EXHIBIT 4.2
ZIM CORPORATION
SUBSCRIPTION AGREEMENT FOR UNITS
TO: ZIM Corporation (the "CORPORATION")
00 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Fax: 000-000-0000
Aggregate Amount: US$2,250,000
Number of Units: 3,000,000
1. SUBSCRIPTION. The undersigned Purchaser (the "PURCHASER") hereby irrevocably
subscribes for and offers to purchase from the Corporation the number of units
(the "UNITS") of the Corporation set forth on the signature page hereto,
comprising of (a) one (1) common share in the capital of the Corporation
("COMMON SHARE") and (b) one (1) non-transferable warrant ("WARRANT") to
purchase one (1) Common Share at any time on or before six (6) months after the
Closing Date (as defined below) at a price equal to US$0.75 (the "EXERCISE
PRICE"). Such Warrant shall be in a form substantially similar to the terms
attached hereto as SCHEDULE "A". The Common Shares issuable upon the due
exercise of such Warrants pursuant to their terms are sometimes referred to
herein as the "UNDERLYING SECURITIES".
2. OFFERING. The Purchaser understands that the Unit forms part of a larger
offering and sale of up to US$2,250,000 of Units (the "OFFERING"). There is no
minimum aggregate Offering size.
3. REPRESENTATIONS AND WARRANTIES OF CORPORATION. In the event that the
Corporation accepts the Purchaser's subscription of Units hereunder, the
Corporation hereby represents and warrants to the Purchaser that:
3.1 Organization. The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of Canada and has full corporate
power and authority to own, lease and operate its property and assets, and to
conduct its business as now conducted. The Corporation has registered its Common
Shares pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Common Shares are traded on the OTC-BB Market.
3.2 Capitalization. The authorized, issued and outstanding capital stock of
the Corporation is as set forth in the Corporation's SEC Documents (as defined
below). There are no preemptive rights of any stockholder of the Corporation, as
such, to acquire the Corporation's Common Shares.
3.3 Authorization; Enforceability. The Corporation has all corporate right,
power and authority to enter into this Subscription Agreement and to consummate
the transactions contemplated hereby. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the (i) authorization
execution, delivery and performance of this Subscription Agreement by the
Corporation; and (ii) authorization, sale, issuance and delivery of the Unit
contemplated hereby and the performance of the Corporation's obligations
hereunder has been taken. This Subscription Agreement has been duly executed and
delivered by the Corporation and constitutes a legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. The Units, when issued and fully paid for in accordance with
the terms of this Subscription Agreement, will be validly issued, fully paid and
non-assessable. The Corporation shall, at all times when any Units remain
outstanding, have authorized and reserved for issuance a sufficient number of
Common Shares to provide for the due exercise of the Warrants comprising such
Unit pursuant to their terms. Upon any due exercise of the Warrants in
accordance with their respective terms, the Underlying Securities will be
validly issued, fully paid and non-assessable.
3.4 No Conflict; Governmental Consents.
(a) The execution and delivery by the Corporation of this Subscription
Agreement and the consummation of the transactions contemplated hereby will not
result in the violation of any material law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority to
or by which the Corporation is bound, or of any provision of the articles of
amalgamation, as amended, of the Corporation, and will not conflict with, or
result in a material breach or violation of, any of the terms or provisions of,
or constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Corporation is a party or by which it is
bound or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of the
Corporation.
3.5 (b) No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Corporation in
connection with the authorization, execution and delivery of this Subscription
Agreement or with the authorization, issue and sale of the Units or the
Underlying Securities, except such filings as may be required to be made with
any applicable securities regulatory authority, all of which filings have been
or will be timely made. Litigation. The Corporation knows of no pending or
threatened legal or governmental proceedings against the Corporation which could
materially affect the business, property, financial condition or operations of
the Corporation or which questions the validity of this Subscription Agreement
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or any agreements related to the transactions contemplated hereby or the right
of the Corporation to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby. The Corporation is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality which could affect the
business, property, financial condition or operations of the Corporation. There
is no action, suit, proceeding or investigation by the Corporation currently
pending in any court or before any arbitrator or that the Corporation intends to
initiate.
3.6 SEC Documents, Financial Statements. The Common Stock of the
Corporation is registered pursuant to Section 12(g) of the Exchange Act and the
Corporation has filed on a timely basis all reports, schedules, forms,
statements and other documents required to be filed by it with the U.S.
Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Corporation with the SEC under the
Act (all of the foregoing including filings incorporated by reference therein
being referred to herein as the "SEC Documents"). The Corporation, through its
agent, has delivered (or made available) to the Purchaser true and complete
copies of the SEC Documents (except for exhibits and incorporated documents).
The Corporation has not provided to the Purchaser any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Corporation but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Act") or the Exchange Act as the case may be and the rules and regulations of
the SEC promulgated thereunder and other federal, state and local laws, rules
and regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state 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. The financial statements of the Corporation included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Corporation as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
3.7 Absence of Certain Changes. Since November 30, 2003, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, or results of operations of the
Corporation.
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3.8 Full Disclosure. There is no fact known to the Corporation (other than
general economic conditions known to the public generally) or as disclosed in
the documents referred to in Section 3.6, that has not been disclosed in writing
to the Purchaser that (i) would reasonably be expected to have a material
adverse effect on the business or financial condition of the Corporation or (ii)
would reasonably be expected to materially and adversely affect the ability of
the Corporation to perform its obligations pursuant to this Agreement.
4. STANDSTILL. The Purchaser covenants and agrees that it will not purchase,
sell, short, or engage in any securities transactions relating to the Common
Shares whatsoever (or advise any others to do so) from the date hereof until the
Closing Time (as defined below).
5. ACCEPTANCE OF SUBSCRIPTION. The Purchaser understands and agrees that the
Corporation reserves the right, in its absolute discretion, to reject the
Purchaser's subscription for the Unit, at any time prior to the Closing Time (as
hereinafter defined) notwithstanding prior receipt by the Purchaser of notice of
acceptance of the Purchaser's subscription.
6. PAYMENT OF GROSS PROCEEDS. The gross proceeds of the issue will be paid to
the Corporation on or before the Closing Date (as hereinafter defined).
