Subscription Agreement
THIS AGREEMENT is made the 25th day of September, 2001.
BETWEEN:
XX. XXXXXXX MOFTHAKHAR, c/o the Ikon Group, 00000 Xxxxxxx Xxxx.
Xxxxxxx Xxxx, XX 00000
(the "Investor") OF THE FIRST PART
AND:
MARKETU INC., a company duly incorporated under the laws of the
state of Nevada and having a business office at Suite 101, 20145
Xxxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the "Company") OF THE SECOND PART
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
premises, warranties, covenants and agreements herein contained, the parties
hereto agree as follows:
1. Private Placement I
1.1 Purchase of Units. The Investor hereby unconditionally subscribes for and
agrees to purchase from the Company 1,666,667 units (the "PP1 Units") at a
price of US$0.15 per PP1 Unit, for an aggregate purchase price of
US$250,000.00 (the "PP1 Purchase Price"). Each PP1 Unit consists of one
voting Series B Preferred Share in the capital stock of the Company (a
"Preferred Share") and one-half of one non-transferable share purchase
warrant (a "PP1 Warrant"). Each Preferred Share may at any time be
exchanged for one Common Share of the Company without additional payment
to the Company. Each PP1 Warrant (one whole warrant) will entitle the
Investor to purchase one Common Share in the capital stock of the Company
at a price of US$0.25 per share for a 12-month period commencing on the
date of issuance of the PP1 Warrants.
1.2 Payment of PP1 Units. The PP1 Purchase Price will be paid to the
Company as follows:
(a) the sum of US$50,000.00 shall be paid by the Investor to the Company
upon execution of this Agreement; and
(b) the sum of US$200,000.00 shall be paid by the Investor to the Company
any time on or before September 28, 2001.
1.3 PP1 Closing. The Investor and the Company agree that the closing of the
PP1 Units private placement will occur on the date that the full amount of
the PP1 Purchase Price is paid by the Investor to the Company, such date
is hereby agreed to be September 28, 2001 (the "PP1 Closing Date") or such
other date as mutually agreed to between the parties. On the PP1 Closing
Date, the Company shall deliver or cause to be delivered to the Investor
certificates representing the number of Preferred Shares subscribed for
pursuant to subsection 1.1 (the "PP1 Preferred Shares") and the PP1
Warrants issued in the name of the Investor as set out in subsection 8.9.
1.4 Loan Before Securities are Issued. All funds paid to the Company pursuant
to this Agreement may be used by the Company forthwith and from time to
time and constitute an interest-free loan to the Company from the Investor
until such time as the PP1 Preferred Shares and the PP1 Warrants are
allotted and issued to the Investor. The Company and the Investor agree
that if the PP1 Preferred Shares and PP1 Warrants are not allotted and
issued on or before 14 days after the PP1 Closing Date, the Investor may
give written notice to the Company in which event the Company shall allot
and issue the PP1 Preferred Shares and PP1 Warrants to the Investor. Until
such time as the Company allots and issues the PP1 Preferred Shares and
PP1 Warrants to the Investor the Company will not be required to make such
allotment or issuance and reserves the option to repay the PP1 Purchase
Price. If on the PP1 Closing Date the Company has not received from the
Investor the full amount of the PP1 Purchase Price, the Company will issue
the number of Preferred Shares and PP1 Warrants for the portion of the PP1
Purchase Price received by the Company at the price of US$0.15 per PP1
Unit.
2. Private Placement II
2.1 Purchase of Units. The Investor hereby unconditionally subscribes for and
agrees to purchase from the Company 1,000,000 units (the "PP2 Units") at a
price of US$0.50 per PP2 Unit, for an aggregate purchase price of
US$500,000.00 (the "PP2 Purchase Price"). Each PP2 Unit consists of one
Preferred Share and one-half of one non-transferable share purchase
warrant (a "PP2 Warrant"). Each PP2 Warrant (one whole warrant) will
entitle the Investor to purchase one Common Share in the capital stock of
the Company at a price of US$0.60 per share for a 12-month period
commencing on the date of issuance of the PP2 Warrants.
