EXHIBIT 99.1
EXECUTION COPY
SUBSCRIPTION AGREEMENT
GCA Strategic Investment Fund Limited
c/o Prime Management Limited
Mechanics Building
00 Xxxxxx Xxxxxx
Xxxxxxxx XX 00
Xxxxxxx
Dear Sirs:
RE: CONVERTIBLE NOTES AND COMMON SHARE PURCHASE WARRANTS OF
CRYSTALLEX INTERNATIONAL CORPORATION
This letter sets out the terms of a financing by which you
(the "INVESTOR") have irrevocably agreed to subscribe, subject to the terms and
conditions set forth herein, for an aggregate of up to U.S. $3,000,000 principal
amount of convertible notes ("CONVERTIBLE NOTES") and that number of warrants
("WARRANTS") to purchase common shares ("COMMON SHARES") of Crystallex
International Corporation (the "COMPANY") as set out herein, for an aggregate
subscription price of U.S. $3,000,000.
In this agreement "business day" means any day that is not a
Saturday, Sunday or statutory holiday in Toronto, Ontario or the State of New
York. If the day on or before which any action that would otherwise be required
to be taken hereunder is not a business day, that action will be required to be
taken on or before the requisite time on the next succeeding day that is a
business day.
Wherever in this agreement reference is made to generally
accepted accounting principles or to "GAAP", such reference shall be deemed to
be to the generally accepted accounting principles from time to time approved by
the Canadian Institute of Chartered Accountants, or any successor institute, as
at the date on which such calculation is made or required to be made in
accordance with generally accepted accounting principles. Where the character or
amount of any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this agreement, such determination or calculation
shall, to the extent applicable and except as otherwise specified herein or as
otherwise agreed in writing by the parties, be made in accordance with generally
accepted accounting principles applied on a consistent basis.
1. DETAILS OF OFFERING
Subject to the terms hereof, the closing shall take place on
or before August 27, 2003 (the "CLOSING DATE"). The securities to be purchased
hereunder on the Closing Date shall consist of: (i) U.S. $3,000,000 principal
amount of Convertible Notes, to be issued by the Company under and governed in
accordance with the provisions of a note indenture (the "NOTE INDENTURE") to be
entered into between the Company and CIBC Mellon Trust Company ("CIBC MELLON"),
as trustee; and (ii) a number of Warrants of the Company, to be issued by the
Company under and governed in accordance with the provisions of a Warrant
Indenture (the "WARRANT INDENTURE") to be entered into between the Company and
CIBC Mellon, as warrant agent (such indentures being collectively referred to as
the "INDENTURES"). The aggregate number of Warrants to be issued on the Closing
Date shall be 150,000, 50,000 of which shall be issued to the Investor and
100,000 of which shall be issued to Global Capital Advisors, LLC.
2. RESALE RESTRICTIONS
The Convertible Notes and the Warrants are subject to resale
restrictions under the United States Securities Act of 1933, as amended (the
"1933 ACT") and under the applicable Canadian securities laws.
The Common Shares issuable upon the conversion of the
Convertible Notes and exercise of the Warrants are subject to resale
restrictions (i) under the 1933 Act until the date on which a resale
registration statement (the "REGISTRATION STATEMENT") is declared effective (the
"EFFECTIVE DATE") under the 1933 Act; and (ii) under applicable Canadian
securities laws. In addition, the Common Shares issuable upon the conversion of
the Convertible Notes and exercise of the Warrants may not be resold on the
Toronto Stock Exchange (the "TSX") (a) for a period of four months from the date
of acquisition of such Convertible Notes and Warrants or such longer period as
may be required by applicable Canadian securities laws and (b) except pursuant
to an exemption from registration under the 1933 Act or an effective
registration thereunder.
The Investor is advised to consult with its own legal advisors
with respect to these resale restrictions.
You, as the holder of the Convertible Notes and the Warrants
(collectively, with the Common Shares underlying the Convertible Notes and the
Warrants, the "SECURITIES"), acknowledge and agree that (i) the Securities have
not been registered with the U.S. Securities and Exchange Commission (the "SEC")
under the 1933 Act and applicable state securities laws and no prospectus has
been filed in respect of the Securities under applicable Canadian securities
laws; (ii) the Securities cannot be sold in the United States or otherwise
transferred unless registered under federal and applicable state securities laws
or unless an exemption from registration is available under the federal and
applicable state securities laws and cannot be sold or otherwise transferred in
Canada except pursuant to an exemption from the registration and prospectus
requirements under applicable Canadian securities laws and except pursuant to an
exemption from registration under the 1933 Act or an effective registration
thereunder; (iii) the Convertible Notes and the Warrants cannot be converted or
exercised, respectively, unless the conversion or exercise is registered under
the 1933 Act or is made pursuant to an applicable exemption from registration
under the 1933 Act and until the Common Shares underlying the Convertible Notes
and the Warrants have been listed for issuance with the American Stock Exchange,
Inc. (the "AMEX"); and (iv) accordingly, you may not readily liquidate or
transfer the Securities. The Securities will bear, so long as appropriate and in
addition to any legends required by the TSX, AMEX or any other exchange on which
the securities are listed and posted for trading, restrictive legends
substantially similar to the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE
DECEMBER 28, 2003.
