EXHIBIT B
First Financing Subscription Agreement
SUBSCRIPTION AGREEMENT - ss. 74(2)(4)
THIS AGREEMENT MADE EFFECTIVE AS OF THE 20TH DAY OF APRIL, 2000 (the "Effective
Date").
BETWEEN:
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. The Purchaser wishes to subscribe for __ units (each, a "Unit"), where
each Unit consists of one common share (each, a "Share") and one-half
of one non-transferable share purchase warrant (each whole warrant is a
"Warrant"), of the Company (together, 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) if the Purchaser is resident of an "International Jurisdiction"
(which means a country other than Canada or the United States)
then:
(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;
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(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
(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) 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, including those referred
to in the Form 20A attached hereto and, if applicable, the
Purchaser meets those criteria;
(e) 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;
(f) 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;
(g) 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;
and
(h) 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
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obligations hereunder and has taken all necessary corporate
action in respect thereof, or, if the Purchaser is a partnership,
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; and
(i) 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;
(j) 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;
(k) no offers of Securities were made by any person to the Purchaser
while the Purchaser was in the United States; and
(l) 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 Nevada;
(b) the Company is not a reporting issuer in British Columbia and any
Securities issued to the Purchaser 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;
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(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");
(e) upon their issuance, the Shares 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 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
memoranda, 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
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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.
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 (a "Share" or the "Shares") with a par
value of U.S. $0.01 in the capital stock of the Company and one-half
of one non-transferable share purchase warrant (a "Warrant" or the
"Warrants"), at a price of U.S. $7.50 per Unit. Each whole Warrant
(comprising two half warrants) will entitle the Purchaser to
subscribe for one additional common share of the Company at a price
of U.S. $7.50 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. $10.00 per share at any time up to 5:00
p.m. local time on the second anniversary of the Closing Date. After
two years the Warrants will expire if not exercised.
2.2 On or before the __ day of ______, 2000, 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 and 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. The
Purchaser hereby confirms that upon the Company advising Xxxxxxx &
Xxxxxx that is has delivered such certificates, or caused such
certificates to be delivered to, the Purchaser, Xxxxxxx & Xxxxxx is
hereby authorized and directed to release and deliver the
Subscription Funds to the Company without prior notice to, consent of
or action by the Purchaser.
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3. Covenants, Agreements and Acknowledgements
3.1 The Purchaser covenants and agrees with the Company to:
(a) concurrent with the execution of this Agreement, if the
Purchaser is an individual (which means a natural person, but
does not include a partnership, unincorporated association,
unincorporated syndicate, unincorporated organization or trust,
or a natural person in his capacity as a trustee, executor,
administrator or personal or other legal representative), fully
complete and execute the Form 20A scheduled to this Agreement;
and
(b) 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;
(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;
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(d) the certificates evidencing the Securities issued in this
subscription will bear a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"). THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT THAT IS THEN APPLICABLE TO
THE SHARES, AS TO WHICH A PRIOR OPINION OF COUNSEL MAY BE REQUIRED BY
THE ISSUER OR THE TRANSFER AGENT. HEDGING TRANSACTIONS MAY NOT BE
CONDUCTGED UNLESS IN COMPLIANCE WITH REGULATION S OF THE 1933 ACT."
(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 the
documents necessary to be filed under the applicable Securities
Rules, including Forms 20 (or the forms equivalent thereto), within
the required time.
4. Closing
4.1 The completion of the subscription contemplated under this Agreement
shall occur on or before __________, 2000 (the "Closing Date"). The
Company shall deliver 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 to the Purchaser as provided for below by the
Purchaser. Upon the Company advising Xxxxxxx & Xxxxxx that it has
delivered these documents, or caused them to be delivered, Xxxxxxx &
Xxxxxx is authorized and directed by the parties hereto to release
and deliver the Subscription Funds to the Company without prior
notice to, consent of or action by the Purchaser.
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5. General
5.1 For the purposes of this Agreement, time is of the essence.
5.2 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.
5.3 This Agreement shall be subject to, governed by and construed in
accordance with the laws of British Columbia.
5.4 This Agreement may not be assigned by either party hereto.
5.5 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.
Per: ________________________________
Authorized Signatory
TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Can not 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:
Name
Street Address
Country
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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"):
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
----------------------------------------
City and Province
----------------------------------------
Country
---------------
Postal Code
C. Delivery 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"):
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
----------------------------------------
City and Province
----------------------------------------
Country
-------------
Postal Code
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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. $__________
Number of Securities: __________ Units.
Note: The number of Securities must equal the Subscription Funds
divided by price of U.S. $7.50 per Security.
TO BE COMPLETED AND SIGNED BY THE PURCHASER:
--------------------------------------
Name of the "Purchaser" - use the name
inserted in paragraph A above.
Per:
------------------------------------------
Signature of Purchaser
------------------------------------------
Title (if applicable)
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[ONLY COMPLETE IF PURCHASER IS AN INDIVIDUAL
(see paragraph 3.1(a) of the Subscription Agreement)]
This is the form required under section 135 of the Rules and, if applicable, by
an order issued under section 76 of the Securities Act.
FORM 20A (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from ______________ (the "Issuer")
[Issuer]
___________________________________ Units (the "Securities") of the Issuer.
[number and description of securities]
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be the beneficial owner of the
Securities.
3. I [circle one] have/have not received an offering memorandum describing the
Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has reviewed
or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities and it
is my responsibility to find out what those restrictions are and to
comply with them before selling the Securities, AND
(e) I will not receive a prospectus that the British Columbia Securities
Act (the "Act") would otherwise require be given to me because the
Issuer has advised me that it is relying on a prospectus exemption,
AND
(f) because I am not purchasing the Securities under a prospectus, I will
not have the civil remedies that would otherwise be available to me,
AND
(g) the Issuer has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except
purchases referred to in paragraphs 5(a) and 5(g), and as a result I
do not have the benefit of any protection that might have been
available to me by having a dealer act on my behalf.
5. I also acknowledge that: [circle one]
(a) I am purchasing Securities that have an aggregate acquisition cost of
$97,000 or more, OR
(b) my net worth, or my net worth jointly with my spouse at the date of
the agreement of purchase and sale of the security, is not less than
$400,000, OR
(c) my annual net income before tax is not less than $75,000, or my annual
net income before tax jointly with my spouse is not less than
$125,000, in each of the two most recent calendar years, and I
reasonably expect to have annual net income before tax of not less
than $75,000 or annual net income before tax jointly with my spouse of
not less than $125,000 in the current calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister or child of a senior officer or
director of the Issuer, or of an affiliate of the Issuer, OR
(f) I am a close personal friend of a senior officer or director of the
Issuer, or of an affiliate of the Issuer, OR
(g) I am purchasing securities under section 128(c) ($25,000 - registrant
required) of the Rules, and I have spoken to a person [Name of
registered person: _______________________________ (the "Registered
Person")] who has advised me that the Registered Person is registered
to trade or advise in the Securities and that the purchase of the
Securities is a suitable investment for me.
6. If I am an individual referred to in paragraph 5(b), 5(c) or 5(d), I
acknowledge that, on the basis of information about the Securities
furnished by the Issuer, I am able to evaluate the risks and merits of the
Securities because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of adviser:
______________________________ (the "Adviser")] who has advised me
that the Adviser is:
(i) registered to advise, or exempted from the requirement to be
registered to advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
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DATED _________________________, 2000.
_________________________________
Signature of Purchaser
_________________________________
Name of Purchaser
_________________________________
_________________________________
Address of Purchaser
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