EXHIBIT 10.1
CASE FINANCIAL, INC.,
A DELAWARE CORPORATION
SUBSCRIPTION AGREEMENT
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Case Financial, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
December __, 2002
Gentlemen:
Reference is made to that certain Confidential Term Sheet dated
November 27, 2002 (the "Confidential Term Sheet"), a copy of which has been
provided to and read by the undersigned, I.F. Propco (Ontario) 32 Ltd., an
Ontario corporation (the "Subscriber"). Unless otherwise indicated or the
context otherwise requires, all capitalized terms used in this Subscription
Agreement (the "Subscription Agreement") and not otherwise defined will have the
meaning provided in the Confidential Term Sheet will have the same meaning when
used herein. By execution hereof, the Subscriber evidences its desire to
purchase one (1) Unit from Case Financial, Inc. (the "Company"), as more
particularly described below (the "Unit"). By its execution hereof, the
Subscriber expressly acknowledges and agrees that the Company is relying upon
the accuracy and completeness of the representations of Subscriber contained
herein in complying with the Company's obligations under applicable securities
laws.
1. SUBSCRIPTION COMMITMENT. The Subscriber hereby subscribes for the
purchase of one (1) Unit and, as full payment therefor, agrees to pay to the
Company, concurrently with the Subscriber's execution and delivery hereof, the
Unit purchase price of Two Million and 00/100 Dollars ($2,000,000.00). The Unit
consists of a Promissory Note, dated as of the date hereof, and delivered by the
Company to the Subscriber, in the principal amount of Two Million and 00/100
Dollars ($2,000,000.00) (the "Note"), a Warrant to purchase Two Million
(2,000,000) shares of the Company's Common Stock, $0.001 par value (the "Common
Stock"), at an exercise price of $0.50 per share of Common Stock, and a Warrant
to purchase 1,000,000 shares of Common Stock at an exercise price of $0.80 per
share of Common Stock (together, the "Warrants"). The shares of Common Stock
issuable upon exercise of the Warrants shall be referred to herein as the
"Warrant Stock", and the Unit, the Note, the Warrants, and the Warrant Stock,
shall be referred to herein collectively as the "Securities". The form of Note
and Warrants are attached hereto as Exhibit A.
2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. To induce the
Company to accept this Subscription Agreement, the Subscriber hereby represents
and warrants to, and covenants with, the Company as follows:
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(a) The Subscriber is familiar with the business operations
and financial affairs of the Company and acknowledges that the Company files
periodic reports with the Securities and Exchange Commission ("SEC"), which
reports are generally available to the public. The Subscriber has been given
reasonable opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Unit, the business prospects and financial condition of the
Company, and to obtain any additional information required by the Subscriber, to
the extent available. As of the date hereof, the Subscriber has received from
the Company all the information that the Subscriber has requested and considers
necessary or appropriate for deciding whether to purchase the Unit.
(b) The Subscriber believes that the purchase of the Unit and
an investment in the Securities are suitable for the Subscriber based upon the
Subscriber's investment objectives and financial needs. The Subscriber: (i) has
adequate means of providing for the Subscriber's current financial needs and
personal contingencies; (ii) has no need for liquidity in this investment; (iii)
can afford a complete loss of such investment; and (iv) does not have an overall
commitment to investments which are not readily marketable that is
disproportionate to the Subscriber's net worth, and the Subscriber's investment
in the Securities will not cause such overall commitment to become excessive.
(c) The Subscriber, in reaching a decision to subscribe for
the Unit, has knowledge and experience in financial and business matters, is
capable of reading and interpreting financial statements and evaluating the
merits and risk of an investment in the Securities, and has the net worth to
undertake such risks.
(d) The Subscriber was not offered or sold the Securities,
directly or indirectly, by means of any form of general advertising or general
solicitation, including, but not limited to: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
medium or broadcast over television or radio; or (ii) any seminar or meeting
whose attendees had been invited by any general solicitation or general
advertising;
(e) The Subscriber has obtained, to the extent the Subscriber
deems necessary, the Subscriber's own personal professional advice with respect
to the risks inherent in an investment in the Securities and the suitability of
an investment in the Securities in light of the Subscriber's financial condition
and investment needs.
(f) The representations made by the Subscriber herein are
true, complete and correct in all respects as of the date hereof. The Subscriber
understands that the Company's determination that exemptions from the
registration and qualification provisions of the Securities Act of 1933, as
amended ("Act"), and applicable state securities laws exist for the offer and
sale of the Securities is based, in part, upon the representations, warranties,
agreements and statements made by the Subscriber herein.
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(g) The Subscriber acknowledges that the Securities have not
been registered under the Act or qualified under any applicable state securities
laws or regulations and that the Securities are being offered in reliance upon
exemptions from the registration requirements of the Act and such laws and
regulations. The Subscriber understands that the Securities are "restricted
securities" under the Act and that, as such, the Securities may not be resold
without registration under the Act and applicable state securities laws or an
applicable exemption therefrom. The Subscriber understands that no public market
presently exists or will exist for the Note or the Warrants. The Subscriber
understands that the Company has no obligation to register the Note or the
Warrants. The Subscriber acknowledges that the certificate or certificates
evidencing the Securities will bear a legend, generally in the form provided in
Section 3(b) hereof, indicating that the Securities are subject to restrictions
on resale under the Act and applicable state securities laws and regulations.
(h) The Subscriber is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D as promulgated under the Act.
(i) The Subscriber is purchasing the Securities solely for its
own account, for investment only, and the Securities are not being purchased for
the account of any other person or entity and not with a view to or for sale in
connection with any distribution of all or any part of the Securities. The
Subscriber has no contract, undertaking, agreement or arrangement with any
person or entity to sell, distribute, pledge or transfer to any person or entity
all or any portion of the Securities, and the Subscriber has no present plan to
enter into any such contract, undertaking, agreement or arrangement.
