FORM OF
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(for Canadian and other non-U.S. Subscriptions)
A completed and originally executed copy of this subscription agreement
must be delivered to Groome Xxxxxxx.xxx Inc., 00 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, X0X 0X0 or transmitted by telecopier (000) 000-0000 by no
later than 5:00 p.m. (Toronto time) on April 12, 2000 (Attention: Xxxxx
Xxxxxxxx).
To: Xxxxxx.xx, Inc. (the "Issuer")
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx X0X 0X0
And to: Groome Xxxxxxx.xxx Inc. (the "Agent")
00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Subject to the terms and conditions of this Agreement and the Agency
Agreement (hereinafter defined), the undersigned (the "Purchaser")
irrevocably subscribes for and agrees to purchase Special Warrants
(hereinafter defined) at a price of U.S. $1.25 (Cdn. $1.83) per Special
Warrant. The particulars of the Special Warrants and certain covenants,
representations and warranties to be made by the Purchaser so that the
Issuer and the Agent can ensure compliance with the Securities Laws, are
set out under the heading "Terms of the Offering" all of which forms a
part of this Subscription Agreement. Attached as Schedule "A" is a Form
20A(IP) which must be completed by Purchasers who are individuals and
resident in British Columbia.
The Purchaser hereby irrevocably instructs the Issuer with respect to
registration and delivery of the certificates representing the Special
Warrants as follows:
Number of Special Warrants to be purchased: at U.S. $1.25 each
(Cdn. $1.83 for those purchasers settling in Canadian funds)
NOTE: the minimum number of Special Warrants purchased for:
Ontario and Quebec residents is: 22,831 Special Warrants
B.C. and Alberta residents is: 14,697 Special Warrants
Total Purchase Price: U.S. $
Total Purchase Price: Cdn.$
Name and Address of Purchaser:
Name:
Address:
Phone No.: Fax:
Registration Instructions: Register the Special Warrants as set forth
below.
Name:
(Please Print)
Account Reference (if applicable)
Address:
(Street Address)
(City, Province and Postal Code)
Delivery Instructions: The name and address (including contact name
and telephone number) of the person to whom the certificate representing
the Shares and Warrants comprising the Units are to be delivered, if
other than the Purchaser:
To:
(Please Print)
Account Reference (if applicable)
Address:
(Street Address)
(City, Province and Postal Code)
Contact Person:
(Please Print)
Phone No.:
IN WITNESS WHEREOF the Purchaser has executed, or caused its duly
authorized representative to execute, on its own behalf and, if
applicable, on behalf of each other person for whom it is contracting
hereunder, this subscription agreement. The Purchaser also hereby
authorizes the Agent to deliver a copy of this Agreement on its behalf
to the Issuer.
DATED the day of , 2000
Signature of Purchaser (if an individual Name of Purchaser (if not an
individual)
Per:
Name of Purchaser (if an individual) Signature of authorized
representative
(Please Print)
Name and title of authorized representative
(Please Print)
1. DEFINITIONS.
1.1 In this Agreement, the following words have the following meaning
unless otherwise indicated:
"Agency Agreement" means the agreement entered into or to be entered
into on or before the Closing Date between the Issuer and the Agent, as
it may be amended, relating to the Private Placement;
"Agreement" or "Subscription Agreement" refers to this Subscription
Agreement;
"Alberta Act" means the Securities Act (Alberta), as amended, the
regulations and rules made thereunder and all administrative policy
statements, blanket orders, notices, directions and rulings issued by
the Alberta Securities Commission;
"BC Act" means the Securities Act (British Columbia), as amended, the
regulations and rules made thereunder and all administrative policy
statements, blanket orders, notices, directions and rulings issued by
the British Columbia Securities Commission;
"Canadian Securities Laws" means, collectively, the applicable
securities laws of each of the Qualifying Provinces and the respective
regulations, rules, rulings and orders made thereunder, the applicable
policy statements, blanket orders and rulings issued by the respective
Commissions;
"Closing" means the closing of the Private Placement;
"Closing Date" means April 19, 2000 or such other date as the Issuer and
the Agent may agree;
"Commissions" means collectively the Alberta Securities Commission, the
British Columbia Securities Commission, the Ontario Securities
Commission and the Commission des valeurs mobil du Quebec (Quebec
Securities Commission and) and "Commission" means any one of them;
Distribution" means the proposed issuance of Unit Shares and Unit
Warrants to the holders of Special Warrants on the exercise or deemed
exercise of the Special Warrants;
"Effective Registration" means the registration effected by filing a
Registration Statement in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act, or any successor rule providing for
offering securities on a continuing basis and the declaration or
ordering of effectiveness of such Registration Statement by the SEC and
all applicable state regulatory authorities;
"Exchange" means the Over-the-Counter Bulletin Board in the United
States;
"material" means material in relation to the Issuer
"material change" means any change in the business, operations, assets,
liabilities, ownership or capital of the Issuer that would reasonably be
expected to have a significant effect on the market price or value of
the Underlying Securities and includes a decision to implement such a
change made by the board of directors of the Issuer or by senior
management of the Issuer who believes that confirmation of the decision
by the board of directors is probable;
"material fact" means any fact that significantly affects or would
reasonably be expected to have a significant effect on the market price
or value of the Underlying Securities, as the case may be;
"misrepresentation" means, with respect to circumstances in which the
Securities Laws of any jurisdiction are applicable, a misrepresentation
as defined under the Securities Laws of that jurisdiction and, if not so
defined or in circumstances in which the laws of a particular