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER. By executing this Subscription
Agreement, the Purchaser acknowledges and agrees that the sale and delivery of
the Units to it or (if applicable) to any purchaser on whose behalf it is
contracting hereunder is conditional upon the sale being exempt from the
prospectus filing requirements of any applicable laws relating to the sale of
the Units or upon the issuance of such rulings, orders, consents or approvals as
may be required to permit the sale without the requirement of filing a
prospectus. The Purchaser on its own behalf and (if applicable) on behalf of
others for whom it is contracting hereunder, further represents, warrants and
covenants to the Corporation (and acknowledges that the Corporation and its
counsel are relying thereon) that:
7.1 the Units (and the Underlying Securities) will be subject to resale
restrictions under applicable laws, and the Purchaser, on its own behalf and (if
applicable) on behalf of others for whom it is contracting hereunder, agrees to
comply with all applicable laws concerning any resale of the Units or the
Underlying Securities;
7.2 the Purchaser, and (if applicable) the others for whom it is
contracting hereunder, have been advised to consult their own legal advisors
with respect to applicable resale restrictions and that it (or others for whom
it is contracting hereunder) are solely responsible and the Corporation is not
in any way responsible for compliance with applicable resale restrictions
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respecting the resale of the Units or the Underlying Securities. All subsequent
offers and sales of the Common Shares by Purchaser shall be made pursuant to
registration of the Common Shares under the Act or pursuant to an exemption from
registration;
7.3 it and any beneficial purchaser for whom it is acting have been
independently advised as to or is aware of the restrictions with respect to
trading in the Units (including the Underlying Securities) by securities
legislation in the jurisdiction in which it or such beneficial purchaser resides
and confirms that no representation has been made respecting the restrictions
with respect to trading in the Units (including the Underlying Securities) and
is aware of the risks and other characteristics of the Units and of the fact
that the Units (including the Underlying Securities) may not be sold except in
accordance with applicable laws and regulatory policy;
7.4 it and any beneficial purchaser for whom it is acting have been
furnished with all materials relating to the business, finances and operations
of the Corporation and materials relating to the offer and sale of the Units
which have been requested by the Purchaser. The Purchaser and its advisors, if
any, have been afforded the opportunity to ask questions of the Corporation and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Purchaser has also had the
opportunity to obtain and to review the Corporation's (1) Quarterly Reports on
Form 10-QSB for the two fiscal quarters ended August 31, 2003 and November 30,
2003 and (2) Current Report on Form 8-K, as amended and filed on August 13,
2003, containing the Corporation's financial statements for the fiscal year
ended May 31, 2003.;
7.5 it and any beneficial purchaser for whom it is acting are resident in
the jurisdiction set forth above the heading "Purchaser's Address" opposite its
signature on the last pages to this Subscription Agreement;
7.6 it and any beneficial purchaser for whom it is acting have relied
solely upon the publicly available information relating to the Corporation and
not upon any verbal or written representations as to fact or otherwise made by
or on behalf of the Corporation, other than the representations and warranties
of the Corporation contained herein;
7.7 it is purchasing the Units as principal for its own account and not for
the benefit of any other person (within the meaning of applicable laws), and not
with a view to the resale or distribution of all or any portion of the Units, or
if it is not purchasing as principal, it acknowledges that the Corporation may
be required by law to disclose to certain regulatory authorities the identity of
each beneficial purchaser of the Units for whom it may be acting and:
(a) if it is resident in the Province of British Columbia, it is an
"accredited investor" as such term is defined in Multilateral Instrument 45-103
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of the British Columbia and Alberta Securities Commissions, is purchasing as
principal and has properly completed and executed the British Columbia / Alberta
Accredited Investor Certificate attached as Schedule "B" to this Subscription
Agreement; or
(b) if it is resident in the Province of Alberta, it is an "accredited
investor" as such term is defined in Multilateral Instrument 45-103 of the
British Columbia and Alberta Securities Commissions, is purchasing as principal
and has properly completed and executed the British Columbia / Alberta
Accredited Investor Certificate attached as Schedule "B" to this Subscription
Agreement; or
(c) if it is resident in the Province of Saskatchewan,
(i) it is an individual or a corporation, the Purchaser is
purchasing a Unit for an aggregate acquisition cost to the Purchaser of
not less than Cdn$150,000, is purchasing as principal and has status as
an exempt purchaser in the Province of Saskatchewan; or
(ii) it is purchasing as principal and has status as an exempt
purchaser in the Province of Saskatchewan; or
(iii) it is purchasing as principal and is a syndicate,
partnership or other unincorporated organization, each member of which
syndicate, partnership or other unincorporated organization is an
individual who has contributed for the purchase of the Unit an amount
not less than Cdn$150,000; or
(iv) it is not purchasing as principal and is a trust
corporation licensed pursuant to the Trust and Loan Corporations Act
(Saskatchewan) or a portfolio manager or person who or Corporation
that, but for the applicability of an exemption pursuant to The
Securities Act, 1988 (Saskatchewan), would be obliged to be registered
as a portfolio manager, and it is purchasing the Unit as trustee or as
agent for accounts fully managed by it and the acquisition cost for
each account is not leas than Cdn$150,000; or
(v) it is a portfolio manager who manages the investment
portfolios of clients through discretionary authority granted by one or
more clients and is registered as a portfolio manager under The
Securities Act, 1988 (Saskatchewan) or is a person or Corporation that
is not required to be registered or is exempt from registration;
(d) if it is a resident in the Province of Manitoba,
(i) it is an individual or a corporation, it is purchasing a
Unit with an aggregate acquisition cost to the Purchaser of not less
than Cdn$97,000 and it is purchasing the Units for bona fide investment
purposes and not with a view to resale; or
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(ii) it is a corporation, partnership or unincorporated
association, organization or syndicated, it was not incorporated or
created solely to permit the purchase of the Units without the need for
the filing of a prospectus or if a corporation incorporated or created
for such a purchase, each shareholder of such corporation is an
individual who has contributed at least Cdn$97,000 to such corporation
for the purpose of investment by such corporation in such Units and the
Purchaser is purchasing the Units for bona fide investment purposes and
not with a view to resale; or
(iii) it is purchasing as principal and has status as an
exempt purchaser in the Province of Manitoba; or
(iv) if it is not purchasing as principal, it is a trust
Corporation registered under Part XVI of The Corporations Act