The Convertible Notes and the Warrants will bear, so long as
appropriate, the following additional legend:
THESE SECURITIES MAY NOT BE CONVERTED [EXERCISED] [BY OR ON
BEHALF OF A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE
ACT)] [INCLUDE ONLY FOR REGULATION S SALES.] UNLESS SUCH
CONVERSION IS REGISTERED UNDER THE ACT OR IS MADE PURSUANT TO
AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS.
The applicable legends set forth above shall be removed in
connection with any resale of Common Shares pursuant to an effective
registration statement under the 1933 Act or sooner if, in the opinion of
counsel to the Company experienced in the area of United States securities laws,
such legend is no longer required under applicable requirements of the 1933 Act
(including judicial interpretation and pronouncements issued by the staff of the
SEC). The Company agrees that it will provide you, upon request, with a
substitute certificate or certificates, free from such legend at such time as
such legend is no longer applicable.
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3. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to the Investor and
acknowledges that it is relying upon such representations and warranties in
entering into this agreement and purchasing Convertible Notes and Warrants that:
(a) the Company and each subsidiary ("subsidiary" having the
meaning attributed to such term in the Canada Business
Corporations Act) of the Company (each, a "SUBSIDIARY") has
been duly incorporated and organized and is validly existing
under the laws of its jurisdiction of incorporation, has all
requisite power and authority to carry on its business as now
conducted and to own, lease and operate its properties and
assets in each of the jurisdictions in which it carries on its
business or owns, leases or operates its properties or assets,
except where any failure would not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole,
and the Company has all requisite power and authority to carry
out its obligations under the Indentures and this agreement;
(b) except as has been publicly disclosed by the Company, the
Company and each Subsidiary has conducted and is conducting
its business in compliance in all material respects with all
applicable laws, rules and regulations of each jurisdiction in
which its business is carried on and is duly licensed,
registered or qualified in all jurisdictions in which it owns,
leases or operates its property or carries on business to
enable its business to be carried on as now conducted and its
property and assets to be owned, leased and operated, and all
such licences, registrations and qualifications are valid and
subsisting and in good standing and none of the same contains
any burdensome term, provision, condition or limitation which
has or would reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole;
(c) the Company has no subsidiaries other than the Subsidiaries.
All the issued and outstanding shares in the capital of each
Subsidiary have been validly allotted and issued and are
outstanding as fully paid and non-assessable and except as
publicly disclosed or as otherwise disclosed to the Investor
(collectively the "PERMITTED TRANSACTIONS"), no person, firm
or corporation has any agreement or option, or right or
privilege (whether pre-emptive or contractual) capable of
becoming an agreement (including convertible securities and
warrants) for the purchase, subscription or issuance of any
unissued shares, securities or warrants of any Subsidiary;
(d) except as has been publicly disclosed by the Company, the
Company is the direct or indirect beneficial owner of all the
issued and outstanding securities in the capital of each
Subsidiary, in each case free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances,
claims or demands whatsoever, and except in connection with
the Permitted Transactions, no person, firm or corporation has
any agreement or option, or right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement
(including convertible securities and warrants) for the
purchase from the Company of any interest in any of the issued
and outstanding securities in the capital of any Subsidiary;
(e) no consent, approval, permit, authorization, order of or
filing with any court or governmental agency or body in Canada
or the United States is required by the Company for the
execution and delivery of and the performance by the Company
of its obligations under the Indentures and this agreement,
except any consent, approval, permit, authorization, order or
filing required under the securities legislation of Ontario,
British Columbia, Alberta, Quebec and Nova Scotia or the
United States and the by-laws, rules and regulations of the
Exchanges which the Company is required hereunder to use its
best efforts to obtain, and except as may be required in order
to qualify or register the Common Shares issuable upon
conversion of the Convertible Notes and the exercise of the
Warrants under the securities laws and rules and regulations
of the United States and the by-laws, rules and regulations of
the TSX and the AMEX (collectively, the "EXCHANGES");
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(f) none of the execution and delivery of the Indentures and this
agreement, the performance by the Company of its obligations
thereunder, the issuance of the Convertible Notes and the
Warrants or the issuance of Common Shares on the conversion of
the Convertible Notes or the exercise of the Warrants will
conflict with or result in a breach of (i) any statute, rule
or regulation applicable to the Company; (ii) the securities
legislation of the United States and the by-laws, rules and
regulations of the Exchanges; (iii) the constating documents,
by-laws or resolutions of the Company which are in effect at
the date hereof; (iv) any material contract, agreement, or
other document to which the Company or a Subsidiary is a party
or by which the Company or a Subsidiary is bound; or (v) any
judgment, decree or order binding the Company or any of its
Subsidiaries or the property or assets of the Company or its
Subsidiary which, in the case of paragraphs (i), (iv) and (v),
may have a material adverse effect on the Company or its
Subsidiaries;
(g) the audited consolidated financial statements of the Company
for the period ended December 31, 2002, as amended and
restated:
(i) have been prepared in all material respects in
accordance with generally accepted accounting
principles applied on a basis consistent with those of
preceding fiscal periods;
(ii) present fairly the consolidated assets, liabilities and
financial condition of the Company as at December 31,
2002 and the consolidated results of its operations and
the changes in its financial position for the period
then ended;
(iii) are in accordance with the books and records of the
Company and its Subsidiaries as at December 31, 2002;
(iv) contain and reflect all necessary adjustments for the
