EXHIBIT 10.5
SUBSCRIPTION AGREEMENT
THIS AGREEMENT is effective the 25th day of May, 2001 between XXXXXX.XXX
SOFTWARE LTD. (the "Issuer"), a company incorporated pursuant to the laws of
British Columbia and having a registered office located at 000 X Xxxxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0 and IQUEST NETWORKS INC. (formerly known as
Interlink Systems Inc. and Glassmaster Industries Inc.), a company incorporated
pursuant to the laws of Wyoming (the "Subscriber") with and address of 507 - 000
Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
WHEREAS the Issuer has offered to sell and the Subscriber has agreed to purchase
certain securities of the Issuer pursuant to, and in compliance with, and
exemption ("Exemption") from the registration and prospectus requirements of the
Securities Act (British Columbia)(the "Act"), and the Securities Rules (the
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"Rules").
NOW THEREFOR THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained, the receipt of which is hereby
acknowledged, the parties covenant and agree with each other as follows:
Subscription
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1. The Subscriber hereby irrevocably subscribes for and agrees to
purchase, and the Issuer agrees to issue and sell 1,875,000 Class B
common shares ("Shares") of the Issuer at a price of $0.05333 per
Share, for and aggregate purchase price (the "Purchase Price") of
$100,000. The Shares will be recorded in the name of the Subscriber at
the address set out below.
Delivery and Use of Purchase Price
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2. The Subscriber has advanced $92,000 of the Purchase price to the
Issuer. The Subscriber agrees to deliver the remainder of the Purchase
Price to the Issuer together with an executed copy of this Agreement
and the applicable prescribed regulatory forms fully executed and
completed. Upon receipt, the subscription hereby constituted shall be
irrevocable, and the Subscriber irrevocably agrees that, upon due
acceptance of the subscription by the Issuer, the Issuer may
immediately user the Purchase Price for its ongoing business.
3. The undersigned hereby directs that, upon acceptance of this offer by
the Issuer, the Shares be issued in its name at the address provided
below and delivered to the undersigned at the address provided below.
4. In the event that a Subscriber's offer is not accepted within 90 days
of the date of this Subscription Agreement, the Issuer agrees to
return its subscription monies to the undersigned, without interest.
Acknowledgement
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5. The Subscriber acknowledges, confirms and agrees with the following:
a. No prospectus has been filed by the Issuer in connection with the
issuance of the Shares, it being understood that the issuance of
the Shares is to be made pursuant to an Exemption on the basis
that the Subscriber meets certain qualifications, and, as a
consequence:
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i. The Subscriber is restricted from using most of the civil
remedies available under the Act and the Rules;
b. The Shares will be subject to restrictions on resale pursuant to
the Act and Rules and any proposed transfer of beneficial
ownership of the Shares will require compliance with and
Exemption under the Act or Rules. If no Exemption is available
then the Subscriber will be unable to resell the Shares until
such time as the Issuer has been a reporting issuer pursuant to
the Act for a period of 12 months. The Issuer is not now and may
never become a reporting Issuer;
c. If the Subscriber is a resident of a jurisdiction other than
British Columbia, the Subscriber will be required to comply with
the requirements, if any, of the securities legislation of that
jurisdiction with respect to the purchase and any subsequent
resale of the Shares, and it is the Subscriber's responsibility,
based on such independent professional advice as the Subscriber
determines is necessary, to abide by all such requirements;
d. The Subscriber's offer to purchase the Shares shall not be deemed
to be accepted by the Issuer until the board of directors of the
Issuer passes a resolution to that effect; and
e. Since the Shares have not been qualified for sale in the United
States of America ("USA"), the Shares cannot be knowingly sold to
a USA resident or citizen at any time prior to the appropriate
registration or qualification of the Shares in the USA.
