Regulation S
SUBSCRIPTION AGREEMENT
Netword, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
1. Subscription. The undersigned ("Subscriber") hereby
subscribes to purchase Units at the purchase price of $1.00 per Unit. Each Unit
includes one share (a "Share") of common stock, par value $.01 ("Common Stock"),
of Netword, Inc., a Delaware corporation (the "Company") and a warrant (a
"Warrant") to purchase eight-tenths (.80) of one share of Common Stock at an
exercise price of $1.25 per share. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares."
The Warrants will be exercisable immediately upon issuance and
will expire on the earlier of the fifth anniversary of their issuance and 150
days after the Registration Statement (described below) becomes effective,
subject to redemption by the Company, as described below. The number of Units
subscribed for is set forth on the signature page hereof. Subscriber herewith
delivers to the Company, Subscriber's check payable to the Company in U.S.
dollars (the "Payment") for the Units subscribed for, in the amount equal to the
product of U.S.$1.00 multiplied by the number of such Units.
2. Representations, Warranties and Covenants of Subscriber.
Subscriber hereby represents, warrants and covenants to the Company that:
2.1 Subscriber has received and has fully read and considered
the Company's Confidential Offering Memorandum, dated February 17, 1999 (the
"Memorandum"), including, without limitation, the material set forth under "Risk
Factors." Subscriber confirms that, except as set forth in the Memorandum, no
representations or warranties have been made to Subscriber by the Company or its
officers and directors, or any agent, employee or affiliate of any of them, and
that in entering into this transaction Subscriber is not relying upon
information regarding the Company other than that contained in the Memorandum.
Capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Memorandum.
2.2 Subscriber is aware that the purchase of the Units is a
speculative investment involving a high degree of risk and that there is no
guarantee that Subscriber will recover its investment in the Units or realize
any gain from such investment.
2.3 Subscriber (a) has sufficient liquid assets to pay the
full purchase price for the Units, (b) has adequate means of providing for
Subscriber's current and presently foreseeable
future needs and possible personal contingencies, (c) has no present need for
liquidity of Subscriber's investment in the Units, and (d) is able to bear the
economic risks of the investment in the Units (i.e., Subscriber can afford a
complete loss).
2.4 Subscriber is not a "U.S. Person" as defined by Rule 902
of Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), was not organized under the laws of any U.S. jurisdiction, and was not
formed for the purpose of investing in securities not registered under the
Securities Act.
2.5 At the time the buy order for this transaction was
originated, Subscriber was outside the United States.
2.6 No offer to purchase the Units was made to Subscriber in
the United States.
2.7 Subscriber is not acquiring the Units for the account or
benefit of a U.S. Person. Subscriber will not offer, distribute, resell or
transfer the Shares, Warrants or Warrant Shares in the United States, or to a
U.S. Person, or for the account or benefit of a U.S. Person, prior to the end of
a one year period expiring on the first anniversary of such acquisition (the
"Restricted Period"), unless such disposition is made pursuant to an (a)
effective registration under the Securities Act, or (b) exemption from such
registration, in each case in compliance with all applicable federal and state
securities laws. Subscriber agrees that during the Restricted Period, in the
absence of registration, offers and sales of the Shares, Warrants and Warrant
Shares to non-U.S. Persons may be made outside the United States only in
compliance with Rule 903 or Rule 904 of Regulation S and applicable foreign
securities laws.
2.8 Subscriber agrees not to enter into any short sales or
other hedging transactions such as option writing, equity swaps or other types
of derivative transactions, with respect to the Shares, Warrants or Warrant
Shares held by Subscriber.
2.9 Subscriber understands that the Units are being offered
and sold to it in reliance on specific provisions of United States federal
securities laws and foreign securities laws and that the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Subscriber set forth herein in order to
determine the applicability of such provisions.
2.10 Subscriber is not subscribing for the Units as a result
of, or subsequent to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or general meeting.
2.11 Subscriber is making the investment in the Shares for
Subscriber's own account and not for the account of others.
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2.12 Subscriber either personally has such knowledge and
experience in financial and business matters to be capable of evaluating the
merits and risks of the proposed investment in the Shares and to make an
informed investment decision with respect thereto, or, by virtue of consultation
with or advice from a person or company who is not a promoter of the Company and
who is a registered advisor or a registered dealer, is able to evaluate the
proposed investment in the Shares.
2.12 Subscriber has had access to substantially the same
information concerning the Company that a prospectus filed under the Ontario
Securities Act would provide.
2.13 The aggregate acquisition cost of the Units subscribed
for by Subscriber pursuant to this Subscription Agreement is equal to or greater
than $150,000.
2.14 Subscriber is making a purchase of the Units concurrent
with and subject to acceptance by the Company of his subscription for shares in
an offering of 6,000,000 shares of Common Stock at a price of $0.1666 per share,
made by the Company pursuant to a Confidential Private Placement Memorandum
dated February 14, 1999.
