Exhibit 10.22: Agency Agreement
LOEWEN, ONDAATJE, XXXXXXXXXX LIMITED
ACUMEN CAPITAL FINANCE PARTNERS LIMITED
PARADIGM CAPITAL INC.
AGENCY AGREEMENT
Dated: April 3, 2001
VOICE MOBILITY INTERNATIONAL, INC.
00000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
ATTENTION: XX. XXX XXXXXX, CHIEF EXECUTIVE OFFICER
Dear Sirs:
Loewen, Ondaatje, XxXxxxxxxx Limited (the "LEAD AGENT"), Acumen Capital
Finance Partners Limited and Paradigm Capital Inc. (the "CO-AGENTS")
(collectively the "AGENTS"), understand that Voice Mobility International, Inc.
(the "CORPORATION") desires to issue and sell special warrants of the
Corporation (the "SPECIAL WARRANTS"). Each Special Warrant will entitle the
holder to receive upon exercise or deemed exercise of the Special Warrants,
without additional payment, subject to adjustment, one unit (a "UNIT"), each
Unit consisting of one common share of the Corporation (collectively the "UNIT
SHARES") and one-half of one common share purchase warrant of the Corporation
(collectively the "WARRANTS"), as more particularly described in the attached
SCHEDULE "A".
In this agency agreement (the "AGENCY AGREEMENT"), the term "OFFERED
SECURITIES" shall mean, collectively, the Special Warrants and, where
applicable, the Unit Shares, the Warrants and the common shares of the
Corporation issuable upon exercise of the Warrants (the "WARRANT SHARES"). The
offering of the Offered Securities by the Corporation is referred to in this
Agency Agreement as the "OFFERING".
The Agents hereby agree to act as the agents of the Corporation to use
their commercially reasonable best efforts to offer for sale and obtain
subscriptions for the Special Warrants from Purchasers (as defined below), upon
and subject to the terms and conditions contained in this Agency Agreement, and
by its acceptance hereof the Corporation agrees to the appointment of the
Agents, as the Corporation's exclusive agents in respect of the Offering in the
Qualifying
Jurisdictions; provided that the Agents shall be under no obligation to
purchase any of the Special Warrants.
In consideration of the Agents' services to be rendered in connection
with the Offering, the Corporation agrees to pay the Agents' Fee (as defined
below) to the Agents.
This offer is conditional upon and subject to the additional terms and
conditions set out below.
EXERCISE OF SPECIAL WARRANTS, ESCROW AND REPURCHASE OPTION
The Special Warrants may, subject to the provisions of this Agency
Agreement, be exercised by the holder by surrendering the Special Warrants to
Montreal Trust Company of Canada (the "TRUSTEE") at any time after the Time of
Closing (as defined below) and on or before 4:30 p.m. (Toronto time) (the "TIME
OF EXPIRY") on the business day (the "QUALIFICATION DATE") which is the latest
of (i) the date a Registration Statement (as defined below) is declared
effective by the SEC (as defined below) pursuant to the 1933 ACT (as defined
below), and (ii) the date a receipt is issued by the last of the securities
regulatory authorities in each of the jurisdictions in Canada set out as
Qualifying Jurisdictions in the Term Sheet (attached as SCHEDULE "A") where
purchasers of Special Warrants are resident as at the Closing Date (the
"CANADIAN JURISDICTIONS") for a Final Prospectus (as defined below); and (iii)
the day preceding the date the listing of the Company's Common Shares on the
Exchange (as defined below) becomes effective, being the time its Common Shares
are posted for trading.
Immediately upon receipt, the gross proceeds from the subscriptions
attributable to Escrowed Subscribers (as defined below) will be deposited in
escrow with the Trustee on the Closing Date, to be held in escrow pursuant to
the Special Warrant Indenture and to be released to the Company on the exercise
or deemed exercise of the Special Warrants. The balance of the proceeds of the
Offering (gross proceeds less the Agents' fees and expenses) received from
certain subscribers ("NON-ESCROWED SUBSCRIBERS") who have agreed to permit the
release of their subscription proceeds to the Company on the Closing Date, will
be delivered to the Company. The subscription proceeds from the balance of the
Subscribers ("ESCROWED SUBSCRIBERS") shall be held in escrow as provided above.
Notwithstanding the above, net proceeds that are required to be deposited in
escrow for the purpose of obtaining approval to list the Company's Common Shares
(as defined below) on the Exchange (as defined below) shall not be released to
the Company on the Closing Date, but shall be deposited in escrow as provided
above.
In the event that a listing of the Company's Common Shares on the
Exchange has not become effective by the date that is six months following the
Closing Date, then each of the Escrowed Subscribers will be entitled, at their
option (the "REPURCHASE OPTION") for a period of 30 days thereafter, to require
the Company to repurchase the Special Warrants held by such holder, from legally
available funds, at $2.00 per Special Warrant plus such holder's portion of the
interest earned by the Trustee under the Special Warrant Indenture. If the funds
of the Company legally available for repurchase of such Special Warrants are
insufficient to repurchase the total number of Special Warrants to be
repurchased, those funds which are legally available will be used to repurchase
the maximum number of such Special Warrants rateably among the
Escrowed Subscribers who have exercised the Repurchase Option. Thereafter, as
additional funds of the Company become legally available for such repurchase,
such funds shall be used quarterly to repurchase the Special Warrants until
all Special Warrants covered by exercised Repurchase Options have been
repurchased.
Any Special Warrants not exercised prior to the Time of Expiry shall be
deemed to be exercised by the holders thereof immediately prior to such time
without any further action on the part of such holders.
CONVERSION RATE INCREASE
In the event that the Qualification Date does not occur prior to the
date which is 120 days after the Closing Date (the "QUALIFICATION DEADLINE") or
such later date as may be approved in writing (with notification to the Trustee)
by the Lead Agent in its sole and absolute discretion not less than five (5)
Business Days prior to the end of the Qualification Deadline, each Special
Warrant shall thereafter automatically entitle the holder to receive, without
further payment, 1.1 Units (comprising of 1.1 Shares and 0.55 of a Warrant) in
lieu of one Unit comprising one Share and 0.50 of a Warrant (the "CONVERSION
RATE INCREASE").
1. INTERPRETATION
1.1 Unless expressly provided otherwise, where used in this Agency Agreement or
any schedule hereto, the following terms shall have the following meanings,
respectively:
"AGENTS' FEE" has the meaning ascribed to that term in section 5 of
this Agency Agreement;
"AGENTS" has the meaning ascribed to that term in the first paragraph
of this Agency Agreement;
"APPLICABLE SECURITIES LAWS" means, collectively, the applicable
securities laws of the Qualifying Provinces, the respective
regulations, rules, rulings and orders made thereunder, the applicable
policy statements issued by the Securities Commissions and the
securities legislation and policies of each other relevant jurisdiction
in Canada (collectively, the "CANADIAN SECURITIES LAWS") and the U.S.
Securities Laws;
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
or municipal holiday in the City of Vancouver, British Columbia;
"CLOSING DATE" means the date on which the Offering is completed, as
specified in SCHEDULE "A" to this Agency Agreement, which includes the
offering in both Canada and the United States and which date shall be
signed off in writing as between the Agents and the Corporation;
"CO-AGENTS" has the meaning ascribed to that term in the first
paragraph of this Agency Agreement;
"COMMON SHARES" means the current issued and outstanding shares in the
capital of the Corporation, with $0.001 par value each, and, once
issued, it includes the Unit Shares, the Warrant Shares, the
Compensation Option Shares and the Compensation Warrant Shares, as the
context requires;
"COMPENSATION OPTION" has the meaning ascribed to that term in section
5 of this Agency Agreement;
"COMPENSATION OPTION SHARES" has the meaning ascribed to that term in
section 5 of this Agency Agreement;
"COMPENSATION WARRANTS" has the meaning ascribed to that term in
section 5 of this Agency Agreement;
"COMPENSATION WARRANT SHARES" has the meaning ascribed to that term in
section 5 of this Agency Agreement;
"COMPENSATION SECURITIES" mean, collectively, the Special Compensation
Options, the Compensation Options, the Compensation Option Shares, the
Compensation Warrants and the Compensation Warrant Shares;
"CORPORATION" means Voice Mobility International, Inc.;
"DISCLOSURE DOCUMENTS" means all of the documents of the Corporation
which have been filed with the Securities Commissions, the SEC or the
Exchange during the period commencing one year prior to the date of
this Agency Agreement and ending immediately prior to the Time of
Closing;
"DISTRIBUTION" means the proposed issuance of Unit Shares and Warrants
to the holders of Special Warrants on the exercise or deemed exercise
of the Special Warrants;
"EFFECTIVE REGISTRATION" means the registration of the resale of the
Special Warrants, Unit Shares and Warrants and the issuance of the
Warrant Shares pursuant to a Registration Statement which has been
filed 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 the
effectiveness of such Registration Statement by the SEC and all
applicable state regulatory authorities;
"EXCHANGE" means The Toronto Stock Exchange;
"FINAL PROSPECTUS" means the final prospectus of the Corporation
qualifying the issuance of the Unit Shares and Warrants for
distribution in the Canadian Jurisdictions to holders of Special
Warrants upon their exercise and, as qualified in this Agency
Agreement, the issuance of the Compensation Options;
"INCLUDING" means including without limitation;
"LEAD AGENT" has the meaning ascribed to that term in the first
paragraph of this Agency Agreement;
"MATERIAL CHANGE" means a material change as defined under the
Applicable Securities Laws or any of them or where undefined under the
Applicable Securities Laws of a jurisdiction means a change in the
business, operations or capital of the Corporation that would
reasonably be expected to have a significant effect on the market price
or value of any of the Corporation's securities and includes a decision
to implement such a change made by the Corporation's board of directors
or by senior management of the Corporation who believe that
confirmation of the decision by the board of directors is probable;
"MATERIAL FACT" means a material fact as defined under the Applicable
Securities Laws or any of them or where undefined under the Applicable
Securities Laws of a jurisdiction means a fact that significantly
affects, or would reasonably be expected to have a significant effect
on the market price or value of any of the Corporation's securities;
"MISREPRESENTATION" means a misrepresentation as defined under the
Applicable Securities Laws or any of them or where undefined under the
Applicable Securities Laws of a jurisdiction means (i) an untrue
statement of a material fact, or (ii) an omission to state a material
fact that is required to be stated or that is necessary to make a
statement not misleading in the light of the circumstances in which it
was made;
"NASD" means the U.S. National Association of Securities Dealers Inc.;
