of acquisition of such
Convertible Notes or Warrants and may not be sold otherwise except if the resale
of such Common Shares is registered under the 1933 Act or is made pursuant to an
exemption from registration. Purchasers are advised to consult their own legal
advisors in this regard.
You, as the holder of the Convertible Notes and the Warrants
(collectively, with the Common Shares underlying the Convertible Notes and the
Warrants, the "Securities"), acknowledge and agree that (i) the Securities have
not been registered with the U.S. Securities and Exchange Commission (the "SEC")
under the 1933 Act and applicable state securities laws; (ii) the Securities
cannot be sold or otherwise transferred unless registered under federal and
applicable state securities laws or unless an exemption from registration is
available under the federal and applicable state securities laws; (iii) the
Convertible Notes and Warrants cannot be converted or exercised, respectively,
unless the conversion or exercise is registered under the 1933 Act or is made
pursuant to an applicable exemption from registration under the 1933 Act and
until the Common Shares underlying the convertible Notes and the Warrants have
been listed for issuance with the American Stock Exchange, Inc. (the "AMEX");
and (iv) accordingly, you may not readily liquidate or transfer the Securities.
The Securities will bear, so long as appropriate, restrictive legends
substantially similar to the following:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
The Convertible Notes and Warrants will bear, so long as appropriate,
the following additional legend:
THESE SECURITIES MAY NOT BE CONVERTED [EXERCISED] [BY OR ON BEHALF OF A
U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE ACT)] [Include only
for Regulation S sales.] UNLESS SUCH CONVERSION [EXERCISE] IS
REGISTERED UNDER THE ACT OR IS MADE PURSUANT TO AN APPLICABLE EXEMPTION
FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
The legends set forth above shall be removed in connection with any
resale of Common Shares pursuant to an effective registration statement under
the 1933 Act or sooner if, in the opinion of counsel to the Company experienced
in the area of United States securities laws, such legend is no longer required
under applicable requirements of the 1933 Act (including judicial interpretation
and pronouncements issued by the staff of the SEC). The Company agrees that it
will provide you, upon request, with a substitute certificate or certificates,
free from such legend at such time as such legend is no longer applicable.
3. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE COMPANY
-----------------------------------------------------------
The Company represents and warrants to the Investor and acknowledges
that it is relying upon such representations and warranties in entering into
this agreement and purchasing Convertible Notes and Warrants that:
(a) the Company and each wholly-owned subsidiary ("subsidiary"
having the meaning attributed to such term in the Canada
Business Corporations Act) of the Company (each, a
"Subsidiary") has been duly incorporated and organized and is
validly existing under the laws of its jurisdiction of
incorporation, has all requisite power and authority to carry
on its business as now conducted and to own, lease and operate
its properties and assets in each of the jurisdictions in
which it carries on its business or owns, leases or operates
its properties or assets, except where any failure would not
have a material adverse effect on the Company and its
Subsidiaries, taken as a whole, and the Company has all
requisite power and authority to carry out its obligations
under the Indentures and this agreement;
(b) except as has been publicly disclosed by the Company, the
Company and each Subsidiary has conducted and is conducting
its business in compliance in all
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material respects with all applicable laws, rules and
regulations of each jurisdiction in which its business is
carried on and is duly licensed, registered or qualified in
all jurisdictions in which it owns, leases or operates its
property or carries on business to enable its business to be
carried on as now conducted and its property and assets to be
owned, leased and operated, and all such licences,
registrations and qualifications are valid and subsisting and
in good standing and none of the same contains any burdensome
term, provision, condition or limitation which has or would
reasonably be expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole;
(c) the Company has no subsidiaries other than the Subsidiaries.
All the issued and outstanding shares in the capital of each
Subsidiary have been validly allotted and issued and are
outstanding as fully paid and non-assessable and no person,
firm or corporation has any agreement or option, or right or
privilege (whether pre-emptive or contractual) capable of
becoming an agreement (including convertible securities and
warrants) for the purchase, subscription or issuance of any
unissued shares, securities or warrants of any Subsidiary;
(d) except as has been publicly disclosed by the Company, the
Company is the direct or indirect beneficial owner of all the
issued and outstanding securities in the capital of each
Subsidiary, in each case free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances,
claims or demands whatsoever, and no person, firm or
corporation has any agreement or option, or right or privilege
(whether pre-emptive or contractual) capable of becoming an
agreement (including convertible securities and warrants) for
the purchase from the Company of any interest in any of the
issued and outstanding securities in the capital of any
Subsidiary;
(e) no consent, approval, permit, authorization, order of or
filing with any court or governmental agency or body in Canada
or the United States is required by the Company for the
execution and delivery of and the performance by the Company
of its obligations under the Indentures and this agreement,
except as may be required in order to qualify or register the
Common Shares issuable upon conversion of the Convertible
Notes and/or exercise of the Warrants under the securities
legislation of the United States and the by-laws, rules and
regulations of The Toronto Stock Exchange (the "TSE") and the
AMEX (collectively, the "Exchanges");
(f) none of the execution and delivery of the Indentures and this
agreement, the performance by the Company of its obligations
thereunder, the issuance of the Convertible Notes and the
Warrants or the issuance of Common Shares on the conversion of
the Convertible Notes or exercise of the Warrants will
conflict with or result in a breach of (i) any statute, rule
or regulation applicable to the Company; (ii) the securities
legislation of the United States and the by-laws, rules and
regulations of the Exchanges, except any consent, approval,
permit, authorization, order or filing required under the
securities legislation of Ontario, British Columbia or the
United States and the by-laws, rules and regulations of
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the Exchanges which the Company is required hereunder to use
its best efforts to obtain; (iii) the constating documents,
by-laws or resolutions of the Company which are in effect at
the date hereof; (iv) any material contract, agreement, or
other document to which the Company or a Subsidiary is a party
or by which the Company or a Subsidiary is bound; or (v) any
judgment, decree or order binding the Company or any of its
Subsidiaries or the property or assets of the Company or its
Subsidiary which, in the case of paragraphs (i), (iv) and (v),
may have a material adverse effect on the Company or its
Subsidiaries;
(g) the audited consolidated financial statements of the Company
for the period ended December 31, 2001:
(i) have been prepared in all material respects in
accordance with generally accepted accounting
principles applied on a basis consistent with those
of preceding fiscal periods;
(ii) present fairly the consolidated assets, liabilities
and financial condition of the Company as at December
31, 2001 and the consolidated results of its
operations and the changes in its financial position
for the period then ended;
(iii) are in accordance with the books and records of the
Company and its Subsidiaries as at December 31, 2001;
(iv) contain and reflect all necessary adjustments for the
fair presentation of the results of operations and
the financial condition of the business of the
Company on a consolidated basis for the period
covered thereby; and
(v) contain and reflect adequate provision or allowance
for all reasonably anticipated liabilities, expenses
and losses of the Company and its Subsidiaries;
(h) the unaudited consolidated financial statements of the Company
for the period ended June 30, 2002:
(i) have been prepared in all material respects in
accordance with generally accepted accounting
principles applied on a basis consistent with those
of preceding fiscal periods;
(ii) present fairly the consolidated results of its
operations and the changes in its financial position
for the period then ended;
(iii) are in accordance with the books and records of the
Company and its Subsidiaries as at the period then
ended;
(iv) contain and reflect all necessary adjustments for a
fair presentation of the results of operations and
the financial condition of the business of the
Company on a consolidated basis for the period
covered thereby; and
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(v) contain and reflect adequate provision or allowance
for all reasonably anticipated liabilities, expenses
and losses of the Company and its Subsidiaries;
(i) at the Time of Closing, the Indentures and this agreement
shall have been duly authorized, executed and delivered by the
Company and each shall be legally valid and binding upon the
Company and enforceable in accordance with its terms;
(j) at the Time of Closing, all necessary corporate action will
have been taken by the Company to authorize the issuance of
the Convertible Notes and the Warrants issuable pursuant to
this transaction and to allot, reserve and authorize the
issuance of the underlying Common Shares which are issuable
upon the due conversion or exercise of the Convertible Notes
and Warrants, respectively, and upon conversion or exercise of
the Convertible Notes or Warrants, respectively, the
underlying Common Shares will be validly issued, fully paid
and non-assessable;
(k) at the Time of Closing, the authorized capital of the Company
will consist of an unlimited number of Common Shares, an
unlimited number of Class A Preference Shares and an unlimited
number of Class B Preference Shares, of which 87,454,976
Common Shares and no Preference Shares were issued and
outstanding as fully paid and non-assessable as at the close
of business on September 24, 2002;
(l) except as have been publicly disclosed, there are no actions,
suits, proceedings, investigations or inquiries pending or, to
the best of the knowledge, information and belief of the
Company, threatened against or affecting the Company (or any
Subsidiary) or any of their properties or assets at law or in
equity or before or by any governmental or regulatory agency
or board, domestic or foreign, which may, in any way, have a
material adverse effect on the condition (financial or
otherwise) of the business, properties, assets, capital, net
worth, results of operations or business prospects of the
Company and its Subsidiaries, taken as a whole, or which
questions the validity of any actions taken or to be taken by
the Company pursuant to or in connection with this agreement;
(m) the Company and its Subsidiaries have timely filed all
necessary tax returns and notices and have paid all applicable
taxes of whatever nature for all tax years to the date hereof
to the extent such taxes have become due or have been alleged
to be due; the Company is not aware of any material tax
deficiencies or material interest or penalties accrued or
accruing, or alleged to be accrued or accruing, thereon with
respect to itself or any of its Subsidiaries;
(n) the Company is a "reporting issuer" not in default under the
securities laws of British Columbia, Ontario, Quebec and Nova
Scotia and has timely filed all forms and reports under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required to be filed by it since it has become subject
to the
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periodic reporting requirements thereunder and there is no
material change in the affairs of the Company which presently
requires disclosure under applicable securities laws which has
not been so disclosed and no such disclosure has been made on
a confidential basis since June 30, 2002 which has not
subsequently been disclosed;
(o) the Company does not employ any person such as to subject the
Company to any potential liability under the Employee
Retirement Income Security Act of 1974, as amended, of the
United States ("ERISA"), and the execution and delivery of the
Indentures and this Agreement and the issuance and sale of the
Convertible Notes and Warrants and the issue of the underlying
Common Shares issuable upon conversion or exercise of the
Convertible Notes and Warrants respectively, hereunder and
under the Indentures will not involve any non-exempt
transaction that is subject to the prohibitions of section
406(a) of ERISA and in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the U.S.
