NUMBER:__________________
ISSUED TO:________________________
BPI PACKAGING TECHNOLOGIES, INC.
SUBSCRIPTION AGREEMENT
In the event you decide not to participate in this
offering please return the Subscription Agreement
to the principal office of the Company as set forth herein.
FOR OFFSHORE INVESTORS ONLY
SUBSCRIPTION AGREEMENT
LIMITED OFFERING OF COMMON STOCK
OF BPI PACKAGING TECHNOLOGIES, INC.
TO OFFSHORE INVESTORS ONLY
THE COMMON STOCK OFFERED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE OR FOREIGN
SECURITIES LAWS, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR
FOREIGN REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
AGREEMENT OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THE INFORMATION CONTAINED IN THIS AGREEMENT DOES NOT PURPORT TO BE ALL
INCLUSIVE OR TO CONTAIN ALL THE INFORMATION THAT A PROSPECTIVE INVESTOR MAY
DESIRE IN INVESTIGATING THE COMPANY. EACH INVESTOR MUST RELY ON THE INVESTOR'S
OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION WITH RESPECT TO THE
COMMON STOCK. SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH THE PURCHASE OF THE SHARES OF COMMON
STOCK.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THE COMMON STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
EXCEPT AS OTHERWISE INDICATED, THIS AGREEMENT SPEAKS AS OF THE DATE
HEREOF. NEITHER THE DELIVERY OF THIS AGREEMENT NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY AFTER THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE PLACEMENT AGENT. EACH INVESTOR WILL BE ENTITLED TO RELY SOLELY ON THOSE
REPRESENTATIONS AND WARRANTIES WHICH MAY BE MADE TO IT IN ANY FINAL SUBSCRIPTION
AGREEMENT RELATING TO THE COMMON STOCK.
i
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
AGREEMENT AS LEGAL ADVICE. EACH INVESTOR SHOULD CONSULT THEIR OWN ATTORNEY OR
BUSINESS ADVISOR AS TO THE LEGAL, TAX AND OTHER CONSIDERATIONS RELATING TO AN
INVESTMENT IN THE COMMON STOCK.
A BUYER'S INVESTMENT IN THE SECURITIES PROPOSED UNDER THE TERMS OF THIS
OFFERING WILL BE SUBJECT TO CERTAIN RESTRICTIONS AS DESCRIBED MORE FULLY IN THE
TERMS OF THE OFFERING AND THE SUBSCRIPTION AGREEMENT. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER REGULATION S, THE ACT, AND THE APPLICABLE
SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS MUST
EXPECT TO BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE COMMON STOCK FOR AN
INDEFINITE PERIOD OF TIME.
THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES OTHER THAN THE COMMON STOCK OFFERED HEREBY.
CERTAIN PROVISIONS OF VARIOUS DOCUMENTS ARE SUMMARIZED IN THIS
AGREEMENT BUT PROSPECTIVE INVESTORS SHOULD NOT ASSUME THAT THESE SUMMARIES ARE
COMPLETE. SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO TEXT OF
THE ORIGINAL DOCUMENTS MADE AVAILABLE TO PROSPECTIVE INVESTORS BY THE COMPANY.
BY ACCEPTANCE OF THIS AGREEMENT, PROSPECTIVE INVESTORS RECOGNIZE AND
ACCEPT THE NEED TO CONDUCT THEIR OWN THOROUGH INVESTIGATION AND DUE DILIGENCE
BEFORE CONSIDERING PURCHASING THE COMMON STOCK OFFERED HEREBY.
ii
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. IN ANALYZING THIS OFFERING, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS:
PREVIOUS LOSSES; ACCUMULATED DEFICIT; NO ASSURANCE OF FUTURE PROFITS
At November 22, 1996, the Company had an accumulated stockholders'
deficit of $20,016,415. Since its inception in 1988, the Company has not
operated profitably in any fiscal year (exclusive of net income of $311,022 for
its fiscal year ending March 1, 1991, which included extraordinary income of
$337,179) and incurred a loss of $4,510,145 for the fiscal year ended February
24, 1995. The Company also expects to incur a loss for the fiscal year ended
February 28, 1997. No assurance can be given that the Company will be profitable
or attain improved operating results.
INTENSE COMPETITION
The manufacture of plastic bags is a highly competitive industry. In
particular, the Company competes with major companies such as Tenneco, Inc.
("Tenneco") and Sonoco Products Corporation ("Sonoco"). The Company's in-store
advertising and promotion products compete in the same markets that are
dominated by Heritage Media Corporation and Catalina Marketing Corporation, both
of which offer in-store advertising and promotion products which are not related
to the floor or the FRESH-SAC(R) produce bag dispensing systems. These companies
have substantially greater research and development, marketing, financial and
human resources than the Company. In addition, competitors may succeed in
developing new or enhanced products that are more effective than any that may be
sold or developed by the Company, and such companies may also prove to be more
successful than the Company in marketing and selling such products. No assurance
can be given that the Company will be able to compete successfully with any of
these companies or achieve a greater market share than it currently possesses.
POSSIBLE PATENT CLAIMS BY SONOCO PRODUCTS COMPANY; POSSIBLE PAYMENT OF LICENSE
FEES AND LITIGATION COSTS
In 1990, Sonoco Products Company ("Sonoco") indicated its intent to
seek licenses under a broadened reissue patent from all manufacturers of plastic
bags which utilize a particular method for holding plastic bags in a metal rack.
Sonoco has commenced litigation against several plastic bag manufacturers other
than the Company. The United States District Court for the Central District of
California entered summary judgment in February 1994 for the defendants in a
suit relating to alleged patent infringement by the defendants. The court
declared Xxxxxx's three reissue claims to be invalid. The court is also allowing
the defendants' counterclaim against Sonoco for unfair competition to continue.
It is expected that Sonoco will appeal this judgment. Subsequent to this
iii
decision, the Company filed suit against Sonoco alleging infringement of the
Company's patent by Sonoco.