2.2 Payment of PP2 Units. The PP2 Purchase Price shall be paid by the Investor
to the Company any time on or before November 30, 2001.
2.3 PP2 Closing. The Investor and the Company agree that the closing of the
PP2 Units private placement will occur on the date that the full amount of
the PP2 Purchase Price is paid by the Investor to the Company, such date
is hereby agreed to be November 30, 2001 (the "PP2 Closing Date") or such
other date as mutually agreed to between the parties. On the PP2 Closing
Date, the Company shall deliver or cause to be delivered to the Investor
certificates representing the number of Preferred Shares subscribed for
pursuant to subsection 2.1 and the PP2 Warrants issued in the name of the
Investor as set out in subsection 8.9.
3. Private Placement III
3.1 Purchase of Units. The Investor hereby unconditionally subscribes for and
agrees to purchase from the Company such number of units (the "PP3 Units")
at a price per PP3 Unit calculated as follows:
the lesser of (a) US$1.00 and (b) the average of the closing price
of the Company's Common Shares within the 30 trading days
immediately preceding the PP3 Closing Date,
for an aggregate purchase price of US$750,000.00 (the "PP3 Purchase
Price"). Each PP3 Unit consists of one Preferred Share and one-half of one
non-transferable share purchase warrant (a "PP3 Warrant"). Each PP3
Warrant (one whole warrant) will entitle the Investor to purchase one
Common Share in the capital stock of the Company at a price of US$1.25 per
share for a 12-month period commencing on the date of issuance of the PP3
Warrants.
3.2 Payment of PP3 Units. The PP3 Purchase Price shall be paid by the Investor
to the Company any time on or before February 28, 2002.
3.3 PP3 Closing. The Investor and the Company agree that the closing of the
PP3 Units private placement will occur on the date that the full amount of
the PP3 Purchase Price is paid by the Investor to the Company, such date
is hereby agreed to be February 28, 2002 (the "PP3 Closing Date") or such
other date as mutually agreed to between the parties. On the PP3 Closing
Date, the Company shall deliver or cause to be delivered to the Investor
certificates representing the number of Preferred Shares subscribed for
pursuant to subsection 3.1 and the PP3 Warrants issued in the name of the
Investor as set out in subsection 8.9.
4. acknowledgements by investor
4.1 Acknowledgements by the Investor. The Investor understands and
acknowledges that:
(a) The Company may accept or reject this Agreement, in whole or in part,
in its sole and absolute discretion.
(b) This Agreement is and shall be irrevocable. This Agreement and the
rights, powers and duties set forth herein shall be binding upon the
Investor, the Investor's heirs, estate, legal representatives,
successors and assigns and shall enure to the benefit of the Company,
its successors and assigns.
(c) No US federal or state agency or the B.C. Securities Commission has
made any finding or determination as to the fairness of this
investment, or any recommendation or endorsement of the PP1 Units, PP2
Units and PP3 Units (collectively, the "Units").
(d) No prospectus has been filed by the Company with the B.C. Securities
Commission or any similar regulatory authority in connection with the
issuance of the Units, the issuance is exempted from the prospectus
requirements of the Securities Act (British Columbia) (the "Act") and
any rules and regulations (the "Rules") promulgated pursuant to the
Act and that:
(i) the Investor is restricted from using most of the civil remedies
available under the Act and the Rules;
(ii) the Investor may not receive information that would otherwise be
required to be provided to the Investor under the Act and the Rules;
and
(iii)the Company is relieved from certain obligations that would otherwise
apply under the Act and the Rules.
(e) The Company has relied upon the Investor's representations and
warranties and the information set forth this Agreement to qualify
for exemptions from British Columbia and US federal and state
securities registration requirements.
(f) The Units were not advertised in printed media of general and
regular paid circulation, radio or television.
4.2 Investor Responsibility for Due Diligence Investigation. The Investor
acknowledges that the Investor must rely upon the Investor's own
examination of the Company, including the merits and risks involved in
making an investment decision regarding the Units.