fair presentation of the results of operations and the
financial condition of the business of the Company on a
consolidated basis for the period covered thereby; and
(v) contain and reflect adequate provision or allowance for
all reasonably anticipated liabilities, expenses and
losses of the Company and its Subsidiaries;
(h) the unaudited consolidated financial statements of the Company
for the period ended March 31, 2003, as amended and restated:
(i) have been prepared in all material respects in
accordance with generally accepted accounting
principles applied on a basis consistent with those of
preceding fiscal periods;
(ii) present fairly the consolidated results of its
operations and the changes in its financial position
for the period then ended;
(iii) are in accordance with the books and records of the
Company and its Subsidiaries as at the period then
ended;
(iv) contain and reflect all necessary adjustments for a
fair presentation of the results of operations and the
financial condition of the business of the Company on a
consolidated basis for the period covered thereby; and
(v) contain and reflect adequate provision or allowance for
all reasonably anticipated liabilities, expenses and
losses of the Company and its Subsidiaries;
(i) at the time of closing of the transactions contemplated hereby
on the Closing Date (the "TIME OF CLOSING"), the Indentures
and this agreement shall have been duly authorized, executed
and delivered by the Company and each shall be legally valid
and binding upon the Company and enforceable in accordance
with its terms;
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(j) at the Time of Closing, all necessary corporate action will
have been taken by the Company to authorize the issuance of
the Convertible Notes and the Warrants issuable pursuant to
this transaction and to allot, reserve and authorize the
issuance of the underlying Common Shares which are issuable
upon the due conversion of the Convertible Notes and exercise
of the Warrants, and upon conversion of the Convertible Notes
and exercise of the Warrants, the underlying Common Shares
will be validly issued, fully paid and non-assessable;
(k) at the Time of Closing, the authorized capital of the Company
will consist of an unlimited number of Common Shares, an
unlimited number of Class A Preference Shares and an unlimited
number of Class B Preference Shares, of which 112,170,673
Common Shares and no Preference Shares were issued and
outstanding as fully paid and non-assessable as at the close
of business on August 19, 2003;
(l) except as have been publicly disclosed, to the best of the
knowledge and belief of the Company, there are no actions,
suits, proceedings, investigations or inquiries pending
against or, affecting the Company (or any Subsidiary) or any
of their properties or assets at law or in equity or before or
by any governmental or regulatory agency or board, domestic or
foreign, which may, in any way, have a material adverse effect
on the condition (financial or otherwise) of the business,
properties, assets, capital, net worth, results of operations
or business prospects of the Company and its Subsidiaries,
taken as a whole, or which questions the validity of any
actions taken or to be taken by the Company pursuant to or in
connection with this agreement;
(m) the Company and its Subsidiaries have timely filed all
necessary tax returns and notices and have paid all applicable
taxes of whatever nature for all tax years to the date hereof
to the extent such taxes have become due or have been alleged
to be due; the Company is not aware of any material tax
deficiencies or material interest or penalties accrued or
accruing, or alleged to be accrued or accruing, thereon with
respect to itself or any of its Subsidiaries;
(n) the Company is a "reporting issuer" not in default under the
securities laws of British Columbia, Alberta, Ontario, Quebec
and Nova Scotia and, with the exception of the most recently
filed Form 20-F of the Company, has timely filed all forms and
reports under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), required to be filed by it since it has
become subject to the periodic reporting requirements
thereunder and there is no material change in the affairs of
the Company which presently requires disclosure under
applicable securities laws which has not been so disclosed and
no such disclosure has been made on a confidential basis since
March 31, 2003 which has not subsequently been disclosed;
(o) except as has been publicly disclosed by the Company, the
Company and the Subsidiaries are conducting their respective
businesses in compliance in all material respects with all
applicable licensing and anti-pollution legislation,
regulations or by-laws, environmental protection legislation,
regulations or by-laws or other similar legislation,
regulations or by-laws or other lawful requirements of any
governmental or regulatory bodies which are applicable to the
Company and its Subsidiaries. Except as has been publicly
disclosed by the Company, the Company is not aware of any such
legislation, regulations, by-laws or lawful requirement
presently in force or proposed to be brought into force by any
governmental or regulatory authority which the Company
anticipates the Company or any Subsidiary will be unable to
comply with without materially adversely affecting their
respective businesses;
(p) in addition to Common Shares issued and except for the Common
Shares to be reserved and allotted in accordance with the
transaction contemplated hereby, not more than 82,254,020
Common Shares are reserved for issuance for various reasons
including for exercise of stock options, conversion of
convertible debentures, finder's fees and exercise of
warrants; and
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(q) the Company maintains a system of internal accounting controls
sufficient, in the judgment of the Company's board of
directors, to provide reasonable assurances that (i)
transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability of assets is compared
with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
4. CONDITIONS OF CLOSING IN FAVOUR OF THE COMPANY
In connection with your purchase of Convertible Notes and
Warrants, we require that you complete, sign and return to us as soon as
possible: (i) Schedule "A" with respect to registration, delivery and closing
instructions; (ii) Schedule "B" relating to the Company's ability to rely upon
certain exemptions from registration requirements under the 1933 Act and to the
Company's ability to rely on certain exemptions from the registration and
prospectus requirements of applicable Canadian securities laws; and (iii) an
executed copy of this subscription agreement. All Investor information in this
Subscription Agreement and the Schedules hereto shall be true, complete and
correct as of the date hereof, the Closing Date and the date of each conversion
of a Convertible Note or exercise of a Warrant.