(Manitoba) and is purchasing the Unit as trustee for accounts fully
managed by it;
(e) if it is resident in the Province of Ontario, it is an "accredited
investor" as such term is defined in Ontario Securities Commission Rule 45-501,
is purchasing as principal and has properly completed and executed the Ontario
Accredited Investor Certificate attached as Schedule "C" to this Subscription
Agreement. Furthermore, the Purchaser acknowledges that the Units (and the
Underlying Securities) are subject to restrictions on resale to purchasers
resident in the Province of Ontario and hereby covenants to the Corporation it
will not resell the Units (or the Underlying Securities) to any Ontario resident
for a period of at least 90 days after the Closing Date;
(f) if it is a resident in the Province of Quebec, it is a "sophisticated
purchaser" within the meaning of Section 44 of the Securities Act (Quebec), or
is a "sophisticated purchaser" within the meaning of Section 45 of the
Securities Act (Quebec) purchasing for the portfolio of a person managed solely
by it, or is purchasing from a Quebec registered dealer with an unrestricted
practice, Units with an aggregate acquisition cost to the Purchaser of at least
Cdn$150,000;
(g) if it is resident in the Province of Xxxxxx Xxxxxx Island or
the Province of New Brunswick, it is purchasing as principal a Unit with an
aggregate acquisition cost to the Purchaser of not less than Cdn$97,000; or
(h) if it is resident in the United States, it is (i) an "accredited
investor" as that term is defined in Rule 501 of the General Rules and
Regulations under the Act by reason of Rule 501(a)(3), and (ii) experienced in
making investments of the kind described in this Agreement and the related
documents, and (iii) able, by reason of the business and financial experience of
its officers (if an entity) and professional advisors (who are not affiliated
with or compensated in any way by the Corporation or any of its affiliates or
selling agents), to protect its own interests in connection with the
transactions described in this Agreement, and the related documents,
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7.8 it acknowledges that the Units and each of the Underlying Securities
will be subject to resale restrictions imposed under applicable laws and rules
of regulatory bodies having jurisdiction and it covenants that it will not
resell the Unit or any of the Underlying Securities except in accordance with
the provisions of applicable laws;
7.9 if required by applicable laws, policy or order or by the Corporation,
it will execute, deliver and file, or assist the Corporation in filing, or
provide to the Corporation such reports, undertakings and other documents with
respect to the issue of the Units or any of the Underlying Securities as may be
required by any securities commission, or other regulatory authority;
7.10 if an individual, the Purchaser has attained the age of majority and
is legally competent to execute this Subscription Agreement and to take all
actions required pursuant hereto and if a corporation, it has been duly
incorporated and validly exists under the laws of its jurisdiction of
incorporation, all necessary approvals by its directors and shareholders have
been obtained for the execution and delivery of this Subscription Agreement and
the individual signing this Subscription Agreement is duly authorized to do so;
7.11 upon acceptance by the Corporation, this Subscription Agreement will
constitute a legal, valid and binding contract of the Purchaser enforceable
against the Purchaser in accordance with its terms and will not violate or
conflict with the terms of any restriction, agreement or undertaking respecting
purchasers of securities by the Purchaser;
7.12 it is responsible for obtaining such legal advice as it considers
necessary in connection with the execution, delivery and performance by it of
this Subscription Agreement and the transactions contemplated hereunder and, if
it is not resident in Canada, it represents and warrants that such execution,
delivery and performance shall not contravene any applicable laws of the
jurisdiction in which it is resident;
7.13 in the case of a purchase by it of the Units as principal, this
Subscription Agreement has been duly and validly authorized, executed and
delivered by and constitutes a legal, valid, binding and enforceable obligation
of the Purchaser;
7.14 in the case of a purchase by it of the Units acting as a trustee or
agent for a disclosed principal, it is duly authorized to execute and deliver
this Subscription Agreement and all other necessary documentation in connection
with such purchase on behalf of such principal and this Subscription Agreement
has been duly authorized, executed and delivered by or on behalf of, and
constitutes a legal, valid, binding and enforceable agreement of, such
principal;
7.15 it has such knowledge in financial and business affairs as to be
capable of evaluating the merits and risks of its investment and it, or, where
it is not purchasing as principal, each beneficial purchaser, is able to bear
the economic risk of loss of its investment;
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7.16 if required by any applicable laws, it will execute, deliver, file and
otherwise assist the Corporation in filing within the applicable limitations of
time, such reports, undertakings and other documents with respect to the issue
of the Units as may be required.
The Purchaser agrees that the above representations, warranties and
covenants will be true and correct both as of the execution of this Subscription
Agreement and as of the Closing Time, as hereinafter defined, and will survive
the completion of the issuance of the Units.
The foregoing representations, warranties and covenants are made by the
Purchaser with the intent that they be relied upon in determining its
suitability as a purchaser of the Units and the Purchaser hereby agrees to
indemnify the Corporation, its officers, employees, directors and agents,
against all losses, claims, costs, expenses and damages or liabilities which any
of them may suffer or incur caused or arising from reliance thereon. The
Purchaser further agrees that by accepting the Units on the Closing Date, it
shall be representing and warranting that the foregoing representations and
warranties are true as at the Closing Date with the same force and effect as if
they had been made by the Purchaser at the Closing Time. Furthermore, the
Purchaser undertakes to notify the Corporation immediately at the addresses
first set forth above of any change in any representation, warranty or other
information relating to the Purchaser set forth herein which takes place prior
to the Closing Time.
8. CLOSING.
8.1 The sale of the Units will be completed at the offices of XxXxxxx
Xxxxxxxxx LLP, counsel to the Corporation, at 10:00 a.m. (Ottawa time) (the
"CLOSING TIME") on January 30, 2004 (the "CLOSING DATE") or such other date and
time as the Corporation and the Purchaser may agree. If this subscription is
accepted by the Corporation, the Corporation will deliver to the Purchaser
definitive certificates representing each of the Common Shares and the Warrants
comprising the Units purchased hereby and such other documentation as may be
required, within five days following the registration of the Common Shares. If
this subscription is not accepted by the Corporation within three days following
the scheduled Closing Date, any cheques, bank drafts or wire transfers delivered
by the Purchaser to the Corporation representing the purchase price for the Unit
will be promptly returned to the Purchaser without interest. The Purchaser
acknowledges that the Offering may be completed in one or more closings with the
final such closing to take place not later than March 31, 2004.