3. UNDERSTANDINGS AND ACKNOWLEDGMENTS OF THE SUBSCRIBER. The Subscriber
understands and acknowledges the following:
(a) The Subscriber recognizes that an investment in the
Securities involves a high degree of risk and is subject to a number of risk
factors, including but not limited to the risk factors set forth in the
Company's filings of periodic reports with the SEC.
(b) Stop transfer instructions will be placed on the books of
the Company, and a legend may be placed on any instrument or certificate
representing the Securities, substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. NO SALE OR OTHER TRANSFER OF THE SECURITIES EVIDENCED
HEREBY, OR OF ANY INTEREST THEREIN, MAY BE EFFECTED WITHOUT COMPLIANCE
WITH THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH ACT AND
LAWS OR THE AVAILABILITY OF APPLICABLE EXEMPTIONS FROM SUCH
REQUIREMENTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
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4. INDEMNIFICATION. The Subscriber shall indemnify and hold harmless
the Company and its directors, officers, stockholders, employees, counsel,
agents, successors and assigns from and against all losses, damages, liabilities
and actual expenses (including, without limitation, reasonable attorneys' fees),
as and when incurred, due to or arising out of, in whole or in part, any breach
of any representation or warranty made by the Subscriber set forth herein or in
any other agreement or document furnished by the Subscriber to any of the
foregoing in connection with this Subscription Agreement or arising out of the
resale or distribution by the Subscriber of the Securities, or any portion
thereof, in violation of the Act or any applicable state securities laws.
5. ADDITIONAL REPRESENTATIONS. Subscriber makes the following
additional representations:
(a) The Subscriber was not organized for the specific purpose
of acquiring the Securities.
(b) This Subscription Agreement has been duly authorized by
all necessary action on the part of the Subscriber, has been duly executed by an
authorized officer or other authorized representative of the Subscriber, and is
a legal, valid and binding obligation of the Subscriber enforceable in
accordance with its terms.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants, and covenants with the Subscriber as follows
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as conducted and as proposed to be conducted.
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which its ownership or leasing of assets
or the conduct of its business makes such qualification necessary.
(b) AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Subscription Agreement, the
performance of the obligations of the Company hereunder and the authorization,
issuance, sale and delivery of the Securities to be issued hereunder, has been
taken.
(c) ISSUANCE OF THE SECURITIES. The Securities being issued
hereunder, when issued, sold and delivered in accordance with the terms of this
Subscription Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under the Act and applicable
state securities laws.
(d) GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Subscription Agreement.
(e) OFFERING. Subject in part to the truth and accuracy of the
Subscriber's representations set forth in Section 2 of this Subscription
Agreement, the offer, sale and issuance of the Securities as contemplated by
this Subscription Agreement is exempt from the registration requirements of the
Act.
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(f) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery
and performance of this Subscription Agreement and the consummation of the
transactions contemplated hereby will not violate or conflict with: (i) any
provision of the Certificate of Incorporation or Bylaws of the Company; (ii) any
material instrument, judgment, order, writ, decree, contract or agreement to
which the Company is a party or by which it is bound; or (iii) to the best of
the Company's knowledge, any provision of any federal or state statute, rule or
regulation applicable to the Company, the violation of which could reasonably be
anticipated to have a material adverse effect on the Company.
7. REGISTRATION RIGHTS. The Company hereby agrees with the Subscriber
that, within ninety (90) days after the execution of this Subscription
Agreement, it shall prepare and file with the SEC a registration statement with
respect to the Warrant Stock, and use reasonable efforts to cause such
registration to become and remain effective, and prepare and file with the SEC
such amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective.
The Company will indemnify and hold harmless the Subscriber
from and against, and will reimburse the Subscriber with respect to, any and all
loss, damage, liability, cost and expense to which the Subscriber may become
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, omission or alleged
omission so made is in conformity with information furnished by the Subscriber.
8. FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Subscription Agreement.
9. IRREVOCABILITY; ASSIGNABILITY. This Subscription Agreement is
irrevocable and may not be withdrawn, and upon the signing of this Subscription
Agreement, the Subscriber is obligated to purchase the Securities for the amount
of consideration set forth above. The Subscriber shall not assign this
Subscription Agreement or any of the Subscriber's rights or delegate any of the
Subscriber's obligations under this Subscription Agreement without the prior
written consent of the Company, which consent will not be unreasonably withheld
or delayed.
10. ENTIRE AGREEMENT. This Subscription Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by both of the parties.
11. GOVERNING LAW. This Subscription Agreement shall be construed in
accordance with and be governed by the laws of the State of California.
12. COUNTERPARTS; FACSIMILE SIGNATURES. This Subscription Agreement may
be executed in two or more counterparts, each of which, when taken together,
shall constitute one and the same instrument. The instrument may be executed by
facsimile, and upon such execution, shall have the same force and effect as an
original.
[Signatures on following page.]
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IN WITNESS WHEREOF, the undersigned do hereby execute this Subscription
Agreement this ____ day of December, 2002.
I.F. PROPCO (ONTARIO) 32 LTD., an CASE FINANCIAL, INC., a Delaware
Ontario corporation corporation
By: /s/ Xxxxxxxx X. Xxxxx By:
----------------------------- --------------------------------
Name: Xxxxxxxx X. Xxxxx Name:
Its: President Its:
Address:
I.F. Propco Holdings (Ontario) 32 Ltd.
X.X. Xxx 000
00 Xxxxxxxxxxxxx
Xxxxxxx X0X 0X0
Xxxxxx
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxx
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