As a further condition of your purchase of the Convertible
Notes and the Warrants, you agree to complete, execute and deliver a private
placement questionnaire and undertaking in the form acceptable to the TSX, a
copy of which is attached as Schedule "C".
You undertake to execute and return to us all relevant
documentation required by applicable securities legislation or stock exchange
rules, as the sale of the Convertible Notes and Warrants to you will not be
qualified by a prospectus, and you shall not be entitled to be registered as the
holder of the Convertible Notes or Warrants nor to receive a certificate for
them until you have complied with the undertaking.
You agree to comply with all applicable securities laws
concerning the purchase and the restrictions on resale of the Convertible Notes
and Warrants and the Common Shares.
5. CONDITIONS OF CLOSING IN FAVOUR OF THE INVESTOR
The following are the conditions of the Investor's obligation
to close the purchase of the Convertible Notes and Warrants as contemplated
hereby, which conditions are for its sole benefit and may be waived in writing
in whole or in part and which conditions the Company covenants to exercise its
best efforts to have fulfilled at or prior to the Time of Closing:
(a) the Company will have made and/or obtained all necessary
filings, approvals, consents and acceptances of the
appropriate regulatory authorities and stock exchanges
required to be obtained by the Company prior to the Closing
Date;
(b) the common shares (the "SUBJECT SECURITIES") underlying the
Convertible Notes and the Warrants shall have been
conditionally approved for listing on the TSX and the TSX
shall have confirmed either orally or in writing that the
Subject Securities will, as soon as possible following their
issue, be posted or listed for trading on the TSX;
(c) the Company's directors shall have authorized and approved
this agreement, the Indentures, the issuance of the
Convertible Notes, the Warrants and the Subject Securities and
all matters related thereto;
(d) the Company shall have delivered to the Investor the
Convertible Notes and the Warrants in accordance with the
terms of this agreement, the Note Indenture and the Warrant
Indenture;
(e) the Investor shall have received a certificate, dated the
Closing Date, signed by an officer of the Company and
certifying (i) that attached thereto is a true, correct and
complete copy of resolutions duly adopted by the directors of
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the Company referred to in paragraph (c) above and (ii) the
incumbency of the officers executing the closing documents;
(f) it shall be the case that, and the Company will deliver to the
Investor a certificate of the Company and signed on behalf of
the Company by Xxxx X. Xxxxxxxxxxx addressed to the Investor
and dated the Closing Date, in form satisfactory to counsels
to the Investor, certifying that:
(i) no order ceasing or suspending trading in any
securities of the Company or prohibiting the sale of
the Convertible Notes, the Warrants, the Subject
Securities or any of the Company's issued securities is
presently in force and no proceedings for such purpose
are pending or, to the knowledge of the signer,
threatened;
(ii) except for the trading halts imposed by the TSX and
AMEX on July 9, 2003, which halts are no longer in
effect, there has not been any disruption in the market
for the Common Shares of the Company (including, but
not limited to, a material decrease in the trading
price or trading volume of the Common Shares) or the
United States stock markets as a whole since March 31,
2003;
(iii) the representations and warranties of the Company set
forth herein and in each of the Indentures shall be
true and correct in all material respects as of the
date when made and as of the Closing Date as though
made on and as of such date;
(iv) the Company has performed, satisfied and complied in
all material respects with all the covenants,
agreements and conditions required by this agreement
and the Indentures to be performed, satisfied or
complied with by the Company at or prior to the Closing
Date, and, for greater certainty, there is no event of
default under the Indentures or an event which, with
the passage of time or the giving of notice or both,
would constitute an event of default or default, as the
case may be, under the Indentures;
(v) except as has been publicly disclosed, there has been
no adverse material change (actual, proposed or
prospective, whether financial or otherwise) in the
business, condition, affairs, prospects, operations,
assets, liabilities (contingent or otherwise) or
capital of the Company and its subsidiaries taken as a
whole since March 31, 2003, and
(vi) the Company is a "reporting issuer" not in default
under the securities laws of Ontario, British Columbia,
Alberta, Nova Scotia and Quebec and, with the exception
of the Company's most recently filed Form 20-F, has
timely filed all forms and reports under the Exchange
Act required to be filed by it since it has become
subject to the periodic reporting requirements
thereunder and there is no material change in the
affairs of the Company which presently requires
disclosure under applicable securities laws which has
not been so disclosed and no such disclosure has been
made on a confidential basis which has not been
subsequently disclosed;
(g) the Investor shall have completed to its reasonable
satisfaction its periodic due diligence investigations of the
Company; and
(h) the Company will have caused a favourable legal opinion to be
delivered by its counsel(s) with respect to such matters as
the Investor may reasonably request relating to this
transaction, acceptable in all reasonable respects to the