"OFFERED SECURITIES" has the meaning ascribed thereto in the second
paragraph of this Agency Agreement;
"OFFERING" has the meaning ascribed thereto in the first paragraph of
this Agency Agreement;
"OFFERING DOCUMENTS" means, collectively, the Preliminary Prospectus,
the Final Prospectus, any Supplementary Material and the Registration
Statement;
"OUTSTANDING CONVERTIBLE SECURITIES" means all options (including
options granted or proposed to be granted to officers, directors or
employees), warrants, other rights to acquire securities and other
convertible securities outstanding as at the date of this Agency
Agreement, whether issued pursuant to an established plan or otherwise,
particulars of which are set out in SCHEDULE "C";
"PERSON" includes any individual, corporation, limited partnership,
general partnership, joint stock company or association, joint venture
association, company, trust, bank, trust company, land trust,
investment trust, society or other entity, organization, syndicate
whether incorporated or not, trustee, estate trustee, executor or other
legal or personal representative, and governments and agencies and
political subdivisions thereof;
"PRELIMINARY PROSPECTUS" means the preliminary prospectus of the
Corporation qualifying the issuance of the Unit Shares and Warrants
and, as qualified in this Agency Agreement, the Compensation Options;
"PRIVATE PLACEMENT EXEMPTIONS" means the prospectus and registration
exemptions pursuant to which the Special Warrants are to be issued in
the Qualifying Provinces and pursuant to Regulation S or Regulation D
exemptions in the United States;
"PURCHASERS" means, collectively, each of the purchasers of Special
Warrants pursuant to the Offering (including, if applicable, the Agents
if it is purchasing Special Warrants);
"QUALIFICATION DATE" has the meaning ascribed to that term in the sixth
paragraph of this Agency Agreement;
"QUALIFYING JURISDICTIONS" means British Columbia, Alberta, Ontario and
Quebec (the "QUALIFYING PROVINCES") and the United States of America
and such other jurisdictions as agreed upon by the Corporation and the
Lead Agent;
"REGISTRATION STATEMENT" means a registration statement of the
Corporation under the 1933 ACT covering (i) the resale of the Special
Warrants, Unit Shares and Warrants, and (ii) the issue of the Warrant
Shares in the United States;
"REGULATION D" means Regulation D under the 1933 ACT;
"REGULATION S" means Regulation S under the 1933 ACT;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES COMMISSIONS" means, collectively, the securities
commissions or similar regulatory authorities in each of the Qualifying
Provinces;
"SIGNIFICANT INTEREST COMPANIES" means those companies, other than
Subsidiaries and immaterial subsidiaries, in which the Corporation
holds 20% or more of the outstanding voting securities;
"SPECIAL COMPENSATION OPTIONS" has the meaning ascribed to that term in
section 5 of this Agency Agreement;
"SPECIAL WARRANTS" has the meaning ascribed to that term in the first
paragraph of this Agency Agreement;
"SUBSCRIPTION AGREEMENTS" means, collectively, the subscription
agreements entered into between, INTER ALIA, the Purchasers and the
Corporation in respect of the Offering;
"SUBSIDIARIES" means the material subsidiaries of the Corporation, the
particulars of which are set out in SCHEDULE "B";
"SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the
Final Prospectus, any amended or supplemental prospectus or any
ancillary material required to be filed with any of the Securities
Commissions in connection with the distribution of the Underlying
Securities;
"SURVIVAL LIMITATION DATE" means the later of: (i) the first
anniversary of the Closing Date; and (ii) the latest date under the
Applicable Securities Laws relevant to a Purchaser (non-residents of
Canada being deemed to be resident in the Province of Ontario for such
purposes) that a Purchaser may be entitled to commence a statutory
action or exercise a statutory right of rescission, with respect to a
misrepresentation contained in the Final Prospectus or, if applicable,
any Supplementary Material;
"TIME OF CLOSING" means the time on the Closing Date at which the
Offering is to be completed, as agreed between the Corporation and the
Agents;
"TRUSTEE" means Montreal Trust Company of Canada;
"UNDERLYING SECURITIES" means the Unit Shares, Warrants and the Warrant
Shares;
"UNIT" has the meaning ascribed to the terms in the first paragraph of
this Agency Agreement;
"UNIT SHARES" means the Common Shares issued by the Corporation on the
exercise of the Special Warrants;
"U.S. PERSON" has the meaning ascribed to the term in Regulation S
under the 1933 ACT;
"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;
"WARRANTS" means the whole Common Share purchase warrants to be issued
by the Corporation on the exercise of the Special Warrants;
"WARRANT SHARES" means the Common Shares issuable upon exercise of
the Warrants;
"1933 ACT" means the UNITED STATES SECURITIES ACT of 1933, as
amended; and
"1934 ACT" means the UNITED STATES SECURITIES EXCHANGE ACT of 1934,
as amended.
1.2 The division of this Agency Agreement into sections, subsections, paragraphs
and other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agency Agreement. Unless something in the subject matter or context is
inconsistent therewith, references herein to sections, subsections, paragraphs
and other subdivisions are to sections, subsections, paragraphs and other
subdivisions of this Agency Agreement.
1.3 This Agency Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the federal laws of Canada
applicable therein and time shall be of the essence hereof.
1.4 Unless otherwise stated herein, all amounts expressed herein in terms of
money refer to lawful currency of Canada and all payments to be made hereunder
shall be made in such currency.
1.5 The following are the schedules attached to this Agency Agreement, which
schedules (including the representations, warranties and covenants set out
therein) are deemed to be a part of this Agency Agreement and are incorporated
by reference:
Schedule "A" - Details of the Offering
Schedule "B" - Details as to Subsidiaries
Schedule "C" - Outstanding Convertible Securities
Schedule "D" - Material Changes
Schedule "E" - Litigation
2. NATURE OF TRANSACTION
2.1 Each Purchaser shall purchase Special Warrants under one or more Private
Placement Exemptions so that the purchases of such Special Warrants will be
exempt from the prospectus and registration requirements of the Applicable
Securities Laws. Each Purchaser shall purchase in accordance with such
procedures as the Corporation and the Agents may mutually agree, acting
reasonably, in order to fully comply with the Applicable Securities Laws. The
Corporation hereby agrees to use all reasonable efforts to secure compliance
with all securities regulatory requirements on a timely basis in connection with
the distribution of the Special Warrants to the Purchasers, including, without
limitation, by filing within the periods stipulated under Applicable Securities
Laws and at the Corporation's expense all private placement forms required to be
filed by the Corporation and the Purchasers, respectively, in connection with
the Offering and paying all filing fees required to be paid in connection
therewith so that the distribution of the Special Warrants may lawfully occur
without the necessity of filing a prospectus, registration statement or any
similar document under the Applicable Securities Laws. The Agents agree to
assist the Corporation in all reasonable respects to secure compliance with all
regulatory requirements in connection with the Offering. The Agents will notify
the Corporation with respect to the identity of each Purchaser as soon as
practicable and with a view to leaving sufficient time to allow the Corporation
to secure compliance with all relevant regulatory requirements under Applicable
Securities Laws relating to the sale of the Special Warrants.
3. COVENANTS OF THE AGENTS
3.1 The Agents covenant with the Corporation that they will:
(i) conduct activities in connection with arranging for the sale
of the Special Warrants and in distributing the Underlying
Securities in compliance with the Applicable Securities Laws;
(ii) not deliver to any prospective Purchaser any document or
material that constitutes an offering memorandum under
Applicable Securities Laws, or any document or material
without the consent of the Corporation;
(iii) not solicit offers to purchase or sell the Special Warrants so
as to then require registration or a prospectus filing with
respect to the Special Warrants under the laws of any
jurisdiction including, without limitation, the United States
of America or any state thereof, or the United Kingdom, and
not solicit offers to purchase or sell the Special Warrants in
any jurisdiction outside of Canada and the United States where
the solicitation or sale of the Special Warrants would result
in any ongoing disclosure requirements in such jurisdiction,
any registration requirements in such jurisdiction except for
the filing of a notice or report of the solicitation or sale,
or where the Corporation may be subject to liability in
connection with the sale of the Special Warrants which is
materially more onerous than its liability under the
Applicable Securities Laws to which it is subject as at the
date of this Agency Agreement;
(iv) obtain from each Purchaser an executed Subscription Agreement
in a form reasonably acceptable to the Corporation and to the
Agents relating to the transactions herein contemplated,
together with all documentation as may be necessary in
connection with subscriptions for Special WARRANTS;
(v) upon the Corporation obtaining the necessary receipts
therefore from the Securities Commissions in the Qualifying
Provinces, deliver sufficient quantities of the Final
Prospectus (together with any Supplementary Material required
to be provided to the Purchasers) to each of the Purchasers
and within the time period as required by Applicable
Securities Laws;
(vi) refrain from advertising the Offering in any medium,
including, without limitation, printed public media, radio,
television or telecommunications, including electronic
display, and not make use of any green sheet or other internal
marketing document without the consent of the Corporation;
(vii) not make any representations or warranties or make any public
announcements or publications with respect to the Corporation,
the Special Warrants or the Underlying Securities, other than
as set forth in the Preliminary Prospectus, the Final
Prospectus, any Supplementary Material, any Subscription
Agreement, this Agency Agreement or in publicly available
information filed by the Corporation;
(viii) not solicit offers from a U.S. Person, except as provided for
in this Agency Agreement;
(ix) not solicit offers to purchase the Special Warrants from any
U.S. Person that is not an "accredited investor" as defined in
Regulation D;
(x) provided that they are otherwise satisfied, in their sole
discretion, that it is responsible for them to do so, execute
and deliver to the Corporation any certificate required to be
executed by them under Applicable Securities Laws in
connection with the Registration Statement, Preliminary
Prospectus, Final Prospectus and any Supplementary Material;
and
(xi) subject to restrictions, if any, imposed under Applicable
Securities Laws, publish substantive research on the
Corporation within 150 days prior to Closing Date, provided
that no such research will be published prior to the
effectiveness of the Registration Statement.