If Sonoco was to appeal the February 1994 judgment which declared
Xxxxxx's three reissue patents invalid, and have that judgment reversed, Sonoco
could institute a patent infringement suit against the Company. If Sonoco was to
succeed in any infringement claim against the Company, it might be able to
prevent the future use, sale and manufacture of certain of the Company's
products which use racking systems. Alternatively, the Company could be required
to pay a license fee for the prior and future use of this technology which might
place the Company at a competitive disadvantage in the sale of certain of its
products. Either outcome could have a material adverse effect on the Company's
business. Infringement of any patent may also render the Company liable to
purchasers and end-users of the infringing product. The Company has been advised
by patent counsel that the Sonoco patent applies to the traditional grocery
T-shirt sack and does not apply to the Company's proprietary HANDI-SAC(TM) and
FRESH-SAC(TM) bag products.
No assurance can be given that the Company's products will not infringe
patents or rights of others. The Company could incur substantial costs if
required to defend itself in any patent litigation.
UNCERTAINTY OF MARKET ACCEPTANCE FOR THE COMPANY'S IN-STORE ADVERTISING AND
PROMOTION PRODUCTS
As is typical in the case of newly introduced products, demand and
market acceptance for such products is subject to a high level of uncertainty.
Achieving and maintaining market acceptance for the Company's in-store
advertising and promotion products will require substantial marketing efforts
and expenditure of significant funds. No assurance can be given that the
Company's in-store advertising and promotion products will achieve and maintain
market acceptance, or that increased marketing efforts will result in successful
commercialization of the in-store advertising and promotion products, or that
such products will generate sufficient revenues to permit profitable operations.
DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY
In 1993, the Company was issued a United States patent for the
dispensing system used in conjunction with its FRESH-SAC(R) product and other
T-shirt sack products and has filed patent applications for this dispensing
system in approximately 20 foreign countries. The Company has filed patent
applications in the United States and approximately 14 foreign countries for the
FRESH-SAC(R) HMWPE material, and was notified that this patent has been issued
in a foreign country. Notwithstanding the issuance of the patent in a foreign
country, the Company has elected not to further prosecute this patent
application in other countries because of technological changes that the Company
plans to make in its manufacturing process which make it uneconomical to
continue to invest in the original patent applications. The Company owns patents
issued in the United States and Canada relating to the method for making a pack
of T-shirt sacks which permit the individual sacks
iv
to be mounted on a handle supported rack dispensing system and to be easily
separated and dispensed from the pack utilizing a central "pull tab." The
Company has also filed a United States patent application for its Fresh Focus
Cartridge Talker(TM). No assurance can be given that any of these patents will
be granted or that the patents currently owned by the Company and any patents
that may be granted in the future will be enforceable or provide the Company
with meaningful protection from competitors. Even if a competitor's products
were to infringe patents owned by the Company, it could be costly for the
Company to enforce its rights in an infringement action and would divert funds
and resources otherwise used in the Company's operations. Furthermore, no
assurance can be given that the Company would be successful in enforcing such
rights. No assurance can be given that any of the Company's patent applications
will be allowed or, if allowed, will provide the Company with any advantage
against competitors selling similar products. Similarly, no assurance can be
given that the Company's products will not infringe patents or rights of others.
The Company also relies on unpatented proprietary know-how, which may
be duplicated, and employs various methods including confidentiality agreements
with employees to protect its proprietary know-how. However, such methods may
not afford complete protection and no assurance can be given that others will
not independently develop such know-how or obtain access thereto.
DEPENDENCE ON LICENSE FOR FLOOR FOCUS AD-TILE(TM)
The Company's success in implementing its strategy for its in-store
advertising and promotion products depends in part on its exclusive, worldwide
license to use the patented Floor Focus Ad-Tile(TM) system. The termination of
this license may limit the Company's ability to market its in-store advertising
and promotion products. Pursuant to this license agreement, the Company is
required to purchase a minimum number of Floor Focus Ad-Tiles(TM) at the price
set forth in the license agreement. In the event the Company does not purchase
the minimum requirements, it must pay a minimum royalty fee based on the
deficiency. Such license is also subject to infringement claims from third
parties. No assurance can be given that this license will not be terminated, or
that a third party will not be successful in an infringement action. The
termination of this license could have a material adverse effect on the
Company's in-store advertising and promotion products.
NEED FOR ADDITIONAL FINANCING
A significant portion of the Company's capital requirements to date has
been funded through equity and subordinated debt investments by Beresford Box
Company Ltd. (formerly Beresford Packaging, Inc.) (subsequently converted into
the Company's Series B and Series C Preferred Stock), a principal stockholder,
the proceeds from the Company's three prior public offerings, the exercise of
warrants sold in these public offerings and private placements. The Company has
also utilized bank loan and line of credit facilities, trade credit facilities
and equipment leases. Although management believes that fixed asset or lease
financing is now available at competitive rates from banks and leasing companies
to finance a substantial part of the planned $1.8 million increase in capacity
at the Dighton facility during Fiscal 1997, and that the availability of this
financing together
v
with its current bank line of credit, and anticipated funds from operations will
be sufficient to fund the Company's operations and proposed expansion of its
business and in-store advertising and promotion business for at least the next
12 months, the Company may require additional financing. The Company may raise
additional financing through the sale of equity or debt securities in order to
finance all or part of the remainder of the planned increased capacity at the
Dighton facility over the next six months as well as to increase its in-store
advertising and promotion business and general working capital. The Company has
no commitments for such financing, and no assurance can be given that the
Company will be successful in obtaining such additional financing or that such
financing will be available on terms favorable to the Company, if at all.
DEPENDENCE UPON KEY PERSONNEL
The Company's ability to continue to develop and to market its products
depends, in large part, on its ability to attract and retain qualified
personnel. Competition for such personnel is intense and no assurance can be
given that the Company will be able to retain and attract such personnel.
The Company is dependent in particular upon the services of Xxxxxx X.
Xxxxxxxxx, its Chief Executive Officer, X. Xxxx Xxxxxxxxx, its President, and
Xxxxxxx X. Xxxxxx, its Vice President of Manufacturing, and has employment
agreements with these officers. The loss of the services of any of these
individuals could have a material adverse effect on the Company. The Company
maintains and is the beneficiary of key-person life insurance on each of Xxxxxx
X. Xxxxxxxxx and X. Xxxx Xxxxxxxxx in the amount of at least $1,000,000 per
individual.
SUBSTANTIAL SHARES OF PREFERRED STOCK OUTSTANDING; POSSIBLE ISSUANCE OF
ADDITIONAL PREFERRED STOCK
The Company is authorized to issue up to 2,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock"). As of February 13,
1997, there were issued and outstanding 347,146 shares of Series A Convertible
Preferred Stock, 146,695 shares of Series B Convertible Preferred Stock and
18,337 shares of Series C Redeemable Preferred Stock.
