OFFSHORE SECURITIES 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 ("1933 Act").
This Offshore Securities Subscription Agreement has been executed by
the undersigned in connection with the private placement of shares of Common
Stock (hereinafter referred to as the "Shares") of:
AFFINITY TELEPRODUCTIONS, INC.
00000 Xxxxx Xxxxxxx Xxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
National Association of Securities Dealers Automated Quotation System Symbol
("AFTY"), a corporation organized under the laws of Delaware, United States of
America (hereinafter referred to as the "ISSUER").
1. Subscription The undersigned:
NAME: PHILMONT A.V.V.
ADDRESS: Sun Plaza
306-160 Xxxxx Xxxxxx Xxxxx Boulevard
Aruba
A Corporation organized under the laws of ARUBA, a non-USA
Jurisdiction (hereinafter referred to as the "PURCHASER"), hereby represents and
warrants to, and agrees with ISSUER as follows:
a. The PURCHASER hereby subscribes for One Million (1,000,000)
shares (the "Stock" or the "Shares") of the Company's Common
Stock at a subscription price equal to $5.00 per share
(calculated by applying a 20% discount of the trading value of
$6.25 per share) payable in United States Dollars for a total
consideration of Five Million Dollars ($5,000,000). The total
consideration is based upon the trading bid price of the stock
on the day prior to the close hereof. Any fluctuations in the
trading price shall be reflected as an adjustment of the
consideration calculated as set forth in this Section 1(a).
b. Form of payment. PURCHASER shall pay the total
consideration by delivering good funds by wire transfer in
United States Dollars on or before January 26, 1996, in the
amount of $5,000,000 to:
Nations Bank of Florida
00000 X. Xxxxxxx Xxx.
Xxxxx, XX 00000
Account No.: 3603136640
ABA Routing No.: 000000000
Account Name: Affinity Teleproductions, Inc.
2. Subscriber Representations: Access to information; independent
investigation.
a. Offshore Transaction. PURCHASER represents and warrants to
ISSUER as follows:
(i) Neither the PURCHASER nor any person or entity
from whom the PURCHASER is acting as fiduciary is a
U.S. person. A U.S. person means any one of the
following:
(1) any natural person resident in the
United States of America;
(2) any partnership or corporation organized
or incorporated under the laws of the United
States of America;
(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 of America.
(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 of America; and
(8) any partnership or corporation if:
(A) organized or incorporated under
the laws of any foreign
jurisdiction; and
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(B) formed by a U.S. person
principally for the purpose of
investing in securities not
registered under the 1933 Act,
(whenever such term is used herein,
it shall have the meaning given in
Regulation S);
(ii) At the time the buy order was originated,
PURCHASER was outside the United States of America
and is outside of the United States of America as of
the date of the execution and delivery of this
Offshore Securities Subscription Agreement. No offer
to purchase the Shares was made in the United States
of America.
(iii) PURCHASER is purchasing the Shares for
PURCHASER's own account or for the account of
beneficiaries from whom the PURCHASER has full
investment discretion with respect to the Shares and
whom the PURCHASER has full authority to bind so that
each such beneficiary is bound hereby as if such
beneficiary were a direct PURCHASER hereunder and all
representations, warranties and agreements herein
were made directly by such beneficiary.
(iv) Each distributor participating in the offering
of the Shares, if any, has agreed in writing that all
offers and sales of the Shares prior to the
expiration of a period commencing on the date of the
closing of the offering of Shares and ending 40 days
thereafter (the "Restricted Period") shall only be
made in compliance with the safe harbor contained in
Regulation S, pursuant to registration of Shares
under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act.
(v) PURCHASER REPRESENTS AND WARRANTS AND HEREBY
AGREES THAT ALL OFFERS AND SALES OF THE SHARES PRIOR
TO THE EXPIRATION OF THE RESTRICTED PERIOD SHALL ONLY
BE MADE IN COMPLIANCE WITH THE SAFE HARBOR CONTAINED
IN REGULATION S, PURSUANT TO REGISTRATION OF
SECURITIES UNDER THE 1933 ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, AND
ALL OFFERS AND SALES AFTER THE RESTRICTED PERIOD
SHALL BE MADE ONLY PURSUANT TO SUCH A REGISTRATION OR
TO SUCH EXEMPTION FROM REGISTRATION.
(vi) ALL OFFERING DOCUMENTS RECEIVED BY PURCHASER
INCLUDE STATEMENTS TO THE EFFECT THAT THE SHARES HAVE
NOT BEEN REGISTERED UNDER THE 1933 ACT AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES OR TO U.S.