Internal Revenue Code (the "Code"). This representation is
made in reliance upon and subject to the accuracy of the
Investor's representation in Schedule "C" as to the sources of
the funds used to pay the purchase price of the Convertible
Notes and Warrants purchased or to be purchased by the
Investor;
(p) except as has been public disclosed by the Company, the
Company and the Subsidiaries are conducting their respective
businesses in compliance in all material respects with all
applicable licensing and anti-pollution legislation,
regulations or by-laws, environmental protection legislation,
regulations or by-laws or other similar legislation,
regulations or by-laws or other lawful requirements of any
governmental or regulatory bodies which are applicable to the
Company and its Subsidiaries. Except as has been public
disclosed by the Company, the Company is not aware of any such
legislation, regulations, by-laws or lawful requirement
presently in force or proposed to be brought into force by any
governmental or regulatory authority which the Company
anticipates the Company or any Subsidiary will be unable to
comply with without materially adversely affecting their
respective businesses;
(q) in addition to Common Shares issued and except for the Common
Shares to be reserved and allotted in accordance with the
transaction contemplated hereby, not more than 49,377,955
Common Shares are reserved for issuance for various reasons
including for exercise of stock options, conversion of
convertible debentures, finder's fees and exercise of
warrants;
(r) the Company currently meets, and will take all necessary
action to continue to meet, the "registrant" requirements set
forth in the general instruction 1A to Form F-3 under the 1933
Act;
(s) the Company maintains a system of internal accounting controls
sufficient, in the judgment of the Company's board of
directors, to provide reasonable assurances that (i)
transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are
recorded as necessary to permit
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preparation of financial statements in conformity with GAAP
and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability of
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
4. CONDITIONS OF CLOSING IN FAVOUR OF THE COMPANY
----------------------------------------------
In connection with your purchase of Convertible Notes and Warrants, we
require that you complete, sign and return to us Schedule "A" with respect to
registration, delivery and closing instructions and Schedule "B" relating to
non-distribution in the United States along with an executed copy of this
subscription agreement as soon as possible. You also agree to deliver to the
Company Schedules "A" and "B" in respect of each exercise of a Warrant and such
other information as may reasonably requested by the Company. All Investor
information in this Subscription Agreement and the Schedules hereto shall be
true, complete and correct as of the date hereof, the Closing Date and the date
of each conversion of a Convertible Note and exercise of a Warrant.
As a further condition of your purchase of the Convertible Notes and
Warrants, you agree to complete, execute and deliver a private placement
questionnaire and undertaking in the form acceptable to the TSE, a copy of which
is attached as Schedule "C".
You undertake to execute and return to us all relevant documentation
required by applicable securities legislation or stock exchange rules, as the
sale of the Convertible Notes and Warrants to you will not be qualified by a
prospectus, and you shall not be entitled to be registered as the holder of the
Convertible Notes and Warrants nor to receive a certificate for them until you
have complied with the undertaking.
You agree to comply with all applicable securities laws concerning the
purchase and the restrictions on resale of the Convertible Notes and Warrants
and the Common Shares.
5. CONDITIONS OF CLOSING IN FAVOUR OF THE INVESTOR
-----------------------------------------------
The following are the conditions of the Investor's obligation to close
the purchase of the Convertible Notes and Warrants as contemplated hereby, which
conditions are for its sole benefit and may be waived in writing in whole or in
part and which conditions the Company covenants to exercise its best efforts to
have fulfilled at or prior to the Time of Closing:
(a) the Company will have made and/or obtained all necessary
filings, approvals, consents and acceptances of the
appropriate regulatory authorities and stock exchanges
required to be obtained by the Company prior to the Closing
Date;
(b) the common shares (the "Subject Securities") underlying the
Convertible Notes and Warrants shall have been conditionally
approved for listing on the TSE and the TSE shall have
confirmed either orally or in writing that the Subject
Securities will, as soon as possible following their issue, be
posted or listed for trading on the TSE;
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(c) the Company's directors shall have authorized and approved
this agreement, each of the Indentures, the issuance of the
Convertible Notes, the Warrants and the Subject Securities and
all matters related thereto;
(d) the Company shall have delivered to the Investor the
Convertible Notes and Warrants in accordance with the terms of
this agreement and the Note Indenture and the Warrant
Indenture;
(e) the Investor shall have received a certificate, dated the
Closing Date, signed by an officer of the Company and
certifying (i) that attached thereto is a true, correct and
complete copy of resolutions duly adopted by the directors of
the Company referred to in paragraph (c) above and (ii) the
incumbency of the officers executing the closing documents;
(f) it shall be the case that, and the Company will deliver to the
Investor a certificate of the Company and signed on behalf of
the Company by Xxxx X. Xxxxxxxxxxx addressed to the Investor
and dated the Closing Date, in form satisfactory to counsels
to the Investor, certifying that:
(i) no order ceasing or suspending trading in any
Securities of the Company or prohibiting the sale of
the Convertible Notes, the Warrants, the Subject
Securities or any of the Company's issued securities
has been issued and no proceedings for such purpose
are pending or, to the knowledge of the signer,
threatened;
(ii) there has not been any disruption in the market for
the Common shares of the Company (including, but not
limited to, a material decrease in the trading price
or trading volume of the common shares) or the United
States stock markets as a whole since June 30, 2002;
(iii) the representations and warranties of the Company set
forth herein and in each Indenture shall be true and
correct in all material respects as of the date when
made and as of the Closing Date as though made on and
as of such date;
(iv) the Company has performed, satisfied and complied in
all material respects with all covenants, agreements
and conditions required by this agreement and each
Indenture to be performed, satisfied or complied with
by the Company at or prior to the Closing Date, and,
for greater certainty, there is no event of default
under the Note Indenture or an event which, with the
passage of time or the giving of notice or both,
would constitute an event of default or default, as
the case may be, under an Indenture;
(v) there has been no adverse material change (actual,
proposed or prospective, whether financial or
otherwise) in the business, condition, affairs,
prospects, operations, assets, liabilities
(contingent or otherwise) or capital of the Company
and its subsidiaries taken as a whole since June 30,
2002, and
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(vi) the Company is a "reporting issuer" not in default
under the securities laws of Ontario and has timely
filed all forms and reports under the Exchange Act
required to be filed by it since it has become
subject to the periodic reporting requirements
thereunder and there is no material change in the
affairs of the Company which presently requires
disclosure under applicable securities laws which has
not been so disclosed and no such disclosure has been
made on a confidential basis which has not been
subsequently disclosed;
(g) the Investor shall have completed to its reasonable
satisfaction its periodic due diligence investigations of the
Company; and
(h) the Company will have caused a favourable legal opinion to be
delivered by its counsel(s) with respect to such matters as
the Investor may reasonably request relating to this
transaction, acceptable in all reasonable respects to the
Investor's counsels, including, without limitation, that:
(i) this agreement has been duly authorized, executed and
delivered by the Company and is legally binding upon
the Company and enforceable in accordance with its
terms (subject to usual assumptions and
qualifications);
(ii) the Convertible Notes and Warrants issuable hereunder
have been validly created and issued and have the
attributes and characteristics contemplated by this
agreement;
(iii) the execution and delivery of each of the Indentures
have been duly authorized by the Company and are each
valid and binding agreements upon the Company and
upon CIBC Mellon, enforceable in accordance with its
terms (subject to the usual assumptions and
qualifications) and CIBC Mellon has been duly
appointed as trustee under the Note Indenture and
warrant agent under the Warrant Indenture;
(iv) the Subject Securities have been validly allotted and
will be issued as fully paid and non-assessable upon
conversion or exercise of the Convertible Notes and
Warrants, respectively, in accordance with their
terms;
(v) the TSE has approved the issuance of the Convertible
Notes, Warrants and Subject Securities and the
Subject Securities have been conditionally approved
for listing on the TSE;
(vi) the issue and sale of the Convertible Notes and
Warrants have been properly effected in such a manner
as to be exempt, either by statute or regulation or
order, from the prospectus requirements of Ontario
securities laws;
(vii) the issuance of Common Shares upon the exercise of
such Convertible Notes and Warrants in accordance
with their terms will in each case be
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registered or exempt from the prospectus and
registration requirements of the applicable
securities laws of Ontario and of the United States;
and
(viii) the Company has been duly incorporated and is validly
subsisting under the laws of Canada and has the
corporate power and capacity to own its properties
and assets and to carry on its business it is as
presently carried on.