The Company has no present intention to issue any additional shares of
Preferred Stock. However, the issuance of any such Preferred Stock could affect
the rights of the holders of the Common Stock and reduce its value. In
particular, specific rights granted to future holders of Preferred Stock could
be used to restrict the Company's ability to merge with or sell its assets to a
third party, thereby preserving control of the Company by its present owners.
SUBSTANTIAL SHARES OF COMMON STOCK RESERVED FOR THE EXERCISE OR GRANT OF OPTIONS
AND WARRANTS; POTENTIAL DILUTIVE EFFECT THEREOF; REGISTRATION RIGHTS OF WARRANT
HOLDERS
The Company has reserved 933,750 shares of Common Stock for issuance
upon exercise of options granted or available for grant to employees, officers,
directors and consultants pursuant to the Company's 1990, 1993 and 1996 Stock
Option Plans, as well as an aggregate of 794,891 shares
vi
of Common Stock upon the exercise, conversion or issuance of (i) the Series A
and Series B Convertible Preferred Stock for an aggregate of 493,841 shares of
Common Stock; (ii) exercise of the warrants issued to an individual and
principals of the placement agent in the Company's private placements to
overseas investors for an aggregate of 21,000 shares of Common Stock; (iii) up
to 80,050 additional shares issuable in connection with the attainment of
certain performance goals by RC America, Inc.; and (iv) exercise of warrants
issued to financial consultants for an aggregate of 200,000 shares of Common
Stock. The existence of the aforementioned options, warrants, and Preferred
Stock may prove to be a hindrance to future financing by the Company. Although
the book value of the Company's Common Stock is currently significantly lower
than the exercise prices of the outstanding options and warrants, the exercise
of any such options or warrants in the future could dilute the book value of the
Company's Common Stock. Further, the holders of such options and warrants may
exercise them at a time when the Company would otherwise be able to obtain
additional equity capital on terms more favorable to the Company.
EFFECT OF FUTURE SALES OF RESTRICTED SECURITIES
Of the 13,982,120 shares of the Company's Common Stock outstanding on
February 13, 1997, 2,284,298 shares are held by Xxxxxx X. Xxxxxxxxx (through a
corporation controlled by Xx. Xxxxxxxxx), Xxxxxxxxx Box Company Ltd. (a
corporation controlled by Xx. Xxxxxxxxx) (excluding 146,695 shares of Series B
Convertible Preferred Stock and 18,337 shares of Series C Redeemable Preferred
Stock), X. Xxxx Xxxxxxxxx and Xxxx X. Xxxxxxxx, and an aggregate of 1,148,970
shares were issued in five Regulation D offerings to accredited investors. Of
the 1,148,970 shares, an aggregate of 515,000 shares of Common Stock issued in
the first three Regulation D offerings were registered by the Company on Form
S-1 Registration Statements that were declared effective on September 13, 1993
and April 7, 1994, respectively. The 212,470 shares of Common Stock sold in the
fourth Regulation D offering were registered in a Registration Statement
declared effective on January 5, 1995. The remaining 421,500 shares of Common
Stock sold in the last Regulation D offering were registered in a Registration
Statement declared effective on July 19, 1996. None of the 2,284,298 shares have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and are "restricted securities" under Rule 144 of the Securities Act,
exclusive of 3,200 shares, which are registered but also subject to the resale
limitations (except the holding period) of Rule 144 since they are held by an
affiliate of the Company. Ordinarily, under Rule 144, a person holding
restricted securities for a period of two years may, every three months, sell in
ordinary brokerage transactions or in transactions directly with a market maker
an amount equal to the greater of one percent of the Company's then outstanding
Common Stock or the average weekly trading volume during the four calendar weeks
prior to such sale. Rule 144 also permits sales by a person who is not an
affiliate of the Company and who has satisfied a three-year holding period to
sell with out any quantity limitation. Future sales under Rule 144 may have a
depressive effect on the market price of the Common Stock. All of the shares of
Common Stock held by Messrs. Xxxxxxxxx and Vaicunas, and Beresford Box Company
Ltd. are currently eligible for sale pursuant to Rule 144.
vii
From December 1992 through June 1994 and in April and May 1996, the
Company issued an aggregate of 2,477,000 shares of its Common Stock in
Regulation S offerings. These shares are subject to the restrictions of
Regulation S and may not be sold unless such shares are registered under the Act
and any applicable state securities law in the United States or such offer or
sale is made pursuant to exemptions from those registration requirements.
In addition, in April 1993, the Company registered 200,000 shares of
its Common Stock underlying the 1990 Stock Option Plan on a Form S-8
registration statement, which shares when exercised will become freely
tradeable. To date, 16,250 shares have been exercised under the 1990 Stock
Option Plan and are freely tradeable. Options to purchase up to an additional
109,250 shares have also been granted under the 1990 Stock Option Plan, and
options to purchase 678,880 shares have been granted under the 1993 Stock Option
Plan. The Company has also reserved 1,000,000 shares of Common Stock under its
1996 Stock Option Plan. To date, no options have been granted under the 1996
Stock Option Plan.
ANTI-TAKEOVER MEASURES; POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER
PROVISIONS
The Company, as a Delaware corporation, is subject to the General
Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law restricts the ability of
a public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder. As a result,
potential acquirors of the Company may be discouraged from attempting to effect
an acquisition transaction with the Company, thereby possibly depriving holders
of the Company's securities of certain opportunities to sell or otherwise
dispose of such securities at above-market prices pursuant to such transactions.
As a result of the application of Section 203 and certain provisions in the
Company's Certificate of Incorporation and Bylaws, including the adoption of a
classified Board of Directors and the requirement for increased shareholder vote
to take certain actions involving the directors and the Certificate of
Incorporation and Bylaws as amended, potential acquirors of the Company may find
it more difficult or be discouraged from attempting to effect an acquisition
transaction with the Company, thereby possibly depriving holders of the
Company's securities of certain opportunities to sell or otherwise dispose of
such securities at above-market prices pursuant to such transactions.