PERSONS OR FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON (OTHER THAN
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DISTRIBUTORS AS DEFINED IN REGULATION S) DURING THE
RESTRICTED PERIOD UNLESS THE SHARES ARE REGISTERED
UNDER THE 1933 ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS IS AVAILABLE.
(vii) PURCHASER acknowledges that the purchase of the
Shares involves a high degree of risk and further
acknowledges that PURCHASER can bear the economic
risk of the purchase of the Shares, including the
total loss of PURCHASER's investment. PURCHASER
acknowledges that PURCHASER has obtained the advice
of competent legal counsel in PURCHASER's domicile
jurisdiction that PURCHASER is qualified under the
laws of its domicile to purchase the Shares offered
hereunder and that the offer and sale of the Shares
will not violate the laws of their domicile
jurisdiction.
(viii) PURCHASER understands that the Shares are
being offered and sold to him or it in reliance on
specific exemption from the registration requirements
of federal and state securities laws and that the
ISSUER is relying upon the truth and accuracy of the
representations, warranties, agreements,
acknowledgments and understandings of PURCHASER set
forth herein in order to determine the applicability
of such exemptions and the suitability of PURCHASER
to acquire the Shares.
(ix) PURCHASER is sufficiently experienced in
financial and business matters to be capable of
evaluating the merits and risks of PURCHASER's
investments, and to make an informed decision
relating thereto.
(x) In evaluating PURCHASER's investment, PURCHASER
has consulted PURCHASER's own investment and/or legal
and/or tax advisors.
(xi) PURCHASER UNDERSTANDS THAT, IN THE VIEW OF THE
SEC, THE STATUTORY BASIS FOR THE EXEMPTION CLAIMED
FOR THIS TRANSACTION WOULD NOT BE PRESENT IF THE
OFFERING OF SHARES, ALTHOUGH IN TECHNICAL COMPLIANCE
WITH REGULATION S, IS PART OF A PLAN OR SCHEME TO
EVADE THE REGISTRATION PROVISIONS OF THE 1933 ACT.
PURCHASER IS ACQUIRING THE SHARES FOR INVESTMENT
PURPOSES AND HAS NO PRESENT INTENTION TO SELL THE
SHARES IN THE UNITED STATES OF AMERICA TO A U.S.
PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S.
PERSON. PURCHASER HEREBY CONFIRMS THAT THE PURPOSE OF
INCLUDING THE PURCHASER REPRESENTATION LETTER
(SCHEDULE A) AS PROVIDED IN PARAGRAPH 7, IN ORDER TO
FACILITATE THE TRANSFER OF THE CERTIFICATES
REPRESENTING THE
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SHARES INTO STREET NAME, IS TO ENABLE PURCHASER TO
COMPLY WITH THE REQUIREMENTS OF CERTAIN OFFSHORE
PORTFOLIO MANAGEMENT REGULATIONS AND THE SECURITY
REQUIREMENTS OF OFFSHORE LENDERS FOR MARGIN LOANS.
(xii) PURCHASER IS NOT AN UNDERWRITER OF, OR DEALER
IN, THE SHARES; AND PURCHASER IS NOT PARTICIPATING,
PURSUANT TO A CONTRACTUAL AGREEMENT, IN THE
DISTRIBUTION OF THE SHARES.
(xiii) PURCHASER represents and warranties that
neither PURCHASER nor any of PURCHASER's affiliates
will directly or indirectly maintain any short
position in Shares of the ISSUER during the Forty Day
(40) Transaction Restriction Period.
(xiv) PURCHASER represents that it may not transfer
the shares for a period of one (1) year from the date
of the Close hereof.
If PURCHASER is purchasing the Shares
subscribed for hereby in representative or fiduciary
capacity, the representations and warranties in this
Offshore Securities Subscription Agreement shall be
deemed to have been made on behalf of the person or
persons for whom PURCHASER is so purchasing.
The foregoing representations and warranties
are true and accurate as of the date hereof, shall be
true and accurate as of the date of the acceptance by
the ISSUER of PURCHASER's subscription, and shall
survive thereafter. If PURCHASER has knowledge, prior
to the acceptance of this Offshore Securities
Subscription Agreement by the ISSUER, that any such
representations and warranties shall not be true and
accurate in any respect, the PURCHASER, prior to such
acceptance, will give written notice of such fact to
the ISSUER specifying which representations and
warranties are not true and accurate and the reasons
therefor.
b. Current Public Information. PURCHASER acknowledges that
PURCHASER has been furnished with or has acquired copies of
the ISSUER's most recent Annual Report on Form 10-K and the
most recent Form 10-Q filed thereafter (collectively the "SEC
Filings"), and other publicly available documents (together
with the SEC Filings, the "Offering Documents").