In giving the opinions contemplated above, counsel(s) to the Company
shall be entitled to rely, where appropriate, upon local counsel and shall be
entitled, as to matters of fact not within their knowledge, to rely upon a
certificate of fact from responsible persons in a position to have knowledge of
such facts and their accuracy.
6. CLOSING
-------
Delivery and payment for the Convertible Notes and Warrants will be
completed at the offices of XxXxxxxx Xxxxxxxx, Xxxxx 0000, Xxxxxxx-Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0 at 1:00 p.m. (Toronto time) on the Closing Date
or such earlier or later date or time as the Company and we shall mutually agree
(the "Time of Closing").
On the Closing Date, certificates representing the Convertible Notes
and Warrants will be available for delivery against payment to the Company of
U.S. $10,800,000 in freely transferable United States funds. Such payment is to
be made by wire transfer to:
Beneficiary: Crystallex International Corporation
Account Number: 4635-082
Beneficiary Bank: Bank of Montreal
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Transit #: 00040
Institution #: 001
Routing #: 000000000 (via Xxxxxx Bank International
Corp, New York)
S.W.F.T. C.O.D.E: XXXXXXX0
7. PROSPECTUS EXEMPTIONS
---------------------
The sale and delivery of the Convertible Notes and Warrants to you is
conditional upon such sale being exempt from the requirements as to the filing
of a prospectus or registration statement or upon the issuance of such orders,
consents or approvals as may be required to permit such sale without the
requirement of filing a prospectus or registration statement.
You acknowledge and agree that you have not received or been provided
with a prospectus, offering memorandum or similar document and that your
decision to enter into this subscription agreement and purchase the Convertible
Notes and Warrants agreed to be purchased by you has not been based upon any
verbal or written representation as to fact or otherwise made by or on behalf of
the Company. You acknowledge that, to your knowledge, the sale of the
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Convertible Notes and Warrants was not accompanied by any advertisement in
printed media of general and regular paid circulation, radio or television or
any other advertisement or any general solicitation.
By your acceptance of this subscription agreement, you represent and
warrant to the Company (which representations and warranties shall survive
closing) that:
1. you and any beneficial purchaser for whom you are acting are resident
in the jurisdiction set out above your signature herein; and
2. the statements made by you in this Subscription Agreement and Schedule
"B" hereto are true and correct as at the date thereof.
In addition, you (or any beneficial purchasers for whom you are acting)
covenant and agree to execute and deliver all additional documentation as may be
required by applicable securities legislation.
8. DIRECTED SELLING
----------------
The Investor covenants and agrees that it shall only dispose of Common
Shares issuable upon conversion of the Convertible Notes or exercises of the
Warrants pursuant to transactions on the AMEX or any other exchange upon which
the Common Shares are listed (other than any Canadian stock exchange) and,
provided that, in the event that it wishes to arrange a sale of a block of
Common Shares (other than through a stock exchange) which represents 5% or more
of the issued and outstanding Common Shares of the Company (the "Sale Shares"),
the Investor shall first make an offer in writing to the Company to sell the
Sale Shares to a person or persons to be designated by the Company (the
"Purchaser") at a price and on the same terms and conditions as it wishes to
arrange the sale of the Sale Shares. The Purchaser may accept such offer within
24 hours of the receipt of the offer made to the Company failing which the offer
shall be deemed to be refused. Following such 24-hour notice, the Investor may
then sell the Sale Shares on a basis which is not more advantageous to a buyer
than the terms provided to the Company.
9. RESTRICTION ON ISSUANCE OF SECURITIES
-------------------------------------
For a period of 90 days following the effective date of the
registration statement referred to in Section 12, the Company will not sell,
without the Investor's prior written consent, or offer to sell, any securities
(including any credit facilities which are convertible into securities which may
be issued at a discount to the then current market price) other than (i)
borrowings under credit facilities existing as of the date hereof, (ii) stock
issued or credit facilities to be established in connection with acquisitions,
employee, and director stock options and compensation plans of the Company,
(iii) stock issued pursuant to existing options, rights and warrants of the
Company, and (iv) stock issued to consultants and service providers, stock
issued in connection with employee termination agreements. In addition, the
Company shall not issue during such 90 day period, without the Investor's prior
written consent, any securities in connection with a strategic alliance entered
into by the Company unless such securities are the subject of a one year
contractual hold period or, if not subject to such a hold period, unless the
Investor has liquidated the securities acquired hereunder. Notwithstanding the
foregoing, the Company may at any time
-13-
enter into the following types of transactions: (1) "permanent financing"
transactions, which would include any form of debt or equity financing (other
than an underwritten offering); (2) "project financing" transactions which
provide for the issuance of non-convertible debt instruments in connection with
the operation of the Company's business as presently conducted or as proposed to
be conducted; and (3) an underwritten offering of the Company's Common Shares,
provided that if such offering is registered in the United States it provides
for the registration of the resale of the Subject Securities unless the resale
of such Subject Securities have already been registered with the SEC.
10. NOTICES
-------
(a) Unless herein otherwise expressly provided, a notice to be
given hereunder to the Company or to the Investor will be
validly given if delivered or if sent by registered letter,
postage prepaid, or if sent by facsimile transmission (and
receipt of such transmission is confirmed in writing):
(i) If to the Company:
Crystallex International Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxxxxxxxx,
President and Chief Executive Officer
Facsimile: 000-000-0000
with a copy to:
XxXxxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: 000-000-0000
-14-
(ii) If to the Investor, at the address specified on
Schedule B.
with a copy to:
Global Capital Advisors, LLC
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XXXX
00000
Attention: Xxxxx X. Xxxxxx
Facsimile: 000-000-0000
and any such notice delivered or sent in accordance with the
foregoing will be deemed to have been received on the date of
delivery or facsimile transmission or, if mailed, on the fifth
business day following the day of the mailing of the notice.
(b) The Company or the Investor, as the case may be, may from time
to time notify the other in the manner provided in subsection
(a) of a change of address which, from the effective date of
such notice and until changed by like notice, will be the
address of the Company or the Investor, as the case may be,
for all purposes of this agreement.
(c) If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving Canadian or United States
postal employees, a notice to be given to the Investor or to
the Company hereunder could reasonably be considered unlikely
to reach or likely to be delayed in reaching its destination,
the notice will be valid and effective only if it is delivered
to an officer of the party to which it is addressed or if it
is delivered to such party at the appropriate address provided
in subsection (a) by confirmed facsimile transmission.
11. LIQUIDATED DAMAGES
------------------
(a) The Company shall, and shall use its best efforts to cause
CIBC Mellon to, issue and deliver Common Shares without
restrictive legends within three AMEX trading days of delivery
of a conversion notice under the Note Indenture or notice of
exercise of the Warrants under the Warrant Indenture, as
applicable (the "Deadline"). Notwithstanding the foregoing,
the delivery obligations of the Company above shall be
conditioned on (i) the existence and effectiveness of the
Registration Statement or the existence of an exemption from
the registration requirements of the 1933 Act, and (ii)
receipt of materials reasonably requested by the Company from
the Investor (which shall not include an opinion of counsel to
be delivered by the Company's counsel to CIBC Mellon regarding
the effectiveness of such registration statements) to permit
the issuance of certificates of Common Shares without
restrictive legend or for the Company or the Investor to
comply with undertakings set forth herein. The Company
understands that a delay in the issuance of such certificates
after the Deadline could result in economic loss to the
Investor. If for any reason the Company fails to issue such
-15-
certificates of Common Shares within two AMEX trading days
following the Deadline, as compensation, and not as a penalty,
the Company agrees to pay liquidated damages to the Investor
for such late issuance of such certificates an amount equal to
U.S. $500 per each U.S. $100,000 funded per day for each day
such certificates are not delivered up to 10 AMEX trading days
and U.S. $1,000 per each U.S. $100,000 funded per day for each
day thereafter. The Company shall promptly pay the Investor
any liquidated damages incurred under this section 11 by wire
transfer in immediately available funds to an account
designated by the Investor. Nothing herein shall waive the
Company's obligations to deliver Common Shares upon a
conversion of the Convertible Notes or exercise of the
Warrants or limit the Investor's right to pursue actual
damages (less the amount of any liquidated damages received
pursuant to the foregoing) for the Company's failure to issue
and deliver Common Shares to such Investor consistent with the
terms of this agreement and the Note Indenture and Warrant
Indenture. The Company agrees that, in addition to any other
remedies which may be available to the Investor, including the
remedies available under this section, in the event the
Company fails for any reason (other than as a result of
actions taken by the Investor in breach of this Agreement) to
effect delivery to the Investor of certificates as
contemplated by this section on or prior to the Deadline, such
Investor will be entitled, if prior to the delivery of such
certificates, to revoke the conversion notice, or notice of
exercise of the Warrants, as applicable, by delivering a
notice to such effect to the Company and CIBC Mellon whereupon
the Company and the Investor shall each be restored to their
respective positions immediately prior to delivery of such
conversion notice, or notice of exercise of the Warrants.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, THE COMPANY'S OBLIGATIONS UNDER THIS SECTION SHALL
SURVIVE ANY TERMINATION OF THIS AGREEMENT.