jurisdiction are not applicable, a misrepresentation as defined under
the Securities Act (Ontario);
"Ontario Act" means the Securities Act (Ontario), as amended, the
regulations and rules made thereunder and all administrative policy
statements, blanket orders, notices, directions and rulings issued by
the Ontario Securities Commission;
"Private Placement" means the offering of the Special Warrants pursuant
to this Agreement, the Special Warrant Agreement and the Agency
Agreement;
"Prospectus" means a prospectus, including any amendments made thereto
which, upon issuance of a receipt by each of the Commissions for the
final prospectus, will qualify the Distribution;
"Qualification Date" means the date which is the later of the date on
which all of the Commissions have issued a receipt for the final
Prospectus and the date of an Effective Registration;
"Qualifying Provinces" means the Provinces of Ontario, Quebec, British
Columbia and Alberta and such other Provinces as the Agent and the
Issuer may determine before the Closing Date;
"Quebec Act" means the Securities Act (Quebec), as amended, the
regulations and rules made thereunder and all administrative policy
statements, blanket orders, notices, directions and rulings issued by
the Quebec Securities Commission;
"Registration Statement" means a registration statement of the Issuer
under the 1933 Act covering the Underlying Securities;
"Regulation S" means Regulation S under the 1933 Act;
"Regulatory Authorities" means the Commissions and the Exchange;
"SEC" means the United States Securities and Exchange Commission;
"Securities" means the Special Warrants, the Unit Shares, the Unit
Warrants and the common shares of the Issuer issued upon exercise of the
Unit Warrants;
"Securities Acts" means, collectively, the Alberta Act, the BC Act, the
Ontario Act and the Quebec Act;
"Securities Laws" means collectively, the Canadian Securities Laws and
U.S. Securities Laws;
"Special Warrants" means the Special Warrants of the Issuer to be
offered under and having the terms provided in this Agreement and issued
pursuant to and subject to the terms of the Special Warrant Agreement;
"Special Warrant Agreement" means the special warrant agreement to be
entered into between the Issuer and the Trustee, in such form and
containing such terms as approved by the Issuer and its counsel and the
Agent and its counsel;
"Trustee" means Pacific Corporate Trust Company or such other person
appointed to act as trustee under the Special Warrant Agreement as may
be mutually agreed to by the Agent and the Issuer;
"Underlying Securities" means the Unit Shares and the Unit Warrants
comprising the Units;
"Unit" means one Unit Share and one-half of one Unit Warrant, subject to
adjustment as provided in subsection 10.2;
"Unit Shares" means the previously unissued common shares without par
value of the Issuer which are issuable upon exercise or deemed exercise
of the Special Warrants;
"Unit Warrants" means the share purchase warrants of the Issuer to be
issued upon the exercise or deemed exercise of the Special Warrants;
"U.S. Securities Laws" means, collectively, all applicable federal and
state securities laws in the United States, including all "Blue Sky"
laws, and all regulations and forms prescribed thereunder, together with
all applicable published policy statements, releases and rulings of the
SEC and any applicable state securities regulatory authorities; and
"1933 Act" means the United States Securities Act of 1933, as amended.
1.2 References to the Purchaser shall, where the context is not
inconsistent therewith, be deemed to a reference to "the Purchaser on
its own behalf and, if applicable, on behalf of others for whom it is
contracting".
2. SUBSCRIPTION AND APPOINTMENT OF AGENT.
2.1 The Purchaser irrevocably subscribes for and agrees to purchase
the number of Special Warrants specified on the first page of this
Agreement, subject to the Purchaser's right to withdraw its subscription
and terminate its obligation if the Agent exercises its right under the
Agency Agreement not to proceed with the Private Placement.
2.2 The Purchaser shall deliver the following to the Agent at 00
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx (xx the attention of Xxxxx Xxxxxxxx)
not later than 5:00 p.m. (Toronto time) on April 12, 2000:
(a) a wire transfer, certified cheque or bank draft made payable to
"Groome Xxxxxxx.xxx Inc." representing the aggregate purchase price
payable for the Special Warrants being purchased; and
(b) an executed copy of this Agreement, together with Schedules "A"
(only if the Purchaser is resident in British Columbia).
2.3 The Purchaser appoints the Agent to act as its agent to represent
it at the Closing for the purpose of all closing matters and deliveries
of documents and payments of funds. The Purchaser authorizes the Agent
to amend the time and/or date of Closing and to modify or waive any
conditions as may be contemplated herein or in the Agency Agreement as
in its absolute discretion it may deem appropriate and to exercise any
rights of termination contained in the Agency Agreement. The Purchaser
further authorizes the Agent to make, on the Purchaser's behalf, non-
material revisions to this Agreement as the Agent in its absolute
discretion may deem appropriate, and to complete or correct any errors
or omissions in any form or document provided by the Purchaser.
2.4 The acceptance by the Issuer of the Purchaser's irrevocable
subscription to purchase the Units as contemplated by this Subscription
Agreement shall constitute an agreement by the Issuer with the Agent and
the Purchaser that the Purchaser shall have, in respect of such Units,
the benefits of the representations, warranties and covenants of the
Issuer contained in the Agency Agreement.
2.5 The obligations of the Purchaser to complete the purchase of the
Units as contemplated in this Subscription Agreement are conditional
upon the fulfilment at or before the Closing Time of each of the
conditions for the Closing of the Offering to be set forth in the Agency
Agreement which has not been waived by the Agent;
3. CONCERNING THE SPECIAL WARRANTS.
3.1 The Special Warrants will be issued and registered in the name of
the Purchaser or its nominee as shown on the first page of this
Agreement.