4.3 Securities Restricted. The Investor acknowledges that the Units have not
been registered under either British Columbia or US federal or state
securities laws, and the Investor represents and warrants that the
Investor is purchasing the Units for investment for the Investor's own
account and not on behalf of any other person, nor with a view to, or for
resale or other distribution of, the Units. The Investor also understands
that the Company is under no obligation and has no intention to register
the Preferred Shares or to take any actions to make available exemptions
from the registration requirements of state and federal and British
Columbia securities laws, and that the Preferred Shares, the Common Shares
acquired upon conversion of the Preferred Shares and exercise of the XX0
Xxxxxxxx, XX0 Xxxxxxxx and PP3 Warrants, cannot be sold or otherwise
distributed in the absence of an exemption from such registration
requirements. No person has made to the Investor any written or oral
representations that any person will resell or repurchase the Preferred
Shares or the shares acquired upon exercise of the XX0 Xxxxxxxx, XX0
Xxxxxxxx xxx XX0 Xxxxxxxx; any person will refund the purchase price of
the Units; or as to the future price or value of the Preferred Shares or
the Common Shares.
4.4 Legend on Share Certificates. The Investor hereby consents to the
placement of a legend on all certificates representing the Preferred
Shares and the Common Shares acquired upon conversion of the Preferred
Shares and the exercise of the XX0 Xxxxxxxx, XX0 Xxxxxxxx and PP3 Warrants
in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
stock" as that term is defined in Rule 144 under the Act. The shares
may not be offered for sale, sold or otherwise transferred except
pursuant to the effective registration statement under the act or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of
the Company."
4.5 Investor Indemnification of the Company. The Investor hereby agrees to
indemnify and hold the Company harmless from any and all liabilities or
damages incurred by the Company arising as a result of any false statement
or misrepresentation made by the Investor in this Agreement including, but
not limited to, liabilities or damages incurred in connection with the
loss of exemptions from securities registration requirements.
5. representations and warranties of the Investor
5.1 Representations and Warranties of the Investor. The Investor hereby
represents and warrants as follows:
(a) Availability of Information. The Company has made available to the
Investor, or to the Investor's attorney, accountant or representative,
all documents that the Investor has requested, and the Investor has
requested all documents and other information that the Investor has
deemed necessary to consider respecting an investment in the Company.
The Company has provided answers to all questions concerning the
investment in the Company. The Investor has carefully considered and
has, to the extent the Investor believes necessary, discussed with the
Investor's professional legal, tax and financial advisers and the
Investor's representative (if any) the suitability of an investment in
the Company for the Investor's particular tax and financial situation.
All information the Investor has provided to the Company concerning
the Investor and the Investor's financial position is correct and
complete as of the date set forth below, and if there should be any
material adverse change in such information prior to the acceptance of
this Agreement by the Company, the Investor will immediately provide
such information to the Company.
(b) Purchaser not Created Solely to Use BC Exemption. The purchase of the
Units by the Purchaser is to be made under the exemption from
prospectus requirements available under section 74(2)(4) of the
Securities Act (British Columbia), and the Investor represents and
warrants that it is not a syndicate, partnership or other form of
unincorporated entity or organization created solely to permit the
purchase of the Units (or other similar purchases) by a group of
individuals whose individual share of the aggregate acquisition cost
of the Units is less than Cdn.$97,000.
(c) Principal Purchaser. The Investor is purchasing the Units as principal
and no other person, corporation, firm or other organization will have
a beneficial interest in the Units.
(d) Investment in Not Readily Marketable Securities Not
Disproportionate. The Investor's overall commitment to investments
that are not readily marketable is not disproportionate to the
Investor's net worth. The Investor's investment in the Units will
not cause such overall commitment to become excessive.
(e) Adequate Net Worth. The Investor has adequate net worth and means of
providing for the Investor's current needs and personal
contingencies to sustain a complete loss of the investment in the
Company at the time of investment, and the Investor has no need for
liquidity in the investment in the Units.
(f) No Notice of Acceptance. The Investor waives the need for the Company
to communicate its acceptance of the purchase of the Units pursuant to
this Agreement.
(g) Additional Documents. The Investor will execute and deliver such
agreements and other documents and things and will do or cause to be
done all such acts or things as are or may be necessary or desirable
to give effect to the provisions hereof and to carry out the intent
of this subscription offer.
