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SUBSCRIPTION AGREEMENT
dated as of
December 17, 1998
ARTICLE I
SUBSCRIPTION
THIS SUBSCRIPTION AGREEMENT dated as of December 17, 1998, between Xxxx
Xxx Xxxxx Xxxx (the "Subscriber") and Integrated Transportation Network Group,
Inc., a Delaware corporation (the "Company").
Section 1.01 Subscription. The Subscriber hereby subscribes to the
immediate acquisition of 275,000 shares (the "Shares") of Common Stock, $0.1 par
value ("Common Stock") of the Company. Such shares of Common Stock are referred
to herein as the "Securities". The Securities are being issued to the Subscriber
in full and complete satisfaction of the indebtedness of the Company's 92% owned
subsidiary, Shenzhen Jinzhenghua Transport Industrial Development Co. Ltd.
("Transport"), a company organized under the laws of the People's Republic of
China ("PRC"), to the Subscriber in the amount of US$481,250 (the
"Indebtedness") as described in the assignment dated December 11, 1998 from
Zhenghua Group Co. Ltd. to, among others, the Subscriber, which indebtedness the
Company hereby acknowledges.
Promptly upon the execution hereof, the Company shall deliver the
Securities to the undersigned at the address indicated below and upon such
delivery the Indebtedness shall be cancelled.
ARTICLE II
PRESENTATIONS AND WARRANTIES
Section 2.01 In connection with the purchase of the Securities, the
Subscriber acknowledges, warrants and represents to the Company as follows:
(a) He is acquiring the Securities for investment for his own account
and without the intention of participating, directly or indirectly, in a
distribution of the Securities, and not with a view to resale or any
distribution of the Securities, or any portion thereof.
(b) He has knowledge and experience in financial and business matters
and has consulted with his own professional representatives as he has considered
appropriate to assist in evaluating the merits and risks of this investment. He
has reviewed the Company's Registration Statement on Form S-1 dated June 29,
1998 and the Company's Quarterly Reports on Form 10Q for the quarter ended June
30 and September 30, 1998, respectively. He has had access to and an opportunity
to question the officers of the
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Company, or persons acting on their behalf, with respect to material information
about the Company and, in connection with his evaluation of this investment,
has, to the best of his knowledge, received all information and data with
respect to the Company that he has requested. He is acquiring the Securities
based solely upon his independent examination and judgment as to the prospects
of the Company.
(c) The Securities were not offered to the Subscriber by means of
publicly disseminated advertisements or sales literature.
(d) Subject to the provisions of Section 3.01, he acknowledges that an
investment in the Securities is speculative and he may have to continue to bear
the economic risk of the investment in the Securities for an indefinite period.
He acknowledges that the Securities are being sold to the undersigned without
registration under any state, or federal or PRC law requiring the registration
of securities for sale, and accordingly will constitute "restricted securities"
as defined in Rule 144 of the U.S. Securities and Exchange Commission. The
transferability of the Securities is therefore restricted by applicable United
States Federal and state securities laws and may be restricted under the laws of
other jurisdictions.
(e) The Subscriber is an "accredited investor" as such term is defined
in Appendix A.
(f) In consideration of the acceptance of this subscription, the
Subscriber agrees that the Securities will not be offered for sale, sold or
transferred by the undersigned other than pursuant to (i) an effective
registration under the Securities Act of 1933, as amended (the "Act"), an
exemption available under the Act or a transaction that is otherwise in
compliance with the Act; and (ii) an effective registration under the securities
law of any state or other jurisdiction applicable to the transaction, an
exemption available under such laws, or a transaction that is otherwise in
compliance with such laws.
(g) He understands that no U.S. federal or state agency has passed upon
the offering of the Securities or has made any finding or determination as to
the fairness of any investment in the Securities.
(h) He agrees to execute such further documents as the Company may
request in order to give effect to the cancellation of indebtedness contemplated
hereby.
Section 2.02 Representations and Warranties of the Company. As an
inducement to the Subscriber to enter into this Agreement and to consummate the
transactions contemplated herein, the Company hereby represents and warrants to
the Subscriber and agrees as follows:
(a) Organization; Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has full power and authority to enter into this Agreement and to perform its
obligations
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hereunder. This Agreement constitutes, and any other agreements and instruments
required to be delivered by the Company hereunder, when duly executed and
delivered by the Company, will constitute, valid and binding obligations of the
Company and will be enforceable in accordance with their respective terms. The
Company has previously provided to the Subscriber true copies of all resolutions
of the Company's Board of Directors necessary to authorize the transactions
described herein, and all such resolutions are in full force and effect and have
not been revoked.
(b) Capitalization. As of December 10, 1998, the authorized share
capital of the Company consists of 50,000,000 common shares, par value US$.01
per share, of which 7,397,108 are fully issued and remain outstanding, and
5,000,000 preferred shares, par value US$.01 per share, none of which are issued
and outstanding. Except as set forth above and as set forth in Appendix B, no
other shares or equity securities of the Company have been issued and remain
outstanding, and there are no outstanding options, warrants or other rights to
purchase or acquire any share capital of the Company, whether granted by the
Company or otherwise, and there are no existing contracts by which the Company
is or may become bound to issue any additional shares. The Company has never
reduced, repaid, redeemed or purchased any of its share capital. The Securities
shall, upon issuance, shall be fully paid and non-assessable.