c. Independent Investigation; Access. PURCHASER acknowledges
that PURCHASER in making the decision to purchase the Shares
subscribed for, has relied upon independent investigations
made by PURCHASER and
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PURCHASER's purchaser representatives, if any, and PURCHASER
and such representatives, if any, have, prior to any sale to
him or it, been given access and the opportunity to examine
all material books and records of the ISSUER, all material
contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers from
ISSUER or any person acting on its behalf concerning the terms
and conditions of this offering. PURCHASER and Purchaser's
advisors, if any, have been furnished with access to all
publicly available materials relating to the business,
finances and operation of the ISSUER and materials relating to
the offer and sale of the Shares which have been requested.
PURCHASER and PURCHASER's advisors, if any, have received
complete and satisfactory answers to any such inquiries.
d. No Government Recommendation or Approval. PURCHASER
understands that no federal or state agency has made or will
make any finding or determination relating to the fairness for
public investment in the Shares, or has passed on or made, or
will pass on or make, any recommendation or endorsement of the
Shares.
e. Entity Purchases. If PURCHASER is a partnership corporation
or trust, the person executing this Offshore Securities
Subscription Agreement on PURCHASER'S BEHALF represents and
warrants that:
(i) he or she has made due inquiry to determine the
truthfulness of the representations and warranties
made pursuant to this Offshore Securities
Subscription Agreement; and
(ii) he or she is duly authorized (if the undersigned
is a trust, by the trust agreement) to make this
investment and to enter into and execute this
Offshore Securities Subscription Agreement on behalf
of such entity.
f. 1934 Act Compliance. PURCHASER agrees to make all filings
required pursuant to the Securities and Exchange Act of 1934.
3. Issuer Representations.
ISSUER represents and warrants to the PURCHASER as follows:
a. Reporting Company Status. ISSUER is a reporting issuer as
defined by Rule 902 of Regulation S.
b. Offshore Transaction. ISSUER has not offered these
securities to any person in the United States of America or to
any U.S. person or for the account or benefit of any U.S.
person.
c. No Direct Selling Efforts. In regard to this transaction,
ISSUER has not conducted any "directed selling efforts" as
that term is defined in Rule 902 of
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the offer and sale of the Shares to U.S. persons resident
within the United States of America or elsewhere.
d. Shares. The Shares when issued and delivered will be duly
and validly authorized and issued and, subject to receipt of
the full consideration as provided herein, fully paid and
non-assessable and will not subject the holders thereof to any
liability by reason of being such holders. The Shares are
subject to a stop transfer order as described herein below.
The issuance of the shares herein is in full compliance with
all state and federal securities laws and regulations, subject
to the representations and warranties of PURCHASER set forth
in paragraph 2(a).
e. Offshore Securities Subscription Agreement. This Offshore
Securities Subscription Agreement, when acknowledged by the
signature of an officer of the ISSUER, has been duly
authorized, validly executed and delivered on behalf of the
ISSUER and is a valid and binding agreement in accordance with
its terms.
f. Non-contravention. The execution and delivery of the
Offshore Securities Subscription Agreement and the
consummation of the issuance of the Shares and the
transactions contemplated by this Offshore Securities
Subscription Agreement do not and will not conflict with or
result in a breach by the ISSUER of any of the terms or
provisions, of, or constitute a default under, the certificate
of incorporation or by-laws of the ISSUER, or any indenture,
mortgage, deed of trust, or other material agreement or
instrument to which the ISSUER is a party or by which it or
any of its properties or assets are bound, or any existing
applicable law, rule or regulation, or any applicable decrees,
judgment or order of any court, federal or state regulatory
body, administrative agency or other governmental body having
jurisdictions over the ISSUER or any of its properties or
assets.
g. Prior Share Issues Under Regulation S. Except as previously
disclosed to the PURCHASER, ISSUER has not issued any shares
of its Common Stock under Regulation S subsequent to its
current SEC Filings except for any shares which may be issued
in connection with ISSUER's current financing activities and
shares issued as an adjustment to prior sales under Regulation
S.
h. Filings. ISSUER undertakes and agrees pursuant to the sale
of its securities under Regulation S to make all necessary
filings in connection with the sale of its securities as
required by the laws and regulations of all appropriate
jurisdictions.
i. Margin. ISSUER shall use its best effort to become a member
of NASDAQ, National Market System, and be listed on the
Federal Margin List by March 1, 1996.