4. REPRESENTATIONS AND WARRANTIES OF THE AGENTS
4.1 The Agents represent and warrant to the Corporation, and acknowledge that
the Corporation will be relying upon such representations and warranties in
entering into this Agency Agreement, that:
(a) the Agents hold all licences and permits that are required for
carrying on their businesses in the manner in which such
businesses has been carried on;
(b) the Agents have good and sufficient right and authority to
enter into this Agency Agreement and complete the transactions
contemplated under this Agency Agreement on the terms and
conditions set forth herein;
(c) the Agents are appropriately registered under the Applicable
Securities Laws of the Qualifying Provinces so as to permit
them to lawfully fulfill their obligations under this Agency
Agreement; and
(d) the Lead Agent is a member in good standing of the Exchange.
5. AGENTS' COMPENSATION
5.1 In consideration of the Agents' services to be rendered to the Corporation
in connection with the Offering, including, without limitation, soliciting
offers to purchase the Special Warrants, acting as financial advisor to the
Corporation in respect of the sale of the Special Warrants, preparation of
relevant documentation including assisting the Corporation in connection with
the preparation of the Offering Documents, performing administrative work in
connection with such matters, and all other services arising out of this Agency
Agreement, the Corporation agrees, subject to and upon the terms and conditions
set out herein, to pay or cause to be paid to the Agents at the Time of Closing
the following:
(a) A fee (the "Agents' Fee") equal to 7% of the amount of the
aggregate gross proceeds to the Corporation from the sale of
Special Warrants to Purchasers pursuant to the Offering, which
shall be paid to the Lead Agent, on behalf of the Agents, in
accordance with the following:
(i) 6% of the Agents' Fee shall be paid directly to the
Lead Agent as a management step-up fee; and
(ii) after the amount in (i) above has been subtracted
from the Agents' Fee, the remainder of the Agents'
Fee will be divided as to 60% to the Lead Agent, as
to 20% to Acumen Capital Finance Partners Limited and
as to 20% to Paradigm Capital Inc.
(b) In addition to (a) above and subject to regulatory approval,
the Agents will receive special compensation options (the
"SPECIAL COMPENSATION OPTIONS") to acquire, without payment of
additional consideration, compensation options (the
"COMPENSATION OPTIONS"). Subject to regulatory approval, the
Compensation Options will, upon exercise, entitle the Agents
to purchase at a price per Unit that is equal to the issue
price of each Special Warrant at any time on or prior to 4:30
p.m. (Toronto time) 24 months following the Closing Date, a
number of units, each comprised of one Common Share
(collectively the "COMPENSATION OPTION SHARES") and one-half
of one warrant (collectively the "COMPENSATION WARRANTS"),
equal to 10% of the number of Special Warrants sold under the
Offering in the aggregate, to be divided as to 60% to the Lead
Agent, 20% to Acumen Capital Finance Partners Limited and 20%
to Paradigm Capital Inc. Each whole Compensation Warrant will
entitle the purchaser to acquire one Common Share
(collectively the "COMPENSATION WARRANT SHARES") at $2.25 at
any time on or before a date which is two years from the
Closing Date.
(c) Subject to Applicable Securities Laws, the Corporation shall
use its commercially reasonable best efforts to qualify the
resale of the Compensation Option issuable upon exercise of
the Special Compensation Options under the Final Prospectus.
(d) In connection with the receipt hereunder of the Special
Compensation Options and the issuance of the Compensation
Options, Compensation Option Shares, Compensation Warrants and
Compensation Warrant Shares (collectively with the Special
Compensation Options, the "Compensation Securities"), each
Agent hereby certifies, represents and warrants to the
Corporation as follows, and acknowledges that the Corporation
will be relying upon such certifications, representations and
warranties in issuing the Compensation Securities: that (i) it
is not a "U.S. person" (as defined in Regulation S under the
0000 Xxx) and is not subscribing for the Compensation
Securities for the benefit of any U.S. person; (ii) it has no
intention to distribute, either directly or indirectly, any of
the Compensation Securities in the United States or to any
U.S. person; (iii) it has not acquired and is not acquiring
the Compensation Securities as a result of any "directed
selling efforts" of any party (as defined in Regulation S) in
the United States; (iv) the Compensation Securities are being
or will be acquired by the
holder for investment purposes for the holder's own
account only and not for sale or with a view to
distribution of all or any part of such Compensation
Securities; (v) it has been informed that the
Compensation Securities will be, when issued, "restricted
securities" under the 1933 ACT and may not be resold or
transferred unless first registered under the federal
securities laws or unless an exemption from such
registration is available with respect to a resale in the
United States or in an "offshore transaction" (as such
term is defined in Regulation S); (vi) it is prepared to
hold the Compensation Securities for an indefinite
period; (vii) it is aware that Rule 144 and Regulation S
under the 1933 ACT permit limited public resales of
securities acquired in nonpublic offerings, subject to
the satisfaction of certain conditions; (viii) it
understands that Regulation S, as currently in effect,
allows resales in private and public transactions in
certain circumstances, only in qualified offshore
transactions and only when certain holding periods of at
least one (1) year have been fulfilled; (ix) it
understands that it may be precluded from selling any of
the Compensation Securities under Rule 144 or Regulation S
even if the holding periods have been satisfied either
because the other conditions may not have been fulfilled or
because markets for resales do not exist.
5.2 The Corporation and the Agents acknowledge and agree that in the event that
the Corporation withdraws from or terminates the Offering as the result of
entering into an alternative financing arrangement or a proposed or contemplated
merger, amalgamation, reorganization, plan of arrangement, take-over bid or
other similar transaction involving the Corporation or a sale of all or
substantially all of the assets of the Corporation, the Corporation shall pay to
the Agents the compensation outlined above in paragraph 5.1(a) that would be
otherwise payable pursuant to the terms hereof.
5.3 The Corporation and the Agents acknowledge and agree that if a separate fee
were to have been charged to the Corporation for the services described above
pertaining to the distribution of the Special Warrants, such separate fee would
represent more than 50% of the Agents' Fee, and the Agents further acknowledge
and agree that the Agents will rely on the foregoing in not charging G.S.T. on
such fees. Should it be determined by Canada Customs and Revenue Agency that
G.S.T. should have been charged on all or any part of the Agents' Fee, the
Corporation shall pay to the Agents an amount equal to the G.S.T. determined to
be exigible.
5.4 The Corporation and the Agents acknowledge and agree that in the event the
NASD, SEC or other regulatory authority determines that the aggregate or any
portion of the compensation to be paid to the Agents under this Section 5
violates the NASD's Corporate Financing Rules, including without limitation,
Rule 2710 of the NASD, the Agents will reduce the aggregate compensation to be
paid to the Agents hereunder to be in compliance with such Rules, and such
reduced compensation shall be the compensation to be paid by the Corporation to
the Agents hereunder. The Agents shall not be entitled to terminate this Agency
Agreement as a result of limitations placed in the compensation to be paid to
the Agents under the NASD's Corporate Financing Rules.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
6.1 The Corporation hereby represents, warrants and covenants to and with the
Agents and the Purchasers that:
(a) Subject to the Agents obligations hereunder, it will assure
that any offers and sales of Special Warrants in Canada, the
United States and elsewhere, or to any U.S. Persons, are
exempt from registration and qualification under U.S.
Securities Laws;
(b) it will as soon as practicable after the Closing Date and, in
any event, within applicable time periods under the Applicable
Securities Laws, file such documents as may be required under
the Applicable Securities Laws relating to the private
placement of the Special Warrants which, without limiting the
generality of the foregoing, shall include a Form 45-501F1 as
prescribed by Rule 45-501 of the Ontario Securities Commission
and the equivalent provisions thereto in the other Qualifying
Provinces, and pay all associated filing fees required to be
paid;
(c) it will use its commercial best efforts to (i) ensure that the
resale of the Special Warrants, Unit Shares and Warrants and
the issue of Warrant Shares. will be registered under all
applicable U.S. Securities Laws not later than 120 days
following the Closing Date and (ii) to cause the Registration
Statement to remain effective for a period of 4 years from the
Closing Date provided that it will not be required to maintain
an effective Registration Statement at any time that the
Warrant Shares may be sold pursuant to Rule 144(k), presuming
a cashless exercise of the Warrants for as long as the
Warrants and Compensation Warrants are exerciseable, however,
notwithstanding the above, the Company undertakes to keep the
Registration Statement effective for a minimum of two years
from Closing Date;
(d) it will use its commercially reasonable efforts to cause the
Final Prospectus and any Supplementary Material to be prepared
and filed, and associated receipts obtained, in each of the
Qualifying Provinces in accordance with the Applicable
Securities Laws as soon as practicable within 120 days
following the Closing Date, which Final Prospectus shall be,
in form and substance, satisfactory to the Corporation and the
Agents, each acting reasonably, and to take all other steps
and proceedings that may be reasonably necessary in order to
qualify the Unit Shares and Warrants issuable upon exercise of
the Special Warrants for distribution to the public in each of
the Qualifying Provinces and to qualify the Compensation
Options for distribution by the Agents in the Province of
Ontario to the extent permitted by the British Columbia and
Ontario Securities Commissions;
(e) during the period commencing with the date hereof and ending
on the first Business Day which is the earlier of April 3,
2002 and 90 days after the receipt for a Final Prospectus is
issued in the Qualifying Provinces, it will not issue, or
enter into any agreement to issue, any additional Common
Shares or financial instruments convertible or exchangeable
into Common Shares of the Corporation, other than for purposes
of employee stock purchase plans or to satisfy existing
instruments already issued, without the consent of the Lead
Agent, such consent not to be unreasonably withheld;
(f) it will use its commercially reasonable efforts (i) to settle
as expeditiously as possible any comments made by any
Securities Commission on the Preliminary Prospectus on a basis
acceptable to the Agents, acting reasonably; (ii) as soon as
practicable after such comments are settled, prepare and file
the Final Prospectus under the Applicable Securities Laws of
each Qualifying Province and use its commercially reasonable
efforts to obtain a receipt therefore from the Securities
Commission of each Qualifying Province as soon as is
practicable; and (iii) subject to the foregoing, take all
other steps and proceedings that may be reasonably necessary
in order to qualify the Underlying Securities for
distribution, subject to Applicable Securities Laws to the
public in each of the Qualifying Provinces;
(g) it will use its commercially reasonable efforts to ensure that
the Common Shares will be listed and posted for trading on the
Exchange upon their issue;
(h) it will promptly comply with all filing and other requirements
under Applicable Securities Laws in connection with the
Offering, including the filing of amendments to the Final
Prospectus in each of the Qualifying Provinces and the
Registration Statement in the U.S.;
(i) except as set forth in SCHEDULE "B", the Corporation does not
have any Significant Interest Companies;
(j) attached as SCHEDULE "B" is a list of each Subsidiary and the
particulars of the types and percentage of securities in such
Subsidiary, the Corporation holds all of such securities free
and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances, claims and demands whatsoever except
as otherwise disclosed in such schedule;
(k) the Corporation (i) is duly existing under the laws of the
state of Nevada and is and will at the Time of Closing be
validly existing and in good standing under the laws of
Canada; (ii) has all requisite corporate power and authority
to carry on its business as now conducted and to own, lease
and operate its properties and assets; and (iii) has all
required corporate power and authority to create, issue and
sell the Offered Securities, to create and issue the
Underlying Securities and the Compensation Securities, to
enter into this Agency Agreement and the Subscription
Agreements and to carry out the provisions of each of such
agreements;
(l) all necessary corporate action has been taken or will have
been taken prior to the Time of Closing by the Corporation so
as to validly issue and sell the Special
Warrants to the Purchasers and upon receipt by the Corporation
of the purchase price as consideration for the issue of the
Offered Securities, such Offered Securities will be validly
issued and outstanding;
(m) all necessary corporation action has been taken or will have
been taken prior to the Time of Closing by the Corporation so
as to validly issue the Special Compensation Options to the
Agents and on completion of the Closing the Special
Compensation Options will be validly issued and outstanding;
(n) each of the Subsidiaries (i) has been duly incorporated and
organized and is and will at the Time of Closing be validly
existing and in good standing under the laws of its
jurisdiction of incorporation; and (ii) has all requisite
corporate power and authority to carry on its business as now
conducted and to own, lease and operate its properties and
assets;
(o) the Corporation and each of the Subsidiaries is in all
material respects conducting its business in compliance with
all applicable laws, rules and regulations of each
jurisdiction in which its business is carried on and is duly
licensed, registered or qualified in all jurisdictions in
which it owns, leases or operates its property or carries on
business to enable its business to be carried on as now
conducted and its property and assets to be owned, leased and
operated and all such licences, registrations and
qualifications are and will at the Time of Closing be valid,
subsisting and in good standing, except in respect of matters
which do not and will not result in any material adverse
change to the business, business prospects or condition
(financial or otherwise) of any of the Subsidiaries or the
Corporation and except for the failure to be so qualified or
the absence of any such licence, registration or qualification
which does not and will not have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Corporation or any of the Subsidiaries;
(p) the authorized capital of the Corporation consists of
100,000,000 shares of Common Stock, par value $.001 per share
and 1,000,000 shares of preferred stock, par value $.001 per
value, of which one share has been designated Series A
Preferred Stock and 666,667 shares have been designated Series
B Preferred Stock. One share of Series A and 666,667 shares of
Series B Preferred Stock are issued and outstanding. In
addition, 6,600,000 shares of Common Stock are issuable upon
exchange of Exchangeable Shares of the Corporations'
subsidiary, Voice Mobility Canada Limited.