3.2 Each Special Warrant will be exercisable, at no additional cost,
into one Unit.
3.3 The Special Warrants may be exercised by the holder, in whole or
in part, at any time after the Closing. Any outstanding Special
Warrants will be deemed to be exercised (at 4:30 p.m. Toronto time) on
the day which is the earlier of:
(a) the fifth (5th) business day after the Qualification Date; or
(b) twelve (12) months from the Closing.
3.4 Upon exercise or deemed exercise, the Special Warrants will be
automatically cancelled and will have no further force or effect.
3.5 The Special Warrant Agreement, pursuant to which the Special
Warrants will be issued, will contain, among other things, provisions
for the appropriate adjustment in the class and number of the Unit
Shares and Unit Warrants issuable upon exercise or deemed exercise of
the Special Warrants upon the occurrence of certain events, including
any subdivision, consolidation or reclassification of the common shares
of the Issuer, the payment of stock dividends or the amalgamation of the
Issuer.
3.6 The issue of the Special Warrants will not restrict or prevent the
Issuer from obtaining any other financing, or from issuing additional
securities or rights.
4. CONCERNING THE UNIT WARRANTS.
4.1 The Unit Warrants will be non-transferable, and one full Unit
Warrant will entitle the holder to purchase one additional common share
of the Issuer at any time up to the close of business twenty-four (24)
months from the Closing Date at a price of $5.00 (U.S.) per common
share.
4.2 The terms and conditions which govern the Unit Warrants will be
referred to in the Warrant Agreement pursuant to which the Unit Warrants
will be issued and will contain, among other things, provisions for the
appropriate adjustment in the class, number and price of the shares to
be issued on the exercise of the Unit Warrants upon the occurrence of
certain events including any subdivision, consolidation or
reclassification of the shares, the payment of stock dividends or the
amalgamation of the Issuer.
4.3 The issue of the Unit Warrants will not restrict or prevent the
Issuer from obtaining any other financing, nor from issuing additional
securities or rights.
5. REPRESENTATIONS, WARRANTIES, ACKNOWLEDGEMENTS AND COVENANTS.
5.1 The Purchaser acknowledges, represents, warrants and covenants to
and with the Issuer that, as at the date given above and at the Closing:
(a) no prospectus has been filed by the Issuer with any securities
commission or regulatory authority in connection with the issuance of
the Special Warrants, the issuance is being made in reliance on
exemptions from the prospectus requirements of the Securities Acts and
that:
(i) the Purchaser is restricted from using most of the protections,
rights and remedies available under the Securities Acts, including civil
remedies available under the Securities Acts;
(ii) the Purchaser may not receive information that would otherwise be
required to be provided to him under the Securities Acts;
(iii) the Issuer is relieved from certain obligations that would
otherwise apply under the Securities Acts;
(iv) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Private Placement and the
issuance of the Special Warrants;
(b) the Purchaser is:
(i) a person, other than an individual, purchasing as principal and is
recognized by the securities regulatory authority in the province in
which the Purchaser is resident as an exempt purchaser (or if the
Purchaser is resident in Quebec, the Purchaser is a "sophisticated
purchaser") and the Private Placement and the Distribution are made
without advertisement; or
(ii) purchasing sufficient Special Warrants so that the aggregate
acquisition cost of the Special Warrants to the Purchaser is not less
than:
A. if the Purchaser is resident in British Columbia or Alberta,
$97,000; and
B. if the Purchaser is resident in Ontario, $150,000; or
C. if the Purchaser is resident in Quebec, $150,000 and such
Purchaser is active for his own account and the Private Placement and
Distribution are made without advertisement; or
(iii) in the case of a purchase of Special Warrants by the Purchaser as
agent for a disclosed principal or for a principal which is undisclosed
or identified by account number only, each beneficial purchaser of
Special Warrants for whom the Purchaser is acting as agent, is
purchasing as principal for its own account and not for the benefit of
any other person, Special Warrants having an aggregate acquisition cost
of not less than:
A. in the case of a beneficial purchaser of Special Warrants resident
in Ontario, $150,000;
B. in the case of a beneficial purchaser of Special Warrants resident
in British Columbia or Alberta, $97,000; and
C. in the case of a beneficial purchase of Special Warrants resident
in Quebec, $150,000 and such Purchaser is active for his own account and
the Private Placement and Distribution are made without advertisement,
and the Purchaser is an agent or trustee with proper authority to
execute and deliver this Agreement and all documentation in connection
with the purchase on behalf of the beneficial purchaser; or
(iv) in the case of a purchase by the Purchaser of Special Warrants as
a trustee or as an agent for a principal which is undisclosed or
identified by account number only:
A. if any beneficiary of a trust in respect of which the Purchaser
acting as trustee or any such undisclosed principal or principal who is
identified by account number only is resident in or otherwise subject to
the securities legislation of Ontario, the Purchaser is a trust company
registered under the laws of Ontario acting as trustee or as agent for
accounts fully managed by the Purchaser or is a portfolio adviser and is
purchasing the Special Warrants for accounts managed by it pursuant to
Rule 45-504 made under the Ontario Act; or
B. if any beneficiary of a trust in respect of which the Purchaser is
acting as trustee or any such undisclosed principal or principal who is
identified by account number only is resident in or otherwise subject to
the securities legislation of British Columbia, the Purchaser is a trust
company or an insurance company in respect of which a business
authorization has been issued under the laws of British Columbia or an
advisor who manages the investment portfolio of clients through
discretionary authority granted by one or more clients and who is
registered as a portfolio manager under the BC Act or is exempt from
such registration and is purchasing Special Warrants as trustee for
accounts fully managed by it; or