LIMITATION ON DIRECTOR LIABILITY UNDER DELAWARE LAW
Pursuant to the Company's Certificate of Incorporation, as amended, and
under Delaware law, directors of the Company are not liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty, except for
liability in connection with a breach of the duty of loyalty, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, for dividend payments or stock repurchases illegal under
Delaware law or for any transaction in which a director has derived an improper
personal benefit. However, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing, the Company has been informed
that
viii
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
NO ACTIVE PUBLIC MARKET; POSSIBLE VOLATILITY OF TRADING PRICES FOR COMMON STOCK
Although the Common Stock is quoted on NASDAQ/NMS, and the Preferred
Stock is quoted on NASDAQ, no assurance can be given that an active public
market in such securities will be sustained. The trading prices of the Common
Stock could be subject to wide fluctuations in response to the Company's
operating results, announcements by the Company or others of developments
affecting the Company or its competitors or customers and other events or
factors. In addition, the stock market has experienced extreme price and volume
fluctuations in recent years. These fluctuations have had a substantial effect
on the market prices for many companies and similar events in the future may
adversely affect the market prices of the Common Stock.
NO DIVIDENDS
The Company has not paid cash dividends to its stockholders since its
inception and does not plan to pay dividends in the foreseeable future. The
Company intends to reinvest earnings, if any, in the development and expansion
of its business.
ix
OFFSHORE SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT is executed in reliance
upon the transaction exemption afforded by Regulation S ("Regulation S") as
promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933, as amended (the "Act"). This offering is limited solely
to investors not residing in the United States.
THIS AGREEMENT (the "Agreement") made and entered into by and between
BPI Packaging Technologies, Inc., a Delaware (U.S.A.) corporation with its
principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000
(the "Company"); and the undersigned (hereinafter referred to individually as a
"Buyer" and collectively, as the "Buyers") .
W I T N E S S E T H :
WHEREAS, the Company is offering 92,308 shares (the "Shares"), on a
"best efforts" basis to raise up to $150,000.50 in gross proceeds from the sale
of the Shares (the "Offering");
WHEREAS, the Buyers wish to participate in the Offering whereby they
will invest in the Shares as contemplated by this Agreement and all exhibits
attached hereto;
WHEREAS, the Shares being offered in the Offering have not been
registered under the registration provisions of the Securities Act of 1933, as
amended (the "Act") or under applicable state or foreign securities laws, and
are being offered and sold by the Company in reliance upon an exemption from
registration under Regulation S promulgated under the Act; and
WHEREAS, as a new Buyer, you have indicated your desire to participate
in this Offering and to subscribe to and agree to purchase 92,308 Shares at
$1.625 per Share for an aggregate subscription price of $150,000.50.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Buyers agree as follows:
1. PAYMENT AND ACCEPTANCE.
1.1 PAYMENT. Xxxxx hereby agrees to pay to the Company the
amount set forth above.
1.2 ACCEPTANCE OF SUBSCRIPTION. Upon acceptance of the
Subscription Agreement by the Company, the Company may use such funds for
working capital and general corporate purposes. Should this Agreement not be
accepted by the Company, the proceeds shall be returned to the Buyer without
interest. The Company shall have the right to accept or reject the
-1-
Xxxxx's subscription for Shares, in whole or in part, for any reason, including,
without limitations, the ineligibility of the Buyer to participate in an
offering made in reliance on Regulation S promulgated by the Act.
2. SALE OF SHARES. Subject to the terms and conditions of this
Agreement, the Buyer hereby subscribes for and agrees to purchase from the
Company the number of Shares set forth above, at a purchase price of $1.625 per
Share. There is no placement agent acting on behalf of the Company in connection
with the Offering.
3. THE CLOSING.
3.1 CLOSING DATE. This Subscription Agreement constitutes an
offer by the Buyer to purchase the Shares. The Company expects to hold one
closing (the "Closing") of this Offering, on February 14, 1997 (the "Termination
Date"). No minimum number of Shares is required to be sold before a Closing
occurs. The Termination Date of the Offering is subject to prior termination or
extension for up to an additional sixty (60) days in the discretion of the
Company.
3.2 DELIVERY. Within fifteen (15) days following the Closing,
the Company will deliver to each Buyer a certificate or certificates, in such
denominations and registered in such name or names as each Buyer may designate
by notice to the Company, representing the Shares purchased by each Buyer from
the Company. Prior to the Closing, each Buyer shall have delivered to the
Company payment of the purchase price therefor to the Company. If, at the
Closing, any of the Buyers shall have failed to tender the purchase price for
the Shares to be purchased by such Buyer at the Closing or any of the conditions
specified herein shall not have been fulfilled to the satisfaction of the
Company, the Company shall, at its election, be relieved of all of its
obligations under this Agreement to such Buyer. The Company shall be under no
obligation to accept this offer and to close this transaction until the Closing.
3.3 FURTHER UNDERTAKINGS BY BUYERS. Each Buyer undertakes to
execute and deliver to the Company, within five (5) days after receipt of the
Company's reasonable request therefor, such further designations,
authorizations, and other instruments as the Company deems necessary or
appropriate to carry out the provisions of this Agreement.
3.4 WAIVER OF RIGHTS AND REPAYMENT OF SUBSCRIPTION PRICE. The
Buyer, and others (if any) for whom the Buyer is subscribing hereunder, hereby
waives to the fullest extent permitted by law any rights, other than as
expressly described herein in Schedule 1 hereto and in the applicable offering
materials, of withdrawal, rescission or compensation for damages to which they
might otherwise be entitled. By its acceptance of the Buyer's subscription for
the Shares, the Company hereby agrees with the Buyer that the Buyer shall have
the rights set forth herein for the applicable province of residence of the
Buyer under the heading "Buyers' Statutory or Contractual Rights of Action" as
set forth in this Agreement on the annexed Schedule 1.
-2-
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. The Buyer
acknowledges that the Company is offering the Shares in reliance upon the
representations, warranties, and other information set forth by the Buyer
herein. The Buyer undertakes to notify the Company immediately of any changes in
any of the representations, warranties, and other information contained herein.