12. COVENANT TO REGISTER
--------------------
(a) For purposes of this Section 12, the following definitions
shall apply:
(i) The terms "register", "registered" and "registration"
refer to a registration under the 1933 Act, enacted
by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and
the declaration or ordering of effectiveness of such
registration statement, document or amendment
thereto.
(ii) The term "Registrable Securities" means the Common
Shares issued or issuable upon conversion of the
Convertible Notes in accordance with the terms of the
Note Indenture or exercise of the Warrants in
accordance with the terms of the Warrant Indenture,
and any securities of the Company or securities of
any successor corporation issued as, or issuable upon
the conversion or exercise of any warrant, right or
other security that is issued as a dividend or other
distribution with respect to, or in exchange for or
in replacement of the Convertible Notes and Warrants
(but not the
-16-
Convertible Notes and Warrants themselves), which (i)
have not been resold and (ii) may not yet be resold
pursuant to Rule 144 under the 1933 Act.
(iii) The term "holder of Registrable Securities" includes
the Investor and any permitted assignee of
registration rights pursuant to Section 12(h) who
holds Convertible Notes and/or Warrants which are
convertible or exercisable, as the case may be, into
Registrable Securities.
(b) (i) The Company shall, within thirty (30) days following
the Closing Date, file a registration statement on
Form F-3, or if Form F-3 is not then available,
another appropriate form, covering resales of the
Registrable Securities including sales thereof under
Rule 415 or a successor rule regarding delayed or
continuous offerings, and shall use its best efforts
to cause such registration statement to become
effective within the sooner of (i) 120 days of the
Closing Date, (ii) within five (5) business days of a
"No-Review" Letter from the Commission or, (iii) the
fifth (5th) business day following the day the
Commission determines the Registration Statement
eligible to be declared effective. The Company will
respond, within ten (10) business days of the receipt
of comments by the SEC regarding the Registration
Statement. In the event the Registration Statement is
not filed within such thirty (30) day period, the
Company will pay to the Investor, as liquidated
damages and not as a penalty, an amount equal to 1%
of the outstanding principal amount of the
Convertible Notes for which no registration statement
has been filed per day until such registration
statement has been field. In the event such
registration is not so declared effective or does not
include all Registrable Securities (whether at the
time filed or subsequent to the effective date of
such registration statement), a holder of Registrable
Securities shall have the right to require by notice
in writing that the Company register all or any part
of the Registrable Securities held by such holder (a
"Demand Registration") and the Company shall
thereupon effect such registration in accordance
herewith. The parties agree that if the holder of
Registrable Securities demands registration of less
than all of the Registrable Securities, the Company,
at its option, may nevertheless file a registration
statement covering all of the Registrable Securities.
If such registration statement is declared effective
with respect to all Registrable Securities, and the
Company is in compliance with its obligations under
Subsection (c)(i) through (v) hereof, the demand
registration rights granted pursuant to this
Subsection (b)(i) shall not be applicable. If such
registration statement is not declared effective with
respect to all Registrable Securities, or if the
Company is not in compliance with said obligations,
the demand registration rights described herein shall
remain in effect. The Company shall provide holders
of Registrable Securities a reasonable opportunity,
but not in excess of seven (7) days, to review any
such registration statement or amendment or
supplement thereto prior to the filing thereof. If
the Registrable Securities are registered initially
on a
-17-
form other than Form F-3, the Company shall register
the Registerable Securities on Form F-3 as soon as
use of such form is permissible.
(ii) The Company shall not be obligated to effect Demand
Registration under Subsection (b)(i) if all of the
Registrable Securities held by the holder of
Registrable Securities which are demanded to be
covered by the Demand Registration are, at the time
of such demand, included in an effective registration
statement and the Company is in compliance with its
obligations under Subsection (c)(i) through (v)
hereof.
(iii) The Company may suspend the effectiveness of any such
registration affected pursuant to the Subsection (b)
in the event, and for such period of time as, such a
suspension is required by the rules and regulations
of the SEC and may suspend use of the prospectus
including in the Registration Statement if such
prospectus ceases to meet the requirements of Section
10 of the 1933 Act. The Company will immediately
advise the holders of the registered securities of
any such suspension, and will use its best efforts to
cause such suspension to terminate at the earliest
possible date. Notwithstanding the foregoing, the
aggregate number of days (whether or not consecutive)
during which the Company may delay the effectiveness
of a Registration Statement or prevent offerings,
sales or distributions by an Investor pursuant to
this paragraph (b) above shall in no event exceed
thirty (30) days during any 12-month period.
(iv) If the Registration Statement is not declared
effective within such ninety (90) day period, the
Company shall pay to the Investor, as liquidated
damages and not as a penalty, an amount equal to 2%
of the outstanding principal amount of the
Convertible Notes, prorated, for each thirty (30) day
period the Registration Statement is not declared
effective by the SEC. Such amount will increase to 3%
of the outstanding principal amount of the
Convertible Notes in the event that the Registration
Statement is not declared effective by the SEC within
150 days of the Closing Date. If the registration
statement is not effective within 180 days following
the Closing Date, the Company shall redeem the
Convertible Notes and Warrants in accordance with
their terms. Notwithstanding the foregoing, if the
Registration Statement is not declared effective
within one hundred eighty days (180) due to events,
acts or conditions relating to any or all of Global
Capital Advisors, LLC ("GCA"), Colony Park Financial
Services, LLC ("CPFS") or the Investor (including
without limitation failure of the National
Association of Securities Dealers Inc. to approve the
compensation to be allowed or paid to CPFS within
such ninety (90) day period, if required by the SEC),
there will be no liquidated damage penalties.
Further, if the Company receives comments from the
SEC that relate to any or all of GCA, CPFS, or the
Investor, the Company will notify the such party(s)
within 24 hours of receipt of the comment from the
SEC, and such party(s) will respond to the Company
within three (3) business days. In the event of a
failure of the party(s) to respond within the
-18-
three (3) day period (the "Response Deadline"), the
ninety (90) day required effective date will be
extended by the same number of days as the response
extends beyond the Response Deadline.
(v) If, following the declaration of effectiveness of the
Registration Statement, the Registration Statement
(or any prospectus or supplemental prospectus
contained therein) shall cease to be effective for
any reason (including but not limited to the
occurrence of any event that results in any
prospectus or supplemental prospectus containing an
untrue statement of a material fact or omitting a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading) (a "Registration Default"),
other than a reason relating to GCA, CPFS, or the
Investor, the Company shall immediately take all
necessary steps to cause the Registration Statement
to be amended or supplemented so as to cure such
Registration Default. Failure to cure a Registration
Default within ten (10) business days shall result in
the Company incurring a liquidated damage penalty of
$1,000 per day, but only if the Investor holds any
Convertible Notes, Warrants or Common Shares issued
on a conversion of the Notes or exercise of the
Warrants.
(c) Whenever required under this Section to effect the
registration of any Registrable Securities, the Company shall,
as soon as reasonably practicable:
(i) Promptly prepare and file with the SEC a registration
statement with respect to such Registrable Securities
and use its best efforts to cause such registration
to become effective as provided in Section 14(b)(i),
and upon the request of any holder of Registrable
Securities keep such registration statement effective
for so long as any holder of Registrable Securities
desires to dispose of the securities covered by such
registration statement, or, if earlier, until such
Registrable Securities may be sold under Rule 144.
(ii) Promptly prepare and file with the SEC such
amendments and supplements to such registration
statement and the prospectus used in connection with
such registration statement as may be necessary to
comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered
by such registration statement and notify the holders
of the filing and effectiveness of such Registration
Statement and any amendments or supplements.
(iii) Promptly furnish to each holder of Registrable
Securities such numbers of copies of a current
prospectus conforming with the requirements of the
1933 Act, copies of the registration statement, any
amendment or supplement thereto and any documents
incorporated by reference therein and such other
documents as such holder of Registrable Securities
may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such
holder of Registrable Securities.
-19-
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement
under such other securities or "Blue Sky" laws of
such jurisdictions in the United States and Canada as
the Company may determine is legally required under
such "Blue Sky" laws and as shall be reasonably
requested by a holder of Registrable Securities,
provided that the Company shall not be required in
connection therewith or as a condition thereto to
qualify to do business or to file a general consent
to service of process in any such states or
jurisdictions.
(v) Notify each holder of Registrable Securities
immediately of the happening of any event 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 than
existing, and use its best efforts to promptly update
and/or correct such prospectus.
(vi) Furnish, at the request of any holder of Registrable
Securities, (1) an opinion of counsel of the Company,
dated the effective date of the registration
statement, in form and substance reasonably
satisfactory to the holder and its counsel and
covering, without limitation, such matters as the due
authorization and issuance of the securities being
registered and compliance with securities laws by the
Company in connection with the authorization,
issuance and registration thereof and (2) a letter or
letters of the Company's independent public accounts
in form and substance reasonably satisfactory to the
holder and its counsel.