8.2 The Purchaser agrees to deliver to the Corporation, at 00 Xxxxxxxxx
Xxxx, Xxxxx 000 Xxxxxx, Xxxxxxx Xxxxxx X0X 0X0, Fax: 000-000-0000, Attention:
Chief Financial Officer, not later than 12:00 p.m. (Ottawa time) on January 28,
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2004: (i) this duly completed and executed Subscription Agreement, (ii) a duly
completed and executed accredited investor certificate in Schedule "B" or "C" as
applicable; (iii) any other documents reasonably required by the Corporation;
and (iv) a certified cheque, bank draft or wire transfer payable to the
Corporation for the Purchase Price and payable on or before the Closing Date,
(or such other date as the Corporation may advise) in same day freely
transferable funds, or make payment of the same amount in such other manner as
is acceptable to the Corporation.
9. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Purchaser acknowledges that (1) the Units
have not been registered under the provisions of the Act and that neither the
Units nor the Underlying Securities may be transferred, in whole or in part,
unless (A) subsequently registered thereunder, as provided for herein, or (B)
the Purchaser shall have delivered to the Corporation an opinion of counsel,
reasonably satisfactory in form, scope and substance to the Corporation, to the
effect that the securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; and (2) any sale of the Common
Shares made in reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Common Shares under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the Act, may require compliance with some
other exemption under the Act or the rules and regulations of the SEC
thereunder.
b. Restrictive Legend. The Purchaser acknowledges and agrees that until
such time as the Common Shares have been registered under the Act as
contemplated hereby and sold in accordance with an effective registration
statement ("Registration Statement"), the Common Shares included in the Units
and Underlying Securities shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
Common Shares):
THESE SHARES (THE "SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.
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c. Reporting Status. So long as the Purchaser beneficially owns any of the
Units, the Corporation shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, and the Corporation shall
not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.
10. COVENANT TO REGISTER.
a. For purposes of this Section, the following definitions shall apply:
(i) The terms "register," "registered," and "registration"
refer to a registration under the Act, effected by preparing and filing a
registration statement or similar document in compliance with the 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
included in the Units and the Underlying Securities, and any securities of the
Corporation 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 Shares.
(iii) The term "holder of Registrable Securities" means
Purchaser and any permitted assignee of registration rights pursuant to Section
10(g).
b. (i) The Corporation shall use its best efforts to prepare and
file a registration statement with the SEC on Form SB-2 within thirty (30) days
of the date hereof and cause such registration statement to become effective as
soon as possible, but no later than one hundred and fifty (150) days from the
date of this Agreement.
(ii) The Corporation may suspend the effectiveness of any
registration effected pursuant to this 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. The Corporation will use its best efforts to cause such suspension to
terminate at the earliest possible date.
c. Whenever required under this Section 5 to effect the registration of any
Registrable Securities, the Corporation shall, as expeditiously as reasonably
possible:
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(i) Prepare and file with the SEC a registration statement or
amendment thereto with respect to such Registrable Securities and use its best
efforts to cause such registration to become effective as provided in Section
10(b)(i) hereof, and 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; provided, however, that in no event
shall the Corporation be required to keep the Registration statement effective
for a period greater than three (3) years from the Closing Date;
(ii) 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 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) Furnish to each holder of Registrable Securities such
numbers of copies of a current prospectus, including a preliminary prospectus,
conforming with the requirements of the Act, copies of the registration
statement any amendment or supplement to any thereof 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;
(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 as shall be reasonably requested by the
holder of Registrable Securities;
(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 then existing, and use its best efforts to promptly update and/or
correct such prospectus.
d. Upon request of the Corporation, each holder of Registrable Securities
will furnish to the Corporation in connection with any registration under this
Section such information regarding itself, the Registrable Securities and other
securities of the Corporation 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.
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e. (i) To the fullest extent permitted by law, the Corporation shall
indemnify, defend and hold harmless each holder of Registrable Securities which
are included in a registration statement 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 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 Corporation 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 so made
in strict conformity with information furnished by such indemnified party in
writing specifically for use in the registration statement.
(ii) In the event of any registration under the Act of
Registrable Securities, each holder of such Registrable Securities hereby
severally agrees to indemnity, defend and hold harmless the Corporation, and its
officers, directors, employees, agents, partners, or controlling persons (within
the meaning of the Act) (each, an "indemnified party") from and against, and
shall reimburse such indemnified party with respect to, any and all Liabilities
to which such indemnified party may become subject under the 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, 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 specifically for use in the
preparation thereof, and such Liability may in no event exceed the value of the
Registrable Securities so registered.
(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 such party shall not relieve such 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 an indemnifying party is materially prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and such indemnified party shall notify an 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
defense thereof with counsel reasonably satisfactory to such indemnified party,
and, after notice from the indemnifying party to the indemnified party of its
13
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 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 parties and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to them which are
different from or additional to those available to the indemnifying party or if
the interests 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 one such separate counsel and other reasonable expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
f. (i) With respect to the inclusion of Registrable Securities in a
registration statement, all fees, costs and expenses of and incidental to such
registration, inclusion and public offering shall be borne by the Corporation;
provided, however, that any security holders 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.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (f) shall include, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and accountants for the Corporation, and all legal fees
and disbursements and other expenses of complying with state securities or Blue
Sky laws of any jurisdiction or jurisdictions in which securities to be offered
are to be registered and qualified. Subject to appropriate agreements as to
confidentiality, the Corporation shall make available to the holders of
Registrable Securities and their counsel its documents and personnel for due
diligence purposes, provided that the fees and disbursements of counsel and
accountants for the selling security holders shall be borne by the respective
selling security holders.
14
g. The rights to cause the Corporation to register all or any portion of
Registrable Securities pursuant to this Section 10 may be assigned by Purchaser
to a proper transferee or assignee as described herein. Within a reasonable time
after such transfer, the Purchaser shall notify the Corporation of the name and
address of such transferee or assignee, and the securities with respect to which
such registration rights are being assigned. Such assignment shall be effective
only if, (i) the Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Corporation
within a reasonable time after such transfer or assignment (subject to the
purchase price of the shares being kept confidential by the Purchaser and such
transferee or assignee, (ii) the Corporation is, within a reasonable time after
such transfer or assignment, furnished with written notice of (A) the name and
address of such transferee or assignee, (B) the Registrable Securities with
respect to which such registration rights are being assigned, (iii) following
such transfer or assignment, the further disposition of the Registrable
Securities by the transferee or assignee is restricted under the 1933 Act and
applicable state securities laws, (iv) at or before the time that the
Corporation receives the written notice contemplated by clause (ii) of this
sentence the transferee or assignee agrees in writing with the Corporation to be
bound by all of the provisions contained herein, (v) such transfer shall have
been made in accordance with the applicable requirements of the purchase
agreement covering the transaction and (vi) such transferee shall be an
"accredited investor", as that term is defined in Rule 501 of Regulation D,
promulgated under the Act.
