EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
THIS AGREEMENT MADE EFFECTIVE AS OF THE 14th DAY OF JUNE, 1999 (the "Effective
Date").
BETWEEN:
XXXXXXXXXX.XXX, INC. (formerly Digital Sign Xxxxxxxxxxx)
000 - 0 Xxxxxxxx
Xxxxxxxx
Xxxxx 252 0815
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. The Purchaser wishes to subscribe for 1,300,000 units, where each unit
consists of one common share and one-half of one non-transferable share purchase
warrant of the Company (the "Securities");
B. It is the intention of the parties to this Agreement that this subscription
will be made pursuant to appropriate exemptions (the "Exemptions") from the
registration and prospectus or equivalent requirements of all rules, policies,
notices, orders and legislation of any kind whatsoever (collectively the
"Securities Rules") of all jurisdictions applicable to this subscription;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained, the receipt of which is hereby
acknowledged, the parties covenant and agree with each other (the "Agreement")
as follows:
1. Representations and Warranties of the Purchaser
1.1 The Purchaser represents and warrants to the Company, and acknowledges that
the Company is relying on these representations and warranties to, among other
things, ensure that it is complying with all of the applicable Securities Rules,
that:
(a) the Purchaser is purchasing a sufficient number of Securities such
that the aggregate acquisition cost to the Purchaser of such
Securities is not less than $97,000, if the Purchaser is a resident of
British Columbia, Alberta, Manitoba, New Brunswick, Xxxxxx Xxxxxx
Island, Newfoundland or an International Jurisdiction, or $150,000 if
the Purchaser is a resident of Saskatchewan, Ontario, Quebec or Nova
Scotia, and the Purchaser is:
(i) purchasing such Securities as principal for its own account and
not for the benefit of any other person; or
(ii) deemed to be acting as principal by virtue of it being:
A. a trust company or insurer which is authorized to carry on
business in B.C. under the Financial Institutions Act
(British Columbia) and which is acting as agent or trustee
for accounts that are fully managed by it within the meaning
of ss. 74(1)(a) of the Securities Act (British Columbia (the
"Act") and NIN #97/11 issued by the B.C. Securities
Commission (the "Commission"); or
B. a portfolio manager within the meaning of ss. 1(1) of the
Act which is carrying on business in B.C. and which is
registered or exempt from registration under the Act and
which is acting as agent for accounts that are fully managed
by it within the meaning of ss. 74(1)(b) of the Act and NIN
#97/11; or
C. a trust company, insurer or portfolio manager within the
meaning of BOR #97/4 issued by the Commission which is
acting, in the case of a trust company or insurer, as agent
or trustee or, in the case of a portfolio manager, as agent,
for accounts that are fully managed by it within the meaning
of BOR #97/4and NIN #97/11;
and the Purchaser is also deemed to be acting as principal under
the analogous provisions of any other Securities Rules having
application;
(b) the Purchaser has not been formed, created, established or
incorporated for the purpose of permitting the purchase of the
Securities without a prospectus by groups of individuals whose
individual share of the aggregate acquisition cost for such Securities
is less than $97,000, if the beneficial purchaser is a resident of
British Columbia, Alberta, Manitoba, New Brunswick, Xxxxxx Xxxxxx
Island, Newfoundland or an International Jurisdiction, or $150,000 if
the beneficial purchaser is a resident of Saskatchewan, Ontario,
Quebec or Nova Scotia;
(c) the Purchaser is resident of an "International Jurisdiction" (which
means a country other than Canada or the United States) and the
Purchaser further represents and warrants that:
(i) the Purchaser is knowledgeable of, or has been independently
advised as to, the applicable Securities Rules of the
International Jurisdiction which would apply to this
subscription, if there are any;
(ii) the Purchaser is purchasing the Securities pursuant to Exemptions
under the Securities Rules of that International Jurisdiction or,
if such is not applicable, the Purchaser is permitted to purchase
the Securities under the applicable Securities Rules of the
International Jurisdiction without the need to rely on
Exemptions; and
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(iii) the applicable Securities Rules do not require the Company to