(vii) Use its best efforts to list the Registrable
Securities covered by such registration statement on
the Exchanges;
(viii) Makes available for inspection by the holder of
Registrable Securities, upon request, all documents
listed by the Company with the SEC filed subsequent
to the Closing and require the Company's officers and
employees to supply all information reasonably
requested by any holder of Registrable Securities in
connection with such registration statement, subject
to appropriate arrangements for confidentiality.
(d) Each holder of Registrable Securities will furnish to the
Company in connection with any registration under this Section
such information regarding itself, the Registrable Securities
and other securities of the Company held by it, and the
intended method of disposition of such securities as shall be
reasonably required to effect the registration of the
Registrable Securities held by such holder of Registrable
Securities. The Investor shall provide such data on the
Closing Date. The intended method of disposition (Plan of
Distribution) of such securities as so provided by the
Investor shall be included without substantial alteration in
the Registration Statement covering the Registrable Securities
and shall not be changed in any material respect without the
prior written consent of the Investor
-20-
provided that the Company is not required to include such
information in a registration statement or proceed with
registering the Registrable Securities hereunder to the extent
that any information or other material provided to the Company
by the Investor hereunder is untrue in any material respect
and further provided that the Investor shall include such
modifications to the Plan of Distribution as shall, in the
reasonable opinion of the Company, be necessary to ensure
compliance with the 1933 Act, comments of SEC's staff on the
Registration Statement, the Exchange Act, applicable "Blue
Sky" laws, or securities laws of other applicable countries.
(e) (i) The Company shall indemnify, defend and hold harmless
each holder of Registrable Securities which are
included in a registration statement pursuant to the
provisions of Subsections (b) or (c) (such, a
"Selling Shareholder") and each of its officers,
directors, employees, agents, partners or controlling
persons (within the meaning of the 0000 Xxx) (each,
an "indemnified party") from and against, and shall
reimburse such indemnified party with respect to, any
and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses
("Liabilities") to which such indemnified party may
become subject under the 1933 Act or otherwise,
arising from or relating to (A) any untrue statement
or alleged untrue statement of any material fact
contained in such registration statement, any
prospectus contained therein or any amendment or
supplement thereto, or (B) the omission 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 in
which they were made, not misleading provided,
however, that the Company shall not be liable in any
such case to the extent that any such Liability
arises out of or is based upon an untrue statement or
omission is made in strict conformity with
information furnished by or on behalf of such
indemnified party in writing specifically for use in
the preparation thereof, provided further that the
Company shall not be liable in any such case to the
extent that any such Liability arises out of or is
based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any
preliminary prospectus if (i) a Selling Shareholder
failed to deliver, to the person asserting such
Liability who purchased such Registrable Securities
which are the subject thereof, a prospectus that
would have completely corrected such untrue statement
or omission; and provided further, that the Company
shall not be liable in any such case to the extent
that any Liability arises out of or is based upon an
untrue statement or alleged untrue statement or
omission or alleged omission in the prospectus, if
such untrue statement or alleged untrue statement,
omission or alleged omission is completely corrected
in an amendment or supplement to the prospectus and
if having previously been furnished by or on behalf
of the Company with copies of the prospectuses so
amended or supplemented, the Selling Shareholder
thereafter failed to deliver such prospectus as so
amended or supplemented, prior to or concurrently
with the sale of Registrable Securities to the person
asserting such Liability
-21-
who purchased such Registrable Securities which are
the subject thereof from such Selling Shareholder.
(ii) In the event of any registration under the 1933 Act
of Registrable Securities pursuant to Subsections (b)
or (c), each holder of such Registrable Securities
hereby severally agrees to indemnify, defend and hold
harmless the Company, and its officers, directors,
employees, agents, partners, or controlling persons
(within the meaning of the 0000 Xxx) (each, an
"indemnified party") from and against, and shall
reimburse such indemnified party with respect to, any
and all Liabilities in which such indemnified party
may become subject under the 1933 Act or otherwise,
arising from or relating to (A) any untrue statement
or alleged untrue statement of any material fact
contained in such registration statement, any
prospectus contained therein or any amendment or
supplement thereto, (B) the omission 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 in which they
were made, not misleading, provided that such holders
will be liable in any such case to the extent, and
only to the extent, that any such Liability arises
out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged
omission made in such registration statement,
prospectus or amendment or supplement thereto in
reliance upon and in conformity with written
information furnished by such holder or its agent
specifically for use in the preparation thereof, (c)
the failure to follow any Plan of Distribution as set
forth in (d), or (D) failure to deliver an amended or
supplemented prospectus prior to or concurrently with
the sale of Registrable Securities to the person
asserting such Liability who purchased such
Registrable Securities which are the subject thereof
from such Selling Shareholder.
(iii) Promptly after receipt by any indemnified party of
notice of the commencement of any action, such
indemnified party shall, if a claim in respect
thereof is to be made against another party (the
"indemnifying party") hereunder, notify such party in
writing thereof, but the omission so to notify shall
not relieve the indemnifying party from any Liability
which it may have to the indemnified party other than
under this section and shall only relieve it from any
Liability which it may have to the indemnified party
under this section if and to the extent it is
actually prejudiced by such omission. In case any
such action shall be brought against any indemnified
party and such indemnified party shall notify the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and
undertake the defence thereof with counsel reasonably
satisfactory to such indemnified party, and, after
notice from the indemnifying party to the indemnified
party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be
liable to the indemnified party under this section
for any legal expenses subsequently incurred by the
indemnified party in connection with the defense
thereof
-22-
other than reasonable costs of investigation and of
liaison with counsel so selected, provided however,
that if the defendants in any such action include
both the indemnifying party and such indemnified
party and the indemnified party shall have reasonably
concluded that there may be reasonable defences
available to it which are different from or
additional to those available to the indemnifying
party or if the interest of the indemnified party
reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified
party shall have the right to select a separate
counsel and to assume such legal defenses and
otherwise to participate in the defense of such
action, with the reasonable expenses and fees of such
separate counsel and other reasonable expenses
related to such participation to be reimbursed by the
indemnifying party as incurred. In clarification of
the foregoing, if the Company is the indemnifying
party it shall pay the reasonable expenses and fees
of one separate counsel whose selection is approved
by the largest group of similarly situated
indemnified parties as measured by the aggregate par
value of such Registrable Securities owned by such
group. Any indemnified party who chooses not to be
represented by the foregoing separate counsel shall
be entitled, at its own expense, to be represented by
counsel of its own selection.
(f) (i) With respect to the inclusion of Registrable
Securities in a registration statement pursuant to
Subsections (b) or (c), all fees, costs and expenses
of and incidental to such registration, inclusion and
public offering shall be borne by the Company (the
"Company's Registration Expenses"), provided,
however, that any Selling Shareholders participating
in such registration shall bear their pro-rata share
of the underwriting discounts and commissions, if
any, incurred by them in connection with such
registration (the "Selling Shareholder's Expenses").
(ii) The fees, costs and expenses of registration to be
borne by the Company as provided in this Subsection
(f) shall include, without limitation, all
registration, filing and exchange fees, printing
expenses, fees and disbursements of counsel and
accountants for the Company, and all legal fees and
disbursements and other expenses of complying with
applicable state securities or Blue Sky laws of any
jurisdiction or jurisdictions in the United States in
which securities to be offered are to be registered
and qualified. Subject to appropriate agreements as
to confidentiality, the Company shall make available
to counsel for the holders of Registrable Securities
its documents and personnel for due diligence
purposes. Except as otherwise provided herein, fees
and disbursements of counsel and accountants for the
Selling Shareholders shall be borne by the respective
Selling Shareholders. The Company shall pay the
reasonable fees and expenses of one counsel for the
Investor in connection with registration of the
Registrable Securities.
-23-
(g) From and after the date of this Agreement, the
Company shall not agree to allow the holders of any
securities of the Company to include any of their
securities in any registration statement filed by the
Company pursuant to Subsection (b) unless such
inclusion will not reduce the amount of the
Registrable Securities included therein.