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4. Indemnification.
a. Indemnification by Issuer. ISSUER shall indemnify and hold
harmless PURCHASER from and against any and all loss, damage,
expense (including court costs and reasonable attorney's
fees), suit, action, claim, liability or obligation related to
or caused by ISSUER or arising from any misrepresentation,
breach of warranty or failure to fulfill any covenant or
agreement contained herein.
b. Indemnification by Purchaser. PURCHASER shall indemnify and
hold harmless ISSUER from and against any and all loss,
damage, expense (including court costs and reasonable
attorney's fees), suit, action, claim, liability or obligation
related to, caused by or arising from any misrepresentation,
breach of warranty or failure to fulfill any covenant or
agreement contained herein by PURCHASER.
c. Defense of Claims. If any lawsuit or enforcement action is
filed against any party entitled to be benefit of indemnity
hereunder, written notice thereof shall be given to the
indemnifying party as promptly as practicable; provided that
the failure of any indemnified party to give timely notice
shall not affect rights to indemnification hereunder, except
to the extent that the indemnifying party demonstrates actual
damages caused by such failure. After such notice, if the
indemnifying party shall, within 10 days after receiving the
indemnified party's notice, acknowledge in writing to such
indemnified party that such indemnifying party shall be
obligated under the terms of its indemnity hereunder in
connection with such lawsuit or action, then the indemnifying
party shall be entitled, if it so elects, to take control of
the defense and investigation of such lawsuit or action and to
employ and engage attorneys satisfactory to the indemnified
party to handle and defend the same, at the indemnifying
party's cost, risk and expense, provided, however, that the
indemnified party may, at its own cost, employ its own counsel
and participate in such investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. The
indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any such lawsuit
or action; provided, however, that in the event the
indemnified party does not consent to such settlement or
compromise, the indemnifying party's indemnification liability
to the indemnified party hereunder with respect to such
lawsuit or action shall not exceed the amount contemplated by
such proposed settlement or compromise.
5. Expiration of Restricted Period. The transaction restriction in
connection with this offshore offer and sale restricts the PURCHASER
from offering and selling to U.S. persons or for the account or benefit
of a U.S. person for a forty (40) day period. Rule 903 (c)(2) governs
the forty (40) day transaction restriction. In the event that multiple
subscriptions are accepted by the ISSUER, each separate subscription
agreement shall be deemed to be a separate offering under Regulation S
and the forty (40) day restriction period shall begin for each
transaction separately on the date full payment is made to the ISSUER
for that specific transaction. Title to the Shares may be transferred
by PURCHASER to other non U.S. persons or entities in accordance with
Regulation S, subject to the restriction imposed by Section 2(a)(xiv)
of this Agreement.
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6. Exemption; Reliance on Representations. PURCHASER understands that
the offer and sale of the Shares is not being registered under the 1933
Act. ISSUER is relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S. Rules 901 through
903 of Regulation S govern this transaction.
7. Transfer Agent Instructions. ISSUER shall inform its Transfer Agent
of the restrictions imposed pursuant to Regulation S as set forth in
paragraph 2 (a) and the restriction on transfer of 12 months as imposed
in Section 2 (a)(xiv). These shares shall be legend free.
8. Closing Date. The date of issuance of the Shares and the sale of the
Shares (the "Closing Date") shall be no later than January 26, 1996.
Closing shall be effectuated through delivery of funds to the account
designated in Section 1 (b) hereof; provided, however, that the shares
are delivered in accordance with Section 10 hereinbelow.
9. Conditions to the Issuer's Obligation to Sell. ISSUER reserves the
right in its complete discretion to reject this Offshore Securities
Subscription Agreement. PURCHASER understands that ISSUER's obligation
to sell the Shares is conditioned upon:
a. The receipt and acceptance by ISSUER of this Offshore
Securities Subscription Agreement for all of the Shares is
evidenced by execution of this Offshore Securities
Subscription Agreement by the President or any Vice President
or any Director of the ISSUER.
b. Delivery to the ISSUER of good funds as set forth in
paragraph 1 (b) as payment in full for the purchase of the
Shares, and all fees and commissions.
10. Conditions to Purchaser's Obligation to Purchase. ISSUER
understands that PURCHASER's obligation to purchase the Shares, and
deliver the consideration described herein, is conditioned upon prior
delivery of the certificates representing the Shares according to the
delivery instructions in Section 14, hereinbelow. Prior to the delivery
of the shares, PURCHASER shall provide to ISSUER satisfactory evidence
of the availability of funds with the agents set forth in Section 14 of
this Agreement.
11. Governing law. This Offshore Securities Subscription Agreement
shall be governed by and construed under the laws of the State of
Delaware (without regard to its choice of law principles).