make any filings or seek any approvals of any kind whatsoever
from any regulatory authority of any kind whatsoever in the
International Jurisdiction; and
the Purchaser will, if requested by the Company, deliver to the
Company a certificate or opinion of local counsel from the
International Jurisdiction which will confirm the matters
referred to in subparagraphs (ii) and (iii) above to the
satisfaction of the Company, acting reasonably;
(d) [intentionally left blank]
(e) the Purchaser acknowledges that the Company is relying on the
Exemptions in order to complete the trade and distribution of the
Securities and the Purchaser is aware of the criteria of the
Exemptions to be met by the Purchaser, and if applicable, the
Purchaser meets those criteria;
(f) the Purchaser acknowledges that because this subscription is being
made pursuant to the Exemptions:
(i) the Purchaser is restricted from using certain of the civil
remedies available under the applicable Securities Rules;
(ii) the Purchaser may not receive information that might otherwise be
required to be provided to the Purchaser under the applicable
Securities Rules if the Exemptions were not being used; and
(iii) the Company is relieved from certain obligations that would
otherwise apply under the applicable Securities Rules if the
Exemptions were not being used;
(iv) no securities commission, stock exchange or similar regulatory
authority has reviewed or passed on the merits of the Securities;
(v) there is no government or other insurance covering the
Securities; (vi) there are risks associated with the purchase of
the Securities;
(vii) there are restrictions on the Purchaser's ability to resell the
Securities and it is the responsibility of the Purchaser to find
out what those restrictions are and to comply with them before
selling the Securities.
(g) the Securities are not being subscribed for by the Purchaser as a
result of any material information about the Company's affairs that
has not been publicly disclosed;
(h) the offer and sale of these Securities was not accompanied by an
advertisement and the Purchaser was not induced to purchase these
Securities as a result of any advertisement made by the Company;
(i) if the Purchaser is a corporation, the Purchaser is a valid and
subsisting corporation, has the necessary corporate capacity and
authority to execute and deliver this Agreement and to observe and
perform its covenants and obligations hereunder and has taken all
necessary corporate action in respect thereof, or, if the Purchaser is
a partnership,
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syndicate, trust or other form of unincorporated organization, the
Purchaser has the necessary legal capacity and authority to execute
and deliver this Agreement and to observe and perform its covenants
and obligations hereunder and has obtained all necessary approvals in
respect thereof, and, in either case, upon the Company executing and
delivering this Agreement, this Agreement will constitute a legal,
valid and binding contract of the Purchaser enforceable against the
Purchaser in accordance with its terms and neither the agreement
resulting from such acceptance nor the completion of the transactions
contemplated hereby conflicts with, or will conflict with, or results,
or will result, in a breach or violation of any law applicable to the
Purchaser, any constating documents of the Purchaser or any agreement
to which the Purchaser is a party or by which the Purchaser is bound;
(j) the Purchaser is not, and was not at any time that it purchased the
Securities or received an offer to purchase the Securities pursuant to
this subscription, a "U.S. Person" as defined in Regulation S under
the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), which definition includes, but is not limited to, an
individual resident in the United States, an estate or trust of which
any executor or administrator or trustee, respectively, is a U.S.
person, and any partnership or corporation organized or incorporated
under the laws of the United States;
(k) the Purchaser did not receive any term sheet, subscription form or
other offering materials in connection with this subscription in the
United States, and did not execute or deliver any such subscription
form or other materials in the United States;
(l) no offers of Securities were made by any person to the Purchaser while
the Purchaser was in the United States; and
(m) the Purchaser is not acquiring Securities, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United
States.