(h) If at any time after the date hereof but before the
filing of the registration statement required to be
filed pursuant to Section 12(b)(i) above, the Company
proposes to register any of its securities under the
Securities Act (other than by a registration in
connection with an acquisition in a manner which
would not permit registration of Registrable
Securities for sale to the public, on Form S-8, or
any successor form thereto, on Form S-4, or any
successor form thereto and other than pursuant to
Section 12(b)(i)), on an underwritten basis (either
best-efforts or firm-commitment), then the Company
will each such time give prompt written notice to all
holders of Registrable Securities of its intention to
do so and of such holders' rights under this Section
12(h). Upon the written request of any such holder
made within twenty (20) days after the receipt of any
such notice (which request shall specify the
Registrable Securities intended to be disposed of by
such holder and the intended method of disposition
thereof), the Company will, subject to the terms of
this Agreement, use its commercially reasonable best
efforts to effect the registration under the 1933 Act
of the Registrable Securities, to the extent
requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of
such Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the
registration statement which covers the securities
which the Company proposes to register, provided that
if, at any time after written notice of its intention
to register any securities and prior to the effective
date of the registration statement filed in
connection with such registration, the Company shall
determine for any reason either not to register or to
delay registration of such securities, the Company
may, at its election, give written notice of such
determination to each holder and, thereupon, (i) in
the case of a determination not to register, shall be
relieved of this obligation to register any
Registrable Securities in connection with such
registration (but not from its obligation to pay the
Company's Registration Expenses in connection
therewith), and (ii) in the case of a determination
to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same
period as the delay in registering such other
securities. No registration effected under this
paragraph shall relieve the Company of its obligation
to effect any registration otherwise required
pursuant to this Agreement. The Company will pay all
Company's Registration Expenses in connection with
each registration of Registrable Securities requested
pursuant to this Section 12(h), and the holder of
Registrable Securities electing to sell their
Registrable Securities under this Section 12(h) shall
pay all Selling Shareholder's Expenses. The right
provided the holders of the Registrable Securities
pursuant to this Section 12(h) shall be exercisable
at their sole discretion. If the managing underwriter
of the holders of the Registrable Securities
requesting such registration by letter of its belief
that the number of securities requested to be
included in such registration exceeds the number
which can be sold in such offering, then the Company
will include in such registration,
-24-
to the extent of the number which the Company is so
advised can be sold in such offering, (i) first
securities proposed by the Company to be sold for its
own account, and (ii) second Registrable Securities
and securities of other selling securityholders
requested to be included in such registration pro
rata on the basis of the number of shares of such
securities so proposed to be sold and so requested to
be included; provided, however, the holders of
Registrable Securities shall have priority to all
shares sought to be included by officers and
directors of the Company as well as holders of ten
percent (10%) or more of the Company's Common Shares.
Notwithstanding the foregoing, the incidental
registration rights provided under this paragraph
shall not apply to any underwritten offering to be
registered exclusively outside of the United States,
nor shall they apply in the event that the
Corporation has filed the registration statement
contemplated in Section 12(b)(i).
13. CONSENT TO JURISDICTION AND SERVICE OF PROCESS
----------------------------------------------
The Company agrees that any legal suit, action or proceeding brought by
any party to enforce any rights under or with respect to this agreement or the
Indentures or the Convertible Notes or Warrants may be instituted in any state
or federal court in New York City and waives to the fullest extent permitted by
law any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding and irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding. The
Company hereby irrevocably designates and appoints Prentice Hall Corporate
Service ("PH") as the Company's authorized agents to receive and forward on its
behalf service of any and all process which may be served in any such suit,
action or proceeding in any such court and agrees that service of process upon
PH (or any successor) at its office at 00 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or such other address in the Borough of Manhattan, New York City, as the
Company may designate by written notice to the trustee under the Indentures) and
written notice of such service to the Company marked or delivered to PH at its
address set forth herein shall be deemed in every respect effective service of
process upon the Company in any such suit, action or proceeding and shall be
taken and held to be valid personal service upon the Company. Nothing in this
Section 13 shall affect the right of any party hereto to serve process in any
manner permitted by law or limit the right of any party hereto to bring
proceedings against the Company in the courts of any jurisdiction or
jurisdictions. The Company further agrees to take any and all action, including
the execution and filing of any and all such documents and instruments as may be
necessary to continue such designation and appointment of PH in full force and
effect so long as this agreement or any of the Convertible Notes or Warrants
shall be outstanding. To the extent that the Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, executor or otherwise) with respect to itself or its property,
the Company hereby irrevocably waives such immunity in respect of its
obligations under this agreement and the Convertible Notes or Warrants, to the
extent permitted by law. The Company covenants to forthwith make all appropriate
arrangements to appoint PH for the purposes of the foregoing. If the Company and
PH are unable to agree on terms for the appointment of PH in such capacity
within thirty (30) days, the Company shall forthwith make arrangements for the
appointment of another agent reasonably acceptable to the Investor for such
purposes.
-25-
14. CONVERSION OF CURRENCY
----------------------
(a) The Company shall indemnify the Investor against, and the
Investor shall have an additional legal claim for, any loss or
damage which, consequent upon any judgment being obtained or
enforced in respect of the non-payment by the Company of any
amount due under or pursuant to this agreement or the
Indentures arises from any variation in rates of exchange
between United States dollars and the currency in which
judgment is obtained or enforced between the date such amount
became due (or the date of the said judgment being obtained as
the case may be) and the date of actual payment of such
amount. The indemnity shall apply irrespective of any
indulgence granted to the Company from time to time and shall
continue in full force and effect notwithstanding any payment
by or on behalf of the Company and any amount due from the
Company under this Section 16 will be due as a separate
payment and shall not be affected by any judgment being
obtained for any other sums due under or in respect of this
agreement.
(b) The term "rate(s) of exchange" shall mean the rate, quoted at
noon for transactions in excess of $1,000,000, at which the
Investor is able or would have been able on the relevant date
to purchase at Xxxxxx Guaranty Trust Company of New York at
its main branch in New York City, United States dollars with
the judgment currency other than United States dollars
referred to in subsection (a) above and includes any premiums
and costs of exchange payable.
15. GOVERNING LAW
-------------
This agreement (together with the Schedules and attachments hereto
which are incorporated herein by reference) is governed by the laws of the
Province of Ontario and the laws of Canada applicable therein. By your
acceptance of this subscription agreement, you irrevocably attorn to the
jurisdiction of the courts of the Province of Ontario.
If the foregoing is in accordance with your understanding, please sign
and return to the undersigned the enclosed copy of this subscription agreement.
Yours very truly,
CRYSTALLEX INTERNATIONAL
CORPORATION
By:-------------------------
Xxxxxx X. Xxxx
Executive Vice President
-26-
TO: CRYSTALLEX INTERNATIONAL CORPORATION
We accept the foregoing and agree to be bound by the terms set forth
herein.
DATED this 25th day of September, 2002.
Purchase price per U.S. $1,000 principal amount of
Convertible Notes U.S. $ 1,000
----------
Total purchase price: U.S. $ 3,500,000
----------
Name and Address of Investor: GCA Strategic Investment Fund Limited
---------------------------------------
(full legal name of Investor)
c/o Prime Management Limited
Mechanics Building
12 Church Street
Xxxxxxxx, XX 11
Bermuda
---------------------------------------
(address)
---------------------------------------
(facsimile number)
Bermuda
---------------------------------------
Jurisdiction of Incorporation/Formation
------------------------------
By: (signature/position)
-27-
TO: CRYSTALLEX INTERNATIONAL CORPORATION
We accept the foregoing and agree to be bound by the terms set forth
herein.
DATED this 25th day of September, 2002.
Purchase price per U.S. $1,000 principal amount of
Convertible Notes U.S. $ 1,000
--------------
Total purchase price: U.S. $ 5,700,000(1)
--------------
Name and Address of Investor: Riverview Group, LLC
---------------------------------------
(full legal name of Investor)
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
---------------------------------------
(address)
---------------------------------------
(facsimile number)
---------------------------------------
Jurisdiction of Incorporation/Formation
------------------------------
By: (signature/position)
________________________
(1) Investor to have the option to purchase an additional U.S. $2.0 million
principal amount of Convertible Notes on the same terms and conditions until
5:00 p.m. (Toronto time) on October 25, 2002.
SCHEDULE "A"
CRYSTALLEX INTERNATIONAL CORPORATION
1. DELIVERY - upon closing, please deliver the certificates evidencing
Convertible Notes and Warrants to the following:
__________________________________________________________________________
__________________________________________________________________________
Contact:____________________________________Telephone:____________________
2. REGISTRATION - registration of certificates which are to be delivered at
closing should be made as follows (must also include a facsimile transmission
number for the purposes of receiving certain notices):
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
3. CLOSING - The undersigned will be represented at the closing as follows:
Name of Representative: ___________________________________________________
Office Held: _____________________________________________________________
Name of Company: _______________________________________________________
4. We acknowledge that we will deliver to the Corporation all such additional
completed forms in respect of our purchase of Convertible Notes and Warrants of
Crystallex International Corporation as may be required for filing with the
appropriate securities and regulatory authorities.
5. We acknowledge that no commission or other remuneration has been or will
be paid or given, directly or indirectly, for soliciting the purchase of the
Convertible Notes, the Warrants or the Common Shares issuable on conversion or
exercise thereof.
-A2-
DATE: __________________________ ________________________
(name of purchaser)
By: ________________________
(signature)
________________________
(position)
SCHEDULE "B" - REGULATION S INVESTORS
To: Crystallex International Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Dear Sirs:
In connection with its purchase of Convertible Notes and Warrants and
Common Shares issuable upon the conversion of the Convertible Notes and the
exercise of the Warrants (collectively, the "Securities") of Crystallex
International Corporation ("the Company"), the undersigned confirms to you that:
(a) the undersigned is duly authorized and empowered to enter into,
execute and deliver and perform this Subscription Agreement and related
documents, and the person executing and delivering this Subscription Agreement
and Schedules B and C thereto on behalf of the undersigned is duly authorized
and empowered to do so. This Subscription Agreement and related documents have
been duly and validly executed, issued, and delivered and constitutes the legal,
valid and binding obligations of the undersigned, enforceable in accordance with
their terms.