Investor's counsel, including, without limitation, that:
(i) this agreement has been duly authorized, executed and
delivered by the Company and is legally binding upon
the Company and enforceable in accordance with its
terms (subject to usual assumptions and
qualifications);
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(ii) the Convertible Notes and the Warrants issuable
hereunder have been validly created and issued and have
the attributes and characteristics contemplated by this
agreement;
(iii) the execution and delivery of the Indentures has been
duly authorized by the Company and is a valid and
binding agreement upon the Company and upon CIBC
Mellon, enforceable in accordance with its terms
(subject to the usual assumptions and qualifications);
(iv) the Subject Securities have been validly allotted and
will be issued as fully paid and non-assessable upon
conversion of the Convertible Notes and the exercise of
the Warrants in accordance with their terms;
(v) the TSX has approved the issuance of the Convertible
Notes, the Warrants and the Subject Securities, and the
Subject Securities have been conditionally approved for
listing on the TSX;
(vi) the issue and sale of the Convertible Notes and the
Warrants have been properly effected in such a manner
as to be exempt, either by statute or regulation or
order, from the prospectus requirements of Ontario
securities laws;
(vii) the issuance of Common Shares upon the conversion of
such Convertible Notes and the Warrants in accordance
with their terms will be registered or exempt from the
prospectus and registration requirements of the
applicable securities laws of Ontario and of the United
States; and
(viii) the Company has been duly incorporated and is validly
subsisting under the laws of Canada and has the
corporate power and capacity to own its properties and
assets and to carry on its business it is as presently
carried on.
In giving the opinions contemplated above, counsel(s) to the
Company shall be entitled to rely, where appropriate, upon local counsel and
shall be entitled, as to matters of fact not within their knowledge, to rely
upon a certificate of fact from responsible persons in a position to have
knowledge of such facts and their accuracy.
6. CLOSING
Delivery and payment for the Convertible Notes and the
Warrants will be completed at The Law Offices of Xxx Xxxxxxxx, Athens, Georgia
at 1:00 p.m. (Toronto time) on the Closing Date or such earlier or later date or
time as the Company and the Investor shall mutually agree (the "TIME OF
CLOSING").
On the Closing Date, certificates representing the Convertible
Notes and the Warrants will be available for delivery against payment to the
Company of U.S. $3,000,000, such amount to be satisfied by the delivery to the
Company of outstanding promissory notes of the Company in favour of the Investor
in an equivalent principal amount.
7. PROSPECTUS EXEMPTIONS
The sale and delivery of the Convertible Notes and the
Warrants to you is conditional upon such sale being exempt from the requirements
as to the filing of a prospectus or registration statement or upon the issuance
of such orders, consents or approvals as may be required to permit such sale
without the requirement of filing a prospectus or registration statement.
You acknowledge and agree that you have not received or been
provided with a prospectus, offering memorandum or similar document and that
your decision to enter into this subscription agreement and purchase the
Convertible Notes and the Warrants agreed to be purchased by you has not been
based upon any verbal or written representation as to fact or otherwise made by
or on behalf of the Company. You acknowledge that, to your knowledge, the sale
of the Convertible Notes was not accompanied by any advertisement in printed
media of general and regular paid circulation, radio or television or any other
advertisement or any general solicitation.
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By your acceptance of this subscription agreement, you
represent and warrant to the Company (which representations and warranties shall
survive closing) that:
(a) you and any beneficial purchaser for whom you are acting are
resident in the jurisdiction set out above your signature
herein; and
(b) the statements made by you in this Subscription Agreement and
Schedules "B" and "C" hereto are true and correct as at the
date thereof.
In addition, you (or any beneficial purchasers for whom you
are acting) covenant and agree to execute and deliver all additional
documentation as may be required by applicable securities legislation.
8. DIRECTED SELLING
The Investor covenants and agrees that it shall only dispose
of Common Shares issuable upon conversion of the Convertible Notes or exercises
of the Warrants pursuant to transactions on the AMEX or any other exchange upon
which the Common Shares are listed (other than any Canadian stock exchange,
including without limitation the TSX) and, provided that, in the event that it
wishes to arrange a sale of a block of Common Shares (other than through a stock
exchange) which represents 5% or more of the issued and outstanding Common
Shares of the Company (the "SALE SHARES"), the Investor shall first make an
offer in writing to the Company to sell the Sale Shares to a person or persons
to be designated by the Company (the "PURCHASER") at a price and on the same
terms and conditions as it wishes to arrange the sale of the Sale Shares. The
Purchaser may accept such offer within 24 hours of the receipt of the offer made
to the Company failing which the offer shall be deemed to be refused. Following
such 24-hour notice, the Investor may then sell the Sale Shares on a basis which
is not more advantageous to a buyer than the terms provided to the Company.
