Exhibit 3
FORM OF SUBSCRIPTION AGREEMENTS
SUBSCRIPTION AGREEMENT (the "Agreement") made as of the date specified on the
signature page hereto between PORTACOM WIRELESS, INC., a British Columbia
corporation having its corporate offices at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxx xxx Xxx, Xxxxxxxxxx 00000 (the "Company"), and the undersigned
investor (the "Investor").
The Company desires to sell in a private placement of securities, units (the
"Units"), each Unit consisting of a Convertible Promissory Note in the principal
amount of $100,000 bearing interest at the annual rate of 10%, due and payable
two (2) years from the subscription date, or at any time after six (6) months
upon demand of the holder, (the "Note") and a two-year Warrant (the "Warrant")
to purchase ____ shares of common stock of the Company (the "Common Stock") at a
price of $__________ per share, the number of warrant shares and exercise price
subject to adjustment. The purchase price of each Unit is $100,000. Except where
otherwise indicated, all dollar amounts in this Agreement, the Note and the
Warrant are denominated in United States dollars. The Company has reserved the
right to sell fractional Units. The forms of Note and Warrant are attached
hereto and are incorporated herein by reference. The Investor desires to
purchase the number of Units set forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the promises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION FOR UNITS.
1.1. Subject to the terms and conditions hereinafter set forth, the
Investor hereby subscribes for and agrees to purchase the number of
Units from the Company set forth upon the signature page hereof and the
Company agrees to sell such Units to the Investor at a purchase price
equal to $100,000 per Unit (such aggregate purchase price shall be
referred to as the "Purchase Price"). The Purchase Price is payable by
bank wire transfer or cashier's check made payable to the order of
"PORTACOM WIRELESS, INC." delivered contemporaneously herewith.
Following the receipt of the Purchase Price and acceptance of this
Agreement by the Company, the Notes and Warrants will be issued by the
Company within ten (10) days after the Company receives final approval
of this subscription by the Vancouver Stock Exchange. The maturity date
of the Note shall be two (2) years after the date upon which the
Page 14 of 49
Company is in receipt of the Purchase Price and accepts this Agreement.
2. REPRESENTATIONS, AGREEMENTS AND COVENANTS OF THE INVESTOR.
2.1. The Investor recognizes that the purchase of Units involves a high
degree of speculative risk and is suitable only for persons of adequate
financial means who have no need for liquidity in this investment in
that (i) the Company is in the early stages of development and requires
substantial funds in addition to this private placement; (ii) he may
not be able to liquidate his investment; (iii) transferability is
extremely limited; and (iv) he could sustain a complete loss of his
entire investment. The Investor further represents that (i) he or she
can bear the economic risk of loss of his or her entire investment;
(ii) the Investor has adequate means for providing for his or her
current needs and personal contingencies; and (iii) the Investor has no
need for liquidity with respect to his or her investment in the Units.
2.2. The Investor acknowledges that: (i) he must be a qualified investor,
as described herein, to qualify for the purchase of the Units; (ii) he
and/or his purchaser representative is competent to understand and does
understand the nature of the investment; and (iii) he must be able to
bear the economic risk of this investment.
2.3. The Investor represents that he or she is an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "1933 Act").
2.4. The Investor represents that he or she has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company based
upon the information furnished to him or her (including without
limitation the Disclosure Documents); his or her personal knowledge of
the business and affairs of the Company; the records, files and plans
of the Company to all of which the purchaser has had full access; such
additional information as the purchaser may have requested and has
received from the Company; and the independent inquiries and
investigations undertaken by the purchaser. The Investor understands
that no governmental agency has passed on or made any recommendation or
endorsement of the Securities.