C. if any beneficiary or a trust in respect of which the Purchaser is
acting as trustee or any such undisclosed principal or principal who is
identified by account number only is resident in or otherwise subject to
the securities legislation of Alberta, the Purchaser is a trust company
trading as a trustee or an agent or an advisor trading as agent who
manages the investment portfolio of clients through discretionary
authority granted by one or more clients and who is registered as a
portfolio manager under the Alberta Act or is exempt from such
registration and is purchasing Special Warrants for accounts fully
managed by it; or
D. if any beneficiary of a trust in respect of which the Purchaser is
acting as trustee or any such undisclosed principal or principal who is
identified by account number only is resident in or otherwise subject to
the securities legislation of Quebec, the Purchaser is a trust company
licensed under The Trust Companies and Savings Companies Act (Quebec),
an insurance company holding a license under An Act Respecting Insurance
(Quebec) or a dealer or advisor appropriately registered under the
Quebec Act and is purchasing such Special Warrants for the portfolio of
a third person managed solely by it; or
(v) if the Purchaser is resident in or is subject to the securities
laws of Ontarioand is not an individual, the Purchaser is:
A. a corporation that was not incorporated or created solely to
permit the purchase of the Special Warrants without the need for filing
a prospectus in respect of its purchase of the Special Warrants or, if
it is a corporation incorporated or created for such a purpose and a
resident in Ontario, each shareholder of the corporation is an
individual who has contributed at least $150,000 to the Issuer for the
purpose of investment by the corporation in the Special Warrants; or
B. a syndicate, partnership, trust or other unincorporated
organization, and is purchasing as principal for its own account and was
not created or being used primarily to permit purchases without a
prospectus or if a syndicate partnership, trust or other unincorporated
organization created or being used for such purposes:
(1) each member of the syndicate, partnership, or other unincorporated
organization or each beneficiary of the trust, as the case may be, is an
individual who has contributed at least $150,000 for the Special
Warrants purchased; or
(2) it will have an aggregate acquisition cost of purchasing the
Special Warrants of not less than $150,000 and falls within one of the
following categories: pension plans, groups of pension plans under
common management, organizations of members of a family fund formed to
make investments of family funds, testamentary trusts and estates,
organizations which have primary ongoing business activities other than
investing in securities, mutual funds other than private mutual funds
within the meaning of section 1 of the Ontario Act, group registered
retirement savings plans or group deferred profit sharing plans, or
partnerships, interests in which are offered by a prospectus, where the
partnership invests in securities in reliance upon section 72(1)(d) of
the Ontario Act; or
C. an investment club and the share or portion of any member of the
investment club of the aggregate acquisition cost to such investment
club of the Special Warrants subscribed to hereunder is at least
$150,000; or
(vi) if the Purchaser is resident in or is otherwise subject to the
securities laws of Alberta and is a corporation, syndicate, partnership
or other form of unincorporated organization, it pre-existed the
offering of the Special Warrants and has a bona fide purpose other than
investment in the Special Warrants or, if created to permit such
investment, the individual share of the aggregate acquisition cost for
each participant is not less than $97,000;
(vii) an individual exempted from registration and prospectus filing
requirements by sections 45(2)(10) and 74(2)(9) of the BC Act as an
employee, senior officer or director of the Issuer or an affiliate of
the Issuer, or is a corporation all of the voting securities of which
are owned by one of the foregoing persons, and the Purchaser has not
been induced to purchase the Special Warrants by expectation of
employment or continued employment by the Issuer; or
(viii) if the Purchaser is not a resident of British Columbia,
Alberta, Ontario or Quebec, they are purchasing in full compliance with
the laws of the jurisdiction in which the Purchaser resides;
(c) if the Purchaser is resident in or is otherwise subject to the
securities laws of British Columbia and is a syndicate, partnership or
other form of unincorporated organization, such syndicate, partnership
or other unincorporated organization was not created solely to permit
purchases under section 74(2)(4) of the BC Act by groups of individuals
whose individual share of the aggregate acquisition cost is less than
$97,000;
(d) the Purchaser is resident in the jurisdiction specified on the
first page of this Agreement and, if the Purchaser is acting as agent
for a principal, the principal is also resident in the jurisdiction
specified on the first page of this Agreement;
(e) no person has made to the Purchaser any written or oral
representations:
(i) that any person will resell or repurchase the Securities;
(ii) that any person will refund the purchase price of the Securities;
(iii) as to the future price or value of any of the Securities; or
(iv) that the Securities will be listed and posted or quoted for
trading on a stock exchange or that application has been made to list
and post the Securities for trading or quotation on a stock exchange,
other than the Exchange;
(f) the Purchaser covenants and agrees to comply with the reporting
requirements of the Securities Acts and any other applicable securities
legislation;
(g) the Purchaser is not a U.S. Person (as that term is defined in
Rule 902 under the 0000 Xxx) and is not and will not be purchasing
Special Warrants for the account or benefit of any U.S. Person was not
offered the Special Warrants in the United States, and did not execute
or deliver this Subscription Agreement in the United States;
(h) the Purchaser acknowledges that the Securities have not been
registered under the 1933 Act and may not be resold or otherwise
transferred, other than in compliance with Regulation S pursuant to a
registration under the 1933 Act and the securities laws of all
applicable states of the United States or an exemption from such
registration requirements is available.