9. NOTICES
(a) Unless herein otherwise expressly provided, a notice to be
given hereunder to the Company or to the Investor will be
validly given if delivered or if sent by registered letter,
postage prepaid, or if sent by facsimile transmission (and
receipt of such transmission is confirmed in writing):
(i) If to the Company:
Crystallex International Corporation
000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxxxxxxxx,
President and Chief Executive Officer
Facsimile: 416.203.0099
with a copy (which shall not constitute notice) to:
XxXxxxxx Xxxxx XXX
Xxxxx 0000
Xxxxx Xxxxx, Xxxxx Bank Plaza
Toronto, Ontario
M5J 2J7
Attention: Xxxx X. Xxxxxxx
Facsimile: 416.865.7048
(ii) If to the Investor, at the address specified on
Schedule "A".
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and any such notice delivered or sent in accordance with the
foregoing will be deemed to have been received on the date of
delivery or facsimile transmission or, if mailed, on the fifth
business day following the day of the mailing of the notice.
(b) The Company or the Investor, as the case may be, may from time
to time notify the other in the manner provided in subsection
(a) of a change of address which, from the effective date of
such notice and until changed by like notice, will be the
address of the Company or the Investor, as the case may be,
for all purposes of this agreement.
(c) If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving Canadian or United States
postal employees, a notice to be given to the Investor or to
the Company hereunder could reasonably be considered unlikely
to reach or likely to be delayed in reaching its destination,
the notice will be valid and effective only if it is delivered
to an officer of the party to which it is addressed or if it
is delivered to such party at the appropriate address provided
in subsection (a) by confirmed facsimile transmission.
10. LIQUIDATED DAMAGES
The Company shall, and shall use its best efforts to cause
CIBC Mellon to, issue and deliver Common Shares without restrictive legends
within three AMEX trading days of delivery of a conversion notice under the Note
Indenture or notice of exercise of the Warrants under the Warrant Indenture, as
applicable (the "DEADLINE"). Notwithstanding the foregoing, the delivery
obligations of the Company above shall be conditioned on (i) the existence and
effectiveness of the Registration Statement or the existence of an exemption
from the registration requirements of the 1933 Act, and (ii) receipt of
materials reasonably requested by the Company from the Investor (which shall not
include an opinion of counsel to be delivered by the Company's counsel to CIBC
Mellon regarding the effectiveness of such registration statements) to permit
the issuance of certificates of Common Shares without restrictive legend or for
the Company or the Investor to comply with undertakings set forth herein. The
Company understands that a delay in the issuance of such certificates after the
Deadline could result in economic loss to the Investor. If for any reason the
Company fails to issue such certificates of Common Shares within two AMEX
trading days following the Deadline, as compensation, and not as a penalty, the
Company agrees to pay liquidated damages to the Investor for such late issuance
of such certificates an amount equal to U.S. $500 per each U.S. $100,000 funded
per day for each day such certificates are not delivered up to 10 AMEX trading
days and U.S. $1,000 per each U.S. $100,000 funded per day for each day
thereafter. The Company shall promptly pay the Investor any liquidated damages
incurred under this Section 10 by wire transfer in immediately available funds
to an account designated by the Investor. Nothing herein shall waive the
Company's obligations to deliver Common Shares upon a conversion of the
Convertible Notes or exercise of the Warrants or limit the Investor's right to
pursue actual damages (less the amount of any liquidated damages received
pursuant to the foregoing) for the Company's failure to issue and deliver Common
Shares to such Investor consistent with the terms of this agreement and the Note
Indenture and the Warrant Indenture. The Company agrees that, in addition to any
other remedies which may be available to the Investor, including the remedies
available under this section, in the event the Company fails for any reason
(other than as a result of actions taken by the Investor in breach of this
Agreement) to effect delivery to the Investor of certificates as contemplated by
this section on or prior to the Deadline, such Investor will be entitled, if
prior to the delivery of such certificates, to revoke the conversion notice, or
notice of exercise of the Warrants, as applicable, by delivering a notice to
such effect to the Company and CIBC Mellon whereupon the Company and the
Investor shall each be restored to their respective positions immediately prior
to delivery of such conversion notice, or notice of exercise of the Warrants.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE
COMPANY'S OBLIGATIONS UNDER THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT.
11. COVENANT TO REGISTER
(a) For purposes of this Section 11, the following definitions
shall apply:
(i) The terms "register", "registered" and "registration"
refer to a registration under the 1933 Act, enacted by
preparing and filing a registration statement or
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similar document in compliance with the 1933 Act, and
the declaration or ordering of effectiveness of such
registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Common
Shares issued or issuable upon conversion of the
Convertible Notes in accordance with the terms of the
Note Indenture or exercise of the Warrants in
accordance with the terms of the Warrant Indenture, and
any securities of the Company or securities of any
successor corporation issued as, or issuable upon the
conversion or exercise of any warrant, right or other
security that is issued as a dividend or other
distribution with respect to, or in exchange for or in
replacement of the Convertible Notes and Warrants (but
not the Convertible Notes and Warrants themselves),
which (i) have not been resold and (ii) may not yet be
resold pursuant to Rule 144 under the 1933 Act.