(c) No Consents. Neither the consummation of the transactions
contemplated hereby, nor compliance with nor fulfillment of the terms and
provisions hereof, will (i) require the consent of any governmental authority or
any person under any contract to which the Company is a party or to which the
Company is subject or (ii) give any party with rights under any material
contract to which the Company or any subsidiary of the Company is a party the
right to terminate, modify or otherwise change the material rights or
obligations of any party under such contract.
(d) Compliance with Laws. The Company is in compliance, and there
exists no alleged material noncompliance, with all applicable laws relating in
any material respect to the Company and the operation or conduct of its
business, except where the failure to so comply would not have a material
adverse effect on the Company, and, except as previously disclosed in the
Prospectus of the Company dated June 29, 1998 or the quarterly reports of the
Company filed with the SEC on Form 10-Q for the three-month periods ending June
30, 1998 and September 30, 1998, the Company has not received any notice of
alleged violation of any such applicable law.
ARTICLE III
MISCELLANEOUS
Section 3.01 Miscellaneous. The Company agrees that it shall file with
the United States Securities and Exchange Commission (the "SEC") a registration
statement under the U.S. Securities Act of 1933 (the "Securities Act") in
accordance with Rule 415 thereof (the "Shelf Registration") with respect to all
of the Securities, and shall use its best efforts to cause such registration
statement to become effective within 180 days
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after the date hereof and to remain effective at all times for a period of two
years after the date hereof. In addition, if the Company at any time files a
Registration Statement under the Securities Act with respect to its Common Stock
after the date hereof, the Company shall so notify the undersigned and shall
include such of the Securities as the Subscriber may request on such
Registration Statement.
Section 3.02 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 3.03 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, applicable to
contracts executed in and to be performed entirely within that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court sitting in the City
of New York and, to the extent permitted by Law, the parties hereto expressly
consent to the jurisdiction of such courts, agree to venue in such courts and
hereby waive any defense or claim of forum non conveniens they may have with
respect to any such action or proceeding.
IN WITNESS WHEREOF, the Financier and the Company have executed this
Agreement or caused this Agreement to be executed as of the date first written
above.
COMPANY SUBSCRIBER
Integrated Transportation
Network Group Inc. /s/ Xxxx Xxx Xxxxx Xxxx
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Name: Xxxx Xxx Xxxxx Xxxx
Address: 1/F Shell Industrial Building
12 Xxx Xxxxx Street, Chai Wan
By: /s/ Xxxxxx Xxx Hong Kong, PRC
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Xxxxxx Xxx, President
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
U.S.A.
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APPENDIX A
An "accredited Investor" within the meaning of Regulation D under the
Securities Act of 1933 includes the following:
Organizations
(1) A bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
insurance company as defined in section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958; an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors.
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(3) A trust (i) with total assets in excess of $5,000,000, (ii) not
formed for the specific purpose of acquiring the Securities, (iii) whose
purchase is directed by a person who, either alone or with his purchaser
representative, has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the proposed
investment.
(4) A corporation, business trust, partnership, or an organization
described in section 501(c)(3) of the Internal Revenue Code, which was not
formed for the specific purpose of acquiring the Securities, and which has total
assets in excess of $5,000,000.
Individuals
(5) Individuals with income from all sources for each of the last two
full calendar years whose reasonably expected income for this calendar year
exceeds either of:
(i) $200,000 individual income; or
(ii) $300,000 joint income with spouse.
NOTE: Your "income" for a particular year may be calculated by adding to your
adjusted gross income as calculated for Federal income tax purposes any
deduction for
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long term capital gains, any deduction for depletion allowance, any exclusion
for tax exempt interest and any losses of a partnership allocated to you as a
partner.
(6) Individuals with net worth as of the date hereof (individually or
jointly with your spouse), including the value of home, furnishings, and
automobiles, in excess of $1,000,000.
(7) Directors, executive officers or general partners of the Issuer.
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APPENDIX B
1. The Company has agreed to issue the following securities, in
connection with the cancellation of an aggregate of US$3.9 million in
indebtedness of the Company's subsidiary, Shenzhen Jinzhenghua Transport
Industrial Development Co., Ltd.: (A) an aggregate of 2,228,571 shares of Common
Stock at a price of not less than US$1.75 per share; and (B) Warrants to
purchase an aggregate of 334,286 shares of Common Stock at an exercise price of
US$2.00 per share.
2. The Company has sold (subject to issuance) US$600,000 in principal
amount of 3% Convertible Debentures, with a fixed conversion price of US$2.625
per share of Common Stock, and has agreed to issue Warrants to purchase up to
360,000 shares of Common Stock at an exercise price of US$1.75 per share.
3. The Company is negotiating to sell US$500,000 in principal amount of
3% Convertible Debentures, at a conversion price equal to the lesser of 150% of
the market price on the closing date and 70% of the market price on the
conversion date. The sale would also involve the issuance of warrants to
purchase 300,000 shares of Common Stock at an exercise price equal to the market
price on the closing date.
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