(i) the Purchaser has no knowledge of a "material fact" or "material
change" in the affairs of the Issuer that has not been generally
disclosed to the public, save knowledge of this particular transaction;
(j) the Purchaser has the necessary legal capacity and competence to
enter into and execute this Agreement and to take all actions required
pursuant hereto and, if the Purchaser is a corporation it is duly
incorporated and validly 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 this
Agreement on behalf of the Purchaser. If the Purchaser is a natural
person, he or she has attained the age of majority and is legally
competent to execute this Subscription Agreement and to take all actions
required pursuant thereto;
(k) 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, or the constituting documents
of, the Purchaser or of any agreement, written or oral, to which the
Purchaser may be a part or by which he is or may be bound;
(l) this Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding agreement of the
Purchaser enforceable against the Purchaser;
(m) the Purchaser has been independently advised as to the applicable
hold period imposed in respect of the Securities by securities
legislation in the jurisdiction in which the Purchaser resides and
confirms that no representation has been made respecting the applicable
hold periods for the Securities, and the Purchaser is aware of the risks
involved in the purchase of the Special Warrants and has the ability to
bear the economic risk of the loss of its investment in the Special
Warrants, and the Purchaser is aware of the fact that the Purchaser may
not be able to resell the Securities except in accordance with the
applicable securities legislation and regulatory policies;
(n) the Purchaser, and any beneficial purchaser for which it is
purchasing, is capable of assessing and evaluating the merits and risks
of the proposed investment as a result of the Purchaser's financial
experience or as a result of advice received from a registered person
and it, or where it is not purchasing as principal, each beneficial
purchaser, is able to bear the economic risk of its investment;
(o) if required by applicable securities legislation, policy or order
or by any securities commission, stock exchange or other regulatory
authority, the Purchaser will execute, deliver, file and otherwise
assist the Issuer in filing, such reports, undertakings and other
documents with respect to the issue of the Securities as may be
required;
(p) if the Purchaser is an individual resident in British Columbia,
the Purchaser agrees to execute and deliver to the Issuer the Form 20A
(IP), attached as Schedule "A";
(q) the Purchaser, or any beneficial purchaser (the "beneficiary") for
whom it's purchasing, acknowledges that it or the beneficiary must file
a report on the applicable form with, as applicable, the Alberta
Securities Commission, British Columbia Securities Commission, Ontario
Securities Commission or Quebec Securities Commission within 10 days of
each disposition of all or any part of the Special Warrants and, unless
the Distribution has been qualified by a Prospectus, Unit Shares and
Unit Warrants;
(r) the Purchaser covenants that the Purchaser's representations,
warranties and covenants in this subsection are and will be true and
correct both as of the execution of this Agreement and as of the
Closing;
(s) the Purchaser has not received, nor has it requested, nor does it
have any need to receive, any offering memorandum, or a prospectus as
defined in applicable Securities Laws, or any other document describing
the business and affairs of the Issuer. The offer and sale to the
Purchaser of the Purchaser's Units were not made through or as a result
of, and the distribution of the Special Warrants is not being
accompanied by, any advertisement in printed public media of general and
regular paid circulation, radio, television or telecommunications,
including electronic display or any other form of advertisement and
except for this Subscription Agreement, the only documents, if any,
delivered or otherwise furnished to the Purchaser in connection with
such offer and sale were a term sheet describing the terms of the
Private Placement and publicly available materials concerning the
Issuer, none of which has been prepared for delivery to and reviewed by
prospective purchasers in order to assist them in making an investment
decision in respect of the Special Warrants and none of which has been
independently verified by the Agent or its professional advisors;
(t) the Purchaser has been advised by the Issuer to obtain its own
legal, financial and tax advice with respect to the advisability of
purchasing the Special Warrants and has had adequate opportunity to do
so, and the Purchaser acknowledges and understands the terms and its
rights and obligations under this Agreement;
(u) the Purchaser, or each beneficial purchaser for whom it is
purchasing, is acquiring Units for investment only and not with a view
to immediate resale or distribution and will not resell or otherwise
transfer or dispose of the Units except in accordance with the provision
of applicable Securities Laws;
(v) the Units are not being purchased by the Purchaser as a result of
any material information concerning the Company which has not been
publicly disclosed and the Subscriber's decision to subscribe for Units
has not been made as a result of any verbal or written representation as
to fact or otherwise made by or on behalf of the Company, the
Underwriter or any other person and is based entirely upon currently
available public information concerning the Company;
(w) the Purchaser acknowledges and agrees that the sale and delivery
of the Units to the Purchaser (or, if applicable, to others for whom it
is contracting hereunder) is conditional upon such sale being exempt
from the requirements under applicable Canadian Securities Laws
requiring the filing of a prospectus or delivery of an offering
memorandum in connection with the distribution of the Units or upon the
issuance of such rulings, orders, consents and approvals as may be
required to permit such sale without the requirement of filing a
prospectus or delivery of an offering memorandum;
(x) the Purchaser is not a "control person" of the Issuer (as defined
in the Securities Act (Ontario)) and will not become a "control person"
of the Issuer by virtue of the acquisition of the Units or the
Underlying Securities pursuant to this subscription and does not intend
to act in concert with any other person to form a control group;
(y) neither the Issuer nor any party on whose behalf the Issuer is
acting is a director, officer or trustee of the Issuer or any subsidiary
thereof or is an "insider" of the Company as such term is defined under
applicable Canadian Securities Laws;
(z) in the case of a subscription by the Purchaser acting as agent for
a principal, the Purchaser is duly authorized to execute and deliver
this Agreement and all other necessary documentation in connection with
this subscription on behalf of such principal and this Agreement has
been duly authorized, executed and delivered by or on behalf of, and
constitutes the legal, valid and binding agreement of such principal;
(aa) the Purchaser acknowledges that the Issuer may enter into
agreements similar to this Agreement with other persons in respect of
the Private Placement, which agreements shall be made and dated for
reference the same date as this Agreement.