11. FACSIMILE COPIES. The Corporation shall be entitled to rely on delivery of a
facsimile copy of this executed Subscription Agreement, and acceptance by the
Corporation of such facsimile shall be legally effective to create a valid and
binding agreement between the Purchaser and the Corporation in accordance with
the terms hereof.
12. COSTS AND FEES. The Purchaser hereby acknowledges and agrees that it shall
bear all costs and expenses incurred by it (including any fees and disbursements
of any special counsel retained by it) relating to the sale of the Unit to the
Purchaser.
13. CURRENCY. All dollar amounts set out herein are stated in United States
currency, unless otherwise indicated.
15
14. LAWS. The contract arising out of this Subscription Agreement shall be
governed by and construed in accordance with the laws of the Province of Ontario
and the laws of Canada applicable therein. The Purchaser and any beneficial
purchaser for whom it is acting hereby irrevocably attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario with respect to any
matters arising out of this Subscription Agreement. Time shall be of the essence
hereof. This Subscription Agreement, together with the agreements referred to
herein, contains the entire agreement of the parties hereto relating to the
subject matter hereof and there are no representations covenants or other
agreements relating to the subject matter hereof except as herein or therein set
out.
15. SURVIVAL. The covenants, representations and warranties contained herein
shall survive the closing of the transactions contemplated hereby.
16. ASSIGNMENT. The obligations under this Subscription Agreement are not
transferable or assignable by the parties hereto. The benefits under this
Subscription Agreement are transferable and assignable by the parties hereto,
subject to applicable law.
17. PURCHASE PRICE. The Purchaser hereby offers to purchase the Units, and
irrevocably instructs you with respect to registration and delivery of the Units
as set forth below.
16
-------------------------------------------------- --------------------------------------------------
Full Name of Purchaser Purchaser's Address
_________________________Number of Units
Subscribed For
--------------------------------------------------
-------------------------------------------------- --------------------------------------------------
Contact Name Telephone Number
DETAILS OF BENEFICIAL PURCHASER
IF NOT SAME AS PURCHASER (ATTACH A SEPARATE PAGE IF NECESSARY)
------------------------------------------------------ ------------------------------------------------------
Full Name - Please print Address
REGISTRATION INSTRUCTIONS: DELIVERY INSTRUCTIONS:
------------------------------------------------------ ------------------------------------------------------
Full Name Instructions
------------------------------------------------------ ------------------------------------------------------
Account Reference, if applicable Account Reference, if applicable
------------------------------------------------------ ------------------------------------------------------
Address Contact Name
------------------------------------------------------ ------------------------------------------------------
Telephone Number
DATED at _____________________ this ____ day of ____________, 2004.
----------------------------------------------------------------------
Full Name of Purchaser (please print)
----------------------------------------------------------------------
Authorized Signature
----------------------------------------------------------------------
Official Capacity if Purchaser is not an individual (please print)
----------------------------------------------------------------------
Please print name of individual whose signature appears above if
different than the name of the Purchaser printed above.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
17
18. ZIM Corporation hereby confirms and agrees to the above Subscription
Agreement as of the ____ day of January, 2004.
ZIM CORPORATION
Per:
-----------------------------------------
18
SCHEDULE "A"
The Warrant and the securities issuable upon exercise of this Warrant (the
"Securities") have not been registered under the United States Securities Act of
1933, as amended (the "US Securities Act") or under any state securities or Blue
Sky laws ("Blue Sky Laws"). No transfer, sale, assignment, pledge, hypothecation
or other disposition of this Warrant or the Securities or any interest therein
may be made except (a) pursuant to an effective registration statement under the
US Securities Act and any applicable Blue Sky Laws or (b) if the Corporation has
been furnished with both an opinion of counsel for the holder, which opinion and
counsel shall be reasonably satisfactory to the Corporation, to the effect that
no registration is required because of the availability of an exemption from
registration under the US Securities Act and applicable Blue Sky Laws, and
assurances that the transfer, sale, assignment, pledge, hypothecation or other
disposition will be made only in compliance with the conditions of any such
registration or exemption.
WARRANT TO PURCHASE COMMON SHARES IN THE CAPITAL
OF ZIM CORPORATION
WARRANT NO. ___ Ottawa, Ontario
[ ], 2004
This certifies that, for value received, _____________________________
(the "Holder") is entitled to purchase from ZIM Corporation (the "Corporation"),
up to ___________________________________ (______) fully paid and non-assessable
common shares (the "Common Shares") in the capital of the Corporation at an
exercise price of US$0.75 per Common Share (the "Exercise Price"), subject to
adjustment as herein provided. This Warrant may be exercised by Holder at any
time on or before July 30, 2004 (the "Expiry Date") after which Exercise Date
all rights under this Warrant shall terminate and be of no further force or
effect.
This Warrant is subject to the following provisions, terms and
conditions:
1.Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Holder, in whole or in part (but not as to a fractional Common
Share), at any time prior to the Expiry Date, by the surrender of this Warrant
(properly endorsed, if required, at the Corporation's principal office in
Ottawa, Ontario, or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the Holder at the address of
such Holder appearing on the books of the Corporation at any time within the
period above named), and upon payment to it by certified check, bank draft, wire
transfer or cash of the purchase price for such Common Shares. The Corporation
agrees that the Common Shares so purchased shall have been and are hereby deemed
to be issued to the Holder as the record owner of such Common Shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such Common Shares as aforesaid (the "Exercise Date").
Certificates for the Common Shares so purchased shall be delivered to the Holder
within a reasonable time, not exceeding ten (10) business days, after the rights
represented by this Warrant shall have been so exercised, and, unless this
Warrant has expired, a new Warrant representing the number of Common Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be delivered to the Holder within such time. The Corporation may require
that any such new Warrant or any certificate for Common Shares purchased upon
the exercise hereof bear legends substantially similar to those contained on the
face of this Warrant.