In order to induce the Company to accept the subscription made hereby, the Buyer
hereby represents, warrants and acknowledges to the Company as follows:
4.1 COMPLIANCE WITH UNITED STATES SECURITIES LAWS. The Buyer
understands and acknowledges that the Shares have not been registered under the
Act, and such Shares may not be offered or sold in the United States or to any
"U.S. Person" (as defined in Rule 902(o) of Regulation S under the Act, which
definition is set forth in Schedule 2 hereto and is hereby incorporated by
reference) for a period of 40 days following the completion of this Offering
(the "Restricted Period") and thereafter unless such Shares are registered under
the Act and any applicable state securities law in the United States or such
offer or sale is made pursuant to exemptions from those registration
requirements. The Shares are being offered and sold pursuant to the terms of
Regulation S promulgated by the Securities and Exchange Commission under the
Act, which permits the Shares to be sold by the Company solely to non-U.S.
Persons in transactions outside of the United States, subject to certain terms
and conditions. The Buyer further acknowledges that neither the Securities and
Exchange Commission nor any other foreign or United States federal or state
agency or authority has passed on or endorsed the merits of this Offering.
4.2 STATUS OF BUYER. Buyer is purchasing the Shares for its
own account or for persons or accounts as to which it exercises investment
discretion. BUYER AND EACH SUCH PERSON OR ACCOUNT ARE NOT U.S. PERSONS. THE
SECURITIES WERE NOT OFFERED TO THE BUYER IN THE UNITED STATES NOR WERE ANY
SELLING EFFORTS MADE TO THE BUYER IN THE UNITED STATES, AND THE BUYER HAS
EXECUTED THIS AGREEMENT OUTSIDE THE UNITED STATES. Either alone or together with
a "Buyer representative" (as defined in Rule 501(h) under the Act), the Buyer is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities such as the Shares and
has requested, received, reviewed and considered all other information it deems
relevant in making a decision to execute this Agreement and to purchase the
Shares. The Buyer has had the opportunity to request additional information from
and to ask questions of the officers of the Company. The Buyer understands the
very substantial risks associated with investment in the Company, and the Buyer,
or the person or account for which it is acting, is able to bear indefinitely
the economic risk of acquiring the Shares, has other adequate means of providing
for current needs and contingencies, has no need for liquidity with respect to
such investment and could afford the complete loss thereof. The Buyer is
purchasing the Shares for investment purposes and not with a view to a
distribution.
4.3 REGULATION S EXEMPTION. Buyer understands that the Shares
are being offered and sold to it in reliance of specific exemptions from the
registration requirements of federal and state securities laws pursuant to
Regulation S and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
-3-
Buyer set forth herein in order to determine the applicability of such
exemptions and the suitability of Buyer to acquire the Shares.
4.4 RESTRICTIONS ON RESALE. Buyer shall not engage in any
activity for the purpose of, or which may reasonably be expected to have the
effect of, conditioning the market in the United States for the Shares, or,
during the Restricted Period, offer or sell any of the Shares in the United
States to or for the benefit or account of a U.S. Person. Xxxxx understands that
the Shares are only transferable on the books and records of the Company and its
transfer agent and that the Company and the transfer agent will not register any
transfer of Shares which the Company in good faith believes violates applicable
federal or state securities law in the United States or the restrictions set
forth herein. All subsequent offers and sales of the Shares by Buyer shall be
made in compliance with Regulation S under the Act, pursuant to registration
under the Act or an exemption from such registration. In any case, the Shares
shall not be resold to U.S. persons or within the United States during the
Restricted Period. Any proposed offer, sale or transfer of any of the Shares
during the Restricted Period shall be subject to the condition that Buyer
deliver to the Company (i) a written certification of the proposed transferee,
acceptable in form and substance to the Company's counsel, that such transferee
is not a U.S. Person and is acquiring the Shares for such transferee's own
account and (ii) a written opinion of counsel, acceptable in form and substance
to the Company's counsel, to the effect that the offer, sale and transfer of
such Shares is permissible under the provisions of Regulation S. The Buyer
understands that this resale restriction will continue to apply to the Shares if
disposed of by the Buyer during the Restricted Period and consents to the
issuance of appropriate stop transfer instructions to the Company's transfer
agent with respect to the Shares.
4.5 LEGENDS. Xxxxx agrees that the certificates representing
the Shares shall bear a legend substantially in the form set forth below:
"The shares of Common Stock represented by this certificate
have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), of the United States of America and have been issued
in reliance upon the exemption from such registration contained in
Regulation S under the Act. They may not be offered, sold or
transferred in the United States or to any "U.S. Person" (as defined in
Regulation S) unless such offer, sale or transfer is in compliance with
Regulation S or the Shares are registered under the 1933 Act or another
exemption from registration is available."
Following any holding period imposed by Regulation S or other
applicable securities laws, the Company shall, upon the receipt of a certificate
from the Buyer in substantially the form attached hereto as Exhibit A or an
opinion of counsel, satisfactory to it, request the transfer agent to remove
said legend and reissue the Shares represented by the certificate.
-4-
4.6 RE-OFFERS BY BUYER IN THE UNITED STATES. If Xxxxx publicly
re-offers all or any part of the Shares in the United States, Xxxxx understands
that it may be deemed under certain circumstances to be an "underwriter" as
defined in Section 2(11) of the Act and should consult with its counsel prior to
any such re-offer.
4.7 ACCESS TO INFORMATION. The Buyer, in making the decision
to purchase the Shares subscribed for, acknowledges that he and his
representatives, if any, have been given access to and the opportunity to
examine all material books and records of the Company and all material contracts
and documents relating to this Offering, specifically the following documents
(the "Documents"):
1. The Company's Registration Statement on Form S-3, declared
effective by the Commission on July 19, 1996;
2. Annual Report on Form 10-K for the year ended February 23,
1996;
3. The Company's Quarterly Reports on Form 10-Q for the quarters
ended May 24, 1996, August 23, 1996, and November 22, 1996, as
amended; and
4. The Company's Definitive Proxy Statement for the 1996 Annual
Meeting, filed with the Commission on August 16, 1996.
The Buyer understands all of the risk factors related to the purchase
of the Shares. The Buyer or his legal counsel or investment advisor has been
given a full opportunity to ask questions of, and to receive answers from, the
Company and its officers and directors concerning the terms and conditions of
the Offering, the documents prepared in connection therewith, the finances and
operations of the business of the Company and to obtain additional information
necessary to verify the accuracy of the information contained in the Documents,
or such other information as he or his legal counsel or investment advisor
desired in order to evaluate an investment in the Shares, and all such questions
have been answered to the full satisfaction of the undersigned.