(b) it (he or she, as applicable) is an "accredited investor" as that
term is defined under Rule 501(a) under the Securities Act of 1933 ("1933 Act")
for one or more of the following reasons (PLEASE CHECK ONE OR MORE REASONS, AS
APPLICABLE):
____ (A) If an individual, his/her individual net worth, or
joint net worth with his/her spouse, at the time
of this purchase exceeds US$1,000,000
____ (B) If an individual, he/she had an individual
income in excess of US$200,000 in each of the two
most recent years or joint income with his/her
spouse in excess of US$300,000 in each of those
years and has a reasonable expectation of reaching
the same income level in the current year
____ (C) If an individual, he/she is an executive officer
or director of the Company
____ (D) It is an organization described in section 501(c)
(3) of the U.S. 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 US$5,000,000
____ (E) It is a trust, with total assets in excess of
US$5,000,000, not formed for the specific purpose
of acquiring the securities offered, whose
purchase is directed by a sophisticated person
who, either alone or with his purchaser
representative(s), has such knowledge,
sophistication and experience in financial and
business matters that he is capable of
-B2-
evaluating the merits and risks of the prospective
investment (Please describe basis):_______________
__________________________________________________
__________________________________________________
(F) It is a bank as defined in section 3(a)(2) of the
1933 Act, or any savings and loan association or
other institution as defined in section 3(a)(5)(A)
of the 1933 Act whether acting in its individual
or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the U.S.
Securities Exchange Act of 1934 ("Exchange Act");
an insurance company as defined in section 2(13)
of the 1933 Act; an investment company registered
under the U.S. 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
U.S. 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, if
such plan has total assets in excess of
US$5,000,000; an employee benefit plan within the
meaning of the U.S. 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 U.S.
$5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that
are accredited investors
____ (G) It is a private business development company as
defined in section 202(a)(22) of the U.S.
Investment Advisers Act of 1940
____ (H) It is an entity in which all of the equity owners
are accredited investors
(c) It is purchasing the Securities for its own account and not with a
view to any resale, distribution or other disposition of the Securities in any
transaction that would be in violation of the securities laws of the United
States or any state thereof;
(d) Except for fees paid by the Company to Colony Park Financial
Services, LLC in connection with the purchase of the Securities, no fees,
commissions or other payments have been made to any broker, dealer, investment
adviser or other such entity not registered under the Exchange Act and
applicable state securities laws. The Investor was not formed for the specific
purpose of acquiring any of the Securities.
(e) The undersigned:
-B3-
(i) is not a U.S. Person (as defined in Regulation S ("Regulation
S") under the 0000 Xxx) and is not purchasing the Convertible Notes and Warrants
for the account of or the benefit of a U.S. Person;
(ii) was not offered the Convertible Notes and Warrants in the
United States (as defined in Regulation S); and
(iii) did not execute or deliver this agreement in the United
States.
(f) The purchase of the Convertible Notes and Warrants has not been
made through or as a result of, and the distribution of the Convertible Notes
and Warrants is not being accompanied by, any directed selling efforts (as
defined in Regulation S) in the United States, including, without limitation,
any advertisement in printed public media, radio, television or
telecommunications including electronic display such as the Internet.
(g) The Convertible Notes may not be converted and the Warrants may not
be exercised by or on behalf of any U.S. Person (as defined in Regulation S)
unless registered under the 1933 Act or where an exemption from such
registration is available, and the undersigned understands that the certificate
for the Convertible Notes and Warrants will contain legends to such effect. The
undersigned also understands that each person converting a Convertible Note or
exercising a Warrant is required to give the Company, in form and substance
satisfactory to the Company: (i) written certification that he is not a U.S.
Person and the Convertible Notes are not being converted, or the Warrants are
not being exercised, on behalf of a U.S. Person or (ii) a written opinion of
counsel to the effect that such conversion or exercise have been registered
under the 1933 Act or are exempt from registration under the 1933 Act.
(h) The Convertible Notes may not be converted and the Warrants may not
be exercised within the United States, and the Common Shares may not be
delivered within the United States upon such exercise, other than in offshore
transactions (as defined in Regulation S), unless such exercise or conversion is
registered under the 1933 Act or is exempt from registration.
(i) No prospectus or "offering memorandum" has been delivered to the
undersigned in connection with the purchase of the Convertible Notes and
Warrants.
(j) In purchasing the Convertible Notes and Warrants, the undersigned
has relied solely upon publicly available information relating to the Company
and not upon any verbal or written representation as to any fact or otherwise
made by or on behalf of the Company or Colony Park Financial Services or any
other person associated therewith. The undersigned acknowledges that the
decision to purchase the Convertible Notes and Warrants was made solely on the
basis of publicly available information, and it is not purchasing Convertible
Notes and Warrants with knowledge of material information concerning the Company
which has not been generally disclosed.
(k) It agrees that it may offer, sell or otherwise transfer such
securities, or securities issuable upon the exercise or conversion of such
securities (other than pursuant to an effective registration statement under the
1933 Act), only if:
-B4-
(i) the sale is to the Company; or
(ii) the sale is made outside the United States in accordance with the
requirements of Rule 904 of Regulation S under the 1933 Act; or
(iii) the sale is made pursuant to the exemption from registration
under the 1933 Act provided by Rule 144 thereunder; or
(iv) the securities are sold in such other transaction that does not
require registration under the 1933 Act or any applicable United States state
securities laws and regulations governing the offer and sale of securities; and
in connection with (ii), (iii), and (iv), above, the undersigned furnishes to
the Company any opinion of counsel, reasonably satisfactory to the Company, to
that effect.
(l) Each of its covenants, agreements, representations, and warranties
contained in the Subscription Agreement are true and correct and are
incorporated herein.
(m) It is fully aware of the Company's current and proposed business and
prospects, has been given and has reviewed a copy of the Company's Annual Report
on Form 20-F for the year ended December 31, 2001 and its Reports on Form 6-K
submitted subsequent to the filing of the Form 20-F, and the undersigned has had
a sufficient opportunity to ask questions of the Company's executive officers
and review all material concerning the Company that it deems necessary in order
to make an informed investment decision to acquire the securities.
(n) It acknowledges that the Convertible Notes, the Warrants and the Common
Shares have not been registered under the 1933 Act or applicable state
securities laws on the ground that the sale of the securities to the undersigned
is exempt from registration thereunder. The undersigned further acknowledges
that the Company's reliance on such exemptions is, in part, based upon the
representations, warranties, confirmations and statements of the undersigned in
this Schedule B and in Schedule C and the Subscription Agreement and that the
residence and principal office of the undersigned is at the location listed on
the signature page to the Subscription Agreement. The undersigned hereby agrees
to indemnify the Company, its directors, officers and agents from and against
all losses, claims, costs, expenses, damages and liabilities which they may
incur or suffer caused by prior reliance thereon.
(o) It acknowledges and agrees that the Common Shares issued in conversion
of the Convertible Notes or exercise of the Warrants may not be resold by it on
any Canadian stock exchange for a period of four months following the date of
acquisition of the Convertible Notes or Warrants, as the case may be.
(p) The Investor's investment advisor has participated in the negotiation
and review of all of the documents relating to the purchase of the Securities
and understands their terms.
(q) All of the information, representations, warranties, covenants,
confirmations, and statements provided by or on behalf of the undersigned in the
Subscription Agreement and in Schedules B and C thereto shall survive Closing.
-B5-
(r) The Investor is a Bermuda corporation with its principal office in
Bermuda as set out below.
Dated: September ______, 2002
GCA Strategic Investment Fund Limited
----------------------------------------
Name of Investor
By:
----------------------------------------
Name:
Address:
SCHEDULE "B" - REGULATION D INVESTORS
To: Crystallex International Corporation
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Dear Sirs:
In connection with its purchase of Convertible Notes and Warrants and
Common Shares issuable upon the conversion of the Convertible Notes and the
exercise of the Warrants (collectively, the "Securities") of Crystallex
International Corporation ("the Company"), the undersigned confirms to you that:
(a) the undersigned is duly authorized and empowered to enter into,
execute and deliver and perform this Subscription Agreement and related
documents, and the person executing and delivering this Subscription Agreement
and Schedules B and C thereto on behalf of the undersigned is duly authorized
and empowered to do so. This Subscription Agreement and related documents have
been duly and validly executed, issued, and delivered and constitutes the legal,
valid and binding obligations of the undersigned, enforceable in accordance with
their terms.
(b) it (he or she, as applicable) is an "accredited investor" as that
term is defined under Rule 501(a) under the Securities Act of 1933 ("1933 Act")
for one or more of the following reasons (PLEASE CHECK ONE OR MORE REASONS, AS
APPLICABLE):
____ (A) If an individual, his/her individual net worth, or
joint net worth with his/her spouse, at the time
of this purchase exceeds US$1,000,000
____ (B) If an individual, he/she had an individual income
in excess of US$200,000 in each of the two most
recent years or joint income with his/her spouse
in excess of US$300,000 in each of those years and
has a reasonable expectation of reaching the same
income level in the current year
____ (C) If an individual, he/she is an executive officer
or director of the Company
____ (D) It is an organization described in section
501(c)(3) of the U.S. 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 US$5,000,000
____ (E) It is a trust, with total assets in excess of
US$5,000,000, not formed for the specific purpose
of acquiring the securities offered, whose
purchase is directed by a sophisticated person
who, either alone or with his purchaser
representative(s), has such knowledge,
sophistication and experience in financial and
business matters that he is capable of
-B2-
evaluating the merits and risks of the prospective
investment (Please describe basis):_______________
__________________________________________________
__________________________________________________
(F) It is a bank as defined in section 3(a)(2) of the
1933 Act, or any savings and loan association or
other institution as defined in section 3(a)(5)(A)
of the 1933 Act whether acting in its individual
or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the U.S.