(q) except as disclosed in the Disclosure Documents, or in
SCHEDULE "C", neither the Corporation nor the Subsidiaries
have any Outstanding Convertible Securities and, except under
this Agency Agreement, no person now has any agreement or
option or right or privilege capable of becoming an agreement
for the purchase, subscription or issuance of any unissued
shares, securities or warrants of the Corporation or any of
the Subsidiaries;
(r) the Corporation (and its Subsidiaries taken as a whole)
possess all material certificates, authority, permits or
licences issued by the appropriate state, provincial,
municipal or federal regulatory agencies or bodies necessary
to conduct the business now owned or operated by it and the
Corporation has not received any notice of proceedings
relating to the revocation or modification of any such
certificate, authority, permit or licence which, if the
subject of an unfavourable decision, ruling or finding would
materially and adversely affect the conduct of the business,
operations, financial condition or income of the Corporation;
(s) except as disclosed in SCHEDULE "D":
(i) there has not been any material change in the assets,
liabilities or obligations (absolute, accrued,
contingent or otherwise) of the Corporation, on a
consolidated basis, that has not been publicly
disclosed ;
(ii) there has not been any material change in the capital
stock or long-term debt of the Corporation, on a
consolidated basis, that has not been publicly
disclosed;
(iii) there has not been any material change in the
business, business prospects, condition (financial or
otherwise) or results of the operations of the
Corporation, on a consolidated basis that has not
been publicly disclosed; and
(iv) except as has been publicly disclosed since its last
fiscal year end, the Corporation and each of the
Subsidiaries has carried on its business in the
ordinary course;
(t) the audited financial statements of the Corporation for the
fiscal period ended December 31, 1999, and the unaudited
consolidated financial statements of the Corporation for the
quarters ended March 31, 2000, June 30, 2000 and September 30,
2000 and any subsequent period prior to the Closing Date,
present fairly the financial condition of the Corporation, on
a consolidated basis, for the periods then ended;
(u) except as disclosed in SCHEDULE "E", there is no action,
proceeding or investigation (whether or not purportedly by or
on behalf of the Corporation or any Subsidiary) pending or, to
the knowledge of the Corporation, threatened against or
affecting the Corporation, at law or in equity (whether in any
court, arbitration or similar tribunal) or before or by any
federal, provincial, state, municipal or other governmental
department, commission, board or agency, domestic or foreign,
that could reasonably be expected to result in any material
adverse effect on the Corporation, on a consolidated basis, or
the condition (financial or otherwise) of the Corporation, on
a consolidated basis or which questions the validity of the
Offered Securities, the Underlying Securities or of the
issuance thereof as fully paid and non-assessable securities
or any action taken
or to be taken by the Corporation pursuant to or in
connection with this Agency Agreement;
(v) neither the Corporation nor any of the Subsidiaries is in
default or in breach in any material respect of, and the
execution and delivery of this Agency Agreement, the
Subscription Agreements, and the Special Warrants by the
Corporation, the performance and compliance with the terms of
this Agency Agreement, the Subscription Agreements, the sale
of the Offered Securities and the issuance of the Underlying
Securities by the Corporation, will not result in any material
breach of, or be in conflict with or constitute a default
under, or create a state of facts which, after notice or lapse
of time, or both, would constitute a default under any term or
provision of the constating documents, by-laws or resolutions
of the Corporation or any of the Subsidiaries or any mortgage,
note, indenture, contract, agreement, instrument, lease or
other document to which the Corporation or any of the
Subsidiaries is a party or by which any of them is bound or
any judgment, decree, order, statute, rule or regulation
applicable to any of them except in respect of a default or
breach which does not and will not result in any material
adverse change in the business or condition of the
Corporation;
(w) the auditors of the Corporation who audited the financial
statements of the Corporation most recently delivered to the
security holders of the Corporation and who delivered their
report with respect thereto are independent public accountants
as required by the Applicable Securities Laws;
(x) there has never been any reportable disagreement (within the
meaning of National Policy Statement No. 31 of the Canadian
Securities Administrators) with the present or any former
auditor of the Corporation and there has never been a
disagreement or, except as previously reported, pursuant to
the 1934 ACT, resignation of the Corporation's auditors which
was a required subject of disclosure pursuant to the 1934 ACT,
the 1933 ACT or any rule or regulation adopted thereunder;
(y) the Corporation and, as applicable, the Subsidiaries have
filed all national, provincial, state, local and foreign tax
returns that are required to be filed (except in any case in
which the failure so to file would not have a material adverse
effect on the assets and properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Corporation and its Subsidiaries taken as a whole) and
have paid all taxes required to be paid by them and any other
assessment, fine or penalty levied against them, to the extent
that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being
contested in good faith;
(z) the Corporation and, as applicable, the Subsidiaries have
established on their books and records reserves that are
adequate for the payment of all taxes not yet due and payable
and there are no liens for taxes on the assets of the
Corporation or any of its Subsidiaries, and to the knowledge
of the Corporation there are no audits pending of the tax
returns of the Corporation or any of its Subsidiaries
(whether federal, state, provincial, local or foreign)
and there are no claims which have been or may be
asserted relating to any such tax returns, which audits
and claims, if determined adversely, would result in the
assertion by any governmental agency of any deficiency
that would have a material adverse effect on the assets
or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Corporation
and its Subsidiaries taken as a whole or of any of the
Subsidiaries;
(aa) no domestic or foreign taxation authority has asserted or, to
the best of the Corporation's knowledge, threatened to assert
any assessment, claim or liability for taxes due or to become
due in connection with any review or examination of the tax
returns of the Corporation or any of its Subsidiaries
(including, without limitation, any predecessor companies)
filed for any year which would have a material adverse effect
on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Corporation and its Subsidiaries taken as a whole or of any of
the Subsidiaries;
(bb) neither the Corporation nor the Subsidiaries, nor to the best
of the Corporation's knowledge, any other party, is in default
in the observance or performance of any term or obligation to
be performed by it under any material contract and no event
has occurred which with notice or lapse of time or both would
constitute such a default, in any such case, which default or
event would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Corporation, on a
consolidated basis;
(cc) the Corporation will use its commercially reasonable efforts
to obtain the necessary regulatory consents from the Exchange
to the transactions contemplated herein on such conditions as
are acceptable to the Agents and the Corporation, acting
reasonably;
(dd) the Corporation will use its commercially reasonable efforts
to arrange for the listing and posting for trading on the
Exchange of the Common Shares and the Warrant Shares as soon
as practicable;
(ee) prior to the filing of the Preliminary Prospectus and
thereafter and prior to the filing of the Final Prospectus and
any Supplementary Material, the Corporation will allow the
Agents to participate fully in the preparation of the
Preliminary Prospectus, the Final Prospectus and any such
Supplementary Material and shall allow the Agents to conduct
all due diligence which it may reasonably require to conduct
in order to fulfil its obligations and in order to enable it
responsibly to execute the certificate required to be executed
by it at the end of each of the Preliminary Prospectus, the
Final Prospectus and any Supplementary Material;
(ff) the Corporation will deliver from time to time without charge
to the Agents as many copies of the Preliminary Prospectus,
the Final Prospectus and any Supplementary Material as it may
reasonably request for the purposes contemplated hereunder and
contemplated by the Applicable Securities Laws in
the Qualifying Provinces and such delivery shall constitute
the consent of the Corporation to the Agents' use of such
documents in connection with the distribution of the
Underlying Securities, subject to the provisions of the
Applicable Securities Laws in the Qualifying Provinces and
the provisions of this Agency Agreement;
(gg) all the information and statements to be contained in the
Registration Statement, Preliminary Prospectus, Final
Prospectus and any Supplementary Material shall, at the date
of delivery thereof, constitute full, true and plain
disclosure of all material facts relating to each of the
Offering, the Corporation (on a consolidated basis), the
Offered Securities and the Underlying Securities (provided
that this representation is not intended to extend to
information and statements relating to the Agents included in
reliance upon and in conformity with information furnished to
the Corporation by or on behalf of the Agents specifically for
use therein);
(hh) none of the Registration Statement, Preliminary Prospectus,
the Final Prospectus, and any Supplementary Material will
contain a misrepresentation (provided that this representation
is not intended to extend to information and statements
relating to the Agents included in reliance upon and in
conformity with information furnished to the Corporation by or
on behalf of the Agents specifically for use therein);
(ii) the Registration Statement, Preliminary Prospectus, the Final
Prospectus and any Supplementary Material shall contain the
disclosure required by Applicable Securities Laws;
(jj) this Agency Agreement, the Subscription Agreements and the
Special Warrants, and all other contracts and instruments
required in connection with the issue and distribution of the
Offered Securities shall be, on or prior to the Closing Date,
duly authorized, executed and delivered by the Corporation and
shall be valid and binding obligations of the Corporation
enforceable in accordance with their respective terms, subject
to any applicable bankruptcy, reorganization, winding-up,
insolvency, moratorium or other laws of general application,
the unavailability of any equitable remedies, and that the
enforcement of any rights against the Corporation under this
Agency Agreement with respect to indemnity or contribution may