(iii) The term "holder of Registrable Securities" includes
the Investor and any permitted assignee of registration
rights pursuant to Section 11(h) who holds Convertible
Notes and/or Warrants which are convertible or
exercisable, as the case may be, into Registrable
Securities.
(b) (i) The Company shall, within thirty (30) days following
the Closing Date, file a registration statement on Form
F-3, or if Form F-3 is not then available, another
appropriate form, covering resales of the Registrable
Securities including sales thereof under Rule 415 or a
successor rule regarding delayed or continuous
offerings, and shall use its best efforts to cause such
registration statement to become effective within the
sooner of (i) 120 days of the Closing Date, (ii) within
five (5) business days of a "No-Review" Letter from the
Commission or, (iii) the fifth (5th) business day
following the day the Commission determines the
Registration Statement eligible to be declared
effective. The Company will respond, within ten (10)
business days of the receipt of comments by the SEC
regarding the Registration Statement. In the event the
Registration Statement is not filed within such thirty
(30) day period, the Company will pay to the Investor,
as liquidated damages and not as a penalty, an amount
equal to 1% of the outstanding principal amount of the
Convertible Notes for which no registration statement
has been filed per day until such registration
statement has been field. In the event such
registration is not so declared effective or does not
include all Registrable Securities (whether at the time
filed or subsequent to the effective date of such
registration statement), a holder of Registrable
Securities shall have the right to require by notice in
writing that the Company file a registration statement
as soon as practical to register all or any part of the
Registrable Securities held by such holder (a "DEMAND
REGISTRATION") and the Company shall thereupon use its
best efforts to effect such registration in accordance
herewith. The parties agree that if the holder of
Registrable Securities demands registration of less
than all of the Registrable Securities, the Company, at
its option, may nevertheless file a registration
statement covering all of the Registrable Securities.
If such registration statement is declared effective
with respect to all Registrable Securities, and the
Company is in compliance with its obligations under
Subsection (c)(i) through (v) hereof, the demand
registration rights granted pursuant to this Subsection
(b)(i) shall not be applicable. If such registration
statement is not declared effective with respect to all
Registrable Securities, or if the Company is not in
compliance with said obligations, the demand
registration rights described herein shall remain in
effect. The Company shall provide holders of
Registrable Securities a reasonable opportunity, but
not in excess of seven (7) days, to review any such
registration statement or amendment or supplement
thereto prior to the filing thereof. If the Registrable
Securities are registered initially on a form other
than Form F-3, the Company shall register the
Registerable Securities on Form F-3 as soon as use of
such form is permissible.
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(ii) The Company shall not be obligated to effect Demand
Registration under Subsection (b)(i) if all of the
Registrable Securities held by the holder of
Registrable Securities which are demanded to be covered
by the Demand Registration are, at the time of such
demand, included in an effective registration statement
and the Company is in compliance with its obligations
under Subsection (c)(i) through (v) hereof.
(iii) The Company may suspend the effectiveness of any such
registration affected pursuant to the Subsection (b) in
the event, and for such period of time as, such a
suspension is required by the rules and regulations of
the SEC and may suspend use of the prospectus including
in the Registration Statement if such prospectus ceases
to meet the requirements of Section 10 of the 1933 Act.
The Company will immediately advise the holders of the
Registrable Securities of any such suspension, and will
use its best efforts to cause such suspension to
terminate at the earliest possible date.
Notwithstanding the foregoing, the aggregate number of
days (whether or not consecutive) during which the
Company may delay the effectiveness of a Registration
Statement or prevent offerings, sales or distributions
by an Investor pursuant to this paragraph (b) above
shall in no event exceed thirty (30) days during any
12-month period, or such longer period if such
prospectus ceases to meet the requirements of Section
10 of the 1933 Act.
(iv) If the Registration Statement is not declared effective
within such 120-day period, the Company shall pay to
the Investor, as liquidated damages and not as a
penalty, an amount equal to 2% of the outstanding
principal amount of the Convertible Notes, prorated,
for each thirty (30) day period the Registration
Statement is not declared effective by the SEC. Such
amount will increase to 3% of the outstanding principal
amount of the Convertible Notes in the event that the
Registration Statement is not declared effective by the
SEC within 150 days of the Closing Date. If the
registration statement is not effective within 180 days
following the Closing Date, the Company shall redeem
the Convertible Notes in accordance with their terms.
Notwithstanding the foregoing, if the Registration
Statement is not declared effective within one hundred
eighty days (180) due to events, acts or conditions
relating to any or all of Global Capital Advisors, LLC
("GCA"), Colony Park Financial Services, LLC ("CPFS")
or the Investor (including without limitation failure
of the National Association of Securities Dealers Inc.
to approve the compensation to be allowed or paid to
CPFS within such 120-day period, if required by the
SEC), there will be no liquidated damage penalties.
Further, if the Company receives comments from the SEC
that relate to any or all of GCA, CPFS, or the
Investor, the Company will notify the such party(s)
within 24 hours of receipt of the comment from the SEC,
and such party(s) will respond to the Company within
three (3) business days. In the event of a failure of
the party(s) to respond within the three (3) day period
(the "RESPONSE DEADLINE"), the 120-day required
effective date will be extended by the same number of
days as the response extends beyond the Response
Deadline.