Securities Exchange Act of 1934 ("Exchange Act");
an insurance company as defined in section 2(13)
of the 1933 Act; an investment company registered
under the U.S. 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
U.S. 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, if
such plan has total assets in excess of
US$5,000,000; an employee benefit plan within the
meaning of the U.S. 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 U.S.
$5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that
are accredited investors
____ (G) It is a private business development company as
defined in section 202(a)(22) of the U.S.
Investment Advisers Act of 1940
____ (H) It is an entity in which all of the equity owners
are accredited investors
(c) It is purchasing the Securities for its own account and not with a
view to any resale, distribution or other disposition of the Securities in any
transaction that would be in violation of the securities laws of the United
States or any state thereof;
(d) No fees, commissions or other payments have been made to any
broker, dealer, investment adviser or other such entity not registered under the
Exchange Act and applicable state securities laws. The Investor was not formed
for the specific purpose of acquiring any of the Securities.
(e) The purchase of the Convertible Notes and Warrants has not been
made through or as a result of, and the distribution of the Convertible Notes
and Warrants is not being accompanied by, any general advertising or
solicitation, including, without limitation, any advertisement in printed public
media, radio, television or telecommunications including electronic display such
as the Internet, any general mailing, leaflet, public promotional meeting,
-B3-
newspaper or magazine article, radio or television advertisement, or any other
form of general advertising or general solicitation in connection with the
issuance. Prior to its consideration of the transactions contemplated hereby,
the undersigned had a pre-existing personal or business relationship with either
the Company or with a broker or agent (or a principal thereof) acting on behalf
of the Company.
(f) The Convertible Notes may not be converted and the Warrants may not
be exercised unless registered under the 1933 Act or where an exemption from
such registration is available, and the undersigned understands that the
certificate for the Convertible Notes and Warrants will contain legends to such
effect. The undersigned also understands that each person converting a
Convertible Note or exercising a Warrant is required to give the Company, in
form and substance satisfactory to the Company a written opinion of counsel to
the effect that such conversion or exercise have been registered under the 1933
Act or are exempt from registration under the 1933 Act.
(g) No prospectus or "offering memorandum" has been delivered to the
undersigned in connection with the purchase of the Convertible Notes and
Warrants.
(h) In purchasing the Convertible Notes and Warrants, the undersigned
has relied solely upon publicly available information relating to the Company
and not upon any verbal or written representation as to any fact or otherwise
made by or on behalf of the Company or Colony Park Financial Services or any
other person associated therewith. The undersigned acknowledges that the
decision to purchase the Convertible Notes and Warrants was made solely on the
basis of publicly available information, and it is not purchasing Convertible
Notes and Warrants with knowledge of material information concerning the Company
which has not been generally disclosed. The undersigned acknowledges that the
Company has made available to the undersigned the opportunity to examine such
additional documents from the Company and to ask questions of, and receive full
answers from the Company concerning, among other things, the Company, its
financial condition, its management, its prior activities and any other
information which the undersigned considers relevant or appropriate in
connection with entering into this Agreement.
(i) It agrees that it may offer, sell or otherwise transfer such
securities, or securities issuable upon the exercise or conversion of such
securities (other than pursuant to an effective registration statement under the
1933 Act), only if:
(i) the sale is to the Company; or
(ii) the sale is made pursuant to the exemption from registration
under the 1933 Act provided by Rule 144 thereunder; or
(iii) the securities are sold in such other transaction that does
not require registration under the 1933 Act or any applicable United States
state securities laws and regulations governing the offer and sale of
securities; and
in connection with (ii), (iii), and (iii), above, the undersigned furnishes to
the Company any opinion of counsel, reasonably satisfactory to the Company, to
that effect.
-B4-
(j) Each of its covenants, agreements, representations, and warranties
contained in the Subscription Agreement are true and correct and are
incorporated herein.
(k) It is fully aware of the Company's current and proposed business
and prospects, has been given and has reviewed a copy of the Company's Annual
Report on Form 20-F for the year ended December 31, 2001 and its Reports on Form
6-K submitted subsequent to the filing of the Form 20-F, and the undersigned has
had a sufficient opportunity to ask questions of the Company's executive
officers and review all material concerning the Company that it deems necessary
in order to make an informed investment decision to acquire the securities.
(l) It acknowledges that the Convertible Notes, the Warrants and the
Common Shares have not been registered under the 1933 Act or applicable state
securities laws on the ground that the sale of the securities to the undersigned
is exempt from registration thereunder. The undersigned further acknowledges
that the Company's reliance on such exemptions is, in part, based upon the
representations, warranties, confirmations and statements of the undersigned in
this Schedule B and in Schedule C and the Subscription Agreement and that the
residence and principal office of the undersigned is at the location listed on
the signature page to the Subscription Agreement. The undersigned hereby agrees
to indemnify the Company, its directors, officers and agents from and against
all losses, claims, costs, expenses, damages and liabilities which they may
incur or suffer caused by prior reliance thereon.
(m) It acknowledges and agrees that the Common Shares issued in
conversion of the Convertible Notes or exercise of the Warrants may not be
resold by it on any Canadian stock exchange for a period of four months
following the date of acquisition of the Convertible Notes or Warrants, as the
case may be.
(n) The Investor's investment advisor has participated in the
negotiation and review of all of the documents relating to the purchase of the
Securities and understands their terms.
(o) The Investor (i) is able to bear the economic risk of its
investment in the Securities, (ii) is able to hold the Securities for an
indefinite period of time, (iii) can afford a complete loss of its investment in
the Securities and (iv) has adequate means of providing for its current needs.
If the Investor is a New York resident, or has its principal place of business
in new York, its acknowledges that it is an "institutional investor" for
purposes of Section 359-3(a) of the New York General Business Law, Chapter 20,
Article 23-A.
(p) All of the information, representations, warranties, covenants,
confirmations, and statements provided by or on behalf of the undersigned in the
Subscription Agreement and in Schedules B and C thereto shall survive Closing.
-B5-
Dated: September ______, 2002
Riverview Group, LLC
-----------------------------------------
Name of Investor
By:
-----------------------------------------
Name:
Address:
SCHEDULE "C"
THE TORONTO STOCK EXCHANGE
PRIVATE PLACEMENT QUESTIONNAIRE AND UNDERTAKING
To be completed by each proposed private placement purchaser of listed
securities or which are convertible into listed securities.
QUESTIONNAIRE
1. DESCRIPTION OF TRANSACTION
(a) Name of issuer of the Securities Crystallex International Corporation
_____________________________________________________________________________
(b) Number and Class of Securities to be Purchased
U.S. $ 4% Convertible Notes and Warrants
_____________________________________________________________________________
(c) Purchase Price
U.S. $1,000 per U.S. $1000 principal amount of Notes
_____________________________________________________________________________
2. DETAILS OF PURCHASER
(a) Name of Purchaser: ______________________________________
(b) Address ______________________________________
_____________________________________________________
(c) Names and Addresses of persons having a greater than 10%
beneficial interest in the purchaser
_____________________________________________________________________________
None
_____________________________________________________________________________
_____________________________________________________________________________
3. RELATIONSHIP TO ISSUER
(a) Is the purchaser (or any person named in response to 2(c) above) an
insider of the issuer for the purposes of the Ontario Securities Act
(before giving effect to this private placement)? If so, state the
capacity in which the purchaser (or person named in response to 2(c)
qualifies as an insider
_____________________________________________________________________________
No
_____________________________________________________________________________
(b) If the answer to (a) is "no", are the purchaser and the issuer
controlled by the same person or company? If so, give details
_____________________________________________________________________________
No
_____________________________________________________________________________
-C2-
4. DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER
Give details of all trading by the purchaser, as principal, in the securities
of the issuer (other than debt securities which are not convertible into
equity securities), directly or indirectly, within the 60 days preceding the
date hereof _________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
UNDERTAKING
TO: The Toronto Stock Exchange
The undersigned has subscribed for an agreed to purchase, as principal, the
securities described in item 1 of this Private Placement Questionnaire and
Undertaking.
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of four
months from the date of the closing of the transaction herein or for such period
as is prescribed by applicable securities legislation, whichever is longer
without the prior consent of The Toronto Stock Exchange and any other regulatory
body having jurisdiction.
DATED AT _________________________ _______________________________________
(Name of Purchaser - please print)
this 25th day of September, 2002 _______________________________________
(Authorized Signature)
_______________________________________
(Official Capacity - please print)
_______________________________________
(please print here name of individual
whose signature appears above, if
different from name of purchaser
printed above)