3. Registration Rights. (a) Subject to completion of the
Offering, the Company shall cause to be filed, on or prior to May 31, 1999, a
registration statement in accordance with the applicable provisions of the
Securities Act (the "Registration Statement"), to permit public resale in the
United States of all of the Shares and purchase and resale of the Warrant Shares
and other Common Stock included in the Offering or issuable upon exercise of
Warrants included in the Offering, provided, that Subscriber furnishes to the
Company the information required pursuant to paragraph (c) of this Section 3.
The Company shall use its reasonable best efforts to cause such Registration
Statement to become effective as promptly as practicable; however, the Company
makes no representation as to when, if ever, the Registration Statement will
become effective.
(b) The Company shall use its best efforts to keep the
Registration Statement continuously effective, supplemented and amended to the
extent necessary to ensure that it is available for resales of Shares and
Warrant Shares, and to ensure that it conforms with the requirements of the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period expiring on the earlier to occur of:
(i) the date when all Shares and Warrant Shares have been sold, and (ii) the
first anniversary of the Closing, provided, that the Company will have the
option of suspending the effectiveness of the Registration Statement for periods
of up to an aggregate of 60 days in any calendar year if the Board of Directors
of the Company determines that compliance with the disclosure obligations
necessary to maintain the effectiveness of the Registration Statement at such
time could reasonably be expected to have a material adverse effect on the
Company or a pending corporate transaction of the Company.
(c) Subscriber may not include any of its Shares or Warrant Shares
in the Registration Statement unless and until Subscriber furnishes to the
Company in writing, within 20 business days after receipt of a request therefor,
the information specified in item 507 of
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Regulation S-K under the Securities Act for use in connection with the
Registration Statement or prospectus or preliminary prospectus included therein.
Subscriber agrees to furnish promptly to the Company, for so long as the
Registration Statement is effective, all information required to be disclosed in
order to make the information previously furnished to the Company by Subscriber
not materially misleading.
(d) The Company and Subscriber, as applicable, further covenant
and agree as follows:
(i) Following the effective date of the Registration Statement,
the Company shall furnish Subscriber such number of prospectuses as Subscriber
shall reasonably request.
(ii) The Company shall pay all costs, fees and expenses in
connection with the preparation and filing of the Registration Statement,
including, without limitation, the Company's legal and accounting fees and
printing expenses. Subscriber shall pay its own legal expenses.
(iii) The Company will take all action that may be required in
qualifying or registering the Shares and Warrant Shares included in the
Registration Statement for offering and sale under the securities or blue sky
laws of up to 10 jurisdictions within the United States as are requested by the
holders of 50% or more of the Shares included in the Registration Statement,
provided, that the Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction.
(iv) The Company and Subscriber shall enter into reasonable,
customary and reciprocal agreements to indemnify and hold one another harmless
in connection with the Registration Statement.
4. Redemption of Warrant by the Company. The Company may redeem
each Warrant at a price of $0.05 per Warrant Share (the "Redemption Price"), at
its option, at any time after the first date on which the average closing bid
prices for the shares of the Company's Common Stock in any inter-dealer
quotation system on which the Common Stock has been the subject of both bid and
ask quotations shall have exceeded $2.00 per share on ten consecutive trading
days. From and after the date fixed for redemption by notice given pursuant to
the provisions of the Warrant, the right to purchase Warrant Shares with respect
to the redeemed portion of the Warrant shall cease, and the holder thereof shall
be entitled to payment of the Redemption Price with respect to the portion of
the Warrant so redeemed (and to receive a new Warrant with respect to the
unredeemed portion of the Warrant) upon surrender of the Warrant to the Company.
5. Legend. Subscriber hereby accepts and acknowledges that a
legend, in substantially the following form, will be placed on the Shares,
Warrants and Warrant Shares:
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE OR FOREIGN
SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD IN THE
UNITED STATES, OR TO A U.S. PERSON, OR TO OR FOR THE ACCOUNT OR BENEFIT OF
A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT) FOR A PERIOD OF ONE YEAR EXPIRING ON FEBRUARY , 2000,
UNLESS REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS THE HOLDER PROVIDES THE COMPANY WITH AN OPINION FROM COUNSEL
ACCEPTABLE TO THE COMPANY STATING THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE AT THE TIME OF SUCH TRANSFER. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
6. Miscellaneous
6.1 All notices or other communications given or made hereunder
shall be in writing and shall be delivered by hand or mailed by registered or
certified mail, return receipt requested, postage prepaid, if to Subscriber, at
the address set forth below Subscriber's signature on the signature page hereof,
and if to the Company at 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx
00000, Attention: President, with a copy to Kronish Xxxx Xxxxxx & Xxxxxxx LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx
Xxxxxx, Esq.
6.2 This Subscription Agreement shall be governed by and construed
in accordance with the laws of the state of New York applicable to contracts
made and wholly performed in that state and without regard to the principles of
conflicts of laws.
6.3 This Subscription Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. All
understandings and agreements heretofore had between the parties with respect to
the subject matter hereof are merged in this Subscription Agreement, which fully
and completely expresses their agreement.
6.4 This Subscription Agreement may not be changed, modified,
extended, terminated or discharged orally, but only by an agreement in writing.