2. No Transfer. This Warrant is non-transferable.
3. Certain Covenants of the Corporation. The Corporation covenants and
agrees that all Common Shares which may be issued upon the exercise of the
rights represented by this Warrant, upon issuance and full payment for the
Common Shares so purchased, will be duly authorized and issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue hereof, except those that may be created by or imposed upon the Holder or
its property. The Corporation further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Corporation will at all times have authorized and reserved, free of preemptive
or other rights, for the exclusive purpose of issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of Common Shares
to provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Exercise Price and Number of Common Shares. The
Exercise Price and number of Common Shares which may be purchased pursuant to
the rights represented by this Warrant are subject to the following adjustments:
(a) Adjustment of Exercise Price for Stock Dividend, Stock
Split or Stock Combination. In the event that (i) any dividends on any class of
shares of the Corporation payable in Common Shares or securities convertible
into or exercisable for Common Shares ("Common Share Equivalents") shall be paid
by the Corporation, (ii) the Corporation shall subdivide its then outstanding
Common Shares into a greater number of shares, or (iii) the Corporation shall
combine its outstanding Common Shares, by reclassification or otherwise, then,
in each such event, the Exercise Price in effect immediately prior to such event
shall (until adjusted again pursuant hereto) be adjusted immediately after such
event to a price (calculated to the nearest full cent) determined by dividing
(a) the number of Common Shares outstanding immediately prior to such event,
multiplied by the then existing Exercise Price, by (b) the total number of
Common Shares outstanding immediately after such event, and the resulting
quotient shall be the adjusted Exercise Price per share. No adjustment of the
Exercise Price shall be made if the amount of such adjustment shall be less than
1% of the Exercise Price then in effect, but in such case any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which,
together with any adjustment or adjustments so carried forward, shall amount to
not less than 1% of the Exercise Price then in effect.
(b) Adjustment of Number of Shares Purchasable on Exercise of
Warrants. Upon each adjustment of the Exercise Price pursuant to this Section,
the Holder shall thereafter (until another such adjustment) be entitled to
purchase at the adjusted Exercise Price the number of Common Shares, calculated
to the nearest full share, obtained by multiplying the number of Common Shares
specified in such Warrant (as adjusted as a result of all adjustments in the
Exercise Price in effect prior to such adjustment) by the Exercise Price in
effect prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(c) Notice as to Adjustment. Upon any adjustment of the
Exercise Price and any increase or decrease in the number of Common Shares
purchasable upon the exercise of the Warrant, then, and in each such case, the
Corporation shall, as soon as practicable (and in any event within seven days)
after the occurrence of any event which requires an adjustment pursuant to this
Section 4, give written notice thereof to each Holder as shown on the books of
the Corporation, which notice shall state the adjusted Exercise Price and the
increased or decreased number of Common Shares purchasable upon the exercise of
the Warrants, and shall set forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
(d) Effect of Reorganization, Reclassification, Merger, etc.
If at any time while this Warrant is outstanding there should be (i) any capital
reorganization of the Corporation (other than the issuance of any Common Shares
in subdivision of outstanding Common Shares by reclassification or otherwise and
other than a combination of shares provided for in Section 4(a) hereof), (ii)
any consolidation or merger of the Corporation with another corporation, or any
sale, conveyance, lease or other transfer by the Corporation of all or
substantially all of its property to any other corporation, which is effected in
such a manner that the holders of Common Shares shall be entitled to receive
cash, shares, securities, or assets with respect to or in exchange for Common
Shares, or (iii) any dividend or any other distribution upon any class of shares
of the Corporation payable in shares of the Corporation of a different class,
other securities of the Corporation, or other property of the Corporation (other
than cash), then, as a part of such transaction, lawful provision shall be made
so that Holder shall have the right thereafter to receive, upon the exercise
hereof, the number of shares or other securities or property of the Corporation,
or of the successor corporation resulting from such consolidation or merger, or
of the corporation to which the property of the Corporation has been sold,
conveyed, leased or otherwise transferred, as the case may be, which the Holder
would have been entitled to receive upon such capital reorganization,
consolidation, merger, sale, conveyance, lease or other transfer, if this
Warrant had been exercised immediately prior to such capital reorganization,
consolidation, merger, sale, conveyance, lease or other transfer, or dividend
payment or other distribution. In any such case, appropriate adjustments (as
determined by the Board) shall be made in the application of the provisions set
forth in this Warrant (including the adjustment of the Exercise Price and the
number of Common Shares issuable upon the exercise of the Warrant) to the end
that the provisions set forth herein shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
deliverable upon the exercise of the Warrant as if the Warrant had been
exercised immediately prior to such capital reorganization, consolidation,
merger, sale, conveyance, lease or other transfer, or dividend payment or other
distribution and the Holder had carried out the terms of the exchange as
provided for by such capital reorganization, consolidation or merger. The
Corporation shall not effect any such capital reorganization, consolidation,
merger, sale, conveyance, lease or other transfer, or dividend payment or other
distribution unless, upon or prior to the consummation thereof, the successor
corporation or the corporation to which the property of the Corporation has been
sold, conveyed, leased or otherwise transferred shall assume by written
instrument the obligation to deliver to the Holder such shares, securities, cash
or property as in accordance with the foregoing provisions such Holder shall be
entitled to purchase.
5. No Rights as Shareholders. This Warrant shall not entitle the Holder
as such to any voting rights or other rights as a shareholder of the
Corporation.
6. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
7. Amendments and Waivers. The provisions of this Warrant may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Corporation agrees in writing
and has obtained the written consent of the Holder.
8. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the Holder
shall be mailed, delivered, or telecopied and confirmed to the Holder at his or
her address set forth on the records of the Corporation; or if sent to the
Corporation shall be mailed, delivered, or telecopied and confirmed to the head
office of the Corporation, or to such other address as the Corporation or the
Holder shall notify the other as provided in this Section.
9. Restrictions on Transfer. Neither this Warrant nor the Common Shares
issuable on exercise of this Warrant have been registered under the U.S.
Securities Act or any other securities laws (the "Acts"). Neither this Warrant
nor the Common Shares purchasable hereunder may be sold, transferred, pledged or
hypothecated in the absence of (a) an effective registration statement for this
Warrant or Common Shares purchasable hereunder, as applicable, under the Acts,
or (b) an opinion of counsel reasonably satisfactory to the Corporation that
registration is not required under such Acts. In addition, neither this Warrant
nor any of the rights accruing hereunder may be sold, transferred, pledged or
hypothecated. Each certificate evidencing shares of Common Stock purchased
hereunder will bear a legend describing the restrictions on transfer contained
in this paragraph unless, in the opinion of counsel reasonably acceptable to the
Corporation, the shares need no longer to be subject to the transfer
restrictions
10. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
the Corporation of the loss, theft, destruction or mutilation of this Warrant,
and of indemnity reasonably satisfactory to the Corporation, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant if mutilated, the
Corporation shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
IN WITNESS WHEREOF, ZIM Corporation has caused this Warrant to be
signed by its duly authorized officer in the date set forth above.
