SUBSCRIPTION AGREEMENT-ss.74(2)(4)
THIS AGREEMENT MADE EFFECTIVE AS OF THE __ DAY OF MAY, 2000 (the "Effective
Date").
BETWEEN:
ANTHEM RECORDING WEST, INC.
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. The Purchaser wishes to subscribe for 1,000,000 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 #97/4
and 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;
(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
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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;
(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 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;
(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
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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 California;
(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;
(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
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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 of the
date thereof nor do they omit to state a material fact which, at the
date thereof, was required to have been stated or was necessary to
prevent a statement that was made from being false or misleading in
the circumstances in which it was made;
(i) to the best of its knowledge, and except as publicly disclosed,
there are no material actions, suits, judgments, investigations or
proceedings of any kind whatsoever outstanding, pending or threatened
against or affecting the Company or its Subsidiaries, if any, at law
or in equity or before or by any Federal, Provincial, State,
Municipal or other governmental department, commission, board, bureau
or agency of any kind whatsoever and, to the best of the Company's
knowledge, there is no basis therefor;
(j) the Company has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth herein; and
(k) to the best of its knowledge, the execution and delivery of
this Agreement, the performance of its obligations under this
Agreement and the completion of its transactions contemplated under
this Agreement will not conflict with, or result in the breach of or
the acceleration of any indebtedness under, or constitute default
under, the constating documents of the Company or any indenture,
mortgage, agreement, lease, licence or other instrument of any kind
whatsoever to which the Company is a party or by which it is bound,
or any judgment or order of any kind whatsoever of any Court or
administrative body of any kind whatsoever by which it is bound.
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 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.
2.2 On or before the 16th day of May, 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 Xxxxxxx &
Xxxxxx represents the Company and not the Purchaser, has recommended that the
Purchaser obtain independent legal advice in respect of this Agreement, and
upon the Company advising
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Xxxxxxx & Xxxxxx that it has delivered such certificates, or instructed the
Company's stock transfer agent to deliver such certificates, 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.
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 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 shares certificate or
certificate 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 and may only be resold in accordande 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 transaction involving the Securities may not be conducted
unless in compliance wiht the U.S. Securities Act.
(c) there may be material tax consequence to the Purchaser of an
acquistion 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 acquistion or disposition of such
securities.
(d) the certificates evidencing the Securities issued in this
subscription will bear a legend in substantially the following form:
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"THE SECURITIES RESPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 1933 ACT"), AS
AMENDED. 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
CONDUCTED UNLESS IN COMPLIANCE WITH REGULATIONS 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 exercise 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 mecessary 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 May 23, 2000 (the "Closing Date"). No later than
the Closing Date, the Company shall deliver, or instruct the Company's stock
transfer agent to deliver, to the Purchaser, 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 Puchaser. Upon the Company advising xxxxxxx &
Xxxxxx that it has delivered, or instructed the Compnay's stock transfer
agent to deliver, these documents to the Purchaser. 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.
5. GENERAL
5.1 For the purposes of this Agrement, time is of the essence.
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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 excution of this Agreement, be resonably required to carry out the
full intent and meaning of this Agreemen.
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 assinged by either party hereto.
5.5 This Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each o fwhich so signed shall be deemed to be an
original, and all such counterparts togetther shall constitute one and the same
instrument.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
ANTHEM RECORDING WEST, INC.
Per: [ILLEGIBLE]
---------------------------------------- [SEAL]
Authorized Signatory
TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Cannot be a U.S. address) The name and address
( to establish the Purchaser's jurisdiction of residence for the purpose of
determining the applicable Securities Rule(s) of the purchaser (the "Purchaser")
is as follows:
Name Innovative Finance Limited
Street Address TrustNet Xxxxxxxx
Box 3444
Road Town, Tortola
Country British Virgin Island
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B. Registration Instruction (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"):
N/A
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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"):
N/A
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Name
-------------------------------
Street Address
-------------------------------
-------------------------------
City and Province
-------------------------------
Country
------------------------
Postal Code
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D. Subscription Amount The minimum is Cdn. $97,00 if the Purchaser is a
resident (as per the address in paragraph A above) of British Columbia, Alberta,
Manitoba, New Brundswick, 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. $7,500,000.00
Number of Securities: 1,000,000 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:
Innovative Finance Limited
--------------------------------------------------
Name of the "Purchaser" - use the name inserted in
paragraph A above.
Per:
[ILLEGIBLE]
--------------------------
Signature of Purchaser
Director
---------------------------
Title (if applicable)
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