be limited by applicable law and may or may not be ordered by
a court on grounds of public policy;
(kk) the attributes of the Underlying Securities will conform in
all material respects with their current description and the
Registration Statement and Final Prospectus;
(ll) the forms of the certificates representing the Special
Warrants, the Common Shares, Warrants, Special Compensation
Options, the Compensation Options and the Compensation
Warrants have been, or will be prior to the Closing Date, duly
approved by the Corporation and comply with the provisions of
the laws of its jurisdiction of incorporation and, if
applicable, the regulations of the Exchange;
(mm) save as otherwise provided herein, other than the Agents,
there is no person acting or purporting to act at the request
of the Corporation, who is entitled to any brokerage, agency
or other fiscal advisory or similar fee in connection with the
transactions contemplated herein;
(nn) the Corporation will promptly notify the Agents in writing if
there shall occur any material change or change in a material
fact (in either case, whether actual, anticipated,
contemplated or threatened and other than a change or change
in fact relating solely to the Agents) or any event or
development involving a prospective material change or a
change in a material fact or any other change in any or all of
the business, affairs, operations, assets (including
information or data relating to the estimated value or book
value of assets), liabilities (contingent or otherwise),
capital, ownership, control, management or prospects of the
Corporation, on a consolidated basis, or any other change
which is of such a nature as to result in, or could result in
a misrepresentation in the Registration Statement, Preliminary
Prospectus, Final Prospectus or any Supplementary Material or
could render any of the foregoing not in compliance with any
of the Applicable Securities Laws;
(oo) the Corporation will promptly notify the Agents in writing
with full particulars of any such actual, anticipated,
threatened or prospective change referred to in the first
preceding paragraph and the Corporation shall, to the
reasonable satisfaction of the Agents, file promptly and, in
any event, within all applicable time limitation periods with
the applicable regulatory authorities a new or amended
Registration Statement, Preliminary Prospectus, Final
Prospectus or Supplementary Material, as the case may be, or
material change report as may be required under the Applicable
Securities Laws and shall comply with all other applicable
filing and other requirements under the Applicable Securities
Laws including, without limitation, any requirements necessary
to qualify the issuance and distribution of the Unit Shares
and Warrants, and to the extent permitted by the Ontario
Securities Commission and the NASD, the Compensation Options,
and shall deliver to the Agents as soon as practicable
thereafter its reasonable requirements of conformed or
commercial copies of any such new of amended Registration
Statement, Preliminary Prospectus, Final Prospectus or
Supplementary Material. The Corporation will not file any such
new or amended disclosure documentation or material change
report relating to such new or amended disclosure
documentation without first obtaining the written approval of
the form and content thereof by the Agents, which approval
shall not be unreasonably withheld or delayed;
(pp) all of the Disclosure Documents and other materials filed by
or on behalf of the Corporation with the Securities
Commissions, the SEC and the Exchange were true and correct in
all material respects as of the date of such issuance or
filing, and, to the extent required, provided full, true and
plain disclosure of all material facts relevant to the
Corporation and did not contain a misrepresentation;
(qq) the Corporation has not withheld and will not withhold from
the Agents any material facts relating to the Corporation or
to the Offering;
(rr) there is not, in the constating documents or the by-laws of
the Corporation or in any agreement, mortgage, note,
debenture, indenture or other instrument or document to which
the Corporation is party, subject to the rights of holders of
Preferred Stock under the Corporation's Certificate of
Incorporation, any restriction upon or impediment to the
declaration or payment of dividends by the directors of the
Corporation or the payment of dividends by the Corporation to
the holders of its Common Shares;
(ss) the minute books of the Corporation and each of the
Subsidiaries made available to counsel to the Agents contain
copies of all constating documents and all resolutions of
their directors and security holders;
(tt) the Corporation is not aware of any licensing or environmental
legislation, regulation, by-law or lawful requirement
presently in force or proposed to be brought into force which
the Corporation anticipates that it or any of its Subsidiaries
will be unable to comply with without materially adversely
affecting its financial condition, results of operations,
business or prospects of each jurisdiction in which its
business is carried on;
(uu) each of the Corporation and its Subsidiaries has conducted and
is conducting its business in compliance in all material
respects with all applicable licensing and environmental
protection legislation, regulations or by-laws or other
similar laws, bylaws, rules and regulations or other lawful
requirements of each jurisdiction in which its business is
carried on and holds all material licences, certificates,
registrations, permits, consents or qualifications required in
order to enable its business to be carried on as now conducted
or as proposed to be conducted, and all such licences,
certificates, registrations, permits, consents and
qualifications are valid and subsisting and in good standing
except in respect of matters which do not and will not result
in any material adverse change to the business, business
prospects or condition (financial or otherwise) of any of the
Subsidiaries or the Corporation;
(vv) the Corporation will, during the period of distribution of the
Offered Securities and the Underlying Securities and while the
Warrants are outstanding, maintain the Trustee as the transfer
agent and registrar in respect of the Common Shares in the
City of Toronto, and such other cities of Canada as may be
required under Applicable Securities Laws; and
(ww) the Corporation will ensure that any press release relating to
the issue of the Special Warrants or the Underlying Securities
shall be in the form and content agreed to by the Lead Agent
acting reasonably and promptly.
7. CONDITIONS TO PURCHASE OBLIGATION
7.1 The following are conditions of the Purchasers' obligations to close the
purchase of the Special Warrants from the Corporation as contemplated hereby,
which conditions the Corporation covenants to exercise its commercially
reasonable best efforts to have fulfilled at or prior to the Closing Date, which
conditions may be waived in writing in whole or in part by the Agents on their
own behalf and on behalf of the Purchasers:
(a) the Corporation shall have made and/or obtained the necessary
filings, approvals, consents and acceptances to or from, as
the case may be, the Securities Commissions, the SEC and the
Exchange required to be made or obtained by the Corporation in
connection with the Offering, on terms which are acceptable to
the Corporation and the Agents, acting reasonably, prior to
the Closing Date, it being understood that the Agents will do
all that is reasonably required to assist the Corporation to
fulfil this condition;
(b) the Corporation's board of directors shall have authorized and
approved this Agency Agreement, the respective forms of the
Special Warrants, the Warrants, the Special Compensation
Options, Compensation Options and Compensation Warrants and
all other agreements and instruments prepared in connection
with the Offering, the sale of the Offered Securities, the
issuance of the Underlying Securities and Compensation
Securities and all matters relating to the foregoing;
(c) as at the Closing Date, the Corporation will deliver a
certificate certifying that:
(i) no order ceasing or suspending trading in any
securities of the Corporation or prohibiting the sale
of the Offered Securities, the issuance of Underlying
Securities or Compensation Securities or any of the
Corporation's issued securities has been issued and
no proceedings for such purpose are pending or, to
the knowledge of the Corporation, threatened;
(ii) there has been no adverse material change (actual,
proposed or prospective, whether financial or
otherwise) in the business, affairs, operations,
assets, liabilities (contingent or otherwise) or
capital of the Corporation on a consolidated basis,
since the date hereof which has not been generally
disclosed;
(iii) since the date hereof, no material change relating to
the Corporation, on a consolidated basis, except for
the Offering, has occurred with respect to which the
requisite material change statement or report has not
been filed and no such disclosure has been made on a
confidential basis;
(iv) the representations and warranties of the Corporation
contained in this Agency Agreement are true and
correct at the Time of Closing, with the same force
and effect as if made by the Corporation as at the
Time of Closing after giving effect to the
transactions contemplated hereby; and
(v) the Corporation has complied in all material respects
with all the covenants and satisfied all the terms
and conditions of this Agency Agreement on its part
to be complied with or satisfied at or prior to the
Time of Closing; and
(d) the Corporation will have caused a favourable legal opinion to
be delivered by its Canadian and United States counsel,
addressed to the Agents and the Purchasers with respect to
such matters as the Agents may reasonably request relating to
this transaction, acceptable in all reasonable respects to the
Agents' counsel. In giving such opinion, counsel to the
Corporation shall be entitled to rely, to the extent
appropriate in the circumstances, upon local counsel and shall
be entitled as to matters of fact not within their knowledge
to rely upon a certificate of fact from responsible persons in
a position to have knowledge of such facts and their accuracy
including a certificate of the Corporation's registrar and
transfer agent as to the outstanding securities of the
Corporation.
8. ADDITIONAL DOCUMENTS UPON FILING OF PROSPECTUS
8.1 The Corporation shall cause to be delivered to the Agents concurrently with
the filing of the Final Prospectus, or any Supplementary Material executed by
the Agents, a comfort letter dated the date thereof from the auditors of the
Corporation and addressed to the Agents and to the directors of the Corporation
relating to:
(a) the verification of the financial information and accounting
data and other numerical data of a financial nature contained
therein and matters involving changes or developments since
the respective dates as of which specified financial
information is given therein, to a date not more than two
business days prior to the date of such letter; and
(b) the period beyond the most recent year end of the Corporation
for which an audited financial statement appears therein to a
date not more than two business days prior to the date of such
letter.