4.8 BINDING EFFECT OF SUBSCRIPTION AGREEMENT. This Agreement
shall not be binding on the Company until such Agreement is accepted by the
Company. The Buyer hereby acknowledges and agrees, subject to any applicable
securities law, that the subscription and application hereunder are irrevocable,
that the Buyer is not entitled to cancel, terminate or revoke this Subscription
Agreement or any agreements of the Buyer hereunder and that this Subscription
Agreement and such other agreements shall survive the death or disability of the
undersigned and shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives
and assigns. If the Buyer is more than one person, the obligations of the
undersigned hereunder shall be joint and several, and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and his heirs, executors,
administrators, successors, legal representatives and assigns.
-5-
4.9 DECISION TO INVEST. In making his decision to purchase the
Shares herein subscribed for, the Buyer has relied solely upon the information
about the Company contained in the Agreement and Documents provided to him, and
upon independent investigations made by him or his legal counsel or investment
advisor. He is not relying on any representations or warranties from the Company
or any of its officers, directors, affiliates, employees or agents, other than
the information provided by the Company to him in this Offering.
4.10 BUYER'S RESIDENCE. The Buyer represents that he is a
resident and domiciliary (not a temporary or transient resident) of the state
(or province), county, and country set forth below, has no present intention to
become a resident of any other jurisdiction, and all communications, written or
oral, concerning the Shares have been directed to the Buyer in, and received by
him in, such jurisdiction.
4.11 BUYER AS REPRESENTATIVE. The Buyer represents and
warrants that if the Buyer is executing this Agreement in a representative or
fiduciary capacity, the Buyer has full power and authority to execute and
deliver the Agreement on behalf of the subscribing corporation, partnership,
trust or other entity for whom the Buyer is executing this Agreement, and such
corporation, partnership, trust or other entity has full right and power to
enter into and perform this Agreement.
4.12 BUYER AS AGENT. The Buyer may purchase Shares as agent
for various principals to be designated, in which case it shall hereby make the
above representations and warranties on behalf of such principals.
4.13 BUYER'S UNDERSTANDING. The Buyer has read, understands
and acknowledges receipt of the written material supplied by the Company,
including the Documents.
4.14 NO PROTECTION OF XXXXX'S INTERESTS. The Buyer has been
advised that the Company has not retained any independent professionals to
review or comment on this Offering or otherwise protect the interests of the
Buyer. Although the Company has retained its own counsel, neither such firm nor
any other firm has acted on behalf of the Buyer, and any purchaser of the Shares
offered hereby should not rely on the firm so retained by the Company with
respect to any matters herein described.
4.15 NO REPRESENTATIONS ON COMPANY'S RESULTS OF OPERATIONS.
There has never been represented, guaranteed, or warranted to the Buyer by any
broker, the Company, its officers, directors, agents, or employees or any other
person, expressly or by implication (i) the percentage of profits and/or amount
of or type of consideration, profit or loss to be realized, if any, as a result
of the Company's operations; and (ii) that the past performance or experience on
the part of the management of the Company, or of any other person, will in any
way result in the overall profitable operations of the Company.
-6-
4.16 NO SHORT POSITION. Neither Buyer nor any of its
affiliates will directly or indirectly maintain any short position in any
securities of the Company until after the end of the Restricted Period.
4.17 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
AND OTHER OBLIGATIONS. Buyer has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated
hereby; and, if Buyer is a company or corporation, the execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
requisite corporate and shareholder action of Buyer. Upon the execution and
delivery of this Agreement and its acceptance by the Company, this Agreement
shall constitute the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with its terms (except insofar as the enforcement
thereof may be limited by any applicable laws relating to or affecting the
enforcement of creditors' rights generally or by general equitable principles).
4.18 VALUATION OF THE COMMON STOCK. The Buyer understands that
the valuation placed upon the Common Stock has been based on the recent
performance of the Common Stock as reported by NASDAQ/NMS. The Buyer represents
that he has independently evaluated the fairness of the offering price for the
Common Stock.
4.19 FOREIGN LAWS. Buyer hereby represents that he has
satisfied himself as to the full observance of the laws of his jurisdiction in
connection with any invitation to subscribe for the Shares or any use of this
Agreement, including (i) the legal requirements within his jurisdiction for the
purchase of the Shares, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, which may
be relevant to the purchase, holding, redemption, sale, or transfer of the
Shares. Such Buyer's subscription and payment for, and his continued beneficial
ownership of the Shares will not violate any applicable securities or other laws
of his jurisdiction.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Buyer that as of the date hereof, and as of the
first Closing and any interim Closings, except as otherwise set forth herein:
5.1 REPORTING COMPANY STATUS. The Company is a "Reporting
Company" as defined by Rule 902 of Regulation S. The Company is in full
compliance, to the extent applicable, with all reporting obligations under
either Section 12(b), 12(g) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
5.2 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good corporate standing
under the laws of the State of Delaware, and is qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
required, except where failure so to qualify would not have a material adverse
effect on the Company. The Company has all required corporate power and
authority to own its property, to carry on its business as presently conducted
or contemplated, to enter into and perform this
-7-
Agreement and generally to carry out the transactions contemplated hereby. The
Company is not in violation of any term of its Certificate of Incorporation or
its By-laws, or any material instrument, agreement, judgment, decree, order,
statute, rule or regulation of any federal, state or local government or agency
applicable to the Company.
5.3 AUTHORIZATION. This Agreement, and all documents and
instruments executed pursuant hereto are legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws applicable to
creditors' rights and remedies and to the exercise of judicial discretion in
accordance with general principles of equity.
5.4 CAPITALIZATION. As of February 13, 1997, the authorized
capital stock of the Company consisted of (i) 30,000,000 shares of Common Stock,
$.01 par value, of which 13,982,120 shares were issued and outstanding; and (ii)
2,000,000 shares of Preferred Stock, $.01 par value, of which 1,400,000 shares
have been designated as Series A Convertible Preferred Stock, $.01 par value per
share, 347,146 of which shares are validly issued, fully paid and
non-assessable, one share of Series A Preferred Stock is convertible for one
share of Common Stock; 146,695 shares have been designated as Series B
Convertible Preferred Stock, $.01 par value per share, 146,695 of which shares
are validly issued, fully paid and non-assessable; 36,674 shares have been
designated as Series C Redeemable Preferred Stock, $.01 par value per share,
18,337 of which shares are validly issued, fully paid and non-assessable. The
Company has also reserved the following securities for issuance: (i) 21,000
shares of Common Stock issuable upon exercise of warrants issued to an
individual and principals of the placement agent in the Company's Regulation S
offerings; (ii) 1,933,750 options granted or available for grant under the
Company's 1990, 1993 and 1996 Stock Option Plans; (iii) up to 80,050 additional
shares issuable in connection with the acquisition of the interest of a minority
shareholder of RC America, Inc.; and (iv) 20,000 shares of Common Stock issuable
upon exercise of warrants issued to financial consultants of the Company.