12. Entire Agreement. This Offshore Securities Subscription Agreement
constitutes the entire agreement among the parties hereof with respect
to the subject matter hereof and supersedes any and all prior or
contemporaneous representations, warranties,
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agreement and understandings in connection therewith. This Offshore
Securities Subscription Agreement may be amended only by a writing
executed by all parties hereto.
13. Full Name and Address of Purchaser for Registration Purposes.
NAME: PHILMONT A.V.V.
ADDRESS: 1108 Capilano 000,
000 Xxxx Xxxxx
Xxxx Xxxxxxxxx, X.X. Xxxxxx
X0X 0X0
TEL. NO.: (000) 000-0000
FAX NO.: (000) 000-0000
CONTACT
NAME: XXXXXXXXX XXXXXXXX
14. Delivery instructions: (if different from Registration Name):
NAME: Citibank N.A. (London)
ADDRESS: 00 Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
FAX NO.: 0171 409 5944
NAME: PHILMONT A.V.V.
SPECIAL
INSTRUCTIONS: Account Number: To be provided.
NUMBER OF SHARES: 500,000
NAME: Xxxxxx Brothers
ADDRESS: 14th Floor
0000 Xxxxxxxx Xxx.
Xxxxx, XX 00000
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TEL NO.: (000) 000-0000
FAX NO.: (000) 000-0000
CONTACT: Xxxxxx Xxxxxxxx
NAME: PHILMONT A.V.V. or ASSIGNEE
SPECIAL
INSTRUCTIONS: To be provided.
NUMBER OF SHARES: 500,000
15. Issuer's Acceptance based upon Purchaser Representations. ISSUER IS
ACCEPTING THIS OFFSHORE SECURITIES SUBSCRIPTION BASED UPON AND IN
RELIANCE UPON THE REPRESENTATIONS AND WARRANTIES OF PURCHASER CONTAINED
HEREIN, INCLUDING, WITHOUT LIMITATION, THOSE CONTAINED IN SECTIONS 2 OF
THIS AGREEMENT, AND THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
WOULD NOT BE ACCEPTED BY ISSUER IN THE ABSENCE OF SUCH REPRESENTATIONS
AND WARRANTIES.
IN WITNESS WHEREOF, this Offshore Securities Subscription Agreement was
duly executed on the date first written below.
Dated this 24th day of the month of January, 1996.
Company Name: AFFINITY TELEPRODUCTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
______________________________
Official Signature of Issuer
Name (Printed): Xxxxxxx X. Xxxxx
Title: President
Country of Execution: USA
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Accepted this 24th day of the month of January, 1996.
PHILMONT A.V.V.
By: /s/ Xxxxxxxxx Xxxxxxxx
_______________________________
Official Signature of Purchaser
Name (Printed): Xxxxxxxxx Xxxxxxxx
_______________________________
Title: Manager
_______________________________
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APPENDIX "A"
PURCHASER REPRESENTATIONS LETTER
Dear Sirs:
The undersigned, PHILMONT A.V.V., has purchased on January 26, 1996,
One Million (1,000,000) Shares of Common Stock (the "Shares") of AFFINITY
TELEPRODUCTIONS, INC. (the "Company") and, in connection with such purchase, has
executed and delivered a subscription form ("Subscription Form") of your design.
Purchaser acknowledges the Regulation S restriction and the 12 month restriction
against transfer imposed.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Shares was made to it outside of the
United States, and the undersigned was, at the time the
subscription form was executed and delivered, and is now
outside the United States;
(2) The undersigned is not a U.S. person (as such term is defined
in Section 902 (a) of Regulation S ("Regulation S")
promulgated under the United States Securities Act of 1933
(the "Securities Act"); and the undersigned has purchased the
Shares for the undersigned's own account and not for the
account or benefit of any U.S. person.
(3) All offers and sales by the undersigned of the shares acquired
pursuant to the Subscription Form shall be made pursuant to an
effective registration statement under the Securities Act or
pursuant to an exemption form, or in a transaction not subject
to the registration requirements of the Securities Act.
(4) He or it is familiar with and understands the terms and
conditions, and requirements contained in Regulation S and
definitions of U.S. persons contained in Regulation S.
(5) The undersigned has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with
respect to the Shares; and
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(6) The undersigned purchased the undersigned's Shares with
investment intent and presently has no interest to sell,
dispose of or otherwise transfer the Shares. The purpose for
this request is to facilitate the management of the
undersigned's investment accounts.
Dated this 26th day of the month of January, 1996.
By: /s/ Xxxxxxxxx Xxxxxxxx
__________________________________
Official Signature of Purchaser
Title: Manager
____________________________________
Country of Execution: Canada
_______________________
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