ZIM CORPORATION
By: _____________________________________
Its: _____________________________________
SUBSCRIPTION FORM
To be signed only upon exercise of Warrant.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ____________________ common shares in the capital of ZIM
Corporation (the "Shares") to which such Warrant relates and herewith makes
payment of US$_____________ therefore in cash, certified check, bank draft or
wire transfer and requests that a certificate evidencing the Shares be delivered
to, ____________________________, the address for whom is set forth below the
signature of the undersigned:
Dated: ____________________
-----------------------------------
(Signature)
-----------------------------------
-----------------------------------
(Address)
SCHEDULE "B"
BRITISH COLUMBIA / ALBERTA ACCREDITED INVESTOR CERTIFICATE
TO: ZIM CORPORATION (THE "CORPORATION")
In connection with the proposed purchase of securities of the
Corporation, the undersigned (the "Purchaser") hereby represents and warrants to
the Corporation as follows:
1. This British Columbia / Alberta Accredited Investor Certificate is Schedule
B to the Subscription Agreement among the Purchaser and the Corporation
dated as of the date hereof.
-- -- --
2. The Purchaser is: an individual: | | OR a corporation: | | OR a partnership: | |
-- -- --
(please check one) OR
-- --
OR a trust: | | OR none of the foregoing: | |
-- --
3. If the Purchaser is an individual, (please check all that apply):
(a) the Purchaser is a person registered under the securities legislation of
any jurisdiction of Canada as an "adviser" or "dealer", other than a
limited market dealer registered under the Securities Act (Ontario) (check
here) __________; OR
(b) the Purchaser is a person registered or formerly registered under the
securities legislation of any jurisdiction of Canada as a representative of
a person or Corporation referred to paragraph 3(b) or 4(e) (check here)
__________; OR
(c) the Purchaser beneficially owns, either individually or jointly with a
spouse, directly or indirectly, financial assets having an aggregate
realizable value that, before taxes, but net of any related liabilities, in
excess of CDN$1,000,000 (check here) __________; OR
(d) the Purchaser had net income before taxes in each of the two most recent
years in excess of CDN$200,000 and has a reasonable expectation of
exceeding the same net income level in the current year (check here)
__________; OR
(e) the Purchaser, together with the Purchaser's spouse, had net income before
taxes in each of the two most recent years in excess of CDN$300,000 and has
a reasonable expectation of exceeding the same net income level in the
current year (check here) __________; OR
2
(f) the Purchaser is none of the above (check here) __________.
4. If the Purchaser is not an individual, (please check all that apply):
(a) the Purchaser is a Canadian financial institute or an authorized foreign
bank listed in Schedule III of the Bank Act (Canada) (check here)
__________; OR
(b) the Purchaser is the Business Development Bank of Canada incorporated under
the Business Development Bank of Canada Act (Canada) (check here)
__________; OR
(c) the Purchaser is an association under the Cooperative Credit Associations
Act (Canada) located in Canada (check here) __________; OR
(d) the Purchaser is a subsidiary of a person or Corporation referred to in
paragraphs 4(a) to (c), if the person or Corporation owns all of the voting
securities of the subsidiary, except the voting securities required by law
to be owned by directors of that subsidiary (check here) __________; OR
(e) the Purchaser is a person or Corporation registered under the securities
legislation of any jurisdiction of Canada as an "adviser" or "dealer",
other than a limited market dealer registered under the Securities Act
(Ontario) (check here) __________; OR
(f) the Purchaser is the government of Canada or a province or any crown
corporation or agency of the government of Canada or a province (check
here) __________; OR
(g) the Purchaser is a municipality, public board or commission in Canada
(check here) __________; OR
(h) the Purchaser is any national, federal, state, provincial, territorial or
municipal government of or in any foreign jurisdiction, or any agency of
that government (check here) __________; OR
(i) the Purchaser is a pension fund that is regulated by either the Office of
the Superintendent of Financial Institutions (Canada) or a provincial
pension commission or similar regulatory authority (check here) __________;
OR
(j) the Purchaser is a registered charity under the Income Tax Act (Canada)
(check here) __________; OR
(k) the Purchaser is a corporation, limited partnership, limited liability
partnership, trust or estate, other than a mutual fund or non-redeemable
investment fund, that had net assets reflected in its most recently
prepared financial statements in excess of CDN$5,000,000 (check here)
__________; OR
3
(l) the Purchaser is a mutual fund or non-redeemable investment fund that, in
the local jurisdiction, distributes its securities only to persons or
companies that are "accredited investors" (check here) __________; OR
(m) the Purchaser is a mutual fund or non-redeemable investment fund that, in
the local jurisdiction, distributes its securities under a prospectus for
which the regulator has issued a receipt (check here) __________; OR
(n) the Purchaser is an entity organized in a foreign jurisdiction that is
analogous to any of the entities referred to in paragraphs 4(a) through (e)
and paragraph 4(i) hereof in form and function (check here) __________; OR
(o) the Purchaser is person or Corporation in respect of which all of the
owners of interests, direct or indirect, legal or beneficial, are persons
or companies that are accredited investors (check here) __________; OR
(p) the Purchaser is none of the above (check here) __________.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
4
DATED at _________________________, this _____ day of ________________, 2004.
Signed: _________________________
Name: _________________________
For: _________________________
Title: _________________________
0
XXXXXXXX "X"
XXXXXXX ACCREDITED INVESTOR CERTIFICATE
TO: ZIM CORPORATION (THE "CORPORATION")
In connection with the proposed purchase of securities of the
Corporation, the undersigned (the "Purchaser") hereby represents and warrants to
the Corporation as follows:
1. This Ontario Accredited Investor Certificate is Schedule "C" to the
Subscription Agreement among the Purchaser and the Corporation dated as of
the date hereof.