5.2 The Purchaser's representations, warranties and covenants are made
with the intent that they be relied upon by the Issuer and Agent in
determining the Purchaser's suitability as a purchaser of Special
Warrants, and the Purchaser hereby agrees to indemnify the Agent and
Issuer against all losses, claims, fees, costs, expenses and damages or
liabilities whatsoever which any of them may suffer or incur as a result
of reliance thereon. The Purchaser undertakes to notify the Issuer and
Agent immediately of any change in any representation, warranty or other
information relating to the Purchaser set forth herein which takes place
prior to the Closing. The covenants, representations and warranties
contained herein shall survive the closing of the transaction
contemplated hereby.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER.
6.1 The Issuer represents and warrants that each of the
representations and warranties of the Issuer set forth in the Agency
Agreement are true and correct. The Issuer further acknowledges and
agrees that it is bound by each of its covenants, obligations and
agreements set out in the Agency Agreement.
7. CLOSING.
7.1 The Purchaser acknowledges and agrees that the Closing will be
completed at the place, time, date and manner specified in the Agency
Agreement or such other place, time and/or date as the Issuer and the
Agent may agree.
7.2 The Purchaser acknowledges and agrees that this Agreement and any
other documents delivered in connection herewith will be held by the
Agent until such time as the conditions for the benefit of the Agent set
forth in the Agency Agreement are satisfied by the Issuer or waived by
the Agent. Upon the satisfaction or waiver of these conditions, the
Agent will, at the Closing, deliver this Agreement and any other
documents delivered in connection herewith, to the Issuer and, on behalf
of the Purchaser, pay to the Issuer an amount equal to the total
Purchase Price for the Purchaser's Special Warrants (the "Subscription
Funds") and the Issuer will deliver to the Agent, on behalf of the
Purchaser, a certificate representing the Special Warrants purchased by
the Purchaser registered in the name of the Purchaser or its nominee.
In the event that the Purchaser's subscription offer is not accepted by
the Issuer or the conditions referred to above are not satisfied by the
Issuer, or waived by the Agent, within the appropriate time period
therein, this Agreement and any other documents delivered in connection
herewith will be returned to the Purchaser at the address of the
Purchaser or nominee according to the delivery instructions shown on the
first page of this Agreement.
8. RESALE RESTRICTIONS.
8.1 The Purchaser understands and acknowledges that the Purchaser's
Special Warrants and, if the Purchaser's Special Warrants are exercised
before the Qualification Date, the Unit Shares and Unit Warrants issued
pursuant thereto, will be subject to certain resale restrictions under
applicable securities legislation and that the certificates representing
the Securities will bear a legend to that effect. The Purchaser also
acknowledges that its has been advised to consult with its own legal
advisors regarding the applicable resale restrictions and that the
Purchaser is solely responsible (and neither the Issuer nor the Agent is
in any manner responsible) for complying with such restrictions. The
Purchaser covenants and agrees to sell, assign or transfer the
Securities only in accordance with the Securities Acts and such legend.
THE PURCHASER FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT THE ISSUER IS
NOT CURRENTLY A "REPORTING ISSUER" UNDER CANADIAN SECURITIES LAWS AND
THAT THE SPECIAL WARRANTS AND THE UNIT SHARES AND UNIT WARRANTS ISSUABLE
UPON THE EXERCISE OF THE SPECIAL WARRANTS MAY NOT BE SOLD IN THE
QUALIFYING PROVINCES EXCEPT PURSUANT TO EXEMPTIONS FROM THE PROSPECTUS
REQUIREMENTS OF THE CANADIAN SECURITIES LAWS.
8.2 The offer and sale of the Special Warrants has been made, and the
sale of shares of common stock upon exercise of Unit Warrants will be
made, in reliance upon Regulation S promulgated by the SEC under the
Securities Act of 1933 ("1933 Act"). Therefore, the Special Warrants,
Unit Shares, Unit Warrants, and shares of common stock issuable upon
exercise of the Unit Warrants will be "restricted securities" and as
such may be resold only in accordance with an effective registration
statement filed under the Act or compliance with Rule 144 under the 1933
Act. Regulation S requires that, for a period of 40 days following the
closing of the offering, no offer or sale of a Special Warrant, Unit
Warrant, Unit Share, or share of common stock issuable upon exercise of
a Unit Warrant may be made to a United States Person, as that term is
defined in Regulation S, or for the account of a United States Person.
Regulation S also requires that each Special Warrant and Unit Warrant
bear a legend stating that the Special Warrant and Unit Warrants, as the
case may be, and the securities issuable upon its exercise have not been
registered under the 1933 Act and that the Warrant may not be exercised
by or on behalf of the United States Person unless such a registration
is effective or an exemption from registration is available.