9. CLOSING
9.1 The Offering will be completed at the offices of the Corporation's counsel
at the Time of Closing or such other place, date or time as may be mutually
agreed to, provided that if the Corporation has not been able to comply with any
of the covenants or conditions set out herein required to be complied with by
the Time of Closing or such other date and time as may be mutually agreed to,
and such covenants and conditions have not been waived, the respective
obligations of the parties will terminate without further liability or
obligation except for payment of expenses, indemnity and contribution provided
for in this Agency Agreement.
9.2 At the Time of Closing, the Corporation shall deliver to the Agents:
(a) in Toronto, certificates duly registered as the Agents may in
writing direct representing the Special Warrants and the
Special Compensation Options;
(b) the requisite legal opinions and certificates as contemplated
above; and
(c) such further documentation as may be contemplated herein or as
counsel to the Agents or the applicable regulatory authorities
may reasonably require;
against payment of the purchase price for the Special Warrants (net of
the Agents' Fee and the Agents' expenses) by certified cheque or bank
draft payable to the Corporation, and delivery of the Subscription
Agreements and other documentation required to be provided by or on
behalf of the Purchasers or the Agents pursuant to this Agency
Agreement.
10. TERMINATION OF PURCHASE OBLIGATION - THE AGENTS
10.1 Without limiting any of the foregoing provisions of this Agency Agreement,
and in addition to any other remedies which may be available to them, the Agents
(on their own behalf and on behalf of the Purchasers) shall be entitled, at
their option, to terminate and cancel, without any liability on their part (or
on the part of the Purchasers), their obligations (and the obligations of the
Purchasers) under this Agency Agreement to purchase the Special Warrants, by
giving written notice to the Corporation at any time through to the Time of
Closing on the Closing Date if:
(a) any order (other than an order based solely upon the
activities or alleged activities of the Agents) to cease or
suspend trading in any securities of the Corporation is made
by any stock exchange, Securities Commission, the SEC or other
regulatory authority, which has not been rescinded, revoked or
withdrawn;
(b) any order or ruling is issued, any inquiry, investigation or
other proceeding (whether formal or informal) in relation to
the Corporation or directors or officers thereof is made, or
announced by any officer or official of any stock exchange,
Securities Commission, the SEC or other regulatory authority
(other than an order based solely upon the activities or
alleged activities of the Agents) or any law or regulation is
promulgated or changed which, in the reasonable opinion of the
Agents, operates to prevent or restrict trading in the Common
Shares of the Corporation or distribution of the Offered
Securities;
(c) there should develop, occur or come into effect any incident
of national or international consequence, any law, regulation
or inquiry or any other event, action or occurrence of any
nature whatsoever which, in the reasonable opinion of the
Agents, materially and adversely affects or may materially and
adversely affect the financial markets in Canada or the United
States generally or the business of the Corporation on a
consolidated basis;
(d) there should occur any material change or change in a
representation and warranty of the Corporation hereunder
which, in the reasonable opinion of the Agents
would be reasonably expected to have a material adverse
effect on the market price or value of the Offered Securities;
(e) the state of the financial markets in Canada or the United
States is such that in the reasonable opinion of the Agents,
the Offered Securities cannot be profitably marketed or sold;
or
(f) the Corporation shall be in breach of, or default under or
non-compliance with any material representation, warranty,
term or condition of this Agency Agreement;
the occurrence or non-occurrence of any of the foregoing events or circumstances
to be determined in the sole discretion of the Agents, acting reasonably.
The Agents shall make reasonable efforts to give notice to the
Corporation (in writing or by other means) of the occurrence of any of the
events or circumstances referred to in this section, provided that neither the
giving nor the failure to give such notice shall in any way affect the Agents'
entitlement to exercise this right at any time through to the Time of Closing.
The Agents' rights of termination contained in this section are in
addition to any other rights or remedies it may have in respect of any default,
act or failure to act or non-compliance by the Corporation in respect of any of
the matters contemplated by this Agency Agreement.
10.2 If the obligations of the Agents and the Purchasers are terminated under
this Agency Agreement pursuant to the termination rights provided for in Section
10.1, the Corporation's liabilities to the Agents shall be limited to the
Corporation's obligations under the indemnity and contribution provisions of
this Agency Agreement, as well as the Agents' expenses provided for in Section
13.1 of this Agreement.
10.3 The Corporation shall be entitled to terminate this Agency Agreement in the
event the Time of Closing shall be later than April 30, 2001.
11. INDEMNITY
11.1 The Corporation covenants and agrees to indemnify the Agents and their
directors, officers, employees and agents (each being hereinafter referred to as
an "INDEMNIFIED PARTY"), against, and to reimburse the Agents promptly upon
demand for any legal or other expenses reasonably incurred by the Agents in
connection with investigating or defending, all losses (other than a loss of
profits or commission), claims, damages, liabilities, costs or expenses caused
or incurred in connection with this offering by reason of:
(a) any statement, other than a statement relating solely to the
Agents, contained in any of the Offering Documents which
constitutes a misrepresentation;
(b) any statement, other than a statement relating solely to the
Agents and provided by or on behalf of the Agents, contained
in the Disclosure Documents which at the time and in the light
of the circumstances under which it was made, contained a
misrepresentation;
(c) the omission to state in any of the Offering Documents, in the
Disclosure Documents or any certificate of the Corporation
delivered hereunder or pursuant hereto any material fact
(other than a material fact omitted in reliance upon and in
conformity with information furnished to the Corporation by or
on behalf of the Agents) required to be stated therein or
necessary to make any statement therein not misleading in
light of the circumstances under which it was made;
(d) any order made or inquiry, investigation or proceeding
commenced or threatened by any Securities Commission or other
competent authority based upon any misrepresentation or
alleged misrepresentation in any of the Offering Documents or
the Disclosure Documents (other than a statement included in
reliance upon and in conformity with information furnished to
the Corporation by or on behalf of the Agents specifically for
use therein) which prevents or restricts the trading in the
Offered Securities or the distribution or distribution to the
public, as the case may be, of the Offered Securities, in any
of the Qualifying Provinces;
(e) the Corporation not complying with any requirement of any
Applicable Securities Laws in connection with the transactions
herein provided; or
(f) any material breach of any representation or warranty of the
Corporation contained herein or the failure of the Corporation
to materially comply with any of its obligations hereunder..
11.2 If any action or claim shall be asserted against an Indemnified Party in
respect of which indemnity may be sought from the Corporation pursuant to the
provisions of Section 11.1 or if any potential claim contemplated hereby shall
come to the knowledge of an Indemnified Party, the Indemnified Party shall
promptly notify the Corporation in writing; but the omission to so notify the
Corporation will not relieve the Corporation from any liability it may otherwise
have to the Indemnified Party pursuant to Section 11.1. The Corporation shall be
entitled but not obligated to participate in or assume the defence thereof;
provided, however, that the defence shall be through legal counsel acceptable to
the Indemnified Party, acting reasonably. In addition, the Indemnified Party
shall also have the right to employ separate counsel in any such action and
participate in the defence thereof and the reasonable fees and expenses of such
counsel shall be borne by the Indemnified Party unless:
(a) the employment thereof has been specifically authorized in
writing by the Corporation;
(b) the Indemnified Party has been advised by counsel that
representation of the Corporation and the Indemnified Party by
the same counsel would be inappropriate due to actual or
potential differing interests between them; or
(c) the Corporation has failed within a reasonable time after
receipt of such written notice to assume the defence of such
action or claim;
provided that in no event shall the Corporation be required to assume the fees
and expenses of more than one counsel for all Indemnified Parties. Neither party
shall effect any settlement of
any such action or claim or make any admission of liability without the
written consent of the other party, such consent to be promptly considered
and not to be unreasonably withheld. The indemnity hereby provided for shall
remain in full force and effect and shall not be limited to or affected by
any other indemnity in respect of any matters specified herein obtained by
the Indemnified Party from any other person.
11.3 To the extent that any Indemnified Party is not a party to this Agency
Agreement, the Agents shall obtain and hold the right and benefit of the
indemnity provisions of Section 11.1 in trust for and on behalf of such
Indemnified Party.
11.4 Each Agent shall, severally but not jointly, indemnify and hold harmless
the Corporation, each of its directors, officers, employees and agents, and each
person, if any, who controls the Corporation within the meaning of the 1933 ACT
against any losses, claims, damages or liabilities to which such indemnified
person may become subject, under the 1933 ACT or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in any Offering
Document or Disclosure Document, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in each case,
to the extent, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such Offering
Document or Disclosure Document in reliance upon and in conformity with written
information furnished by such Agent specifically for use in the preparation
thereof.
12. CONTRIBUTION
12.1 In the event that the indemnity provided for above is, for any reason,
illegal or unenforceable as being contrary to public policy or for any other
reason, the Agents and the Corporation shall contribute to the aggregate of all
losses, claims, costs, damages, expenses or liabilities (including any legal or
other expenses reasonably incurred by the Indemnified Party in connection with
investigating or defending any action or claim which is the subject of this
section but excluding loss of profits or consequential damages) of the nature
provided for above such that the Agents shall be responsible for that portion
represented by the percentage that the Agent's Fee payable by the Corporation to
the Agents bears to the gross proceeds from the sale of the Special Warrants and
the Corporation shall be responsible for the balance, provided that, in no
event, shall the Agents be responsible for any amount in excess of the amount of
the Agency Fee actually received by it. In the event that the Corporation may be
held to be entitled to contribution from the Agents under the provisions of any
statute or law, the Corporation shall, in respect of the Agents, be limited to
contribution in an amount not exceeding the lesser of:
(i) the portion of the full amount of losses, claims' costs,
damages, expenses and liabilities, giving rise to such
contribution for which the Agents are responsible, as
determined above, and
(ii) the amount of the Agent's Fee actually received by the Agents.