6. MISCELLANEOUS PROVISIONS.
6.1 USE OF SPEECH. All pronouns contained herein and any
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require.
6.2 NO WAIVER. Neither this Agreement nor any provisions
hereof shall be waived, modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought, and no waiver of any right
arising from any breach or failure to perform shall be deemed to be a waiver of
any future such right or of any other right arising under this Agreement.
-8-
6.3 ENTIRE AGREEMENT, MODIFICATION. This Agreement constitutes
the entire agreement between the parties and supersedes any prior understanding
or agreements concerning the subject matter hereof. This Agreement may be
amended, modified, or terminated only by a written instrument signed by the
Company and the Buyers hereunder.
6.4 SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
6.5 GOVERNING LAW. This Agreement shall be governed by the
laws of the Commonwealth of Massachusetts and the validity and interpretation
hereof and thereof and the performance hereunder and thereunder shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts applicable to agreements made and to be performed entirely in such
state. Venue for any dispute relating to the provisions of this Agreement shall
be in the United States District Court for the District of Massachusetts.
6.6 SUBMISSION TO JURISDICTION. Each of the parties submits to
the jurisdiction of any state or federal court sitting in the Commonwealth of
Massachusetts, in any action or proceeding arising out of or relating to this
Agreement and offering and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each party also agrees
not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
party with respect thereto.
6.7 NOTICES. All notices, requests, demands, and
communications related to this Agreement will be deemed given if and when
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, to the following addresses:
If to the Company: BPI Packaging Technologies, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
President
With a copy to: X'Xxxxxx, Xxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esquire
If to the Buyers: To the addresses set forth in the
Questionnaire attached hereto
-9-
or, as to each of the foregoing, at such other address as shall be designated by
the addressee in a written notice to the other parties complying as to delivery
with the terms of this Section 6. Notwithstanding anything to the contrary
contained in this Agreement, all notices, requests, demands and other
communications shall be effective when received.
6.8 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives and successors.
6.9 HEADINGS. Headings contained in this Agreement are only as
a matter of convenience and in no way define, limit, extend, or describe the
scope of this Agreement or the intent of any provisions hereof.
6.10 UNENFORCEABILITY. If any provision of this Agreement is
or becomes or is deemed invalid, illegal, or unenforceable in any jurisdiction,
to the maximum extent permissible, such provision shall be deemed amended to
conform to applicable laws so as to be materially altering the intention of the
parties, it shall be stricken and the remainder of this Agreement shall remain
in full force and effect.
6.11 ASSIGNMENT. The Buyers may not assign this Agreement or
its rights hereunder without the Company's written consent.
6.12 MULTIPLE BUYERS. If more than one person is signing this
Agreement, each representation, warranty, and undertaking stated herein shall be
the joint and several representation, warranty, and undertaking of each such
person. Notwithstanding the foregoing, no Buyer shall be liable with respect to
any representation, warranty or undertaking of any other Buyer who signed a
separate Subscription Agreement. The Buyers understand the meaning and legal
consequences of the representations and warranties contained in this Agreement.
6.13 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed and
delivered shall be taken to be an original; but such counterparts shall together
constitute one and the same document binding all parties, notwithstanding that
all parties are not signatories to the same counterpart.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-10-
IN WITNESS WHEREOF, the Buyer has caused this Agreement to be executed
as of the 14th day of February, 1997, at the location stated below.
BUYER: (if an individual) BUYER: (other than an Individual
purchasing for his own account)
Beresford Box Company Limited
------------------------------ ------------------------------------
(Signature) (Printed Name of Buyer)
------------------------------
(Signature of Joint Holder,
if Applicable)
------------------------------ By:/s/ X. Xxxx Xxxxxxxxx, President
(Printed Name of Joint ----------------------------------
Holder, if Applicable) (Signature of Authorized
Officer or Other Representative)
Buyer's Permanent Address:
X. Xxxx Xxxxxxxxx, President
------------------------------ ------------------------------------
(Printed Name and Title of
------------------------------ Signatory)
Ontario, Canada
------------------------------ ------------------------------------
(Buyer's Country or (Buyer's Jurisdiction
Jurisdiction of Citizenship) of Organization)
If this Agreement is being If this Agreement is being
executed in a jurisdiction executed elsewhere than the
other than the address set jurisdiction set forth above,
forth above, indicate such indicate such location:
location:
------------------- -------------------------------------
Buyer's Telephone and Fax Numbers: Buyer's Telephone and Fax Numbers:
(000) 000-0000 & (000) 000-0000
------------------------------ ------------------------------------
--------------------------------------------------------------------------------
Number of Shares:
92,308
-----------------------------
Price per Share: Aggregate Purchase Price:
1.625 $150,000.50
----------------------------- -----------------------------------
Stock certificates should be made out as follows: Beresford Box Company Limited
-----------------------------
Stock certificates and Subscription Agreement should be returned as follows:
Beresford Box Company Limited
--------------------------------------------------------------------------------
607 Xxxxx Drive, Waterloo, Ontario, Canada N2J 4AJ
--------------------------------------------------------------------------------
-11-
The foregoing Subscription Agreement executed by Beresford Box Company
Limited is accepted and agreed to by BPI Packaging Technologies, Inc. as of the
14th day of February, 1997 as to 92,308 shares of Common Stock.
BPI PACKAGING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxxx, Chief Executive Officer
-12-
SCHEDULE 1
----------
BUYERS' CONTRACTUAL OR STATUTORY RIGHTS OF ACTION
Securities legislation in certain of the provinces of Canada provides
investors with, in addition to any other rights they may have at law, rights of
rescission or to damages, or both, where the Offering Materials (which, together
with any amendments thereto, will collectively constitute the "Offering
Materials") contains a misrepresentation. However, such rights must be exercised
by the Buyers within prescribed time limits. Buyers should refer to the
applicable provisions of the securities legislation of their respective
provinces for the particulars of these rights or consult with a legal advisor.