6.5 This Subscription Agreement is not transferable or assignable
by Subscriber. Subscriber agrees that the securities acquired pursuant hereto
shall be transferred only in accordance with applicable federal, state and
foreign laws.
6.6 All references in this Subscription Agreement to "Subscriber"
shall include all parties (other than the Company) who execute this Subscription
Agreement. If Subscriber is a corporation, partnership, trust or two or more
individuals purchasing jointly, Subscriber shall follow the specific
instructions for the Certificate of Corporate, Partnership, Trust and Joint
Purchases at page 7 hereof.
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6.7 Acceptance of Subscription. Subscriber acknowledges that the
subscription made hereby is not binding upon the Company until the Company
accepts it. The Company has the right to accept or reject this subscription in
whole or in part in its sole and absolute discretion. If this subscription is
rejected in whole, the Company shall return the Payment to Subscriber, without
interest, and the Company and Subscriber shall have no further obligation to
each other hereunder. In the event of a partial rejection of this subscription,
a proportionate amount of the Payment will be returned to Subscriber, without
interest.
7. Counterparts. This Subscription Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8. Severability. If any provision of this Subscription Agreement
shall be declared void or unenforceable by any judicial or administrative
authority, the validity of any other provision and of the entire Subscription
Agreement shall not be affected thereby.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Subscription Agreement has been executed
by Subscriber and by the Company on the respective dates set forth below.
Print Name of Subscriber:
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Date:
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Signature of Individual Subscriber
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Print Name of Subscriber, if an entity
By:
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Signature of authorized signatory of Print name and title of signatory
Subscriber which is an entity for any Subscriber which is an
entity
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Social Security No. (for individuals)
Tax Identification No. (for entities)
$
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Number of Units Purchased Payment Amount for Units Purchased
(Number of Units multiplied by $1.00)
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Telephone No./ Facsimile No. Street Address
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City State Zip
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Country
Subscription Accepted by:
NETWORD, INC.
By: Date:
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SPECIAL SUBSCRIPTION INSTRUCTIONS FOR CORPORATE,
PARTNERSHIP, LIMITED LIABILITY COMPANY,
TRUST AND JOINT PURCHASERS
If the subscriber is a corporation, partnership, limited liability
company, trust, or other entity or joint purchaser, the following additional
instructions must be followed. INFORMATION ADDITIONAL TO THAT REQUESTED BELOW
MAY ALSO BE REQUIRED BY THE COMPANY IN SOME CASES.
I. Certificate. The subscriber must date and sign the Certificate
below, and, if requested by the Company, the subscriber may also be required to
provide an opinion of counsel to the same effect as this Certificate or a copy
of (a) the corporation's articles of incorporation, bylaws and authorizing
resolution, (b) the partnership agreement, (c) the limited liability company's
certificate of formation or articles of organization, as applicable, and limited
liability company agreement, operating agreement or similar agreement governing
the rights and obligations of the members of the limited liability company, or
(d) the trust agreement, as applicable.
II. Subscription Agreement
A. Corporations. An authorized officer of the corporation
must date, sign, and complete the Subscription Agreement with information
concerning the corporation. The officer should print the name of the corporation
above his signature, and print his name and office below his signature.
B. Partnerships. An authorized partner must date, sign,
and complete the Subscription Agreement with information concerning the
partnership. The partner should print the name of the partnership above his
signature, and print his name and the words "general partner" below his
signature.
C. Limited Liability Companies. An authorized member or
manager must date, sign, and complete the Subscription Agreement with
information concerning the limited liability company. The member or manager
should print the name of the limited liability company above his signature, and
print his name and the word "member" or "manager" below his signature.
D. Trusts. In the case of a trust, the authorized trustee
should date, sign, and complete the Subscription Agreement with information
concerning the trust. The trustee should print the name of the trust above his
signature, and print his name and the word "trustee" below his signature. In
addition, an authorized trustee should also provide information requested in the
Subscription Agreement as it pertains to him as an individual.
F. Joint Ownership. In all cases, each individual must
date, sign, and complete the Subscription Agreement. Joint investors must state
if they are purchasing the Units as joint tenants with the right of
survivorship, tenants in common, or community property, and each must execute
the Subscription Agreement Signature Page.
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CERTIFICATE FOR CORPORATE, PARTNERSHIP,
LIMITED LIABILITY COMPANY, TRUST, AND JOINT SUBSCRIBERS
If the subscriber is a corporation, partnership, limited liability
company, trust, joint purchaser, or other entity, an authorized officer,
partner, member, manager or trustee must complete, date, and sign this
Certificate.
CERTIFICATE
I hereby certify that:
(a) The subscriber has been duly formed and is validly existing
and has full power and authority to invest in Netword, Inc.
(b) The Subscription Agreement has been duly and validly
authorized, executed, and delivered by the subscriber and, upon acceptance by
Netword, Inc., will constitute the valid, binding, and enforceable obligation of
the subscriber.
Date:
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Name of corporation, partnership, limited liability
company, trust or joint purchasers (please print)
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Signature and title of authorized officer, partner,
member, manager, trustee, or joint purchaser
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