Page 15 of 49
2.5. The Investor hereby represents that he has been furnished by the
Company during the course of this transaction with a copy of (i) the
Company's Private Placement Memorandum dated November 10, 1995 (the
"PPM"); (ii) the Private Placement Memorandum Supplement--Units dated
February 23, 1996 (the "PPM Supplement"); (iii) the Subscription
Agreement including forms of the Company's Convertible Promissory Note,
Warrant and Registration Rights Agreement; (iv) the Company's Audited
Consolidated Financial Statements for the three months ending June 30,
1995 and the three years ending March 31, 1995, 1994, 1993; and (v) the
Company's unaudited Condensed Financial Statements for the three months
ending September 30, 1995 which were prepared by management (all of
which are hereinafter collectively referred to as the "Offering
Documents"), and with all information regarding the Company which the
Investor had requested or desired to know; that all documents which
could be reasonably provided have been made available for his
inspection and review; and that he has been afforded the opportunity to
ask questions of and receive answers from duly authorized officers or
other representatives of the Company concerning the terms and
conditions of the offering, and any additional information which he had
requested. The purchaser has carefully reviewed and fully considered
the contents of the Disclosure Documents, including, without
limitation, the material set forth in the PPM under "INVESTMENT
CONSIDERATIONS" and in the PPM Supplement under "ADDITIONAL INVESTMENT
CONSIDERATIONS."
2.6. The Investor understands that no governmental agency, whether state,
federal or provincial, has passed on, reviewed or made any endorsement
of the Units or the sufficiency of the Offering Documents.
2.7. The Investor hereby acknowledges that this offering of Units has not
been reviewed by the Securities and Exchange Commission (the "SEC").
The Investor further understands that no prospectus or other
information has been filed by the Company with the British Columbia
Securities Commission in connection with the issuance of the Units,
that the issuance is exempted from the prospectus requirements of the
Securities Act (British Columbia) (the "B.C. Act") or any regulations
(the "Regulations") promulgated pursuant to the B.C. Act, and that (i)
the Investor is restricted from using most of the civil remedies
available under the B.C. Act and the Regulations; (ii) the Investor may
not receive information that would otherwise be required to be provided
to the Investor under the B.C. Act and the Regulations; and (iii) the
Company is relieved from
Page 16 of 49
certain obligations that would otherwise apply under the B.C. Act and
the Regulations.
2.8. The Investor represents that his Units are being purchased for his own
account, for investment and not for distribution, resale or
fractionalization thereof, in whole or in part, to others and that no
other person has any direct or indirect interest in the Units. The
Investor agrees that he will not sell or otherwise transfer the Units
unless such sale or transfer is not in violation of the 1933 Act and
applicable U.S. state securities laws (collectively the "Securities
Laws") and Canadian provincial securities laws or they are registered
under the Securities Laws or unless an exemption from such registration
is available. The Investor is aware that the Units are and will be,
when issued, "restricted securities" as that term is defined in Rule
144 under the 1933 Act ("Rule 144") and under applicable state
securities laws.
2.9. The Investor understands that the Units are unregistered and must be
held indefinitely unless they are subsequently registered under the
Securities Laws or an exemption from such registration is available.
The Investor further acknowledges that he or she is fully aware of the
applicable limitations on the resale of the Units. The Investor further
acknowledges that (i) Rule 144 restricts sales of "restricted
securities" for at least two years after acquisition and imposes other
restrictions on the sale of such securities; (ii) if Rule 144 is
available to the Investor, the Investor may only make routine sales of
the securities comprising the Units in limited amounts in accordance
with the terms and conditions of Rule 144; (iii) the Company is the
only person which may register its securities under the Securities Laws
and it currently is not contemplating registering any of its
securities; and (iv) the Company has not made any representations,
warranties or covenants to the Investor regarding the registration of
the Units or compliance with exemptions under the Securities Laws
except as set forth herein.
2.10. The Investor understands that the Units and the securities comprising
the Units have not been registered under the Securities Laws by reason
of a claimed exemption under the provisions of the Securities Laws
which depends, in part, upon his investment intention and his related
representations, warranties and agreements made herein. In this
connection, the Investor understands that it is the position of the SEC
and certain state securities regulatory agencies that the statutory
basis for such exemption would not be present if his present intention
were to hold such securities for
Page 17 of 49
a short period, for a deferred sale, for a market rise, assuming that a
market develops, or for any other fixed period. The Investor realizes
that, in the view of such position, a purchase now with an intent to
resell would represent a purchase with an intent inconsistent with his
representation to the Company, and that the SEC and certain state
securities regulatory agencies might regard such a sale or disposition
as a deferred sale to which the exemption is not available.