The following is a summary of the rights of rescission or damages, or
both, available to Buyers under the securities legislation of certain of the
provinces of Canada. Such rights will be expressly conferred upon Xxxxxx in the
Subscription Agreement to be executed by such Buyers in connection with the
offering of Shares hereunder.
ONTARIO AND BRITISH COLUMBIA
Section 32 of the Regulation to the Securities Act (Ontario) and
Section 126 of the Regulations to the Securities Act (British Columbia) provide,
in effect, that when, in certain circumstances, an offering memorandum is or is
required to be delivered to a prospective Buyer to whom securities are sold, the
Buyer must be given a contractual right of action against the Company (but
specifically not against its directors, officers, agents, affiliates or
representatives) of the securities for rescission or damages. This right of
action must reasonably correspond to the rights provided in Section 130 of the
Securities Act (Ontario) and Section 114 of the Securities Act (British
Columbia) applicable to a prospectus and may be summarized as follows:
In the event that the Offering Materials together with any amendments
thereto contain an untrue statement of a material fact or omit to state a
material fact that is required to be stated or that is necessary in order to
make any statement in the Offering Materials not false or misleading in light of
the circumstances in which it was made (a "misrepresentation"), and it was a
misrepresentation on the date of purchase, a Buyer who is a resident in Ontario
or British Columbia before the purchase of the Shares and to whom the Offering
Materials were delivered and who purchases the Shares offered will be deemed to
have relied on the misrepresentation and will have, subject as hereinafter
provided, a right of action either for damages or, alternatively, for
rescission, exercisable on written notice given to the Company not more than
ninety (90) days subsequent to the date on which payment was made for the Shares
or the date on which initial payment was made where payments subsequent to the
initial payment are made pursuant to a contractual commitment assumed prior to,
or concurrently with, the initial payment, provided that:
(a) the Company will not be held liable under this paragraph if it
proves that the Buyer purchased the Shares with knowledge of
the misrepresentation;
(b) in an action for damages, the Company will not be liable for
all or any portion of such damages that it proves do not
represent the depreciation in value of the Shares as a result
of the misrepresentation relied upon;
(c) in no case will the amount recoverable under this paragraph
exceed the price at which the Shares were sold to the Buyer;
and
(d) the rights of action for rescission or damages are in addition
to and without derogation from any other right or remedy
available at law to the Buyer.
The foregoing rights of action will be provided to Buyers in their
Subscription Agreement.
RESALE RESTRICTIONS
Resale of the securities offered hereby will be subject to restrictions
under applicable securities laws which will vary depending on the relevant
jurisdiction.
SCHEDULE 2
----------
DEFINITION OF "U.S. PERSON"
The term "U.S. Person" means:
1. any natural person resident in the United States;
2. any partnership or corporation organized or incorporated under
the laws of the United States;
3. any estate of which any executor or administrator is a U.S.
Person;
4. any trust of which any trustee is a U.S. Person;
5. any agency or branch of a foreign entity located in the United
States;
6. any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person;
7. any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the
United States; and
8. any partnership or corporation if: (a) organized or
incorporated under the laws of any foreign jurisdiction; and
(b) formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities
Act of 1933, as amended (the "Act"), unless it is organized or
incorporated, and owned, by accredited investors (as defined
in Rule 501(a) under the Act) who are not natural persons,
estates or trusts.
Notwithstanding paragraphs 1 through 8 above, any discretionary account
or similar account (other than an estate or trust) held for the benefit or
account of a non-U.S. Person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. Person."
Notwithstanding paragraphs 1 through 8 above, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. Person
shall not be deemed a U.S. Person if:
1. an executor or administrator of the estate who is not a U.S.
Person has sole or shared investment discretion with respect
to the assets of the estate; and
2. the estate is governed by foreign law.
Notwithstanding paragraphs 1 through 8 above, any trust of which any
professional fiduciary acting as trustee is a U.S. Person shall not be deemed a
U.S. Person if a trustee who is not a U.S. Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. Person.
Notwithstanding paragraphs 1 through 8 above, an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. Person.
Notwithstanding paragraphs 1 through 8 above, any agency or branch of a
U.S. Person located outside the United States shall not be deemed a "U.S.
Person" if:
1. the agency or branch operates for valid business reasons; and
2. the agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. Persons."
EXHIBIT A
__________ __, 1997
BPI Packaging Technologies, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
X'Xxxxxx, Xxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Re: BPI Packaging Technologies, Inc.
-------------------------------
Ladies and Gentlemen:
In connection with the purchase by ______________________ of _________
shares (the "Shares") of BPI Packaging Technologies, Inc. ("BPI"), the Buyer
represents and warrants to the Seller that:
1. The Buyer is not a U.S. person as that term is defined under
Regulation S as promulgated by the Securities and Exchange
Commission (the "SEC") under authority of the Securities Act
of 1933, as amended;
2. At the time the buy order for the Shares was originated, the
Buyer was outside the United States;
3. The Buyer is not purchasing the Shares on behalf of any U.S.
person, and the transaction has not been pre-arranged with a
buyer in the United States;
4. All offers and sales of the Shares prior to _________________
shall be made in compliance with Regulation S, or pursuant to
an effective registration statement or pursuant to an
available exemption from registration;
5. In the event that the Buyer sells the Shares prior to
__________ through a distributor, a dealer or person receiving
remuneration in respect to the Shares sold, each distributor
or dealer must send a confirmation or other notice to the
buyer that it is subject to the same restrictions upon offers
and sales set forth above; and in the Subscription Agreement;
BPI Packaging Technologies, Inc.
X'Xxxxxx, Xxxxxx & Xxxxxxx
Re: BPI Packaging Technologies, Inc.
____________ __, 1997
Page 2
6. Buyer has not engaged in any activity for the purpose of, or
that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the
Shares sold in the Offering; and
7. Buyer hereby confirms that it has complied with the provisions
of the Subscription Agreement, and that Xxxxx's
representations and warranties contained in the Subscription
Agreement are true as of the date hereof.
Very truly yours,
-------------------------------------
Buyer's Signature
-------------------------------------
Buyer's Printed Name
-------------------------------------
Address
-------------------------------------