Each person exercising a Special Warrant or Unit Warrant must provide
the Issuer with either (i) written certification that it is not a United
States Person and that the Warrant is not being exercised on behalf of a
United States Person, or (ii) a written opinion of counsel satisfactory
to the Issuer that the issuance of securities upon exercise of the
Special Warrant or Unit Warrant has been registered under the 1933 Act
and any applicable States securities law or is exempt from registration.
Regulation S also provides for the resale of securities which are issued
and outstanding. As noted above, the Special Warrants, Unit Shares,
Unit Warrants, and shares issuable upon exercise of the Unit Warrants
may be resold only in compliance with Regulation S or pursuant to an
effective registration statement under the 1933 Act or an exemption from
the registration requirements of the 1933 Act. Rule 904 of Regulation S
provides that a resale of an outstanding security may be made pursuant
thereto if the offer and sale of the security are made in an offshore
transaction and if no directed selling effort is made in the United
States with regard to the securities to be sold by the seller, an
affiliate, or any person acting on their behalf. An offer or sale of
securities is made in an "offshore transaction" if the offer is not made
to a person in the United States and either (i) at the time the buy
order is originated, the buyer is outside the United States, or the
seller and any person acting on its behalf have good reason to believe
that the buyer is outside the United States; and (ii) the transaction is
executed in, on or through the facilities of a designated offshore
securities market and neither the seller nor any person acting on its
behalf knows that the transaction has been prearranged with a buyer in
the United States. Offers and sales of securities specifically targeted
at identifiable groups of United States citizens abroad shall, in no
event, be deemed to be made in an offshore transaction. Rule 904
imposes additional limitations on resales by dealers and persons
receiving selling concessions and affiliates of the issuer.
Each certificate evidencing a Special Warrant and Unit Warrant will bear
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES
ISSUABLE UPON THE EXERCISE OF SUCH SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR QUALIFIED UNDER OR
PURSUANT TO THE SECURITIES LAWS OF ANY STATE NOR UNDER OR PURSUANT TO
THE SECURITIES LAWS OF ANY PROVINCE IN CANADA, AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS OF
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER SUCH LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION
THEREFROM. INDEMNITY.
8.3 The Purchaser agrees to indemnify and hold harmless the Issuer and
the Agent and their respective directors, officers, employees, agents,
advisers and shareholders from and against any and all loss, liability,
claim, damage and expense whatsoever including, but not limited to, any
and all fees, costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation,
administrative proceeding or investigation commenced or threatened or
any claim whatsoever arising out of or based upon any representation or
warranty of the Purchaser contained herein or in any document furnished
by the Purchaser to the Issuer or the Agent in connection herewith being
untrue in any material respect or any breach or failure by the Purchaser
to comply with any covenant or agreement made by the Purchaser herein or
in any document furnished by the Purchaser to the Issuer or the Agent in
connection herewith.
9. PROSPECTUS/REGISTRATION STATEMENT.
9.1 The Issuer has agreed with the Agent to prepare and file a final
Prospectus and to use its reasonable best efforts to obtain receipts
therefor from the Commissions and to have an Effective Registration with
respect to the Underlying Securities on or before the date (the
"Qualification Deadline") which is 150 days following the Closing (if
such day is not a business day, then the next following business day).
9.2 If either receipts for the final Prospectus have not been issued
by the applicable Commissions or an Effective Registration has not
occurred before the Qualification Deadline, the Special Warrants shall
be deemed to be exercisable into 1.1 Unit Shares (rather than one Unit
Share) and 0.55 Unit Warrants (rather than one-half of one Unit Warrant)
for no additional consideration.
9.3 Until each of the conditions set forth in Section 10.2 have been
satisfied, 15% of the gross proceeds received in connection with the
Private Placement in Canada will be maintained in Escrow by Pacific
Corporate Trust Company or such other trustee as may be mutually agreed
to between the Issuer and the Agent.
10. COMMISSION TO THE AGENT.
10.1 The Purchaser acknowledges that the Agent will receive from the
Issuer a commission in an amount equivalent to 8% of the gross proceeds
raised from the Private Placement in Canada provided, however, that the
Agent shall receive a commission equivalent to 4% of the gross proceeds
raised from the Private Placement in Canada from those persons
identified on the President's List as provided by the Issuer and as
defined in the Agency Agreement and a Fiscal Advisory Fee equal to 4% of
the gross proceeds raised from the Private Placement in the United
States. The Purchaser further acknowledges that the Agent will also
receive Agent's Warrants (as defined in the Agency Agreement) which will
be exercisable into Agent's Compensation Options (as defined in the
Agency Agreement) and will entitle the Agent to purchase such number of
Units of the Issuer as is equal to 10% of the Special Warrants sold
under the Private Placement in the aggregate, inclusive of those Special
Warrants sold in the United States, and is further entitled to
reimbursement of its expenses in connection with the Private Placement.
10.2 The Purchaser acknowledges that the Agent, its directors,
officers, employees, shareholders, affiliates and associates may, from
time to time, hold positions in securities of the Issuer and may
purchase Special Warrants.
11. CONDITIONAL UPON REGULATORY APPROVAL.
11.1 Without limitation, this subscription and the transactions
contemplated hereby are conditional upon and subject to the Issuer
receiving all necessary regulatory approvals under applicable Securities
Laws relating to this subscription and the Private Placement.