1.2 The Company represents and warrants to the Purchaser, and acknowledges that
the Purchaser is relying on these representations and warranties in entering
into this Agreement, that:
(a) the Company is a valid and subsisting corporation duly incorporated
and in good standing under the laws of Delaware;
(b) the Company is not a reporting issuer in British Columbia and any
Securities issued to the Purchaser that are or become subject to the
laws of British Columbia will be subject to an indefinite hold period
in British Columbia unless an exemption from the registration and
prospectus requirements of the Securities Act is available. Such an
exemption may not be available;
(c) the Company's subsidiaries (the "Subsidiaries"), if any, are valid and
subsisting corporations and in good standing under the laws of the
jurisdictions in which they were incorporated;
(d) the common shares of the Company are eligible for quotation on the
N.A.S.D. OTC Bulletin Board ("OTC");
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(e) upon their issuance, the Shares (as defined below) will be validly
issued and outstanding fully paid and non-assessable common shares of
the Company registered as directed by the Purchaser, free and clear of
all trade restrictions (except as may be imposed by operation of the
applicable Securities Rules) and, except as may be created by the
Purchaser, liens, charges or encumbrances of any kind whatsoever;
(f) upon their issuance, the Warrants (as defined below) will be validly
created, issued and outstanding, registered as directed by the
Purchaser, and, upon their issuance, the shares issued on the exercise
of the Warrants will be validly issued and outstanding fully paid and
non-assessable common shares of the Company registered as directed by
the Purchaser, and both will be free and clear of all trade
restrictions (except as may be imposed by operation of the applicable
Securities Rules) and, except as may be created by the Purchaser,
liens, charges or encumbrances of any kind whatsoever;
(g) the Company and its Subsidiaries, if any, hold all licences and
permits that are required for carrying on their business in the manner
in which such business has been carried on and the Company and its
Subsidiaries, if any, have the corporate power and capacity to own the
assets owned by them and to carry on the business carried on by them
and they are duly qualified to carry on business in all jurisdictions
in which they carry on business;
(h) all prospectuses, exchange offering prospectuses, offering
memorandums, filing statements, information circulars, material change
reports, shareholder communications, press releases and other
disclosure documents of the Company including, but not limited to,
financial statements, contain no untrue statement of a material fact
as at the date thereof nor do they omit to state a material fact
which, at the date thereof, was required to have been stated or was
necessary to prevent a statement that was made from being false or
misleading in the circumstances in which it was made;
(i) to the best of its knowledge, and except as publicly disclosed, there
are no material actions, suits, judgments, investigations or
proceedings of any kind whatsoever outstanding, pending or threatened
against or affecting the Company or its Subsidiaries, if any, at law
or in equity or before or by any Federal, Provincial, State, Municipal
or other governmental department, commission, board, bureau or agency
of any kind whatsoever and, to the best of the Company's knowledge,
there is no basis therefor;
(j) the Company has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated under this
Agreement on the terms and conditions set forth herein; and
(k) to the best of its knowledge, the execution and delivery of this
Agreement, the performance of its obligations under this Agreement and
the completion of its transactions contemplated under this Agreement
will not conflict with, or result in the breach of or the acceleration
of any indebtedness under, or constitute default under, the constating
documents of the Company or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever to which the
Company is a party or by which it is bound, or any judgment or order
of any kind whatsoever of any Court or administrative body of any kind
whatsoever by which it is bound.
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2. Subscription
2.1 The Purchaser hereby subscribes the subscription funds (the "Subscription
Funds") referred to below for and agrees to take up the units (a "Unit" or the
"Units") referred to below, where each Unit consists of one common share with a
par value of U.S. $0.00001 in the capital stock of the Company (a "Share" or the
"Shares") and one-half of one non-transferable share purchase warrant (a
"Warrant" or the "Warrants"), at a price of U.S. $2.31 per Unit. Each whole
Warrant will entitle the Purchaser to subscribe for one additional common share
of the Company at a price of U.S. $2.31 per share at any time up to 5:00 p.m.
local time in Vancouver, B.C. on the first anniversary of the Closing Date, and
thereafter at a price of U.S. $2.90 per share at any time up to 5:00 p.m. local
time on the second anniversary of the Closing Date.
2.2 On or before the 14th day of June, 1999, the Purchaser shall deliver the
Subscription Funds for the Securities subscribed for in the form of solicitor's
trust cheque, certified cheque, bank draft, money order or wire transfer payable
to "Xxxxxxx & Xxxxxx In Trust" as the solicitors for an on behalf of the
Company. The Company will be entitled to use the Subscription Funds immediately
upon the issuance of the certificates representing Securities to the Purchaser
on the Closing Date. The Purchaser hereby confirms that upon the Company
advising Xxxxxxx & Xxxxxx that it is holding such certificates for immediate
delivery to the Purchaser, Xxxxxxx & Xxxxxx is hereby irrevocably authorized and
directed to release and deliver the Subscription Funds, together with any
accrued interest thereon, to the Company or for use as directed by the Company
without prior notice to, consent of or action by the Purchaser and that Xxxxxxx
& Xxxxxx can rely on this irrevocable direction as if it was a party to this
Agreement.
3. Covenants, Agreements and Acknowledgments
3.1 The Purchaser covenants and agrees with the Company to hold and not sell,
transfer or in any manner dispose of the Shares comprising the Units or any
shares acquired on the exercise of the Warrants comprising the Units unless the
sale, transfer or disposition is made in accordance with all applicable
Securities Rules.
3.2 The Purchaser acknowledges and agrees that the Shares comprising the Units
and any shares acquired on the exercise of the Warrants comprising the Units
will be subject to such trade restrictions as may be imposed by operation of the
applicable Securities Rules, and the share certificate or certificates
representing the Shares comprising the Units and any shares acquired on the
exercise of the Warrants comprising the Units will bear such legends as may be
required by the applicable Securities Rules. The Purchaser further acknowledges
and agrees that it is the Purchaser's obligation to comply with the trade
restrictions in all of the applicable jurisdictions and the Company offers no
advice as to those trade restrictions.
3.3 The Purchaser acknowledges that:
(a) the Securities have not been registered under the U.S. Securities Act
and are "restricted securities" within the meaning of Rule 144 under
the U.S. Securities Act and may only be resold in accordance with the
provisions of Regulation S under the U.S. Securities Act, pursuant to
registration under the U.S. Securities Act, or pursuant to an
available exemption from such registration. The Purchaser understands
that the Company has no obligation or present intention of filing a
registration statement under the U.S. Securities Act in respect of the
Securities;
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(b) hedging transactions involving the Securities may not be conducted
unless in compliance with the U.S. Securities Act;
(c) there may be material tax consequences to the Purchaser of an
acquisition or disposition of Securities. The Company gives no opinion
and makes no representation with respect to the tax consequences to
the Purchaser under United States, state, local or foreign tax law of
the Purchaser's acquisition or disposition of such securities;
(d) the certificates evidencing the Securities issued in this subscription
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED ONLY (i)
TO THE COMPANY; (ii) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT; (iii) IN ACCORDANCE WITH RULE 144
UNDER THE 1933 ACT; OR (iv) IN A TRANSACTION THAT IS OTHERWISE EXEMPT
FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
LAWS, PROVIDED, PRIOR TO ANY SUCH SALE, TRANSFER OR ASSIGNMENT, THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL, IN FORM ACCEPTABLE
TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS
WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.";
(e) the Company is required to refuse to register any transfer of the
Securities not made in accordance with the provisions of Regulation S
under the U.S. Securities Act, pursuant to registration under the U.S.
Securities Act, or pursuant to an available exemption from such
registration; and
(f) any person who exercises a Warrant will be required to provide to the
Company either:
(i) written certification that it is not a U.S. Person and that such
Warrant is not being exercised within the United States or on
behalf of, or for the account or benefit of, a U.S. Person; or
(ii) a written opinion of counsel or other evidence satisfactory to
the Company to the effect that the Warrants and the common shares
issuable on the exercise of the Warrants have been registered
under the 1933 Act and applicable state securities laws or are
exempt from registration thereunder.
3.4 The Company covenants and agrees with the Purchaser to file any documents
necessary to be filed under the applicable Securities Rules with respect to this
subscription within the required time.