Representations and Warranties of the Subscriber
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6. The Subscriber represents and warrants to the Issuer, acknowledging
that the Issuer will be relying upon such representations and
warranties in entering into this Agreement, that:
f. The purchase of the Shares by the Subscriber is to be made under
the Exemption available under section 74(2)(4) of the Act, and
that the Subscriber is not a syndicate, partnership or other form
of unincorporated entity or organization created solely to permit
the purchaser of the Shares by a group of individuals whose
individual share of the aggregate acquisition cost of the shares
is less than $97,000;
g. The Subscriber is purchasing as principal, for investment and not
with a view to resale or distribution, and no other person,
corporation, firm or other organization will have a beneficial
interest in the Shares;
h. The Subscriber has the legal capacity and competence to enter
into and execute this Agreement and take all actions required
pursuant hereto and the Subscriber is duly incorporated and
avidly subsisting under the laws of its jurisdiction of
incorporation and all necessary approvals by its directors,
shareholders, and others have been given to authorize execution
of the Agreement on behalf of the Subscriber;
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i. The entering into of this Agreement and the transactions
contemplated hereby will not result in the violation of any of
the terms and provisions of any law applicable to the Subscriber
or of any agreement, written or oral, to which the Subscriber may
be a party or by which the Subscriber is or may be bound;
j. This Agreement has been duly executed and delivered by the
Subscriber and constitutes a valid and binding agreement of the
Subscriber enforceable against the Subscriber in accordance with
its terms;
k. The Subscriber is aware and has been advised that its
subscription monies represent "seed" or "risk" capital for the
Issuer, that the Issuer is in a promotional and speculative stage
of development, that there is no market whatsoever for the
securities of the Issuer and that the Shares may now or in the
future have little or no value;
l. The Subscriber is aware that if the Subscriber is a resident in a
jurisdiction other than British Columbia, any Shares issued to
the Subscriber upon acceptance of the Subscriber's subscription
may be subject to restrictions on resale imposed under the law of
such jurisdiction. The Subscriber acknowledges that it is its
duty to find out what restrictions may apply and that the Issuer
is under no obligation to and does not intend to qualify the
Shares for resale in such jurisdiction;
m. The Issuer is non-reporting issuer under the laws of the PROVINCE
OF BRITISH COLUMBIA and the Shares to be issued to the Subscriber
upon acceptance of this subscription will be issued as an exempt
trade, based upon the relationship set out in paragraph (a)
above, and no filings or clearances or reviews under the Act have
been or are being made in connection with such trade; n. The
Subscriber understands that prior to the date hereof the Issuer
may have allotted and issued shares;
o. The Subscriber has such knowledge in financial and business
affairs as to be capable of evaluating the merits and risks of
this investment and the Subscriber is able to bear the economic
risk of a total loss of this investment;
p. The Subscriber is not purchasing the Shares as a result of an
advertisement of the Shares in printed media of general and
regular paid circulation, radio or television;
q. No person has made to the Subscriber any written or oral
representations:
i. that any person will resell or repurchase the Shares;
ii. that any person will refund the purchase price of the
Shares;
iii. as to the future price of value of the Shares; or
iv. that the Shares will be listed and posted for trading on a
stock exchange, or that application has been made to list
and post the Shares for trading on a stock exchange;
r. to the Subscriber's knowledge, the Subscriber has not been
solicited to make this subscription in any manner contrary to the
Act or the Rules or the USA Securities Act of 1933, as amended;
and
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Representations and Warranties of the Issuer
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7. The Issuer represents and warrants to the Subscriber, acknowledging
that the Subscriber will be relying upon such representations and
warranties in entering into this Agreement, that:
s. The Issuer and its subsidiaries, if any, are valid and subsisting
corporations duly incorporated and in good standing under the
laws of their governing jurisdictions;
t. To the best of its knowledge, there are no actions, suits,
judgments, investigations or proceedings of any material kind
outstanding, pending, or threatened against or affecting the
Issuer, its subsidiaries, if any, or its directors, officers or
promoters at law or in equity or before or by any federal,
provincial, state, municipal, or other governmental department,
commission, board, bureau or agency of any kind whatsoever and,
to the best of its knowledge, there is no basis therefore;
u. The issuance and sale of the Shares by the issuer does not and
will not conflict with and does not and will not result in a
breach of any of the terms, conditions or provisions of its
constating documents or any agreement or instrument to which the
Issuer is a party;
v. The execution of this agreement has been duly authorized by all
necessary corporate action on behalf of the Issuer, and
constitutes a binding obligation of the Issuer enforceable in
accordance with its terms;
w. The Issuer will reserve or set aside sufficient shares in the
treasury of the Issuer to issue to the Subscriber the Shares
purchased; and
x. Upon their issuance, the Shares will be validly issued and
outstanding fully paid and non-assessable common shares of the
Issuer registered in the name of the Subscriber as provided for
herein, free and clear of all voting restrictions, trade
restrictions (except as may be imposed by operation of applicable
securities laws as a result of the use of the prospectus and
registration exemptions described herein), liens, charges or
encumbrances of any kind whatsoever.
Condition
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8. the distribution of the Shares by the Issuer is condition upon
compliance with the requirements of the Exemption.
Miscellaneous
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9. This agreement constitutes the entire agreement between the Subscriber
and the Issuer, and there are not other agreements, warranties,
representations, conditions or covenants, written or oral, express or
implied, in respect of, or which affect, the transactions herein
contemplated, and this Agreement supersedes and supplants any previous
dealings whatsoever between the Subscriber and the Issuer in respect
of this subscription.
10. This Agreement may not be assigned by either party hereto, and shall
be binding on the Subscriber's heirs, executors, trustees in
bankruptcy or other legal representatives or successors.
11. Time is of the essence of the Agreement.
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12. A party to this Agreement will give all notices to, or written
communications with, the other party concerning this Agreement by hand
(including courier) or by registered mail addressed to the other
party's address set out above, as may be amended by like notice, and
such notices shall be effective on the date of delivery.
13. This Agreement will be governed by, and construed in accordance with,
the laws of British Columbia.
14. This Agreement may be signed by the parties in counterparts and may be
delivered by facsimile, each of which when delivered will be deemed to
be an original and all of which together will constitute one
instrument.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
25th day of May, 2001.
XXXXXX.XXX SOFTWARE LTD.
Per: "Xxxxx Xxxxxxxx"
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Authorized Officer
IQUEST NETWORKS INC. SUBSCRIBER'S ADDRESS
#507, 000 Xxxx Xxxxxxxx Xxxxxx
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Xxxxxxxxx, XX
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Per: "Xxxx Xxxxxxxx" V6C 3N6
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Authorized Officer
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