Notwithstanding the foregoing, a party guilty of fraud, fraudulent
misrepresentation, or gross negligence, shall not be entitled to contribution
from the other party. Any party entitled to
contribution will, promptly after receiving notice of commencement of any
claim, action, suit or proceeding against such party in respect of which a
claim for contribution may be made against the other party under this
section, notify such party from whom contribution may be sought. In no case
shall such party from whom contribution may be sought be liable under this
Agency Agreement unless such notice has been provided but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have otherwise than under this
section. The right to contribution provided in this section shall be in
addition and not in derogation of any other right to contribution which the
Agents or the Corporation may have by statute or otherwise by law.
13. EXPENSES
13.1 Whether or not the Offering is completed, all expenses incurred from time
to time in connection with the Offering, including the reasonable fees and
disbursements of the Agents' counsel, of or incidental to the sale, issue or
distribution of the Offered Securities and to all matters in connection with the
transactions set out in this Agency Agreement shall be borne by the Corporation.
The Corporation will also pay taxes, including, subject to s.5.1, G.S.T. on the
above amount. The Agents shall deliver to the Company at the closing appropriate
documentary evidence of any deducted amounts, including the relevant account or
accounts rendered by its legal counsel and other professional representatives.
Subject to the above, the Corporation covenants and agrees to fully reimburse
the Agents from time to time for all such expenses immediately upon the receipt
of one or more invoices. The Corporation shall not pay the costs and expenses of
the Agents (including the Agents' legal costs) in excess of Cdn $100,000 unless
otherwise agreed by the Corporation. The Agents will not be reimbursed for their
costs and expenses in the event that they withdraw from this agreement for
reasons other than those referenced in section 10 of this Agency Agreement.
14. SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS
14.1 All warranties, representations, covenants and agreements of the
Corporation herein contained, or contained in documents submitted or required to
be submitted pursuant to this Agency Agreement, shall survive the purchase by
the Purchasers of the Offered Securities and shall continue in full force and
effect for the benefit of the Purchasers for a period ending on the Survival
Limitation Date. Notwithstanding the foregoing, the provisions contained in this
Agency Agreement in any way related to the indemnification of the Agents by the
Corporation, or the contribution obligations of the Agents or those of the
Corporation, shall survive and continue in full force and effect, until
liability to the Indemnified Parties arising out of the transactions
contemplated by this Agency Agreement has been extinguished by operation of law.
15. GENERAL CONTRACT PROVISIONS
15.1 Any notice or other communication to be given hereunder shall be in writing
and shall be given by delivery or by telecopier, as follows:
if to the Corporation: Voice Mobility International, Inc.
00000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX X0X 0X0
ATTENTION: XXX XXXXXX,
CHIEF EXECUTIVE OFFICER
Fax: (000) 000-0000
and copy to: Catalyst Corporate Finance Lawyers
0000 Xxxxxxxx Xxxxxx X.X.
Xxxxxxxxx, XX X0X 0X0
ATTENTION: XXXXX X. XXXXX
Fax: (000) 000-0000
or if to the Agents: Loewen, Ondaatje, XxXxxxxxxx Limited
Xxxxx 0000
00 Xxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
ATTENTION: XXXXXXX XXXX, DIRECTOR AND
PARTNER OF CORPORATE FINANCE
Fax: (000) 000-0000
to: Acumen Capital Finance Partners Limited
000 - 0xx Xxxxxx X.X.
Xxxxx 000
Xxxxxxx, XX X0X 0X0
ATTENTION: XXXXXXX X. XXXX,
VICE PRESIDENT, INVESTMENT BANKING
Fax: (000) 000-0000
to: Paradigm Capital Inc.
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX X0X 0X0
ATTENTION: XXXX XXXXX, CHAIRMAN
Fax: (000) 000-0000
with a copy to: Fraser Xxxxxx Casgrain LLP
Suite 3900
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, XX X0X 0X0
ATTENTION: XXXXXXX XXXXXX
Fax: (000) 000-0000
and if so given, shall be deemed to have been given and received upon receipt by
the addressee or a responsible officer of the addressee if delivered, or four
hours after being telecopied and receipt confirmed during normal business hours
at the location of the recipient, as the case may be. Any party may, at any
time, give notice in writing to the others in the manner provided for above of
any change of address or telecopier number.
15.2 This Agency Agreement and the other documents herein referred to (including
the Subscription Agreements) constitute the entire agreement between the Agents
and the Corporation relating to the subject matter hereof and supersede all
prior agreements between the Agents and the Corporation with respect to their
respective rights and obligations in respect of the Offering.
15.3 This Agency Agreement may be executed by telecopier and in one or more
counterparts which, together, shall constitute an original copy hereof as of the
date first noted above.
If this Agency Agreement accurately reflects the terms of the
transaction which we are to enter into and if such terms are agreed to by the
Corporation, please communicate your acceptance by executing where indicated
below and returning one originally executed copy to the Agents.
Yours very truly,
LOEWEN, ONDAATJE, XXXXXXXXXX LIMITED
By: /s/ Xxxxxxx Xxxx
----------------------------------------------------
Name: Xxxxxxx Xxxx
Title: Director and Partner of Corporate Finance
ACUMEN CAPITAL FINANCE PARTNERS LIMITED
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President, Investment Banking
PARADIGM CAPITAL INC.
By: /s/ Xxxx Xxxxxxx
----------------------------------------------------
Name: Xxxx Xxxxxxx
Title: Partner
The foregoing accurately reflects the terms of the transaction which
we are to enter into and such terms are agreed to with effect as of the date
first above written.
VOICE MOBILITY INTERNATIONAL, INC.
By: /s/ Xxx Xxxxxx
----------------------------------------------------
Name: Xxx Xxxxxx
Title: Chief Executive Officer
SCHEDULE "A"
DETAILS OF THE OFFERING
This is Schedule "A" to the Agency Agreement between, Voice Mobility
International, Inc., Loewen, Ondaatje, XxXxxxxxxx Limited, Acumen Capital
Finance Partners Limited and Paradigm Capital Inc. made as of March 28, 2001.
TERM SHEET
THE ISSUER: Voice Mobility International, Inc. (the
"Company").
OFFERING: Special Warrants at a price of Cdn.$2.00 per
Special Warrant (the "Issue Price") for
aggregate gross proceeds of up to Cdn.
$15,000,000.
TERMS OF SPECIAL WARRANTS: Each Special Warrant is exercisable, without
payment of additional consideration, into
one Unit of the Company (a "Unit"). Each
Unit consists of one Common Share (a "Unit
Share") and one-half Warrant of the Company.
Each whole Warrant (a "Warrant") entitles
the holder to acquire one Common Share (a
"Warrant Share") at a price of Cdn.$2.25 at
any time on or before a date which is two
years from the Closing Date. The Units, Unit
Shares, Warrants and Warrant Shares are
collectively referred to as the "Underlying
Securities").
MINIMUM SUBSCRIPTION 75,000 Special Warrants (Cdn.$150,000) in the
Province of Ontario and such other minimum
number of Special Warrants as is prescribed by
securities legislation in other Qualifying
Jurisdictions.
CLOSING DATE: March 27, 2001, or such other date as is agreed
upon by the Lead Agent and the Company (the
"Closing Date").
QUALIFYING JURISDICTIONS: Ontario, British Columbia, Alberta and Quebec,
and the United States of America (and such other
jurisdictions as are agreed upon by the Company
and the Lead Agent).
SPECIAL WARRANTS: The Special Warrants will be issued pursuant to
a special warrant indenture containing standard
anti-dilution protections (including in the case
of dividends paid in the ordinary course), which
protections will be operative from the Closing
Date. The Special Warrants are exercisable by
the holders thereof at any time after their
issuance and, if not previously exercised or
repurchased, will be deemed to be exercised
immediately prior to 4:30 p.m. (Toronto time) on
the business day (the "Qualification Deadline")
which is the latest of: (i) the date a
registration statement with regard to the resale
of the Special Warrants, Unit Shares and
Warrants and the issuance of the Warrant Shares
is declared effective by the United States
Securities and Exchange Commission under the
UNITED STATES SECURITIES ACT OF 1933, as
amended, and (ii) the date a receipt is issued
by the last of the securities regulatory
authorities in each of the jurisdictions in
Canada set out as Qualifying Jurisdictions in
the Term Sheet where purchasers of Special
Warrants are resident as at the Closing Date for
a final prospectus qualifying the issuance of
the Unit Shares and the Warrants for
distribution in the Canadian Jurisdictions; and
(iii) the day preceding the date the listing of
the Company's common shares on The Toronto Stock
Exchange becomes effective, being the time its
common shares are posted for trading.
ESCROW: The net proceeds (gross proceeds less Agents'
fees and expenses) from the sale of the Special
Warrants will be deposited in escrow with a
trust company mutually agreeable to the Company
and the Lead Agent, to be released to the
Company on the exercise or deemed exercise of
the Special Warrants, provided that certain
subscribers ("Non-Escrowed Subscribers") may
agree to permit the release of their
subscription proceeds to the Company on the
Closing Date. The subscription proceeds from the
balance of the Subscribers
("Escrowed Subscribers") shall be held in
escrow as provided above. Notwithstanding the
above, net proceeds that are required to be
deposited in escrow for the purpose of
obtaining approval to list the Company's
common shares on The Toronto Stock Exchange
shall not be released to the Company on the
Closing Date, but shall be deposited in
escrow as provided above.
EXCHANGE, PENALTY AND
REPURCHASE PROVISIONS: The Company will use its best efforts to file a
prospectus qualifying the Unit Shares and
Warrants to be issued in exchange for the
Special Warrants in Ontario (and such other
provinces as may be agreed to by the Company and
the Lead Agent) as soon as practicable after the
Closing Date. If the Qualification Deadline has
not occurred on or prior to the date that is 120
days following the Closing Date or such later
date as may be determined at the sole discretion
of the Lead Agent, each Special Warrant will be
exercisable for 1.1 Units. The Company will
continue to use all reasonable commercial
efforts to obtain a receipt for the prospectus
after 120 days after the Closing Date.
In the event a TSE listing of the Company's
Common Shares has not been achieved prior to the
date six (6) months following the Closing Date,
the Escrowed Subscribers shall be entitled, at
their option (the "Repurchase Option"), until
the Time of Expiry, to require the Company to
repurchase their Special Warrants from legally
available funds at the Issue Price plus accrued
interest.
LEAD AGENT: Loewen, Ondaatje, XxXxxxxxxx Limited
CO-AGENTS: Acumen Capital Finance Partners Limited
Paradigm Capital Inc.