2.11. The Investor shall not be permitted to transfer the securities
compromising the Units and the Common Stock issuable upon the
conversion or exercise thereof out of his name unless his request for
transfer is accompanied by an opinion of counsel satisfactory to the
Company that neither the sale nor the proposed transfer results in a
violation of the Securities Laws. The Investor agrees to hold the
Company and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and
to indemnify them against all liabilities, costs and expenses incurred
by them as a result of any sale or distribution by the Investor in
violation of any Securities Laws.
2.12. The Investor consents to the placement of a legend on the securities
comprising the Units, stating that they have not been registered under
the Securities Laws and setting forth or referring to the restrictions
on the transferability and sale thereof. The Investor further consents
to the placement of a further legend on the securities comprising the
Units, stating that the securities are also subject to a hold period
under the B.C. Act and may not be traded in British Columbia until the
expiry of the hold period except as permitted by the B.C. Act and
regulations thereunder with a statement that specifies the date the
hold period expires. The Investor is aware that the Company will make a
notation in its appropriate records with respect to the restrictions on
the transferability of such securities and that the Company will inform
its transfer agent as to said restrictions on transferability.
2.13. The Investor undertakes not to sell or otherwise dispose of any of the
securities comprising the Units for a period of 12 months from the date
of payment without the prior consent of the Vancouver Stock Exchange
and any other regulatory body having jurisdiction. The Investor hereby
certifies that the Units are not being purchased as a result of any
material information about the Company's affairs that has not been
publicly disclosed. The Investor acknowledges that it is aware that the
removal from the securities comprising the Units of any
Page 18 of 49
resale restriction after 12 months that is imposed solely as a
requirement of the Vancouver Stock Exchange will not entitle it to sell
the securities comprising the Units if such sale would contravene any
other applicable securities legislation or regulation.
2.14. The Investor understands that the offer and sale of the Securities are
(i) not being registered under the 1933 Act in reliance on the
so-called "private offering" exemption provided by Section 4 (2) of the
Act and/or Regulation D promulgated pursuant to the Act; and (ii) not
being registered under any applicable state securities laws based on
similar exemptions thereunder, and that the Company is basing its
reliance on these exemptions in part on the representations,
warranties, statements and agreements contained herein and those of
other investors contained in similar subscription agreements. The
Investor acknowledges and agrees that the Company is relying on the
Investor's representations contained in this Agreement and the related
subscription documents in determining whether to accept this
subscription. The Investor hereby gives the Company authority to call
his bank or place of employment or otherwise review the financial
standing of the Investor, and it is further agreed that the Company
reserves the unrestricted right to reject or limit any subscription.
2.15. If the Investor is a corporation, partnership, trust, or other
entity, (i) it is authorized and qualified to become a stockholder in,
and authorized to make its investment in, the Company; (ii) it has not
been formed for the purpose of acquiring an interest in the Company;
(iii) it has not been in existence for less than 90 days prior to the
date hereof and (iv) the person signing this Agreement on behalf of
such entity has been authorized to do so.
2.16. The Investor warrants and represents that all representations made by
the Investor hereunder are true and correct in all material respects as
of the date of this execution hereof, and the Investor further warrants
and represents that he shall inform the Company immediately of any
changes in any of the representations provided by the Investor
hereunder.
2.17. The Investor warrants and represents that neither the Company nor any
other person has made any representations to the Investor not contained
in the Offering Documents. The Investor understands and agrees that any
information or representation not contained therein must not, and will
not, be relied upon and that nothing contained
Page 19 of 49
therein should be construed as legal or tax advice to the purchaser.
2.18. The Investor warrants and represents that neither the Company nor any
other person has made any direct or indirect representation or warranty
of any kind to the Investor with respect to the economic return which
may accrue to the Investor. The Investor has consulted with his own tax
counsel and other advisors with respect to an investment in the
Company.