5.2 Survival. The representations and warranties contained in subsection 5.1
will survive the closings.
6. Status as an Accredited Investor
6.1 Accredited Investor. By initialing the appropriate space(s) below, the
Investor represents and warrants that he/she/it is an "accredited
investor" within the meaning of Regulation D. Specifically, the Investor
represents and warrants that he/she/it qualifies under the following
category or categories of "accredited investor" (INVESTOR MUST INDICATE
THE APPLICABLE CATEGORY OR CATEGORIES BY INITIALING EACH APPLICABLE SPACE
BELOW; IF JOINT INVESTORS, BOTH PARTIES MUST INITIAL):
_____ (a) Investor is a director or executive officer of the Company;
_____ (b) Investor is a natural person whose individual income
exceeded US$200,000 in each of 1999 and 2000, or whose joint
income with spouse exceeded US$300,000 in each of those years,
and who reasonably expects to receive at least the same level
of income in 2001;
_____ (c) Investor is a natural person whose individual net worth,
or joint net worth with his or her spouse, exceeds US
$1,000,000;
_____(d) Investor is an organization or entity consisting solely of
persons who meet the requirements specified in (a), (b) or (c)
above;
_____(e) Investor is a trust, corporation or partnership with total
assets in excess of US$5,000,000 not formed for the specific
purpose of acquiring the Securities;
_____(f) Investor is another type of "accredited investor" as that
term is defined in Regulation D, namely
_________________________.
7. representations and warranties of the Company
7.1 Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
(a) Organization, Good Standing. The Company is a valid and subsisting
corporation duly incorporated and in good standing under the laws of the
jurisdictions in which it is incorporated.
(b) Due Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization,
execution, delivery of, and the performance of all obligations of the
Company under this Agreement and the authorization, issuance, reservation
and delivery of all of the Units being sold under this Agreement, will have
been taken on the closing dates, and this Agreement, when executed by the
Company, will constitute, valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
others laws of general application relating to or affecting the enforcement
of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.
7.2 Survival. The representations and warranties contained in subsection 7.1
will survive the closings.
8. MISCELLANEOUS
8.1 Time of Essence. Time is of the essence of this Agreement.
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8.2 Entire Agreement. This Agreement constitutes the entire agreement between
the Investor and the Company, or their respective representatives and
there are no other agreements, warranties, representations, conditions or
covenants, written or oral, express or implied, in respect of, or which
affect, the transactions herein contemplated, and this Agreement
supersedes and supplants any previous dealings whatsoever between the
Investor and the Company in respect of the said transactions.
8.3 Amendment in Writing. The parties to this Agreement may amend this
Agreement only in writing.
8.4 Severability. Should any part of this Agreement be declared or held
invalid for any reason, that invalidity shall not affect the validity of
the remainder which shall continue in force and effect and be construed as
if this Agreement had been executed without the invalid portion and it is
hereby declared the intention of the parties hereto that this Agreement
would have been executed without reference to any portion which may, for
any reason, be hereafter declared or held invalid.
8.5 Notice. A party to this Agreement will give all notice to or other written
communications with the other party to this Agreement concerning this
Agreement by hand or by registered mail addressed to the address given
above.
8.6 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Nevada.
8.7 Currency. All monies which are referred to in this Agreement are, unless
expressly stated otherwise, expressed in lawful money of United States of
America.
8.8 Execution by Counterpart. This Agreement may be signed by a Director of
the Company and the Investor in as many counterparts as may be necessary,
each of which so signed shall be deemed to be an original and such
counterparts together shall constitute one and the same instrument, and
notwithstanding the date of execution shall be deemed to bear the date as
set forth above.
8.9 Registered Name of Units. The Preferred Shares and Warrants, when issued,
will be registered in the name of:
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The Investor has executed this Subscription Agreement as of the 25th day of
September, 2001.
XX. XXXXXXX MOFTHAKHAR
This Subscription Agreement is accepted by the Company, on the 25th day of
September, 2001.
MARKETU INC.
per:
Xxxxxxx Xxxxxx, President and
Director