12. CONTRACTUAL RIGHT OF ACTION.
12.1 In the event that the Purchaser becomes entitled under the BC Act,
the Alberta Act, the Ontario Act or the Quebec Act to the remedy of
rescission by reason of the Prospectus or any amendment thereto
containing a misrepresentation, then, subject to any available defences
and limitation periods under applicable securities legislation, the
Purchaser will be entitled to rescission not only of the exercise of the
Special Warrants purchased, but also of its subscription hereunder, and
will be entitled in connection with such rescission to a full refund
from the Issuer of all consideration paid to the Issuer on acquisition
of such Special Warrants.
13. NO REVOCATION.
13.1 The Purchaser agrees that this offer is made for valuable
consideration and may not be withdrawn, cancelled, terminated or revoked
by the Purchaser.
14. MISCELLANEOUS.
14.1 This Agreement may be delivered by fax and the Issuer and the
Agent shall be entitled to rely on a fax copy of this executed
Agreement.
14.2 This Agreement is not assignable or transferable by either party
without the express written consent of the other.
14.3 This Agreement enures to the benefit of and is binding upon the
parties to this Agreement and their respective heirs, executors,
administrators, estate trustees, personal representatives, successors
and permitted assigns.
14.4 This Agreement is to be read with all changes in gender or number
as required by the context.
14.5 This Agreement will be governed by and construed exclusively in
accordance with the laws of Ontario and the laws of Canada applicable
therein, and the parties irrevocably attorn to and submit to the
jurisdiction of the courts of Ontario with respect to any dispute
related to this Agreement.
14.6 The parties hereto hereby confirm that they have each requested
that this agreement and all other ancillary documentation be drawn up in
the English language. Les parties aux presentes reconnaissent que
chacune d'elles a exige que cette convention et tout autre document qui
y est accessoire soient rediges en anglais.
14.7 Time shall be the essence of this Agreement.
14.8 All dollar amounts referred to in this Agreement and in any
schedules hereto refer to the lawful currency of the United States
unless otherwise indicated
14.9 This agreement resulting from the acceptance of this subscription
agreement by the Issuer contains the whole agreement between the Issuer
and the Purchaser in respect of the subject matter hereof and there are
no warranties, representations, terms, conditions, collateral
agreements, express, implied or statutory, other than as expressly set
forth herein, in the Agency Agreement, and in any amendments hereto or
thereto. All representations, warranties, agreements and covenants made
or deemed to be made by the Purchaser herein will survive the execution
and delivery and acceptance of this Subscription Agreement and the
closing of the Private Placement.
14.10 The Purchaser acknowledges and agrees that all costs and expenses
incurred by the Purchaser (including any fees and disbursements of any
special counsel returned (the Purchaser) relating to the sale of the
Special Warrants to the Purchaser shall be borne by the Purchaser.
ACCEPTANCE
This subscription is accepted by the Issuer at Xxxxxxx, Xxxxxxx. The
Issuer represents and warrants to the Purchaser that the representations
and warranties made by the Issuer to the Agent in the Agency Agreement
are true and correct in all material respects as of this date (save and
except as waived by the Agent) and that the Purchaser is entitled to
rely thereon.
DATED the day of , 2000.
XXXXXX.XX, INC.
by its authorized signatory:
Signature:
Name & Title:
FOR BRITISH COLUMBIA RESIDENTS ONLY
SCHEDULE "A"
FORM 20A (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from Xxxxxx.xx Inc. (the "Issuer")
_____________special warrants (the "Securities") of the Issuer.
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be the beneficial owner of the
Securities.
3. I [tick one] have have not received an
offering memorandum describing the Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities,
AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities and
it is my responsibility to find out what those restrictions are and to
comply with them before selling the Securities, AND
(e) I will not receive a prospectus that the British Columbia
Securities Act (the "Act") would otherwise require be given to me
because the Issuer has advised me that it is relying on a prospectus
exemption, AND
(f) because I am not purchasing the Securities under a prospectus, I
will not have the civil remedies that would otherwise be available to
me, AND
(g) the Issuer has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except
purchases referred to in paragraph 5(g), and as a result I do not have
the benefit of any protection that might have been available to me by
having a dealer act on my behalf.
5. I also acknowledge that: [tick one]
(a) I am purchasing Securities that have an aggregate
acquisition cost of $97,000 or more, OR
(b) My net worth, or my net worth jointly with my spouse at
the date of the agreement of purchase and sale of the
security, is not less than $400,000, OR
(c) my annual net income before tax is not less than
$75,000, or my annual net income before tax jointly with my
spouse is not less than $125,000, in each of the two most
recent calendar years, and I reasonably expect to have annual
net income before tax of not less than $75,000 or annual net
income before tax jointly with my spouse of not less than
$125,000 in the current calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister or child of a
senior officer or director of the Issuer, or of an affiliate
of the Issuer, OR
(f) I am a close personal friend of a senior officer or
director of the Issuer, or of an affiliate of the Issuer, OR
(g) I am purchasing securities under section 128(c) ($25,000
registrant required) of the Rules, and I have spoken to a
person [Name of registered person:] (the "Registered Person")
who has advised me that the Registered Person is registered
to trade or advise in the Securities and that the purchase of
the Securities is a suitable investment for me.
6. If I am an individual referred to in paragraph 5(b), 5(c), or
5(d), I acknowledge that, on the basis of information about the
Securities furnished by the Issuer, I am able to evaluate the risks and
merits of the Securities because: [tick one]
(a) of my financial, business or investment experience, OR
I (b) have received advice from a person [Name of adviser:]
(the "Adviser")] who has advised me that the Adviser is:
(i) registered to advise, or exempted from the requirement to be
registered to advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
DATED: , 2000.
Purchaser's Signature:
Print Name:
Address:
