EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
(U.S. Purchaser)
THIS SUBSCRIPTION AGREEMENT, dated as of May 22, 2003,
BETWEEN:
XXXXXX X. XXXXXXX, an individual with an address at 00 Xxxxx Xxxx
Xxxxx, Xxxxx 000, Xx. Xxxx, Xxxxxxxxx 00000
(the "Purchaser")
AND:
INFOWAVE SOFTWARE, INC., a British Columbia company with an address
at 0000 Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the "Company")
WITNESSES THAT WHEREAS the Purchaser has agreed to purchase from the Company,
and the Company has agreed to issue and sell to the Purchaser, a total of
29,473,684 units (the "Units") at a price of Cdn$0.1425 per Unit, all on the
terms and conditions described herein.
AND WHEREAS each Unit will consist of one common share without par value of the
Company (a "Share") and one-half of one common share purchase warrant (a
"Warrant").
AND WHEREAS, subject to adjustment in accordance with the terms thereof, each
whole Warrant will entitle the holder thereof to purchase an additional Share at
a price of Cdn.$0.19 for a period of two years after the Closing Date (as
defined below).
NOW THEREFORE in consideration of the mutual covenants and agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by both parties, the parties agree as follows.
1. Subscription. Subject to the terms and conditions hereof, the Purchaser
hereby agrees to purchase from the Company, and the Company hereby agrees to
sell to the Purchaser, a total of 29,473,684 Units at the price of Cdn.$0.1425
per Unit for a total purchase price of U.S.$3,000,000 (based on an agreed
Canada/U.S. dollar exchange rate of 1.40:1.00).
2. Definitions. In this Subscription Agreement, unless the context otherwise
requires:
(a) "Accredited Investor" means an accredited investor as that term is
defined in Rule 501(a) of Regulation D;
(b) "Accredited Investor Questionnaire" means the questionnaire attached
as Schedule "B" hereto;
(c) "affiliate", "distribution" and "insider" have the respective
meanings ascribed to them in the Securities Act (British Columbia);
(d) "Asset Purchase Agreement" means an agreement, dated as of the date
hereof, between the Company and HiddenMind Technology, LLC relating
to the sale of certain assets by HiddenMind Technology, LLC to the
Company;
(e) "Closing" means the completion of the issue and sale by the Company,
and the purchase by the Purchaser, of the Units pursuant to this
Subscription Agreement;
(f) "Closing Date" means June 30, 2003 or such other date as the Company
and the Purchaser may agree;
(g) "Closing Time" means 10:00 a.m. (Vancouver time) on the Closing Date
or such other time on the Closing Date as the Company and the
Purchaser may agree;
(h) "Material Subsidiary" means Infowave USA Inc.;
(i) "Private Placement Questionnaire and Undertaking" means the
questionnaire and undertaking required by the Toronto Stock Exchange
in the form of Schedule "A" hereto;
(j) "Regulation D" means Regulation D under the U.S. Securities Act;
(k) "Regulation S" means Regulation S under the U.S. Securities Act;
(l) "SEC" means the United States Securities and Exchange Commission;
(m) "Securities Laws" means, collectively, the applicable securities
laws of the Province of British Columbia and regulations and rules
made and forms prescribed thereunder together with all applicable
published policy statements, blanket orders, rulings, instruments
and notices of the British Columbia Securities Commission;
(n) "Stock Exchange" means the Toronto Stock Exchange;
(o) "United States" means the United States as that term is defined in
Regulation S;
(p) "U.S. Person" means a U.S. person as that term is defined in
Regulation S; and
(q) "U.S. Securities Act" means the Securities Act of 1933, as amended,
of the United States of America.
3. Conditions of Closing. The transactions contemplated hereby will be completed
at the Closing Time at the offices of the Company's counsel in Vancouver,
British Columbia.
The obligations of the Purchaser to complete the transactions contemplated
hereby shall be subject to the following conditions precedent (which are for the
sole benefit of the Purchaser):
(a) The Company shall have delivered all of the documents described in
paragraph 5 below, in each case in form and substance satisfactory
to the Purchaser, acting reasonably;
(b) By no later than July 30, 2003, the Company shall have received all
shareholder and regulatory approvals which are necessary in order to
permit the Company to lawfully complete the transactions
contemplated hereby including, without limitation, the approval
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of the Company shareholders (by way of an ordinary resolution) and
the approval of the Stock Exchange;
(c) Between the date hereof and the Closing, there shall not have been
any material adverse change in the business or prospects of the
Company (including the termination of employment of Xxxxxx Xxxx or
Xxxxxx Xxxxxx); and
(d) The acquisition by the Company of certain assets of HiddenMind
Technology, LLC pursuant to the Asset Purchase Agreement shall be
completed before, or concurrently with, the transactions
contemplated hereby.
The obligations of the Company to complete the transactions contemplated hereby
shall be subject to the following conditions precedent (which are for the sole
benefit of the Company):
(e) The Purchaser shall have delivered all of the documents described in
paragraph 4 below, in each case in form and substance satisfactory
to the Company, acting reasonably;
(f) By no later than July 30, 2003, the Company shall have received all
shareholder and regulatory approvals which are necessary in order to
permit the Company to lawfully complete the transactions
contemplated hereby including, without limitation, the approval of
the Company shareholders (by way of an ordinary resolution) and the
approval of the Stock Exchange; and.
(h) The acquisition by the Company of certain assets of HiddenMind
Technology, LLC pursuant to the Asset Purchase Agreement shall be
completed before, or concurrently with, the transactions
contemplated hereby.
4. Closing Deliveries by the Purchaser. At the Closing Time, concurrently with
the delivery by the Company of the documents described in paragraph 5 below, the
Purchaser shall deliver to, or to the direction of, the Company:
(a) a completed and duly signed copy of the Private Placement
Questionnaire and Undertaking, attached hereto as Schedule "A";
(b) a completed and duly signed copy of the Accredited Investor
Questionnaire, attached hereto as Schedule "B";
(c) any other documents required by applicable securities laws which the
Company may reasonably request;
(d) a certified cheque or bank draft made payable on or before the
Closing Date in same day freely transferable Canadian funds at par
in Vancouver, British Columbia to "Infowave Software, Inc."
representing the aggregate purchase price payable by the Purchaser
for the Shares, or such other method of payment against delivery of
the Shares as the Company may accept;
(e) a duly signed copy of the Nomination and Standstill Agreement
attached as Schedule "D".
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The Purchaser acknowledges and agrees that such undertakings, questionnaires and
other documents, when executed and delivered by the Purchaser, will form part of
and will be incorporated into this Subscription Agreement with the same effect
as if each constituted a representation and warranty or covenant of the
Purchaser hereunder in favour of the Company. The Purchaser consents to the
filing of such undertakings, questionnaires and other documents as may be
required to be filed with the Stock Exchange or other securities regulatory
authority in connection with the transactions contemplated hereby.
5. Closing Deliveries by the Company. At the Closing Time, concurrently with the
delivery by the Purchaser of the documents and payments described in paragraph 4
above, the Company shall deliver to, or to the direction of, the Purchaser:
(a) a share certificate, representing the Shares, which has been duly
executed by the Company and is registered in the name of "Xxxxxx X.
Xxxxxxx";
(b) a warrant certificate, representing the Warrants, which has been
duly executed by the Company and is registered in the name of
"Xxxxxx X. Xxxxxxx";
(c) a certificate of an officer of the Company, dated the Closing Date
confirming that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing
Date and that the Company has complied with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date;
(d) a duly signed copy of the Nomination and Standstill Agreement
attached as Schedule "D".
(e) any other documents which the Purchaser may reasonably request in
connection with the transactions contemplated hereby.
6. Company's Representations and Warranties. The Company hereby makes the
following representations and warranties to the Purchaser and acknowledges that
the Purchaser is relying upon such representations and warranties in entering
into this Subscription Agreement and completing the transactions contemplated
hereby:
Corporate Status:
(a) the Company and the Material Subsidiary have been duly incorporated
or continued and are validly subsisting and in good standing under
the laws of their respective jurisdictions of incorporation and have
all requisite corporate power and authority to carry on their
respective businesses as now conducted, to own, lease and operate
their respective properties and assets;
(b) the Company and the Material Subsidiary are conducting their
business in compliance with all applicable laws, rules and
regulations of each jurisdiction in which their business is carried
on that are material to the business of the Company and the Material
Subsidiary taken as a whole, and are duly licensed, registered or
qualified in all jurisdictions in which they own, lease or operate
their property or carry on business to enable their business to be
carried on as now conducted and their property and assets to be
owned, leased and operated. All such licences, registrations and
qualifications are valid and subsisting and in good standing, and
there is no proceeding pending or, to the knowledge
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of the Company, threatened which may cause any such license,
registration or qualification to be withdrawn, cancelled, suspended
or not renewed, except in respect of matters which do not and will
not result in any material change to the business, business
prospects or condition (financial or otherwise) of the Company and
the Material Subsidiary, taken as a whole;
(c) the Company has all such corporate power and capacity as is
necessary in order to permit the Company to enter into, deliver and
perform this Subscription Agreement and to issue and sell the Shares
and Warrants to the Purchaser;
(d) the Company has no subsidiaries which generate any material revenues
or which hold material assets or have any material liabilities other
than the Material Subsidiary. The Company legally and beneficially
owns, directly or indirectly, 100% of the issued and outstanding
shares in the capital of the Material Subsidiary free and clear of
all liens, mortgages or other security interests (except as granted
to Compaq Cayman Islands Investment Company pursuant to a Security
Agreement dated March 8, 2002) and all of such shares have been duly
authorized and validly issued and are outstanding as fully paid and
non-assessable shares. No person has any right, agreement or option,
present or future, contingent or absolute, or any right capable of
becoming a right, agreement or option, for the purchase from the
Company or the Material Subsidiary of any interest in any of such
shares or for the issue or allotment of any unissued shares in the
capital of the Material Subsidiary or any other security convertible
into or exchangeable or exercisable for any such shares;
(e) other than with respect to Make Technologies Inc., neither the
Company nor the Material Subsidiary has entered into any agreements
of any nature to acquire any shares in any other corporation or
entity or to acquire or lease any other business operations;
Issuance of the Shares:
(f) other than Agile Equity LLC, there is no person, firm or corporation
acting or purporting to act at the request of the Company, that is
entitled to any brokerage, agency or finder's fee in connection with
the transactions contemplated herein;
(g) the execution and delivery of this Agreement, the performance by the
Company of its obligations hereunder and the issuance of the Shares
and Warrants, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, (whether after notice or lapse of time
or both):
(i) the constating documents and resolutions of shareholders or
directors of the Company (or any committee thereof) which are
in effect at the date hereof;
(ii) any mortgage, note, indenture, contract, agreement,
instrument, lease or other document to which the Company or
any Material Subsidiary is a party or by which any of them is
bound; or
(iii) any judgment, decree or other agreement binding the Company or
any Material Subsidiary or the property or assets of the
Company or any Material Subsidiary.
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In addition, the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder and the
issuance of the Shares will not result in the triggering of:
(iv) any rights of first refusal, rights of first offer,
pre-emptive or similar rights held by any party; or
(v) any rights to have outstanding convertible securities of the
Company re-priced or otherwise adjusted in a manner which
benefits the holders of such rights.
(h) the Company has taken all necessary corporate action to duly allot
and issue the Shares to the Purchaser in accordance with the terms
hereof and, upon issuance, such shares shall be fully paid and
non-assessable shares in the capital of the Company;
(i) the Company has taken all necessary corporate action to duly allot
the common shares to be issued upon exercise of the Warrants and,
upon due exercise of the Warrants in accordance with the terms
thereof (including payment of the required exercise price) and
subsequent issue of such common shares by the Company, such common
shares shall be fully paid and non-assessable shares in the capital
of the Company;
(j) this Agreement has been duly authorized by all necessary corporate
action on the part of the Company and, after execution and delivery
on behalf of the Company, will constitute a valid obligation of the
Company which is legally binding and enforceable against the Company
in accordance with its terms;
Securities of the Company
(k) the authorized capital of the Company consists of 200,000,000 common
shares without par value. As of May 22, 2003, the total issued
capital of the Company consists of 66,659,578 common shares without
par value, each of which has been issued as a fully paid and
non-assessable share in the capital of the Company;
(l) other than as set forth in Schedule "E" hereto, no person, firm or a
corporation has any agreement, option, right or privilege (whether
by law, pre-emptive or contractual) that constitutes or is capable
of becoming an agreement, option, right or privilege, including
convertible securities, warrants or convertible obligations of any
nature, for the purchase, subscription, allotment or issuance of any
of the unissued common shares of the Company or in respect of any
other unissued securities of the Company;
Regulatory Matters:
(m) the Company is a "reporting issuer" under the Securities Act
(British Columbia), and is in compliance with the continuous
disclosure requirements under all applicable Securities Laws;
(n) the issued and outstanding common shares of the Company are listed
and posted for trading on the Stock Exchange;
(o) no order ceasing or suspending trading in any securities of the
Company has been issued against the Company or its directors,
officers or promoters or to any companies that have
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common directors, officers or promoters, and to the best of the
Company's knowledge, no investigations or proceedings for such
purposes are pending or threatened;
Financial Statements:
(p) as of their date of issue, the consolidated financial statements of
the Company for the year ended December 31, 2002 (as contained in
the Form 10-K filed by the Company with the SEC) and the unaudited
consolidated financial statements of the Company for the three month
period ended March 31, 2003 (as contained in the Form 10-Q filed by
the Company with the SEC):
(i) were true and correct in all material respects;
(ii) were prepared in accordance with generally accepted accounting
principles in Canada; and
(iii) complied, to the extent necessary, with all applicable
Securities Laws.
(q) KPMG LLP have been duly appointed as the auditors of the Company and
are independent public accountants;
(r) the Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that:
(i) transactions are carried out in accordance with management's
general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with Canadian generally
accepted accounting principles and to maintain asset
accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and
(iv) the recorded assets are compared with the existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences;
Due Diligence Matters:
(s) since March 31, 2003, except as has been publicly disclosed by the
Company:
(i) there has been no material change in the financial position or
condition of the Company nor any damage, loss or other change
in circumstances materially affecting the business or property
of the Company, or its right or capacity to carry on business;
(ii) the Company has not waived or surrendered any right of
material value;
(iii) the Company has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current
liabilities paid in the ordinary course of business;
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(iv) the business of the Company has been carried on in the
ordinary course; and
(v) the Company has not declared or paid any dividends or declared
or made any other distribution on any of the common shares nor
redeemed, purchased or otherwise acquired any of the common
shares nor agreed to do so;
(t) other than as disclosed in the financial statements of the Company
for the three months ended March 31, 2003 or as incurred in the
ordinary course of business, the Company has no outstanding debts,
bonds, debentures, mortgages, notes or other evidence of
indebtedness and there are no outstanding agreements of the Company
to create or issue any debts, bonds, debentures, mortgages, notes or
other evidence of indebtedness;
(u) the Company has not taken and will not take, directly or indirectly,
any action designed to, or that might reasonably be expected to
cause or result in, stabilization or manipulation of the price of
the Company's common shares;
(v) there are no actions, suits, proceedings or investigations, whether
on behalf of or against the Company or the Material Subsidiary
pending, or, to the knowledge of the Company and its directors and
officers, threatened, against or affecting the Company or the
Material Subsidiary at law or in equity, before or by any federal,
provincial, municipal or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign which may in
any way materially adversely affect the Company and the Material
Subsidiary as a whole or the condition (financial or otherwise) of
the Company and the Material Subsidiary as a whole, or which
questions the validity of the issuance of the Shares and Warrants,
or any action taken or to be taken by the Company pursuant to or in
conjunction with this Subscription Agreement;
(w) neither the Company nor the Material Subsidiary nor, to the
Company'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 to which the Company or the Material
Subsidiary is a party or by which any of them is bound, and no event
has occurred which with notice or lapse of time or both would
constitute such a default, in any 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 Company and the Material Subsidiary as a whole;
(x) neither the Company nor the Material Subsidiary is a party to, or
bound by, any agreement of guarantee, indemnification, assumption or
endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other
person, firm or corporation, other than indemnities entered into in
the ordinary course of business;
(y) the corporate records and minute books of the Company and the
Material Subsidiary are complete and up-to-date in all respects and,
in particular, contain complete and accurate minutes of all meetings
of their respective directors and shareholders held since its date
of incorporation and all resolutions consented to in writing;
(z) no press release or material change report issued by the Company
subsequent to March 31, 2003 contained a misrepresentation as of the
date of its release;
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(aa) except as has been publicly disclosed by the Company, the Company
and its Material Subsidiary own or possesses adequate and
enforceable rights to all patents, patent applications, other patent
rights, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, methods,
unpatented inventions, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for
the conduct of its business as currently carried on by it. Neither
the Company nor its Material Subsidiary has received any notice of,
or is otherwise aware of, any infringement of, or conflict with,
rights of others with respect to any Intangibles which, singularly
or in the aggregate, if the subject of an unfavourable decision,
ruling or finding, would have a material adverse effect upon the
assets, properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its Material
Subsidiary on a consolidated basis. The Company and its Material
Subsidiary have taken all commercially reasonable measures to
protect the confidentiality and value of all of the Intangibles.
(bb) neither the Company nor its Material Subsidiary is in violation of
any material law, order, rule, regulation, writ, injunction or
decree of any court or governmental agency or body, where the
consequences of such violation would have a material adverse effect
on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company and
the Material Subsidiary as a whole;
(cc) no strike or work stoppage exists involving the employees of the
Company, and the Company is not aware of any threatened or imminent
labour disturbance by any such employees or the employees of any of
the principal suppliers, manufacturers, customers or contractors of
the Company or its Material Subsidiary;
Tax Matters:
(dd) the Company and the Material Subsidiary have filed all federal,
provincial, local and foreign tax returns that are required to be
filed or have requested extensions thereof (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
Company or the Material Subsidiary, taken as a whole) and have paid
all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, 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;
(ee) the Company and the Material Subsidiary 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 Company or the Material Subsidiary, except for
taxes not yet due. There are no audits known by the Company's
management to be pending of the tax returns of the Company or the
Material Subsidiary (whether federal, provincial, local or foreign).
There are no claims which have been or may be asserted relating to
any such tax returns, which audits (including those audits for which
notice has been received by the Company as described herein) 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
Company or the Material Subsidiary; and
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(ff) neither the Canada Customs and Revenue Agency nor any foreign
taxation authority has asserted or, to the Company'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 Company or the Material Subsidiary
(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 Company or the Material Subsidiary.
7. Purchaser's Representations and Warranties. The Purchaser represents and
warrants to the Company, and acknowledges that the Company is relying upon such
representations and warranties in entering into this Subscription Agreement and
completing the transactions contemplated hereby, as follows:
(a) Authorization and Effectiveness. The Purchaser has the necessary
legal capacity and authority to execute and deliver this
subscription agreement and to observe and perform his covenants and
obligations hereunder and has obtained all necessary approvals in
respect thereof.
(b) Residence. The Purchaser is a resident of the jurisdiction referred
to on page 1 above.
(c) Purchasing as Principal. The Purchaser is purchasing all the Shares
and Warrants hereunder as principal (as defined under all applicable
Securities Laws) for his own account, and not for the benefit of any
other person.
(d) Purchasing for Investment Only. The Purchaser is purchasing all the
Shares and Warrants hereunder for investment only and not with a
view to resale or distribution in violation of applicable Securities
Laws, the U.S. Securities Act or applicable state securities laws.
(e) Accredited Investor. The Purchaser is an Accredited Investor and has
completed and delivered the Accredited Investor Questionnaire to the
Company as further confirmation of that fact.
(f) No Registration. The Purchaser acknowledges that none of the Shares
or Warrants (or common shares issuable upon exercise of the
Warrants) have been registered under the U.S. Securities Act or any
applicable state securities laws and that the sale contemplated
hereby is being made in reliance on a private placement exemption to
Accredited Investors.
(g) Resales. The Purchaser understands that if he decides to offer,
sell, or otherwise transfer any of the Shares, Warrants or common
shares issuable upon exercise of the Warrants, such securities may
be transferred only: (A) to the Company, (B) outside the United
States in accordance with Rule 904 of Regulation S and pursuant to
applicable Securities Laws and Stock Exchange policy, (C) within the
United States in accordance with the exemption from registration
under the U.S. Securities Act provided by Rule 144 thereunder, if
available, and in compliance with any applicable state securities
laws, or (D) in a transaction that does not require registration
under the U.S. Securities Act or any applicable state laws and
regulations governing the offer and sale of securities, where the
Purchaser has, prior to such sale, furnished to the Company an
opinion of counsel, of recognized standing, reasonably satisfactory
to the Company.
(h) Legend Requirements. The Purchaser understands and acknowledges
that:
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(i) upon the original issuance thereof, and until such time as the
same is no longer required under applicable requirements of
the U.S. Securities Act or applicable state securities laws,
certificates representing Shares and Warrants, and all
certificates issued in exchange therefor or in substitution
thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE
BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES
ACT, (C) WITHIN THE UNITED STATES IN ACCORDANCE WITH THE
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND
IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS,
OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY
APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE
OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR
TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF
COUNSEL, OF RECOGNIZED STANDING, REASONABLY SATISFACTORY
TO THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS
ON STOCK EXCHANGES IN CANADA. PROVIDED THAT THE COMPANY
IS A "FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S
AT THE TIME OF SALE, A NEW CERTIFICATE BEARING NO LEGEND
MAY BE OBTAINED FROM COMPUTERSHARE TRUST COMPANY OF
CANADA, AS REGISTRAR AND TRANSFER AGENT, UPON DELIVERY
OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN
A FORM SATISFACTORY TO COMPUTERSHARE TRUST COMPANY OF
CANADA AND THE COMPANY, TO THE EFFECT THAT SUCH SALE IS
BEING MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S
UNDER THE 1933 ACT."
(ii) if the Shares are being sold under section (B) of the
foregoing legend, and provided that the Company is a "foreign
issuer" within the meaning of Regulation S at the time of
sale, any such legend may be removed by providing a
declaration to Computershare Trust Company of Canada, as
registrar and
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transfer agent, to the effect set forth in Schedule "C" hereto
(or as the Company may prescribe from time to time); and
(iii) if the Shares or Warrants are being sold under section (C) of
the foregoing legend, the legend may be removed by delivery to
Computershare Trust Company of Canada and the Company of an
opinion of counsel, of recognized standing reasonably
satisfactory to the Company, that such legend is no longer
required under applicable requirements of the U.S. Securities
Act or state securities laws.
For purposes of complying with applicable Securities Laws and
Multilateral Instrument 45-102, Resale of Securities, the Purchaser
understands and acknowledges that upon the issuance of Shares or
Warrants, all the certificates representing the Shares or Warrants,
as well as all certificates issued in exchange for or in
substitution of the foregoing securities, shall bear the following
legend:
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THE SECURITIES SHALL NOT TRADE THESE
SECURITIES BEFORE [date which is four months and one day
after the date of the Closing]."
(i) Adequate Information. The Purchaser has access to all information,
if any, concerning the Company as he has considered necessary in
connection with his investment decision to acquire Shares and
Warrants hereunder.
(j) No Solicitation or Advertising. He acknowledges that he has not
purchased Shares or Warrants hereunder as a result of any general
solicitation or general advertising, including advertisements,
articles, notices or other communications published in any
newspaper, magazine, or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
(k) Income Tax Consequences. He acknowledges that, although an
investment in Shares and Warrants may have certain material federal
and state income tax consequences, neither the Company nor any of
their representatives, have made any representations concerning
income tax consequences to the Purchaser and the Purchaser has
relied solely, if at all, on the Purchaser's own tax advisors in
evaluating the tax aspects of such an investment.
(l) Absence of Offering Memorandum. The Purchaser acknowledges that none
of the documents provided to him by the Company in connection with
the transactions contemplated hereby constitute an offering
memorandum or similar document for the purposes of the Securities
Laws or other applicable securities laws.
(m) Investment Suitability. The Purchaser has such knowledge and
experience in financial and business affairs as to be capable of
evaluating the merits and risks of the investment hereunder in the
Shares and Warrants and is able to bear the economic risk of loss of
such investment.
-12-
8. Indemnities.
8.1 The Company shall indemnify the Purchaser and save the Purchaser harmless
from any loss, liability, claim, damage or expense (whether or not involving a
third party claim) including reasonable legal fees and expenses (collectively,
"Damages") suffered by, imposed upon or asserted against the Purchaser as a
result of, in respect of, connected with, or arising out of, under, or pursuant
to:
(a) any failure of the Company to perform or fulfil any covenant of the
Company under this Subscription Agreement; and
(b) any breach of any representation or warranty given by the Company in
this Subscription Agreement,
provided that the Company shall not be required to make any payments under this
Section 8.1 unless the Purchaser has provided written notice of such claim to
the Company on or prior to the expiration of the deadline for making such claims
as specified in Section 8.4.
8.2 The Purchaser shall indemnify the Company and save the Company harmless from
any Damages suffered by, imposed upon or asserted against the Company as a
result of, in respect of, connected with, or arising out of, under, or pursuant
to:
(a) any failure of the Purchaser to perform or fulfil any covenant of
the Company under this Subscription Agreement; and
(b) any breach of any representation or warranty given by the Purchaser
in this Subscription Agreement,
provided that the Purchaser shall not be required to make any payments under
this Section 8.2 unless the Company has provided written notice of such claim to
the Purchaser on or prior to the expiration of the deadline for making such
claims as specified in Section 8.4.
8.3 The remedies provided in Sections 8.1 and 8.2 are the sole remedies
available to the Company and the Purchaser under any legal theory in respect of
damages as a result of, in respect of, connected with, or arising out of, under,
or pursuant to this Subscription Agreement and the transactions contemplated
hereby and, to the full extent permitted by applicable law, the Purchaser and
the Company hereby waive any and all other remedies which may otherwise be
available to either of them.
8.4 In the event that either party wishes to make a claim for indemnification
under this Article 8, it must provide written notice of its intention to do so
to the other party by no later than the date which is [two (2)] years after the
Closing Date. Such notice shall be delivered to the address specified on page
one of this Subscription Agreement (or such other address as a party hereto may
so advise the other party hereto in writing) and shall specify, in reasonable
detail, the claim being made and (to the extent then known) the Damages which
will be claimed by the party seeking indemnification.
8.5 In the case of a claim for indemnification which arises as a result of a
third party claim being made against one of the parties hereto, the following
rules apply in addition to the other provisions of this Article 8:
(a) Promptly after receipt by a party who is indemnified under Section
8.1 or 8.2 (an "Indemnified Party") of a notice of commencement of
any proceeding against it by a third party, the Indemnified Party
will, if a claim is to be made against an indemnifying party under
such Section, give notice to the Indemnifying Party (and
"Indemnifying Party") of the commencement of such claim as soon as
reasonably possible after receipt
-13-
of such notice of commencement, provided that a delay in delivering
such notice shall not preclude a claim for indemnification except:
(i) to the extent that an Indemnifying Party demonstrates that the
defence of such action is prejudiced by the Indemnified
Party's failure to give such notice in a timely manner; or
(ii) where such notice is not delivered by the deadline specified
in Section 8.4, in which case the Indemnifying Party shall
have no obligation to indemnify the Indemnified Party at all.
(b) If any proceeding referred to in Section 8.5(a) (a "Proceeding") is
brought against an Indemnified Party and it gives notice to the
Indemnifying Party of the commencement of the Proceeding, the
Indemnifying Party will be entitled to participate in the Proceeding
as hereinafter provided. To the extent that the Indemnifying Party
wishes to assume the defense of the Proceeding with counsel
satisfactory to the Indemnified Party, it may do so provided it: (i)
reimburses the Indemnified Party for all of its out-of-pocket
expenses (including solicitor's fees and disbursements) arising
prior to or in connection with such assumption; and (ii) permits the
Indemnified Party to participate in such defense through counsel
chosen by the Indemnified Party provided that the fees and expenses
of such counsel shall be borne by the Indemnified Party unless there
are separate defenses available to the Indemnified Party or
conflicts of interest in which case those fees and expenses will be
paid by the Indemnifying Party. After notice from the Indemnifying
Party to the Indemnified Party of its election to assume the defense
of the Proceeding as against the Indemnified Party, the Indemnifying
Party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Party under this Article 8 for any fees of
other counsel or any other expenses with respect to the defense of
the Proceeding, in each case subsequently incurred by the
Indemnified Party in connection with the defense of the Proceeding,
other than reasonable costs of investigation approved in advance by
the Indemnifying Party. If the Indemnifying Party assumes the
defense of a Proceeding as against the Indemnified Party: (i) no
compromise or settlement of such claims may be made by the
Indemnifying Party without the Indemnified Party's consent unless:
(A) there is no admission of any violation of laws or any violation
of the rights of any person and no adverse effect on any other
claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary damages that are paid in full by
the Indemnifying Party; and (ii) the Indemnified Party will have no
liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an
Indemnifying Party of the commencement of any Proceeding and the
Indemnifying Party does not, within ten days after receipt of such
notice, give notice to the Indemnified Party of its election to
assume the defense of the Proceeding, the Indemnifying Party will be
bound by any determination made in the Proceeding or any compromise
or settlement effected by the Indemnified Party acting in good
faith.
(c) Where the defence of a Proceeding is being undertaken and controlled
by the Indemnifying Party, the Indemnified Party will use its
reasonable commercial efforts to make available to the Indemnifying
Party those employees whose assistance, testimony or presence is
necessary to assist the Indemnifying Party in evaluating and
defending any such claims. However, the Indemnifying Party shall be
responsible for the expense associated with any employees made
available by the Indemnified Party to the Indemnifying Party
pursuant to this Section 8.5(c), which expense shall be equal to the
out of pocket expenses of such employees and an amount to be
mutually agreed upon per person per hour or per day for each day or
portion thereof that the employees are assisting the Indemnifying
Party and which expenses shall not exceed the actual cost to the
Indemnified Party associated with the employees.
-14-
(d) With respect to any Proceeding at the request of the Indemnifying
Party, the Indemnified Party shall make available to the
Indemnifying Party or its representatives on a timely basis all
documents, records and other materials in the possession of the
Indemnified Party, at the expense of the Indemnifying Party,
reasonably required by the Indemnifying Party for its use in
defending any such claim and shall otherwise cooperate on a timely
basis with the Indemnifying Party in the defense of such claim.
9. Expenses. The Purchaser and the Company shall each be responsible for paying
all of their own costs and expenses relating to the transactions contemplated
hereby and neither party shall have any obligation to pay or otherwise indemnify
the other party for any such costs and expenses incurred by such other party in
connection herewith.
10. No Statutory Right of Rescission or Damages. The Purchaser acknowledges and
agrees that as a consequence of acquiring Shares pursuant to exemptions from
registration and prospectus requirements under the Securities Laws and the
securities laws of the United States, certain protections, rights and remedies
provided by the Securities Laws and the securities laws of the United States,
including statutory rights of rescission or damages, will not be available to
the Purchaser.
11. Resale Restrictions. The Purchaser understands and acknowledges that the
Shares and Warrants purchased hereunder will be subject to certain resale
restrictions under applicable securities laws and the Private Placement
Questionnaire and Undertaking and the Purchaser agrees to comply with such
restrictions. The Purchaser also acknowledges that it has been advised to
consult its own legal advisors with respect to applicable resale restrictions
and that it is solely responsible for complying with such restrictions.
12. No Statutory Right of Rescission or Damages; Additional Acknowledgements.
The Purchaser acknowledges and agrees that: (a) no securities commission or
similar regulatory authority has reviewed or passed on the merits of the Units;
(b) there is no government or other insurance covering the Units; (c) there are
risks associated with the purchase of the Units; and (d) as a consequence of
acquiring Units pursuant to exemptions from registration and prospectus
requirements under the Securities Laws, certain protections, rights and remedies
provided by the Securities Laws, including statutory rights of rescission or
damages, will not be available to the Purchaser.
13. Modification. Neither this Subscription Agreement nor any provision hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing signed by the party against whom any waiver, change, discharge or
termination is sought.
14. Assignment. The terms and provisions of this Subscription Agreement shall be
binding upon and enure to the benefit of the Purchaser, the Company and their
respective successors and assigns; provided that, except as herein provided,
this Subscription Agreement shall not be assignable by any party without the
prior written consent of the other party.
15. Miscellaneous. All representations, warranties, agreements and covenants
made by the Purchaser or the Company herein will survive the Closing. This
Subscription Agreement may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document.
16. Governing Law. This Subscription 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.
-15-
17. Entire Agreement and Headings. This Subscription Agreement (including the
Schedules hereto) contains the entire agreement of the parties hereto relating
to the subject matter hereof and there are no representations, covenants or
other agreements relating to the subject matter hereof except as stated or
referred to herein. The headings contained herein are for convenience only and
shall not affect the meanings or interpretation hereof.
18. Time of Essence. Time shall be of the essence of this Subscription
Agreement.
19. Effective Date. This Subscription Agreement is intended to and shall take
effect on the Closing Date, notwithstanding its actual date of execution or
delivery by any of the parties.
IN WITNESS WHEREOF the undersigned has executed this Subscription Agreement on
the 22nd day of May, 2003.
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
XXXXXX X. XXXXXXX
INFOWAVE SOFTWARE, INC.
By: /s/ Xxxxxx Xxxx
-------------------------------
Authorized Signatory
-16-
SCHEDULE "A"
THE TORONTO STOCK EXCHANGE
Private Placement Questionnaire and Undertaking
To be completed by each proposed private placement purchaser of listed
securities or securities which are convertible into listed securities.
QUESTIONNAIRE
1. DESCRIPTION OF TRANSACTION
(a) Name of issuer of the Securities
INFOWAVE SOFTWARE, INC.
(b) Number and Class of Securities to be Purchased:
29,473,684 Units, each consisting of one Common Shares and one-half
of one Common Share Purchase Warrant.
(c) Purchase Price:
Cdn.$0.1425 per Unit.
2. DETAILS OF PURCHASER
(a) Name of Purchaser:
____________________________________________________________________
(b) Address:
____________________________________________________________________
____________________________________________________________________
(c) Names and addresses of persons having a greater than 10% beneficial
interest in the Purchaser:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
A-1
3. RELATIONSHIP TO ISSUER
(a) Is the Purchaser (or any person named in response to 2(c) above) an
insider of the issuer for the purposes of the Securities Act
(Ontario) (before giving effect to this private placement)? If so,
state the capacity in which the Purchaser (or person named in
response to 2(c)) qualifies as an insider:
____________________________________________________________________
____________________________________________________________________
(b) If the answer to (a) is "no", are the Purchaser and the issuer
controlled by the same person or company? If so, give details:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
4. DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER
Give details of all trading by the Purchaser, as principal, in the
securities of the issuer (other than debt securities which are not
convertible into equity securities), directly or indirectly, within the 60
days preceding the date hereof:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
A-2
UNDERTAKING
TO: The Toronto Stock Exchange
The undersigned has subscribed for and agreed to purchase, as principal, the
securities described in item 1 of this Private Placement Questionnaire and
Undertaking.
The undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of four
months from the date of the closing of the transaction herein or for such period
as is prescribed by applicable securities legislation, whichever is longer,
without the prior consent of the Toronto Stock Exchange and any other regulatory
body having jurisdiction.
Dated at _____________________ this ______ day of ______________, 2003.
________________________________________
(Name of Purchaser - please print)
________________________________________
(Authorized Signatory)
________________________________________
(Official Capacity - please print)
A-3
SCHEDULE "B"
U.S. ACCREDITED INVESTOR QUESTIONNAIRE
The undersigned, as a purchaser of Units of Infowave Software, Inc. (the
"Company"), has represented that the undersigned is an "accredited investor" as
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the "1933 Act"). The undersigned has indicated below the
categories which it, he or she satisfies.
The undersigned understands that the Company is relying on this information in
determining to sell securities to the undersigned in a manner exempt from the
registration requirements of the 1933 Act and applicable state securities laws.
A. ACCREDITED INVESTOR STATUS
The undersigned represents and warrants that it, he or she is [check
each applicable item]:
_____ (a) A bank, as defined in Section 3(a)(2) of the 1933 Act, or savings
and loan association or other institution as defined in Section
3(a)(5)(A) of the 1933 Act, whether acting in its individual or
fiduciary capacity.
_____ (b) A broker or dealer registered pursuant to Section 15 of the United
States Securities Exchange Act of 1934, as amended.
_____ (c) An insurance company (as defined in Section 2(13) of the 1933 Act).
_____ (d) An investment company registered under the United States Investment
Company Act of 1940 (the "1940 Act").
_____ (e) A business development company (as defined in Section 2(a)(48) of
the 1940 Act).
_____ (f) A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the United
States Small Business Investment Act of 1958.
_____ (g) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of U.S. $5,000,000.
_____ (h) An employee benefit plan within the meaning of the United States
Employee Retirement Income Security Act of 1974 ("ERISA") (1) whose
investment decision is made by a plan fiduciary as defined in
Section 3(21) of ERISA, which is either a bank, savings and loan
association, insurance company or registered investment advisor, or
(2) having total assets in excess of U.S. $5,000,000, or (3) if a
self-directed plan, with investment decisions made solely by persons
that are accredited investors.
_____ (i) A private business development company (as defined in Section
202(a)(22) of the United States Investment Advisers Act of 1940).
B-1
_____ (j) An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation, a Massachusetts or similar business
trust, or a partnership, not formed for the specific purpose of
acquiring the securities offered, having total assets in excess of
U.S. $5,000,000.
_____ (k) A director or executive officer of the Company.
_____ (l) A natural person with individual net worth, or joint net worth with
his or her spouse, at the time of purchase in excess of U.S.
$1,000,000.
_____ (m) A natural person with an individual income in excess of U.S.
$200,000 in each of the last two years or joint income with his or
her spouse in excess of U.S. $300,000 in each of those years, and
who reasonably expects to reach the same income level in the current
year.
_____ (n) A trust, with total assets in excess of U.S. $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in
section Rule 506 (b)(2)(ii) of the 1933 Act.
_____ (o) An entity in which all of the equity owners are accredited
investors.
As used in this questionnaire, the term "net worth" means the excess of total
assets over total liabilities. In computing net worth for the purpose of
paragraph (1) above, the principal residence of the investor must be valued at
cost, including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, an investor should add to adjusted gross income any amount attributable
to tax exempt income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion, contributions to an XXX
or Xxxxx retirement plan, alimony payments, and any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
_____ day of _____________________, 2003.
If a Corporation, Partnership or Other Entity: If an Individual:
________________________________________________ ________________________________________
Name of Entity Signature
________________________________________________ ________________________________________
Type of Entity Printed or Typed Name
________________________________________________ ________________________________________
Signature of Person Signing Social Security or Taxpayer I.D. Number
________________________________________________
Printed or Typed Name and Title of Person Signing
B-2
SCHEDULE "C"
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: INFOWAVE SOFTWARE, INC.
The undersigned: (a) acknowledges that the sale of the securities of Infowave
Software, Inc. (the "Company") to which this declaration relates is being made
in reliance on Rule 904 of Regulation S under the United States Securities Act
of 1933, as amended (the "1933 Act") and (b) certifies that: (1) the undersigned
is not an affiliate of the Company as that term is defined in the 1933 Act, (2)
the offer of such securities was not made to a person in the United States and
either (A) at the time the buy order was originated, the buyer was outside the
United States, or the seller and any person acting on its behalf reasonably
believed that the buyer was outside the United States, or (B) the transaction
was executed in, on or through the facilities of the Toronto Stock Exchange or
any other designated offshore securities market as defined in Regulation S under
the 1933 Act and neither the seller nor any person acting on its behalf knows
that the transaction has been prearranged with a buyer in the United States, (3)
neither the seller nor any affiliate of the seller nor any person acting on any
of their behalf has engaged or will engage in any directed selling efforts in
the United States in connection with the offer and sale of such securities, (4)
the sale is bona fide and not for the purpose of "washing off" the resale
restrictions imposed because the securities are "restricted securities" (as such
term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not
intend to replace the securities sold in reliance on Rule 904 of the 1933 Act
with fungible unrestricted securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated: ____________________________ _______________________________________
Name of Seller
By: ________________________________
Name: ________________________________
Title: ________________________________
C-1
SCHEDULE "D"
NOMINATION AND STANDSTILL AGREEMENT
PLEASE SEE ATTACHED
D-1
SCHEDULE "E"
Outstanding Rights to Acquire Securities of the company
Infowave Software Inc.
Summary Capital Structure
March 31, 2002
Common Shares
Authorized: 200,000,000
Issued: 57,754,578
December 9, 2002 Private
Placement:
Shares issued to investors 8,500,000
Shares issued to Agent
Corporate Finance 185,000
2003-Q1 Stock Options
Exercised 220,000
-------------
66,659,578
=============
Warrants Expiry
-------- ------
Xxxx Warrants @ $1.10 3,510,455 7/24/04
Purchase Warrants @ $0.90 17,060,644 11/26/04 Company has right to force conversion if
MV is >= $9.00/sh for 20 trading days
Agents' Special Warrants @ $0.81 2,386,775 11/23/04
Agents' Purchase Warrants @ $0.90 1,193,387 11/26/04
Purchase Warrants @ $0.24 4,250,000 Dec-04 1/2 warrant for each of the 8,500,000 units
Agents' Fee Warrants @ $0.24 850,000 Dec-04 10% of the number of Units Sold 8,500,000
Agent's Corporate Finance Fee Warrants @ $0.24 92,500 Dec-04 1/2 warrant for each of the above Corporate
Finance shares issued
-------------
Total Warrants Outstanding 29,343,761
=============
Total Options Outstanding: 4,826,933
Convertible Debt 2,000,000
Fully Diluted: 102,830,272
Market Cap. Fully Diluted $ 0.33 $33,933,990 15-Jan-03
Market Cap. At current Market $ 0.33 $19,059,011
-----------------------------------------------------------------------
Incentive Stock Options
Options Authorized:
Carry Forward from 2001 8,568,679
Increased at AGM 1,500,000
-------------
10,068,679
-------------
Options Issued:
Carry Forward from 2002 13,987,029
Xxx Xxxxxxxxx 2-Jan-03 25,000
Xxxx Huntingdon 17-Feb-03 60,000
Xxxxx Xxxxxxxxx 5-Mar-03 25,000
Xxxxxxxxx Xxxxxxxx 10-Mar-03 40,000
Dio Ami 10-Mar-03 4,000
-------------
14,141,029
-------------
Options Cancelled: 7,303,131
-------------
Options Exercised: 2,010,965
-------------
1.4600
Options Outstanding: 4,826,933 31 day average per OANDA - 1.46700
-------------
OANDA fx rate - 1.45490 per April 21, 2003
with high bid 1.45530
Options Available: 3,230,781
-------------
E-1