AGENTS' COMMISSION: The Agents will be paid at the closing of the
sale of Special Warrants a commission of 7% of
the gross proceeds of this Offering, which
commission and the expenses of the Agents
(including the fees of the Agents' legal
counsel) will be fully paid in cash on the
Closing Date out of the proceeds of the
Offering. In addition, the Agents shall receive
a Special Compensation Option, exercisable for a
Compensation Option which, in the aggregate,
upon exercise will entitle the Agents to
purchase for a period of two years from the
Closing Date the number of Units that is equal
to 10% of the number of Special Warrants sold,
at a price per Unit that is equal to the issue
price of each Special Warrant. The terms of the
commission, the Special Compensation Option and
the Compensation Option shall be subject to
regulatory approval.
SUBSCRIPTION: Persons wishing to subscribe for Special
Warrants must complete and sign a Subscription
Form and deliver a cheque to the Lead Agent not
later than one business day prior to the Closing
Date.
USE OF PROCEEDS: The proceeds from the sale of the Special
Warrants will be expended by the Company
to finance its growth strategy. Specifically,
the proceeds will be allocated to sales and
marketing, research and development, working
capital purposes and potential acquisitions.
RESALE RESTRICTIONS: The Special Warrants will be issued pursuant
to exemptions from prospectus requirements of
applicable securities legislation and will be
subject to resale restrictions under that
legislation.
If the Company is unable to obtain a receipt for
a final prospectus in any Qualifying
Jurisdiction and an effective Registration
Statement, the Underlying Securities will be
subject to statutory hold periods during which
time these securities may not be resold in such
Qualifying Jurisdictions.
In addition, if any Special Warrants are
exercised prior to the issuance of receipts for
a final prospectus and/or an effective
Registration Statement by the securities
commissions in any of the Qualifying
Jurisdictions, the Underlying Securities will be
subject to statutory restrictions on resale.
The Company intends to file a prospectus to
qualify the Underlying Securities only in the
Qualifying Jurisdictions. Accordingly, the
Underlying Securities that are acquired outside
of the Qualifying Jurisdictions may be subject
to resale restrictions.
The Special Warrants are not transferable
without the prior written consent of the
Company. This restriction shall not, however
restrict the exercise of the Special Warrants
for the Units. Absent an effective Registration
Statement, the Warrants are not transferable
without the prior written consent of the
Company.
FOREIGN SALES: The Special Warrants may be sold outside of
Canada pursuant to applicable exemptions.
SCHEDULE "B"
DETAILS AS TO SUBSIDIARIES
The Company has a total of four subsidiaries. The names of the Company's
subsidiaries, the percentage interests held, their dates of incorporation and
the jurisdictions in which they were incorporated are as follows:
------------------------------------- ----------------- ---------------------------- ---------------------------------
Percentage (%)
Name of Subsidiary Interest Held Date of Incorporation Jurisdiction of Incorporation
------------------------------------- ----------------- ---------------------------- ---------------------------------
Voice Mobility Inc. 100% September 15, 1993 B.C. (now a CBCA corp.)
Voice Mobility Canada Limited 100% May 26, 1999 Canada (CBCA)
VM Sub Limited 100% May 26, 1999 Canada (CBCA)
Voice Mobility (US), Inc. 100% April 6, 2000 Nevada
------------------------------------- ----------------- ---------------------------- ---------------------------------
SCHEDULE "C"
OUTSTANDING CONVERTIBLE SECURITIES
Preferred stock issued
In connection with the 1999 recapitalization of VMI, Voice Mobility
Canada Limited (VM Canada) issued 6,600,000 VM Canada Exchangeable Shares. VM
Canada is a wholly owned subsidiary of VMII. Each VM Canada Exchangeable Share
is exchangeable for one VMII common share at any time at the option of the
shareholder, and will be exchanged no later than July 1, 2009, and has
essentially the same voting, dividend and other rights as one VMII common share.
A share of Series A preferred voting stock, which was issued to a trustee in
trust for the holders of the VM Canada Exchangeable Shares, provides the
mechanism for holders of the VM Canada Exchangeable Shares to have voting rights
in VMII. The Company considers each Exchangeable Share as equivalent to a share
of its common stock and therefore the Exchangeable Shares are included in the
computation of basic earnings per share.
On December 29, 2000 the Company issued 666,667 units at U.S.$3.00 per
unit for net cash proceeds of U.S.$2,000,000. Each unit comprises one share of
Series B Non-Voting Convertible Preferred Stock and 3/4 of a Class I warrant,
entitling the holder to one share of common stock per warrant, exercisable at
U.S.$1.75 at any time up to November 30, 2003. Each share of Series B Preferred
Stock is convertible, at the option of the holder, into two shares of Common
Stock and will automatically be converted into Common Stock as of June 30, 2001.
Holders of the Series B Preferred Stock are entitled to a U.S.$0.195 per annum
dividend. The dividends are not cumulative. Pursuant to an escrow arrangement
between the investors and the Company, the funds have been placed in escrow and
may be withdrawn by the Company in increments of U.S.$500,000 on January 15,
2001, January 31, 2001, February 15, 2001 and February 28, 2001 on a cumulative
basis. The escrow provides that under certain conditions, the Company can
retract, at its option, the sale of the Series B Preferred Stock, for the amount
of the paid in capital together with all accrued and unpaid dividends. The Class
I warrants will remain in effect regardless of whether the funds are disbursed
to the Company or returned to the investors from the escrow.
Stock options
The weighted average remaining contractual life and weighted average exercise
price of options outstanding and of options exercisable as at December 31, 2000
are as follows:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- --------------------------
WEIGHTED
NUMBER WEIGHTED AVERAGE NUMBER WEIGHTED
RANGE OF OUTSTANDING AT AVERAGE REMAINING EXERCISABLE AT AVERAGE
EXERCISE DECEMBER 31, EXERCISE CONTRACTUAL DECEMBER 31, EXERCISE
PRICES 2000 PRICE LIFE (YEARS) 2000 PRICE
---------------------------------------------------------------------------------------------------
$0.75 - 1.00 2,543,877 $0.86 2.93 2,283,516 $0.87
$1.01 - 3.00 2,057,900 $2.16 4.15 713,033 $2.11
$3.01 - 5.00 148,000 $4.50 4.62 15,833 $3.97
$5.01 - 7.00 1,603,799 $5.55 4.54 474,683 $5.47
$7.01 - 9.50 630,000 $7.88 4.23 291,750 $7.90
---------------------------------------------------------------------------------------------------
6,983,576 $3.03 3.81 3,778,815 $2.24
---------------------------------------------------------------------------------------------------
Warrants
As at December 31, the Company has the following common stock warrants
outstanding:
COMMON COMMON
SHARES SHARES
ISSUABLE AT WARRANTS WARRANTS ISSUABLE AT EXERCISE PROCEEDS
JANUARY 1 ISSUED EXERCISED DECEMBER 31 PRICE EXPIRY ON EXERCISE
# # # # $ DATE $
------------------------------------------------------------------------------------------------------------
1999
Series A warrants -- 1,600,000 (400,000) 1,200,000 0.35 Dec. 29/00 133,333
Series B, C and D
warrants -- 3,193,000 (2,760,000) 433,000 0.50 Dec. 29/00 1,380,000
Series E warrants -- 601,000 -- 601,000 0.35 Dec. 29/00 --
------------------------------------------------------------------------------------------------------------
-- 5,394,000 (3,160,000) 2,234,000 1,513,333
------------------------------------------------------------------------------------------------------------
2000
Series A warrants 1,200,000 -- (1,200,000) -- 0.35 Dec. 29/00 426,668
Series B, C and D
warrants 433,000 -- (433,000) -- 0.50 Dec. 29/00 216,500
Series E warrants 601,000 -- (601,000) -- 0.35 Dec. 29/00 210,350
Series F and G
warrants -- 3,750,000 -- 3,750,000 2.25 Nov. 30/03 --
Series H warrants -- 200,000 (200,000) -- 0.50 Dec. 29/00 100,000
Series I warrants -- 500,000 -- 500,000 1.75 Nov. 30/03 --
------------------------------------------------------------------------------------------------------------
2,234,000 4,450,000 (2,434,000) 4,250,000 953,518
------------------------------------------------------------------------------------------------------------
On February 27, 2001, the Company entered into a three year agreement
with Innovatia Inc. ("Innovatia"), a wholly owned subsidiary of Aliant Inc.
(`Aliant"), to development a carrier-classified unified communications product.
The intent of the development agreement is that the resulting unified
communications product will become Aliant's primary hosted messaging solution
for business and residential customers.
Innovatia will license certain intellectual property to the Company on
a non-exclusive, non-transferable basis for use in the development and
verification of current products and will provide specific professional, project
management and administrative and support services. In consideration of the
licenses and services provided, the Company has agreed to pay fees of U.S.$5.7
million over the three year term of the agreement beginning February 1, 2001.
Innovatia will invoice the Company on a quarterly basis, equaling U.S.$475,000
per quarter commencing April 30, 2001. At the Company's option, the Company may
elect to pay for some or all of the services, from time to time, in common
shares. In the event that the Company makes this election, the number of common
shares will equal the value of the payment then being made divided by the
weighted average trading price of the Company's common stock over the ten
trading days immediately preceding the date the payment is made.
SCHEDULE "D"
MATERIAL CHANGES
On February 27, 2001, the Company entered into a three year agreement
with Innovatia Inc. ("Innovatia"), a wholly owned subsidiary of Aliant Inc.
(`Aliant"), to development a carrier-classified unified communications product.
The intent of the development agreement is that the resulting unified
communications product will become Aliant's primary hosted messaging solution
for business and residential customers.
Innovatia will license certain intellectual property to the Company on
a non-exclusive, non-transferable basis for use in the development and
verification of current products and will provide specific professional, project
management and administrative and support services. In consideration of the
licenses and services provided, the Company has agreed to pay fees of U.S.$5.7
million over the three year term of the agreement beginning February 1, 2001.
Innovatia will invoice the Company on a quarterly basis, equaling U.S.$475,000
per quarter commencing April 30, 2001. At the Company's option, the Company may
elect to pay for some or all of the services, from time to time, in common
shares. In the event that the Company makes this election, the number of common
shares will equal the value of the payment then being made divided by the
weighted average trading price of the Company's common stock over the ten
trading days immediately preceding the date the payment is made.
SCHEDULE "E"
LITIGATION
None.