3. INDEMNIFICATION.
The Investor understands and acknowledges the meaning and legal
consequences of the representations, warranties and covenants contained
herein and in the Investor Questionnaire and hereby agrees to indemnify
and hold the Company and its agents, employees, officers, directors,
shareholders, representatives, affiliates, advisors and controlling
persons harmless from and against any and all loss, damage or liability
(including, without limitation, attorneys' fees and disbursements) due
to or arising out of a breach of any such representation, warranty,
covenant, acknowledgment or agreement, and this indemnification shall
survive the purchase and sale of the Units subscribed for herein. No
waiver by the Company of any breach by the Investor of any such
representation, warranty, covenants, acknowledgment or agreement shall
in any manner be deemed to be the waiver of any rights granted in
federal or state securities laws.
4. REPRESENTATIONS BY THE COMPANY.
The Company represents and warrants to the Investor as follows:
4.1. The Company is a corporation duly organized, existing and in good
standing under the laws of the province of British Columbia, Canada and
has the corporate power to conduct its proposed business.
4.2. The execution, delivery and performance of this agreement by the
Company has been duly approved by the Board of Directors of the
Company, and all other actions required to authorize and effect the
offer and sale of the Units have been or will be duly taken and
approved.
4.3. Subject only to approval by the Vancouver Stock Exchange, the Notes
have been duly and validly authorized and, when issued in accordance
with the terms hereof, will be duly and validly binding obligations of
the Company, enforceable in accordance with their terms.
Page 20 of 49
4.4. Subject only to approval by the Vancouver Stock Exchange, the
Warrants have been duly and validly authorized and, when issued in
accordance with the terms hereof, will be duly and validly binding
obligations of the Company, enforceable in accordance with their terms.
4.5. Subject only to approval by the Vancouver Stock Exchange, the
Common Stock issuable upon exercise of the Warrants and conversion of
the Notes, if ever, have been duly and validly authorized and, when
paid for and issued in accordance with the terms of the Warrants or
converted according to the terms of the Notes, will be duly and validly
issued, fully paid and non-assessable. The Company will at all times
during the term of the Warrants and the Notes have reserved a
sufficient number of shares of Common Stock to provide for exercise of
the Warrants and/or the conversion of the Notes.
5. TERMS OF THE OFFERING.
5.1. The Investor hereby agrees to purchase the number of Units from
the Company set forth upon the signature page hereof payable by bank
wire transfer, or a certified or bank cashier's check made payable to
"Portacom Wireless, Inc." The Investor understands and agrees that the
Company shall have the right, in its absolute and sole discretion, to
accept or reject this subscription in whole or in part; that the same
shall be deemed to have been accepted by the Company only in writing;
and that the Company shall have the right to revoke its acceptance of
the subscription, in whole or in part, at any time prior to the closing
of the sale of the Units. It is further understood that, except as
provided under any applicable state securities laws, this Agreement is
and shall be irrevocable on the part of the Investor, except that the
Investor shall not have any obligations hereunder in the event and to
the extent that this Subscription is rejected for any reason by the
Company. The minimum subscription per Investor shall be one (1) Unit.
However, the Company hereby reserves the right to accept subscriptions
for fractional Units.
5.2. The Investor hereby agrees that the Purchase Price may be used by
the Company for its general corporate purposes pending the approval of
this Agreement by all securities regulatory authorities having
jurisdiction over this private placement. Any interest income from the
Purchase Price shall be for the account of the Company regardless of
whether this Agreement is approved by such regulatory authorities or
not. The Investor further acknowledges and agrees that should such
regulatory authorities not approve this Agreement the Investor's
subscription funds shall be converted as of such date into a loan
payable on
Page 21 of 49
demand by the Company with a principal amount equal to the
Purchase Price and with simple interest of 10%.
5.3. The Units will be offered directly by the Company. Commissions or
placement fees of up to 10.0% may be paid by the Company to registered
broker-dealers or finders in connection with the placement of these
securities. The Company may additionally compensate broker-dealers and
placement agents in connection with this Offering through the issuance
of warrants to purchase Common Stock as permitted by Vancouver Stock
Exchange regulations.
