EXHIBIT 10.43
SUBSCRIPTION AGREEMENT
Dear Subscriber:
You (the "Subscriber") hereby agree to purchase, and Commercial
Consolidators Corp., an Alberta, Canada corporation (the "Company") hereby
agrees to issue and to sell to the Subscriber (a) $250,000 principal amount of
8% Secured Convertible Notes ("Note") convertible in accordance with the terms
thereof into shares of the Company's no par value common stock (the "Common
Stock") and common stock purchase warrants to purchase 50,000 shares of Common
Stock ("Warrants") for aggregate consideration of $250,000, as set forth on the
signature page hereof ("Purchase Price"). The form of Secured Note is annexed
hereto as Exhibit A. The form of Warrant is annexed hereto as Exhibit B. (The
Common Stock included in the Securities (as hereinafter defined) is sometimes
referred to herein as the "Shares", "Company Shares", "Common Shares" or "Common
Stock"). (The Notes, the Company Shares and the Common Stock issuable upon
exercise of the Warrants are collectively referred to herein as, the
"Securities"). Upon acceptance of this Agreement by the Subscriber, the Company
shall issue and deliver the Note against payment, by federal funds wire transfer
of the Purchase Price. All references to "dollars" or "$" in this Agreement
shall mean United States dollars unless otherwise indicated.
The following terms and conditions shall apply to this subscription.
1. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to and agrees with the Company that:
(a) Investment Purpose. The Subscriber is acquiring the Securities,
for its own account for investment purposes only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, the Subscriber does not agree to hold
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to an
effective registration statement under the 1933 Act and in compliance with
applicable state securities laws or an exemption from such registration.
(b) Information on Company. The Subscriber, and its advisors, if
any, have been furnished with written information relating to the business of
the Company and such other information concerning its operations, financial
condition and other matters as the Subscriber has requested. The Subscriber and
its advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by the Subscriber or its advisors, if any, or their representatives
shall modify, amend or affect the Subscriber's right to rely on the Company's
representations and warranties contained in Section 2 below. The Subscriber
understands that its investment in the Securities involves a high degree of
risk. The Subscriber has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Notes and the Company Shares. The Subscriber has considered
all factors the Subscriber deems material in deciding on the advisability of
investing in the Securities (such information in writing is collectively, the
"Written Information").
(c) Information on Subscriber; Accredited Investor Status. The
Subscriber is an "accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the Securities Act of 1933, as amended (the
"1933 Act"), is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable the Subscriber to utilize the information made
available by the Company to evaluate the merits and risks of and to make an
informed investment decision with respect to the proposed purchase, which
represents a speculative investment. The Subscriber has the authority and is
duly and legally qualified to purchase and own the Securities. The Subscriber is
able to bear the risk of such investment for an indefinite period and to afford
a complete loss thereof.
1
(d) Compliance with Securities Act. The Subscriber understands and
agrees that the Securities are being offered and sold to it in a private
placement in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and the Subscriber's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Subscriber set forth herein in order to determine the
availability of such exemptions and the eligibility of such Subscriber to
acquire such securities.
(e) No Governmental Review. The Subscriber understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities, or the fairness or suitability of the investment in the Securities,
nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.
(f) No Broker Commissions or Finder Fees. To the best of its
knowledge, the Subscriber has taken no action which would give rise to any claim
by any person for brokerage commissions, finders' fees or the like relating to
this Agreement or the transactions contemplated hereby except as described in
Section 6 hereof.
(g) Buyer Liquidity. The Subscriber has adequate means of providing
for its current needs and foreseeable financial contingencies.
(h) Transfer or Resale of Securities. The Subscriber understands
that except as provided herein (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned, transferred or otherwise disposed of by the
Subscriber unless (a) subsequently registered under the 1933 Act and state
securities laws, if applicable, (b) the Subscriber shall have delivered to the
Company an opinion of counsel, in form and substance reasonably satisfactory to
the Company, to the effect that such securities to be sold, assigned,
transferred or otherwise disposed of may be sold, assigned, transferred or
otherwise disposed of pursuant to an exemption from such registration, or (c)
the Subscriber provides the Company with written customary assurance that such
securities can be sold, assigned, transferred or otherwise disposed of pursuant
to Rule 144 promulgated under the 1933 Act (or a successor rule thereto) ("Rule
144"); and (ii) any sale of such securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of such securities 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 defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder.
(i) Company Shares Legend. The Company Shares and shares of Common
Stock issuable upon exercise of the Warrants shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COMMERCIAL
CONSOLIDATORS CORP., THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT."
2
(j) Note Legend. The Note shall bear the following legend:
"THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THIS NOTE AND THE SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COMMERCIAL
CONSOLIDATORS CORP., THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT."
(k) Warrants Legend. The Warrants shall bear the following legend:
"THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO COMMERCIAL CONSOLIDATORS CORP., THAT SUCH
REGISTRATION IS NOT REQUIRED."
(l) Communication of Offer. The offer to sell the Securities was
directly communicated to the Subscriber. At no time was the Subscriber presented
with or solicited by any leaflet, newspaper or magazine article, radio or
television advertisement, or any other form of general advertising or solicited
or invited to attend a promotional meeting otherwise than in connection and
concurrently with such communicated offer.
3
(m) Powers; Authorization; Enforceability. The Subscriber has all
corporate or company power and authority to enter into and perform this
Agreement. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Subscriber and is a valid and binding agreement of
the Subscriber enforceable in accordance with its terms, except as such
enforceability may be limited by general principles of equity and bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally the enforcement of, applicable creditors'
rights and remedies.
(n) Conflicts. To the best knowledge of Subscriber, the execution,
delivery and performance of this Agreement by the Subscriber and the
consummation by the Subscriber of the transactions contemplated hereby will not
(i) conflict with or violate its organizational charters or by-laws, or (ii)
conflict with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Subscriber is a party.
(o) Correctness of Representations. The Subscriber represents that
the foregoing representations and warranties are true and correct as of the date
hereof and, unless the Subscriber otherwise notifies the Company prior to the
Closing Date (as hereinafter defined), shall be true and correct as of the
Closing Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents
and warrants to and agrees with the Subscriber that:
(a) Due Incorporation. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the respective jurisdictions of their incorporation and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition of the Company.
(b) Outstanding Stock. All issued and outstanding shares of capital
stock of the Company and each of its subsidiaries has been duly authorized and
validly issued and are fully paid and non-assessable.
(c) Authority; Enforceability. This Agreement has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity; and the Company has full corporate power and
authority necessary to enter into this Agreement and to perform its obligations
hereunder and all other agreements entered into by the Company relating hereto.
(d) Additional Issuances. Except as described in the Reports or
Other Written Information or as set forth on Schedule 2(d), there are no
outstanding agreements or preemptive or similar rights affecting the Company's
common stock or equity and no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of any shares of common
stock or equity of the Company or other equity interest in any of the
subsidiaries of the Company.
4
(e) Consents. No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its affiliates, the NASD, NASDAQ, the American Stock
Exchange, Inc. ("Amex") or the Company's Shareholders is required for execution
of this Agreement, and all other agreements entered into by the Company relating
thereto, including, without limitation issuance and sale of the Securities, and
the performance of the Company's obligations hereunder.
(f) No Violation or Conflict. Assuming the representations and
warranties of the Subscriber in Paragraph 1 are true and correct and the
Subscriber complies with its obligations under this Agreement, neither the
issuance and sale of the Securities nor the performance of its obligations under
this Agreement and all other agreements entered into by the Company relating
thereto by the Company will:
(i) violate, conflict with, result in a breach of, or constitute
a default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the
certificate of incorporation, charter or bylaws of the Company, (B) to the
Company's knowledge, any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or any of its
affiliates or over the properties or assets of the Company or any of its
affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its affiliates is a party, by which the Company or any of its affiliates is
bound, or to which any of the properties of the Company or any of its affiliates
is subject, or (D) the terms of any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company, or any of its affiliates
is a party except the violation, conflict, breach, or default of which would not
have a material adverse effect on the Company; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company, or any of
its affiliates.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests,
liens, claims or other encumbrances, subject to restrictions upon transfer under
the 1933 Act and State laws;
(ii) have been, or will be, duly and validly authorized and on
the date of issuance and on the Closing Date, as hereinafter defined, and the
date the Note is converted, the Securities will be duly and validly issued,
fully paid and nonassessable (and if registered pursuant to the 1933 Act, and
resold pursuant to an effective registration statement will be free trading and
unrestricted, provided that the Subscriber complies with the Prospectus delivery
requirements);
(iii) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of the
Company; and
(iv) will not subject the holders thereof to personal liability
by reason of being such holders.
5
(h) Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates or subsidiaries that would affect the execution by the
Company or the performance by the Company of its obligations under this
Agreement, and all other agreements entered into by the Company relating hereto.
Except as disclosed in the Reports or Other Written Information, there is no
pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its affiliates or
subsidiaries, which litigation, if adversely determined could have a material
adverse effect on the Company.
(i) Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to Sections 15(d) and 13 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and has a class of
common shares registered pursuant to Section 12(g) of the 1934 Act. The
Company's common stock is trading on the American Stock Exchange ("Amex").
Pursuant to the provisions of the 1934 Act, the Company has filed all reports
and other materials required to be filed thereunder with the Securities and
Exchange Commission during the preceding twelve months except as set forth in
the Reports.
(j) No Market Manipulation. The Company has not taken, and will not
take, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
the common stock of the Company to facilitate the sale or resale of the
Securities or affect the price at which the Securities may be issued.
(k) Information Concerning Company. The Reports contain all material
information relating to the Company and its operations and financial condition
as of their respective dates which information is required to be disclosed
therein. Since the date of the financial statements included in the Reports, and
except as modified in the Other Written Information or in the Schedule hereto,
there has been no material adverse change in the Company's business, financial
condition or affairs not disclosed in the Reports. The Reports do not contain
any untrue statement of a material fact or omit to state a material fact in
light of the circumstances when made required to be stated therein or necessary
to make the statements therein not misleading.
(l) Dilution. The number of Shares issuable upon conversion of the
Notes may increase substantially in certain circumstances, including, but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock declines prior to conversion of the Note. The Company's executive officers
and directors have studied and fully understand the nature of the Securities
being sold hereby and recognize that they have a potential dilutive effect. The
board of directors of the Company has concluded, in its good faith business
judgment, that such issuance is in the best interests of the Company. The
Company specifically acknowledges that its obligation to issue the Company
Shares upon conversion of the Note is binding upon the Company and enforceable,
except as otherwise described in this Subscription Agreement or the Note,
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company.
(m) Stop Transfer. The Securities are restricted securities as of
the date of this Agreement. Except for such restrictions as may be set forth in
Sections 1(i), (j) and (k) above, the Company will not issue any stop transfer
order or other order impeding the sale and delivery of the Securities, and
except as may be required by federal securities laws.
(n) Defaults. Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or ByLaws. Neither the Company nor
any of its subsidiaries is (i) in default under or in violation of any other
material agreement or instrument to which it is a party or by which it or any of
its properties are bound or affected, which default or violation would have a
material adverse effect on the Company, (ii) in default with respect to any
order of any court, arbitrator or governmental body or subject to or party to
any order of any court or governmental authority arising out of any action, suit
or proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) to its
knowledge in violation of any statute, rule or regulation of any governmental
authority which violation would have a material adverse effect on the Company.
6
(o) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
Amex nor will the Company or any of its affiliates or subsidiaries take any
action or steps that would cause the offering of the Securities to be integrated
with other offerings. The Company has not conducted and will not conduct any
offering other than the transactions contemplated hereby that will be integrated
with the offer and issuance of the Securities.
(p) No General Solicitation. Neither the Company, nor any of its
affiliates, nor to its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the offer or sale of
the Securities.
(q) Listing. The Company's Common Stock is quoted on, and listed for
trading on the Amex. As of the date of this Agreement and the Closing Date, the
Amex is the Principal Market as defined in Section 7(b) of this Agreement.
Except as disclosed in the Other Written Information, the Company has not
received any oral or written notice that its Common Stock will be delisted from
the Amex or that the Common Stock does not meet all requirements for the
continuation of such listing.
(r) No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, which are not
disclosed in the Reports and Other Written Information, other than those
incurred in the ordinary course of the Company's business since September 30,
2001 and which, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the Company's financial condition.
(s) No Undisclosed Events or Circumstances. Since the most recent
quarterly or annual filing with the Securities and Exchange Commission (the
"Commission"), no event or circumstance has occurred or exists with respect to
the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.
(t) Capitalization. The authorized and outstanding capital stock of
the Company as of the date of this Agreement and the Closing Date are set forth
on Schedule 2(t) hereto. Except as set forth in the Reports and Other Written
Information and Schedule 2(t), there are no options, warrants, or rights to
subscribe to, securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock of the
Company. All of the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and nonassessable.
(u) Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, will be true and correct as of the Closing Date
in all material respects, and, unless the Company otherwise notifies the
Subscriber prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date. The foregoing representations and warranties
shall survive the Closing Date.
7
3. Regulation D Offering. This Offering is being made pursuant to
the exemption from the registration provisions of the 1933 Act afforded by Rule
506 of Regulation D promulgated thereunder. On the Closing Date, the Company
will provide an opinion reasonably acceptable to Subscriber from the Company's
legal counsel opining on the availability of the Regulation D exemption as it
relates to the offer and issuance of the Securities. A form of the legal opinion
is annexed hereto as Exhibit C. The Company will provide, at the Company's
expense, such other legal opinions in the future as are reasonably necessary for
the conversion of the Note.
4. Reissuance of Securities. The Company agrees to reissue
certificates representing the Securities without the legend set forth in
Sections 1(e) and 1(f) above at such time as (a) the holder thereof is permitted
to and disposes of the Securities pursuant to Rule 144(d) and/or Rule 144(k)
under the 1933 Act in the opinion of counsel reasonably satisfactory to the
Company, or (b) upon resale subject to an effective registration statement after
the Securities are registered under the 0000 Xxx. The Company agrees to
cooperate with the Subscriber in connection with all resales of Securities
pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to
allow such resales provided the Company and its counsel receive all reasonably
requested written representations from the Subscriber and selling broker, if
any. Provided the Subscriber provides required certifications and representation
letters, if any, if the Company fails to remove any legend as required by this
Section 4 (a "Legend Removal Failure"), then beginning on the tenth (10th) day
following the date that the Subscriber has requested the removal of the legend
and delivered all items reasonably required by the Company to be delivered by
the Subscriber, the Company continues to fail to remove such legend, the Company
shall pay to Subscriber or assignee holding shares subject to a Legend Removal
Failure an amount equal to one percent (1%) of the Purchase Price of the Common
Stock subject to a Legend Removal Failure per day that such failure continues.
If during any twelve (12) month period, the Company fails to remove any legend
as required by this Section 4 for an aggregate of thirty (30) days, each
Subscriber or assignee holding Securities subject to a Legend Removal Failure
may, at its option, require the Company to purchase all or any portion of the
Company Shares subject to a Legend Removal Failure held by such Subscriber or
assignee at a price per share equal to 130% of the applicable Purchase Price.
5. Warrants.
(a) In partial consideration of the Purchase Price, on the Closing
Date, the Company will issue and deliver to the Subscriber a Warrant entitling
the Subscriber to purchase 50,000 shares of Common Stock. The per share
"Purchase Price" of Common Stock as defined in the Warrant shall be 105% of the
closing price of the Common Stock on the Amex on the trading day immediately
preceding the Closing Date. The Warrants shall be exercisable for three years
after the Issue Date (as defined in the Warrant).
(b) All the representations, covenants, warranties, undertakings,
remedies, liquidated damages, indemnification, rights in Section 9 hereof, and
other rights including but not limited to registration rights made or granted to
or for the benefit of the Subscriber are hereby also made and granted to the
Subscribers in respect of the Warrants and Company Shares issuable upon exercise
of the Warrants.
6. Fees.
(a) The Company shall pay to counsel to the Subscriber their fees of
$10,000 for services rendered to Subscribers in connection with this Agreement
for the aggregate subscription amounts of up to $250,000 of principal amount of
Notes (the "Initial Offering") and acting as escrow agent for the Initial
Offering. The Company will pay to Libra Finance, S.A. ("Finder") a cash fee
equal to seven percent (7%) of the Purchase Price of the Notes ("Finder's Fee").
The Finder's Fee in connection with the Initial Offering must be paid on the
Closing Date. The legal fees will be payable out of funds held pursuant to a
Funds Escrow Agreement to be entered into by the Company, Subscriber and Escrow
Agent.
8
(b) The Company on the one hand, and the Subscriber on the other
hand, agree to indemnify the other against and hold the other harmless from any
and all liabilities to any persons claiming brokerage commissions or finder's
fees other than Libra Finance, S.A. on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby and arising out of such
party's actions. The Company and Subscribers represent that there are no other
parties entitled to receive fees, commissions, or similar payments in connection
with the offering described in this Subscription Agreement.
7. Covenants of the Company. The Company covenants and agrees with
the Subscriber as follows:
(a) Stop Orders. The Company will advise the Subscriber, promptly
after it receives notice of issuance by the Securities and Exchange Commission,
any state securities commission or any other regulatory authority of any stop
order or of any order preventing or suspending any offering of any securities of
the Company, or of the suspension of the qualification of the Common Stock of
the Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.
(b) Listing. The Company shall promptly secure the listing of the
Company Shares and Common Stock issuable upon exercise of the Warrants upon each
national securities exchange, or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance)
and shall maintain such listing so long as any Notes are outstanding. The
Company will maintain the listing of its Common Stock on the Amex, the NASDAQ
SmallCap Market, NASDAQ National Market System, New York Exchange or OTC
Bulletin Board (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (the "Principal Market"), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of Securities
Dealers ("NASD") and such other exchanges or markets, as applicable. The Company
will provide the Subscriber copies of all notices it receives notifying the
Company of the threatened or actual delisting of the Common Stock from any
Principal Market provided the provisions of such information to the Subscriber
would not violate the provisions of Regulation FD under the 1933 Act.
(c) Market Regulations. The Company shall notify the SEC, NASD, the
Principal Market and applicable state authorities, in accordance with their
requirements, if any, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscriber and promptly provide copies thereof
to Subscriber.
(d) Reporting Requirements. From the Closing Date and until at least
three (3) years after the effectiveness of the registration statement on Form
F-1 or such other registration statement described in Section 10.1(iv) hereof,
the Company will (i) cause its Common Stock to continue to be registered under
Sections 12(b) or 12(g) of the Exchange Act, (ii) comply in all respects with
its reporting and filing obligations under the Exchange Act, (iii) comply with
all reporting requirements that is applicable to an issuer with a class of
Shares registered pursuant to Section 12(g) of the Exchange Act, and (iv) comply
with all requirements related to any registration statement filed pursuant to
this Agreement. The Company will use its best efforts not to take any action or
file any document (whether or not permitted by the Act or the Exchange Act or
the rules thereunder) to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under said Acts until the later
of three (3) years after the actual effective date of the registration statement
on Form F-1 or such other registration statement described in Section 10.1(iv)
hereof. Until the earlier of the resale of the Company Shares by the Subscriber
or at least three (3) years after the Warrants have been exercised, the Company
will use its best efforts to continue the listing of the Common Stock on the
Amex and will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of Amex.
9
(e) Use of Proceeds. The Company undertakes to use the proceeds of
the Subscriber's funds solely for the purposes of reducing high interest rate
indebtedness owed to certain bridge lenders incurred in 2000 and 2001, and
payment of accrued professional fees incurred in connection with the Company's
listing on the Amex.
(f) Reservation of Common Stock. The Company undertakes to reserve,
pro rata on behalf of each holder of a Note or Warrant, from its authorized but
unissued Common Stock, at all times that Notes remain outstanding, a number of
Common Shares equal to not less than the amount of Common Shares necessary to
allow each such holder to be able to convert all such outstanding Notes, at the
then applicable Conversion Price, and one share of Common Stock for each Common
Share issuable upon exercise of the Warrants.
(g) Taxes. The Company will promptly pay and discharge, or cause to
be paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.
(h) Insurance. The Company will keep its assets which are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies in the Company's line of business, in amounts sufficient to prevent
the Company from becoming a co-insurer and not in any event less than 100% of
the insurable value of the property insured; and the Company will maintain, with
financially sound and reputable insurers, insurance against other hazards and
risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated and to the
extent available on commercially reasonable terms.
(i) Books and Records. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
(j) Governmental Authorities. The Company shall duly observe and
conform in all material respects to all valid requirements of governmental
authorities relating to the conduct of its business or to its properties or
assets.
(k) Intellectual Property. The Company shall maintain in full force
and effect its corporate existence, rights and franchises and all licenses and
other rights to use intellectual property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.
10
(l) Properties. The Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needful and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company will at all times comply with each
provision of all leases to which it is a party or under which it occupies
property if the breach of such provision could reasonably be expected to have a
material adverse effect.
(m) Confidentiality. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of any Subscriber,
unless expressly agreed to by such Subscriber or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.
(n) The Company and Subscriber agree that until the Company either
obtains shareholder approval of the issuance of the Securities, or an exemption
from Amex's corporate governance rules as they may apply to the Securities, and
an opinion of counsel reasonably acceptable to Subscriber that Amex's corporate
governance rules do not conflict with nor may result in a delisting of the
Company's common stock from the Amex ("the Approval") upon the conversion of the
Notes, each Subscriber may not receive more than the number of common shares
designated on the Signature Page hereto ("Section 7 Shares"). The Company
represents that this number of Company Shares together with the aggregate of
such amounts designated for all investors in the Initial Offering is not greater
than 19.9% of the shares of Company's common stock outstanding on the Closing
Date. The Company covenants to obtain the Approval, if required, pursuant to the
Amex's corporate governance rules to allow conversion of all the Notes and
interest thereon and exercise of the Warrants. The Company further covenants to
file the preliminary proxy statement relating to the Approval with the
Commission on or before thirty days after the Approval becomes necessary ("Proxy
Filing Date"). The Company further covenants to obtain the Approval no later
than one hundred and twenty (120) days after the Proxy Filing Date ("Approval
Date"). The Company's failure to (i) file the proxy on or before the Proxy
Filing Date; or (ii) the Company's failure to obtain the Approval on or before
the Approval Date (each being an "Approval Default") shall be deemed an Event of
Default under the Note, but only to the extent the Notes and interest thereon
that may not be converted in compliance with Amex's corporate governance rules,
due to the Company's failure to obtain the Approval. Anything to the contrary in
this Section 7(n) notwithstanding, there shall be no limitation on the amount of
Notes that may be converted by the Subscriber and the amount of Company Shares
that may be issued upon conversion of the Notes provided the Subscriber elects a
Conversion Price (as defined in the Note) equal to the closing price of the
Common Stock on the Closing Date. At any meeting at which the Company's
shareholders will vote on the Approval, Company Shares issued upon conversion of
the Notes may be counted for the purpose of obtaining a quorum but may not be
voted on the Approval resolution.
8. Covenants of the Company and Subscriber Regarding
Indemnification.
8.1 Company Indemnification. The Company agrees to indemnify, hold
harmless, reimburse and defend Subscriber, Subscriber's officers, directors,
agents, affiliates, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon Subscriber or
any such person which results, arises out of or is based upon (i) any material
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any Exhibits or Schedules attached hereto, or other agreement
delivered pursuant hereto; or (ii) after any applicable notice and/or cure
periods, any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscribers relating hereto.
11
8.2 Subscriber Indemnification. Subscriber agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's officers,
directors, agents, affiliates, control persons against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Company or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Subscriber in this Agreement or in any Exhibits or Schedules attached hereto, or
other agreement delivered pursuant hereto; or (ii) after any applicable notice
and/or cure periods, any breach or default in performance by Subscriber of any
covenant or undertaking to be performed by Subscriber hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
8.3 Procedures. The procedures and limitations set forth in Section
10.6 shall apply to the indemnifications set forth in Sections 8.1 and 8.2
above.
9. Conversion of Note.
9.1 Mechanics of Conversion.
(a) Upon the conversion of the Note or part thereof ("Conversion"),
the Company shall, at its own cost and expense, take all necessary action
(including the issuance of an opinion of counsel) to assure that the Company's
transfer agent shall issue stock certificates in the name of Subscriber (or its
nominee) or such other persons as designated by Subscriber and in such
denominations to be specified at Conversion representing the number of shares of
common stock issuable upon such Conversion. The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the Company Shares will be
unlegended, free-trading, and freely transferable, and will not contain a legend
restricting the resale or transferability of the Company Shares provided the
Company Shares are being sold pursuant to an effective registration statement
covering the Shares to be sold or are otherwise exempt from registration when
sold and, if applicable, Subscriber complies with prospectus delivery
requirements.
(b) Subscriber will give notice of its decision to exercise its
right to convert the Note or part thereof by telecopying an executed and
completed Notice of Conversion (a form of which is annexed to Exhibit A hereto)
to the Company via confirmed telecopier transmission. The Subscriber will not be
required to surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to the
Company in accordance with the provisions hereof shall be deemed a Conversion
Date. The Company will itself or cause its transfer agent to transmit the
Company's Common Stock certificates representing the Company Shares issuable
upon conversion of the Note to the Subscriber via express courier for receipt by
such Subscriber within five (5) business days after receipt by the Company of
the Notice of Conversion (the "Delivery Date"). In the event the Company Shares
are DTC eligible or otherwise electronically transferable, then delivery of the
Company Shares must be made by electronic transfer provided request for such
electronic transfer has been made by the Subscriber. A Note representing the
balance of the Note not so converted will be provided to the Subscriber, if
requested by Subscriber provided an original Note is delivered to the Company.
To the extent that a Subscriber elects not to surrender a Note for reissuance
upon partial payment or Conversion, the Subscriber hereby indemnifies the
Company against any and all loss or damage attributable to such non-surrender
arising from a third-party claim in an amount in excess of the actual amount
then due under the Note.
12
(c) The Company understands that a delay in the delivery of the
Company Shares in the form required pursuant to Section 9 hereof, or the
Mandatory Redemption Amount described in Section 9.2 hereof, beyond the Delivery
Date or Mandatory Redemption Payment Date (as hereinafter defined) could result
in economic loss to the Subscriber. As compensation to the Subscriber for such
loss, the Company agrees to pay late payments to the Subscriber for late
issuance of Company Shares in the form required pursuant to Section 9 hereof
upon Conversion or late payment of the Mandatory Redemption Amount, in the
amount of $100 per business day after the Delivery Date or Mandatory Redemption
Payment Date, as the case may be, for each $10,000 of Note principal amount
being converted or redeemed. The Company shall pay any payments incurred under
this Section 9 in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Subscriber, in the
event that the Company fails for any reason to effect delivery of the Company
Shares by the Delivery Date or make payment by the Mandatory Redemption Payment
Date, the Subscriber will be entitled to revoke all or part of the relevant
Notice of Conversion or rescind all or part of the notice of Mandatory
Redemption by delivery of a notice to such effect to the Company whereupon the
Company and the Subscriber shall each be restored to their respective positions
immediately prior to the delivery of such notice, except that late payment
charges described above shall be payable through the date notice of revocation
or rescission is given to the Company.
(d) Nothing contained herein or in any document referred to herein
or delivered in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest or dividends
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Subscriber and thus refunded to the Company.
9.2. Mandatory Redemption at Subscriber's Election. In the event the
Company is prohibited from issuing Company Shares, or fails to timely deliver
Company Shares on a Delivery Date, or upon the occurrence of any other Event of
Default (as defined in the Note) or for any reason other than pursuant to the
limitations set forth in Section 9.3 hereof, then at the Subscriber's election,
the Company must pay to the Subscriber ten (10) business days after request by
the Subscriber or on the Delivery Date (if requested by the Subscriber) a sum of
money determined by (i) multiplying up to the outstanding principal amount of
the Note designated by the Subscriber by 130%, plus accrued interest on the
outstanding principal amount of the Note, or (ii) multiplying the number of
Shares otherwise deliverable upon conversion of an amount of Note principal
designated by the Subscriber (with the date of giving of such designation being
a Deemed Conversion Date) at the then Conversion Price that would be in effect
on the Deemed Conversion Date by the highest closing price of the Common Stock
on the principal market from the Deemed Conversion Date until the day prior to
the receipt by the Subscriber of the Mandatory Redemption Payment, whichever is
greater, together with accrued but unpaid interest thereon ("Mandatory
Redemption Payment"). The Mandatory Redemption Payment must be received by the
Subscriber on the same date as the Company Shares otherwise deliverable or
within ten (10) business days after request, whichever is sooner ("Mandatory
Redemption Payment Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal and interest will be deemed paid and no longer
outstanding.
9.3. Maximum Conversion. The Subscriber shall not be entitled to
convert on a Conversion Date that amount of the Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Subscriber and its
affiliates on a Conversion Date, and (ii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Subscriber and its affiliates of more than 4.99% of
the outstanding shares of Common Stock of the Company on such Conversion Date.
For the purposes of the provision to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Subscriber shall not be limited to aggregate
conversions of only 4.99% and aggregate conversion by the Subscriber may exceed
4.99%. The Subscriber shall have the authority and obligation to determine
whether the restriction contained in this Section 9.3 will limit any conversion
hereunder and to the extent that the Subscriber determines that the limitation
contained in this Section applies, the determination of which portion of the
Notes are convertible shall be the responsibility and obligation of the
Subscriber. The Subscriber may void the conversion limitation described in this
Section 9.3 upon 75 days prior written notice to the Company. The Subscriber may
allocate which of the equity of the Company deemed beneficially owned by the
Subscriber shall be included in the 4.99% amount described above and which shall
be allocated to the excess above 4.99%.
13
9.4. Injunction - Posting of Bond. In the event a Subscriber shall
elect to convert a Note or part thereof, the Company may not refuse conversion
based on any claim that such Subscriber or any one associated or affiliated with
such Subscriber has been engaged in any violation of law, or for any other
reason, unless, an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of said Note shall have been sought and
obtained and the Company posts a surety bond for the benefit of such Subscriber
in the amount of 130% of the amount of the Note, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Subscriber to the extent Subscriber obtains judgment.
9.5. Buy-In. In addition to any other rights available to the
Subscriber, if the Company fails to deliver the Company Shares to the Subscriber
by the Delivery Date and if ten (10) days after the Delivery Date the Subscriber
or a broker on behalf of the Subscriber, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Subscriber of the Company Shares which the Subscriber anticipated
receiving upon such conversion (a "Buy-In"), then the Company shall pay in cash
to the Subscriber (in addition to any remedies available to or elected by the
Subscriber) the amount by which (A) the Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion was not timely honored, together with interest thereon
at a rate of 15% per annum, accruing until such amount and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated damages and
not as a penalty). For example, if the Subscriber purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of $10,000 of note principal and/or interest, the
Company shall be required to pay the Subscriber $1,000, plus interest. The
Subscriber shall provide the Company written notice indicating the amounts
payable to the Subscriber in respect of the Buy-In.
9.6 Adjustments. The Conversion Price and amount of Company Shares
issuable upon Conversion of the Note shall be subject to equitable and pro-rata
adjustment to offset the effect of stock splits, stock dividends and pro rata
distributions of property or equity interests to the Company's shareholders.
9.7. Optional Redemption at Company's Election.
(a) Subject to the Optional Conversion Conditions set forth in this
Section 9.7(a), the Company will have the option of redeeming all or any portion
of the outstanding Notes ("Optional Redemption") by paying to the Subscriber a
sum of money equal to 130% of the principal amount of the Note to be redeemed
("Premium") together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to the Subscriber arising under this
Subscription Agreement relating to the Note, the Note or any other document
delivered herewith ("Redemption Amount") outstanding on the day notice of
redemption ("Notice of Redemption) is given to a Subscriber ("Redemption Date").
The Subscriber may elect within five (5) business days after receipt of a Notice
of Redemption to give the Company Notice of Conversion in connection with some
or all of the Note principal and interest which was the subject of the Notice of
Redemption provided the Conversion Price elected by the Subscriber is the
Maximum Base Price set forth in Section 2.1(b)(i) of the Note. A Notice of
Redemption must be accompanied by a certificate signed by the chief executive
officer or chief financial officer of the Company stating that the Company has
on deposit and segregated ready funds equal to the Redemption Amount. The
Redemption Amount must be paid in good funds to the Subscriber no later than the
tenth (10th) business day after the Redemption Date ("Optional Redemption
Payment Date"). On the Optional Redemption Payment Date, the Company must
deliver a common stock purchase warrant representing the right to purchase one
share of Common Stock for each five dollar ($5.00) of Redemption Amount
("Redemption Warrant"). The Redemption Warrant will be identical to the Warrant
except that the Purchase Price (as defined in the Warrant) shall be 120% of the
closing price of the Common Stock on the Redemption Date. The Redemption Warrant
will be exercisable for three years from the Optional Redemption Payment Date.
In the event the Company fails to pay the Redemption Amount by the Optional
Redemption Payment Date, then the Redemption Notice will be null and void and
the Company will thereafter have no further right to effect an Optional
Redemption, and at the Subscription's election, the Redemption Amount will be
deemed a Mandatory Redemption Payment and the Optional Redemption Payment Date
will be deemed a Mandatory Redemption Payment Date. Such failure will also be
deemed an Event of Default under the Notes. A Notice of Redemption may be given
by the Company pursuant to this Section 9.7(a), provided (i) no Event of
Default, as described in the Notes shall have occurred and be continuing, (ii)
the Company Shares issuable upon conversion of the entire outstanding Note
principal are included for unrestricted resale in a registration statement
effective as of the Redemption Date, and (iii) the Conversion Price for the ten
(10) trading days prior to a Redemption Date is less than $1.50 (the "Optional
Conversion Conditions").
14
(b) If no Event of Default (as defined in the Note) has occurred and
is continuing, then until ninety (90) days following the Closing Date, the
Company may elect at its option to exercise the Optional Redemption Rights
described in Section 9.7(a) except that (i) the Premium shall be 140%, (ii) no
other Optional Conversion Conditions shall be applicable, (iii) the Subscriber
shall not have the right to elect to convert any portion of the Note into Common
Stock for which a Conversion Notice has not already been given, and (iv) the
Subscriber will not receive any Redemption Warrants.
9.8. Redemption. The Company may not redeem or call the Note without
the consent of the holder of the Securities except as otherwise described in
Section 9.7 above.
9.9. Elimination of Floor Price. Subject to the provisions of
Section 9.10 below, the $1.50 per share Floor Price limitation on the Conversion
Price described in Section 2.1(b)(ii) of the Note shall not apply in the event
that either: (i) the registration statement described in Section 10.1(c) shall
not have been declared effective by the SEC on or before one hundred and eighty
(180) days after the Closing Date, or (ii) there shall occur a Projection
Default as described in Section 9.10.
9.10. Projection Default. Annexed hereto as Schedule 9.10 is a
schedule of the projections of the consolidated net income after taxes expressed
in Canadian dollars (the "Projected Net Income") of the Company and its
subsidiaries on a consolidated basis, for the fiscal quarters ending November
30, 2001, February 28, 2002, May 31, 2002, and August 31, 2002 (each a "Subject
Fiscal Quarter"). In the event the actual consolidated net income after taxes
expressed in Canadian dollars (the "Actual Net Income") of the Company and its
subsidiaries on a consolidated basis is not at least ninety (90%) percent of the
Projected Net Income for any such Subject Fiscal Quarter, then a "Projection
Default" hereunder shall be deemed to have occurred. Following the occurrence of
a Projection Default, Company may elect to exercise the Optional Redemption
described in Section 9.7(a) and on the same terms as set forth in said Section
9.7(a); provided that in such event the Company must pay the full Redemption
Amount to the Subscriber within thirty (30) days from the Income Notification
Date described below following such Projection Default. In the event that the
Company shall not timely pay such full Redemption Amount, the $1.50 per share
Floor Price limitation on Conversion set forth in Section 2.1(b)(ii) of the Note
shall no longer be applicable . The Company or the Company's accountants Xxxxx &
Partners or another recognized accounting firm shall notify the Subscriber of
the actual Net Income (in Canadian dollars) as reconciled with United States
dollars and United States generally accepted accounting principles ("the Net
Income Reconciliation"), as reported on the Company's forms 6-K or 20-F to be
filed with the Commission for each such Subject Fiscal Quarter. Such Net Income
Reconciliation shall be delivered to the Subscriber within five days after the
required filing date of such Form 6-F or Form 20-F for the applicable Subject
Fiscal Quarter, including any timely permissible notifications of late filing
but in any case not later than sixty (60) days after the end of each Subject
Fiscal Quarter (the "Income Notification Date"). If, for any reason, the Net
Income Reconciliation shall not be delivered to the Subscriber by such Income
Notification Date, the Company must deliver such Net Income Reconciliation
within five (5) days following written notice from the Subscriber or its
representative; failing which the $1.50 per share Floor Price limitation on
Conversion set forth in Section 2.1(b)(ii) of the Note shall no longer be
applicable, irrespective of whether or not there has been a Projection Default.
The Income Notification Date shall be accelerated to any date on which the
Subscriber notifies the Company that, based on the Company's filings with the
Commission or press releases issued by the Company a Projection Default has
occurred.
15
10. Registration Rights.
10.1. Registration Rights Granted. The Company hereby grants the
following registration rights to holders of the Securities.
(a) On one occasion, for a period commencing 121 days after the
Closing Date, but not later than three years after the Closing Date ("Request
Date"), the Company, upon a written request therefor from any record holder or
holders of more than 50% of the aggregate of the Company's Shares actually
issued and issuable upon Conversion of the Notes issued in the Initial Offering
(the Common Stock issued or issuable upon conversion of the Notes or issuable by
virtue of ownership of the Notes and issuable upon exercise of the Warrants,
being the "Registrable Securities"), shall prepare and file with the Commission
a registration statement under the Act covering the Registrable Securities which
are the subject of such request, unless such Registrable Securities are the
subject of an effective registration statement or included for registration in a
pending registration statement. In addition, upon the receipt of such request,
the Company shall promptly give written notice to all other record holders of
the Registrable Securities that such registration statement is to be filed and
shall include in such registration statement Registrable Securities for which it
has received written requests within 10 days after the Company gives such
written notice. Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section 10.1(a). As a
condition precedent to the inclusion of Registrable Securities, the holder
thereof shall provide the Company with such information as the Company
reasonably requests. The obligation of the Company under this Section 10.1(a)
shall be limited to one registration statement.
(b) If the Company at any time proposes to register any of its
securities under the Act for sale to the public, whether for its own account or
for the account of other security holders or both, except with respect to
registration statements on Forms X-0, X-0 or another form not available for
registering the Registrable Securities for sale to the public, provided the
Registrable Securities are not otherwise registered for resale by the Subscriber
or Holder pursuant to an effective registration statement, each such time it
will give at least 25 days' prior written notice to the record holder of the
Registrable Securities of its intention so to do. Upon the written request of
the holder, received by the Company within 15 days after the giving of any such
notice by the Company, to register any of the Registrable Securities, the
Company will cause such Registrable Securities as to which registration shall
have been so requested to be included with the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable Securities
so registered by the holder of such Registrable Securities (the "Seller"). In
the event that any registration pursuant to this Section 10.1(b) shall be, in
whole or in part, an underwritten public offering of common stock of the
Company, the number of shares of Registrable Securities to be included in such
an underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 10.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 10.1(b)
without thereby incurring any liability to the Seller.
16
(c) In addition to the registration rights set forth in Sections
10.1(a) and 10.1(b) above, the Company shall file with the Commission not later
than thirty (30) days after the Closing Date (the "Filing Date"), and use its
reasonable commercial efforts to cause to be declared effective a Form F-1
registration statement (or such other form that it is eligible to use) in order
to register the Registrable Securities (as defined herein) for resale and
distribution under the 1933 Act. The registration statement described in this
paragraph must be declared effective by the Commission by one hundred and twenty
days (120) of the Closing Date (the "Effective Date"). The Company will register
not less than a number of shares of Common Stock in the aforedescribed
registration statement that is equal to 200% of the Company Shares issuable at
the Conversion Price that would be in effect on the Closing Date or the date of
filing of such registration statement (employing the Conversion Price which
would result in the greater number of Shares), assuming the conversion of 100%
of the Notes and one share of Common Stock for each share of Common Stock
issuable upon exercise of the Warrants. The Registrable Securities shall be
reserved and set aside exclusively for the benefit of the Subscriber, and not
issued, employed or reserved for anyone other than the Subscriber. Such
registration statement will immediately be amended or additional registration
statements will be immediately filed by the Company as necessary to register
additional Company Shares to allow the public resale of all Common Stock
included in and issuable by virtue of the Registrable Securities. No securities
of the Company other than the Registrable Securities will be included in the
registration statement described in this Section 10.1(c) except as described on
Schedule 10.1.
10.2. Registration Procedures. If and whenever the Company is
required by the provisions hereof to effect the registration of any shares of
Registrable Securities under the 1933 Act, the Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as herein provided), and promptly
provide to the holders of Registrable Securities ("Sellers") copies of all
filings and Commission letters of comment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the latest of: (i) twenty-four months after the latest Maturity Date of a
Note; (ii) until twelve months after all the Company Shares are eligible for
resale pursuant to Rule 144(k) of the 1933 Act; or (iii) until such registration
statement has been effective for a period of not less than 365 days, and comply
with the provisions of the Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Seller's intended method of disposition set forth in such registration
statement for such period;
17
(c) furnish to the Seller, such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to facilitate the
public sale or their disposition of the securities covered by such registration
statement;
(d) use its best efforts to register or qualify the Seller's
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Seller, provided,
however, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(e) list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;
(f) immediately notify the Seller when a prospectus relating thereto
is required to be delivered under the Act, of the happening of any event of
which the Company has knowledge as a result of which the prospectus contained in
such registration statement, as then in effect, includes an untrue statement of
a 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;
(g) make available for inspection by the Seller, and any attorney,
accountant or other agent retained by the Seller or underwriter, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the seller, attorney, accountant or agent in
connection with such registration statement.
10.3. Provision of Documents. At the request of the Seller, provided
a demand for registration has been made pursuant to Section 10.1(a) or a request
for registration has been made pursuant to Section 10.1(b), the Registrable
Securities will be included in a registration statement filed pursuant to this
Section 10. In connection with each registration hereunder, the Seller will
furnish to the Company in writing such information and representation letters
with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws. In connection with each registration pursuant to Section
10.1(a) or 10.1(b) covering an underwritten public offering, the Company and the
Seller agree to enter into a written agreement with the managing underwriter in
such form and containing such provisions as are customary in the securities
business for such an arrangement between such underwriter and companies of the
Company's size and investment stature.
10.4. Non-Registration Events. The Company and the Subscriber agree
that the Seller will suffer damages if any registration statement required under
Section 10.1(a) or 10.1(b) above is not filed within 30 days after written
request by the Holder and not declared effective by the Commission within 90
days after such request [or the Filing Date and Effective Date, respectively, in
reference to the Registration Statement on Form F-1 or such other form described
in Section 10.1(c)], and maintained in the manner and within the time periods
contemplated by Section 10 hereof, and it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, if (i) the Registration
Statement described in Sections 10.1(a) or 10.1(b) is not filed within 30 days
of such written request, or is not declared effective by the Commission on or
prior to the date that is 90 days after such request, or (ii) the registration
statement on Form F-1 or such other form described in Section 10.1(c) is not
filed on or before the Filing Date or not declared effective on or before the
sooner of the Effective Date, or within five business days of receipt by the
Company of a written or oral communication from the Commission that the
registration statement described in Section 10.1(c) will not be reviewed, or
(iii) any registration statement described in Sections 10.1(a), 10.1(b) or
10.1(c) is filed and declared effective but shall thereafter cease to be
effective (without being succeeded immediately by an additional registration
statement filed and declared effective) for a period of time which shall exceed
30 days in the aggregate per year but not more than 20 consecutive calendar days
("year" being defined as a period of 365 days commencing on the date the
Registration Statement is declared effective) (each such event referred to in
clauses (i), (ii) and (iii) of this Section 10.4 is referred to herein as a
"Non-Registration Event"), then, for so long as such Non-Registration Event
shall continue, the Company shall pay, at the Subscriber's option, in cash or
stock at the applicable Conversion Price, as Liquidated Damages to each holder
of any Registrable Securities an amount equal to two (2%) percent per month or
pro rata part thereof for each month or part thereof thereafter during the
pendency of such Non-Registration Event, of the principal of the Notes issued in
the Initial Offering and principal and interest of the Notes converted into
Company Shares, then owned of record by such holder or issuable as of or
subsequent to the occurrence of such Non-Registration Event. Payments to be made
pursuant to this Section 10.4 shall be due and payable within ten (10) business
days after demand in immediately available funds. In the event a Mandatory
Redemption Payment is demanded from the Company by the Holder pursuant to
Section 9.2 of this Subscription Agreement, then the Liquidated Damages
described in this Section 10.4 shall no longer accrue on the portion of the
Purchase Price underlying the Mandatory Redemption Payment, from and after the
date the Holder receives the Mandatory Redemption Payment. It shall also be
deemed a Non-Registration Event if at any time a Note is outstanding, there is
less than 125% of the amount of Common Shares necessary to allow full conversion
of such Note at the then applicable Conversion Price registered for unrestricted
resale in an effective registration statement.
18
10.5. Expenses. All expenses incurred by the Company in complying
with Section 10, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including reasonable
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, and costs of insurance
are called "Registration Expenses". All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Seller, are called "Selling
Expenses". The Seller shall pay the fees of its own additional counsel, if any.
The Company will pay all Registration Expenses in connection with the
registration statement under Section 10. All Selling Expenses in connection with
each registration statement under Section 10 shall be borne by the Seller and
may be apportioned among the Sellers in proportion to the number of shares sold
by the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.
10.6. Indemnification and Contribution.
(a) In the event of a registration of any Registrable Securities
under the Act pursuant to Section 10, the Company will indemnify and hold
harmless the Seller, each officer of the Seller, each director of the Seller,
each underwriter of such Registrable Securities thereunder and each other
person, if any, who controls such Seller or underwriter within the meaning of
the 1933 Act, against any losses, claims, damages or liabilities, joint or
several, to which the Seller, or such underwriter or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Securities
was registered under the Act pursuant to Section 10, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made, and
will subject to the provisions of Section 10.6(c) reimburse the Seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company shall not be liable to the Seller to the extent that any such
damages arise out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) the Seller failed to send or deliver a copy of
the final prospectus delivered by the Company to the Seller with or prior to the
delivery of written confirmation of the sale by the Seller to the person
asserting the claim from which such damages arise, (ii) the final prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (iii) to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by any such Seller, or any such controlling person in
writing specifically for use in such registration statement or prospectus.
19
(b) In the event of a registration of any of the Registrable
Securities under the Act pursuant to Section 10, the Seller will indemnify and
hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, underwriter or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Securities were
registered under the Act pursuant to Section 10, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the gross proceeds received by the Seller from the sale of Registrable
Securities covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 10.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 10.6(c), except and only if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 10.6(c) for any legal expenses
subsequently incurred by such 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 the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it 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 parties shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
20
(d) In order to provide for just and equitable contribution in the
event of joint liability under the Act in any case in which either (i) the
Seller, or any controlling person of the Seller, makes a claim for
indemnification pursuant to this Section 10.6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 10.6 provides for indemnification in such case, or (ii)
contribution under the Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
provided under this Section 10.6; then, and in each such case, the Company and
the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by it
pursuant to such registration statement; and (z) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
11. Favored Nations Provision. In the event that at any time a Note
is outstanding, the Company shall for any reason (other than in connection with
employee stock options or as full or partial consideration in connection with
any merger, consolidation or purchase of the securities or assets of any
corporation or other entity (an "Acquisition") issue any Common Stock or
securities convertible into or exercisable for shares of Common Stock to any
person, firm or corporation at price per share or conversion or exercise price
per share which shall be lower than the Conversion Price of the Common Shares
issuable upon conversion of the Note, then and in such event the per share
Conversion Price set forth in the Note shall be automatically reduced to such
lower per share purchase price, exercise price or conversion price, as the case
may be.
12. Security Interest. The Subscriber will be granted a security
interest in certain assets of the Company to be memorialized in a General
Security Agreement. A shareholder of the Company ("Shareholder") will also grant
the Subscriber a security interest in 125,000 shares of the Company's Common
Stock. The security interest granted by the Shareholder will be memorialized in
a Stock Pledge Agreement. The Company and Shareholder will execute such other
agreements, documents and forms UCC-1 to be filed at the Company's expense with
such jurisdictions, states and counties designated by the Subscribers. The
Company will also execute all such documents reasonably necessary in the opinion
of Subscriber to memorialize and further protect the security interest described
herein. A form of General Security Agreement is annexed hereto as Exhibit D. A
form of Stock Pledge Agreement is annexed hereto as Exhibit E.
21
13. Transfer Agent Instructions. At or prior to the Closing, the
Company will deliver the executed transfer agent instructions ("Transfer Agent
Instructions"), a form of which is annexed hereto as Exhibit F.
14. Miscellaneous.
(a) Notices. All notices or other communications given or made
hereunder shall be in writing and shall be personally delivered or deemed
delivered the first business day after being telecopied (provided that a copy is
delivered by first class mail) to the party to receive the same at its address
set forth below or to such other address as either party shall hereafter give to
the other by notice duly made under this Section: (i) if to the Company, to
Commercial Consolidators Corp., 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
X0X 0X0, Xxxxxx, attn: Xxxxxxx Xxxxxxxxxx, Chairman, telecopier number: (416)
512-8348, with a copy by telecopier only to: Xxxxxxxxx Traurig, LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, attn: Xxxxxxx X. Xxxxx, Esq., telecopier number:
212-801-6400, and (ii) if to the Subscriber, to the name, address and telecopy
number set forth on the signature page hereto, with a copy by telecopier only to
Xxxxxxx & Prager LLP, 00 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, attn: Xxxxxx
X. Xxxxxxx, Esq., telecopier number: (000) 000-0000, and Grushko & Xxxxxxx,
P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number:
(000) 000-0000. Any notice that may be given pursuant to this Agreement, or any
document delivered in connection with the foregoing may be given by the
Subscriber on the first business day after the observance dates in the United
States of America by Orthodox Jewry of Rosh Hashanah, Yom Kippur, the first two
days of the Feast of Tabernacles, Shemini Atzeret, Simchat Torah, the first two
and final two days of Passover and Pentecost, with such notice to be deemed
given and effective, at the election of the Subscriber on a holiday date that
precedes such notice, however the Company's time to respond to such notice shall
commence from the actual date such notice is given. Any notice received by the
Subscriber on any of the aforedescribed holidays may be deemed by the Subscriber
to be received and effective as if such notice had been received on the first
business day after the holiday.
(b) Closing. The consummation of the transactions contemplated
herein shall take place at the offices of Grushko & Xxxxxxx, P.C., 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, upon the satisfaction of all
conditions to Closing set forth in this Agreement. The closing date shall
respectively be the dates that subscriber funds representing the net amount due
the Company from the Purchase Price are transmitted by wire transfer to the
Company (the "Closing Date").
(c) Entire Agreement; Assignment. This Agreement represents the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by both parties. No right
or obligation of either party shall be assigned by that party without prior
notice to and the written consent of the other party.
(d) Execution. This Agreement may be executed by facsimile
transmission, and in counterparts, each of which will be deemed an original.
(e) Law Governing this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. Both parties and the individuals executing
this Agreement and other agreements on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. All parties to this
Agreement and all other agreements delivered in connection herewith and all
individuals executing this Agreement and such other agreements waive any
objection to the aforedescribed venue based on forum non conveniens. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
22
(f) Specific Enforcement, Consent to Jurisdiction. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 14(e) hereof, each of the Company and Subscriber
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
(g) Automatic Termination. This Agreement shall automatically
terminate without any further action of either party hereto if the Closing shall
not have occurred by the tenth (10th) business day following the date this
Agreement is accepted by the Subscriber.
[THIS SPACE INTENTIONALLY LEFT BLANK]
23
Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.
COMMERCIAL CONSOLIDATORS CORP.
An Alberta, Canada Corporation
By:_________________________________
Name:
Title:
Dated: February 26, 2002
Purchase Price and Note Principal: $250,000.00
Section 7 Shares: _______________
ACCEPTED: Dated as of February 26, 2002
THE SHAAR FUND LTD. - Subscriber
C/x Xxxxxxxx Capital Management, LLC
00 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000 Fax: 000-000-0000
By:______________________________________
24