4. [Intentionally left blank]
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5. Closing
5.1 The completion of the subscription contemplated under this Agreement shall
occur on or before July 15, 1999 or such later date agreed to in writing by the
parties hereto (the "Closing Date") immediately preceding the acquisition by the
Company of the issued shares of Xxxxxxxxxx.xxx (a Nevada corporation). The
Company shall issue to the Purchaser, no later than the Closing Date, a share
certificate or certificates representing the Shares and a warrant certificate or
certificates representing the Warrants comprising the Units as provided for
below by the Purchaser. Upon the Company advising Xxxxxxx & Xxxxxx that it is
holding such certificates for immediate delivery to the Purchaser, Xxxxxxx &
Xxxxxx is irrevocably authorized and directed by the parties hereto to release
and deliver the Subscription Funds, together with any accrued interest thereon,
to the Company or for use as directed by the Company without prior notice to,
consent of or action by the Purchaser.
6. General
6.1 For the purposes of this Agreement, time is of the essence.
6.2 The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as may, either before or after the
execution of this Agreement, be reasonably required to carry out the full intent
and meaning of this Agreement.
6.3 This Agreement shall be subject to, governed by and construed in accordance
with the laws of Delaware. 6.4 This Agreement may not be assigned by either
party hereto. 6.5 This Agreement may be signed by the parties in as many
counterparts as may be deemed necessary, each of which so signed shall be deemed
to be an original, and all such counterparts together shall constitute one and
the same instrument.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
XXXXXXXXXX.XXX, INC.
Per: /s/ Xxxx XxXxxx
--------------------------------
Authorized Signatory
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TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Cannot be a U.S. Address) The name and address (to
establish the Purchaser's jurisdiction of residence for the purpose of
determining the applicable Securities Rules) of the purchaser (the "Purchaser")
is as follows:
Packard Financial Group Inc.
--------------------------------------------
Name
00 Xxx Xxxxxx Xxxx
X.X. Xxx 0000
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Street Address
--------------------------------------------
St. Xxxx
Antigua
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Country
B. Registration Instructions (Note: Cannot be a U.S. Address) The name and
address of the person in whose name the Purchaser's Securities are to be
registered is as follows (if the name and address is the same as was inserted in
paragraph A above, then insert "N/A"):
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Name
--------------------------------------------
Street Address
--------------------------------------------
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City and Province
--------------------------------------------
Country
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Postal Code
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X.Xxxxxxxx Instructions (Note: Cannot be a U.S. Address) The name and address of
the person to whom the certificates representing the Purchaser's Securities
referred to in paragraph A above are to be delivered is as follows (if the name
and address is the same as was inserted in paragraph A above, then insert
"N/A"):
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Name
--------------------------------------------
Street Address
--------------------------------------------
--------------------------------------------
City and Province
--------------------------------------------
Country
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Postal Code
D. Subscription Amount The minimum is Cdn. $97,000 if the Purchaser is a
resident (as per the address inserted in paragraph A above) of British Columbia,
Alberta, Manitoba. New Brunswick, Xxxxxx Xxxxxx Island, Newfoundland or an
International Jurisdiction, or Cdn. $150,000 if the Purchaser is a resident of
Saskatchewan, Ontario, Quebec or Nova Scotia.:
Subscription Funds: U.S. $3,003,000
Number of Units: 1,300,000 Units (where each Unit consists of
one share and one-half of one share purchase
warrant. Each whole share purchase warrant
will entitle the Purchaser to subscribe for
one additional common share of the Company on
the terms set forth in paragraph 2.1 of this
Subscription Agreement).
Note: The number of Units must equal the Subscription Funds divided by
price of U.S. $2.31 per Unit.
TO BE COMPLETED AND SIGNED BY THE PURCHASER:
PACKARD FINANCIAL GROUP INC.
----------------------------------------
Name of the "Purchaser" - use the name
inserted in paragraph A above.
Per: ---------------------------------
Signature of Purchaser
---------------------------------
Title (if applicable)
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