6. REGISTRATION OF SECURITIES.
The Investor understands that there is no public market for the Notes
or the Warrants and only a limited public market for the Common Stock
issuable upon exercise of the Warrants or conversion of the Notes, if
ever, and that the Company makes no representations of any kind
concerning its intent or ability to offer or sell any thereof in a
public offering or otherwise. Subject to the exercise of the Warrants
and/or the conversion of the Notes, if ever, the Company is granting to
holders of the Warrants and to the holders of the Notes certain limited
registration rights with respect to the Common Stock issuable upon
exercise of the Warrants or conversion of the Notes. Such registration
rights are more specifically set forth in that certain Registration
Rights Agreement, a copy of which is attached hereto. The Investor
understands that if a public market for any of the Notes, Warrants or
the Common Stock should ever develop (as to which there is no
assurance), Rule 144 promulgated under the 1933 Act, permits, subject
to all of its terms and conditions, the public resale (in limited
amounts) of securities acquired in non-public offerings such as the
securities contemplated hereby without having to satisfy the
registration requirements of the 1933 Act. The Investor further
understands that the Company has failed to make certain required
filings under, and makes no representation or warranty regarding its
ability to fulfill in the future any reporting requirements under, the
Securities Exchange Act of 1934, as amended, or its future
dissemination to the public of any current financial or other
information concerning the Company, as is required by Rule 144 as one
of the conditions of its availability. Accordingly, the Investor
recognizes that, notwithstanding the existence of a public market for
the Notes, Warrants and Common Stock, he may not be able to take
advantage of the resale provisions of Rule 144 and may be unable to
publicly offer or sell any thereof.
Page 22 of 49
7. MISCELLANEOUS.
7.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail,
return receipt requested, addressed to the Company at 0000 X.
Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx xxx Xxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx XxxXxxxxx, President, and to the Investor at his
address indicated on the last page of this Agreement. Notices shall be
deemed to have been given on the date of mailing, except notices of
change of address, which shall be deemed to have been given when
received.
7.2. This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not
be discharged except by performance in accordance with its terms or by
a writing signed by the party to be charged.
7.3. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective permitted heirs, legal
representatives, successors and assigns. This Agreement sets forth the
entire agreement and understanding between the parties as to the
subject matter thereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
7.4. This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of California.
Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms
and provisions hereof shall be construed in accordance with and
governed by the laws of the State of California. The parties hereby
agree that any dispute which may arise between them arising out of or
in connection with this Agreement shall be adjudicated before a court
located in Los Angeles and they hereby submit to the exclusive
jurisdiction of the courts of the State of California and of the
federal courts in the district of Los Angeles with respect to any
action or legal proceeding commenced by any party, and irrevocably
waive any objection they now or hereafter may have respecting the venue
of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the
sale of the securities hereunder, and consent to the service of process
in any such action or legal proceeding by means of registered or
certified mail, return receipt requested, in care of the address set
Page 23 of 49
forth below or such other address as the undersigned shall furnish in
writing to the other.
7.5. This Agreement may be executed in counterparts. Upon the execution of
this Agreement by the Investor, this Agreement shall become a binding
obligation of the Investor; subject, however, to the rights hereby
reserved to the Company to enter into the same agreement with other
Investors, to delete other persons as Investors, to sell fractional
Units and to sell Units in amounts less than the minimum investment as
set forth herein.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto dated as of this ____ day of ___________________, 1996.
PORTACOM WIRELESS, INC.
a British Columbia corporation
By:
-------------------------------
Xxxxxxx X. XxxXxxxxx, President
TO BE COMPLETED BY
INDIVIDUAL PURCHASER(S)
-----------------------------------------
Signature of Investor(s)
-----------------------------------------
Name of Investor(s) (please print)
-----------------------------------------
Address
-----------------------------------------
Page 24 of 49
------------------------------------------
Social Security or Taxpayer Identification
Number of Investor
------------------------------------------
Number of Units Subscribed for at
$100,000 per Unit
------------------------------------------
Total Purchase Price
Page 25 of 49