-- -- --
2. The Purchaser is: an individual: | | OR a corporation: | | OR a partnership: | |
-- -- --
(please check one) OR
-- --
OR a trust: | | OR none of the foregoing: | |
-- --
3. If the Purchaser is an individual, (please check all that apply):
(a) the Purchaser beneficially owns, either individually or together with a
spouse, financial assets having an aggregate realizable value that, before
taxes but net of any related liabilities, in excess of CDN$1,000,000 (check
here) __________; OR
(b) the Purchaser net had income before taxes in each of the two most recent
years in excess of CDN$200,000 and has a reasonable expectation of
exceeding the same net income level in the current year (check here)
__________; OR
(c) the Purchaser, together with the Purchaser's spouse, had income before
taxes in each of the two most recent years in excess of CDN$300,000 and has
a reasonable expectation of exceeding the same net income level in the
current year (check here) __________; OR
(d) the Purchaser is a person registered under the Securities Act (Ontario) or
securities legislation in another jurisdiction as an "adviser" or "dealer",
other than a limited market dealer (check here) __________; OR
(e) the Purchaser is an individual who has been granted registration under the
Securities Act (Ontario) or securities legislation in another jurisdiction
as a representative of a person or Corporation referred to in paragraph
3(d) or 4(g) hereof, whether or not such individual's registration is still
in effect (check here) __________; OR
(f) the Purchaser is a promoter of the Corporation (check here) __________; OR
(g) the Purchaser is a spouse, parent, grandparent or child of an officer,
director or promoter of the Corporation (check here) __________; OR
(h) the Purchaser is a person that is recognized by the Ontario Securities
Commission as an accredited investor (check here) __________; OR
(i) the Purchaser is a director, officer, employee or consultant of ZIM or a
subsidiary of ZIM (the Corporation and its subsidiaries are referred to as
the "ZIM Group"). "Officer" means the chair, any vice-chair of the board of
directors, the president, any vice-president, the secretary, assistant
secretary, the treasurer, assistant treasurer or general manager, any
individual designated as an officer by the by-laws of the Corporation (or
another company within the ZIM Group), or any other individual acting in a
similar capacity. "Consultant" means an individual who is engaged to
provide on a bona fide basis consulting, technical, management or other
services to the Corporation (or another company within the ZIM Group),
under a written contract with the Corporation (or another company within
the ZIM Group); OR
(j) the Purchaser is none of the above (check here) __________.
4. If the Purchaser is not an individual, (please check all that apply):
(a) the Purchaser is a bank listed in Schedule I or II of the Bank Act (Canada)
or an authorized foreign bank listed in Schedule III of that Act (check
here) __________; OR
(b) the Purchaser is the Business Development Bank of Canada incorporated under
the Business Development Bank of Canada Act (Canada) (check here)
__________; OR
(c) the Purchaser is a loan corporation or trust corporation registered under
the Loan and Trust Corporations Act (Ontario) or under the Trust and Loan
Companies Act (Canada) or under comparable legislation in any other
jurisdiction (check here) __________; OR
(d) the Purchaser is a co-operative credit society, credit union central,
federation of caisses populaires, credit union or league, or regional
caisse populaire, or an association under the Cooperative Credit
Associations Act (Canada), in each case, located in Canada (check here)
__________; OR
(e) the Purchaser is a Corporation licensed to do business as an insurance
Corporation in any jurisdiction (check here) __________; OR
(f) the Purchaser is a subsidiary of any Corporation referred to in paragraphs
4(a) to (f) hereof, where the Corporation owns all of the voting shares of
the subsidiary (check here) __________; OR
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(g) the Purchaser is a person or Corporation registered under the Securities
Act (Ontario) or securities legislation in another jurisdiction as an
"adviser" or "dealer", other than a limited market dealer (check here)
__________; OR
(h) the Purchaser is a person or Corporation registered under the Securities
Act (Ontario) or securities legislation in another jurisdiction as an
adviser or dealer, other than a limited market dealer (check here)
__________; OR
(i) the Purchaser is the government of Canada or of any jurisdiction, or any
crown corporation, instrumentality or agency of a Canadian federal,
provincial or territorial government (check here) __________; OR
(j) the Purchaser is any Canadian municipality or any Canadian provincial or
territorial capital city (check here) __________; OR
(k) the Purchaser is any national, federal, state, provincial, territorial or
municipal government of or in any foreign jurisdiction, or any
instrumentality or agency thereof (check here) __________; OR
(q) the Purchaser is a pension fund that is regulated by either the Office of
the Superintendent of Financial Institutions (Canada) or a provincial
pension commission or similar regulatory authority (check here) __________;
OR
(r) the Purchaser is a registered charity under the Income Tax Act (Canada)
(check here) __________; OR
(s) the Purchaser is a promoter of the Corporation or is an affiliated entity
of a promoter of the Corporation (check here) __________; OR
(t) the Purchaser is a person or Corporation that, in relation to the issuer,
is an affiliated entity or a person or Corporation referred to in clause
(c) of the definition of "distribution" in subsection 1(1) of the
Securities Act (Ontario) (check here) __________; OR
(u) the Purchaser is a corporation, limited partnership, limited liability
partnership, trust or estate, other than a mutual fund or non-redeemable
investment fund, that had net assets reflected in its most recently
prepared financial statements in excess of CDN$5,000,000 (check here)
__________; OR
(v) the Purchaser is a person or Corporation that is recognized by the Ontario
Securities Commission as an "accredited investor" (initial here)
__________; OR
(w) the Purchaser is a mutual fund or non-redeemable investment fund that, in
Ontario, distributes its securities only to persons or companies that are
"accredited investors" (check here) __________; OR
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(x) the Purchaser is a mutual fund or non-redeemable investment fund that, in
Ontario, distributes its securities under a prospectus for which a receipt
has been granted by the Director under the Securities Act (Ontario) (check
here) __________; OR
(y) the Purchaser is a managed account (check here) __________; OR
(z) the Purchaser is an account that is fully managed by a trust corporation
registered under the Loan and Trust Corporations Act (Ontario) (check here)
__________; OR
(aa) the Purchaser is an entity organized outside of Canada that is analogous to
any of the entities referred to in paragraphs 4(a) through (g) or paragraph
4(q) hereof in form and function (check here) __________; OR
(bb) the Purchaser is person or Corporation in respect of which all of the
owners of interests, direct or indirect, legal or beneficial, are persons
or companies each of which would otherwise meet any definition of
"accredited investor" as contemplated in paragraphs 3(a) through (h) hereof
or paragraphs 4(a) through (l) hereof (check here) __________; OR
(cc) the Purchaser is none of the above (check here) __________.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
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DATED at _________________________, this _____ day of ________________, 2004.
Signed: _________________________
Name: _________________________
For: _________________________
Title: _________________________
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