(v) If, following the declaration of effectiveness of the
Registration Statement, the Registration Statement (or
any prospectus or supplemental prospectus contained
therein) shall cease to be effective for any reason
(including but not limited to the occurrence of any
event that results in any prospectus or supplemental
prospectus containing an untrue statement of a material
fact or omitting a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading, but excluding a suspension
of the prospectus for purposes of filing a
post-effective amendment to the registration statement
to update the financial information contained therein
pursuant to Section 10 of the 1933 Act (a "REGISTRATION
DEFAULT"), other than a reason relating to GCA, CPFS,
or the Investor, the Company shall immediately take all
necessary steps to cause the Registration Statement to
be amended or supplemented so as to cure such
Registration Default. Failure to cure a Registration
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Default within ten (10) business days shall result in
the Company incurring a liquidated damage penalty of
$1,000 per day, but only if the Investor holds any
Convertible Notes, Warrants or Common Shares issued on
a conversion of the Convertible Notes or exercise of
the Warrants.
(c) Whenever required under this Section to effect the
registration of any Registrable Securities, the Company shall,
as soon as reasonably practicable:
(i) Promptly prepare and file with the SEC a registration
statement with respect to such Registrable Securities
and use its best efforts to cause such registration to
become effective as provided in Section 11(b), and upon
the request of any holder of Registrable Securities
keep such registration statement effective for so long
as any holder of Registrable Securities desires to
dispose of the securities covered by such registration
statement, or, if earlier, until such Registrable
Securities may be sold under Rule 144.
(ii) Promptly prepare and file with the SEC such amendments
and supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the
disposition of all securities covered by such
registration statement and notify the holders of the
filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iii) Promptly furnish to each holder of Registrable
Securities such numbers of copies of a current
prospectus conforming with the requirements of the 1933
Act, copies of the registration statement, any
amendment or supplement thereto and any documents
incorporated by reference therein and such other
documents as such holder of Registrable Securities may
reasonably require in order to facilitate the
disposition of Registrable Securities owned by such
holder of Registrable Securities.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under
such other securities or "Blue Sky" laws of such
jurisdictions in the United States as the Company may
determine is legally required under such "Blue Sky"
laws and as shall be reasonably requested by a holder
of Registrable Securities, provided that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file
a general consent to service of process in any such
states or jurisdictions.
(v) Notify each holder of Registrable Securities
immediately of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue
statement of material fact or omits to state a material
fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances than existing, and use its best efforts
to promptly update and/or correct such prospectus.
(vi) Furnish, at the request of any holder of Registrable
Securities, (1) an opinion of counsel of the Company,
dated the effective date of the registration statement,
in form and substance reasonably satisfactory to the
holder and its counsel and covering, without
limitation, such matters as the due authorization and
issuance of the securities being registered and
compliance with securities laws by the Company in
connection with the authorization, issuance and
registration thereof and (2) a letter or letters of the
Company's independent public accounts in form and
substance reasonably satisfactory to the holder and its
counsel.
(vii) Use its best efforts to list the Registrable Securities
covered by such registration statement on the
Exchanges;
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(viii) Makes available for inspection by the holder of
Registrable Securities, upon request, all documents
listed by the Company with the SEC filed subsequent to
the Closing and require the Company's officers and
employees to supply all information reasonably
requested by any holder of Registrable Securities in
connection with such registration statement, subject to
appropriate arrangements for confidentiality.
(d) Each holder of Registrable Securities will furnish to the
Company in connection with any registration under this Section
such information regarding itself, the Registrable Securities
and other securities of the Company held by it, and the
intended method of disposition of such securities as shall be
reasonably required to effect the registration of the
Registrable Securities held by such holder of Registrable
Securities. The Investor shall provide such data on the
Closing Date. The intended method of disposition ("PLAN OF
DISTRIBUTION") of such securities as so provided by the
Investor shall be included without substantial alteration in
the Registration Statement covering the Registrable Securities
and shall not be changed in any material respect without the
prior written consent of the Investor provided that the
Company is not required to include such information in a
registration statement or proceed with registering the
Registrable Securities hereunder to the extent that any
information or other material provided to the Company by the
Investor hereunder is untrue in any material respect and
further provided that the Investor shall include such
modifications to the Plan of Distribution as shall, in the
reasonable opinion of the Company, be necessary to ensure
compliance with the 1933 Act, comments of SEC's staff on the
Registration Statement, the Exchange Act, applicable "Blue
Sky" laws, or securities laws of other applicable countries.
(e) (i) The Company shall indemnify, defend and hold harmless
each holder of Registrable Securities which are
included in a registration statement pursuant to the
provisions of Subsections (b) or (c) (such, a "SELLING
SHAREHOLDER") and each of its officers, directors,
employees, agents, partners or controlling persons
(within the meaning of the 0000 Xxx) (each, an
"indemnified party") from and against, and shall
reimburse such indemnified party with respect to, any
and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses
("LIABILITIES") to which such indemnified party may
become subject under the 1933 Act or otherwise, arising
from or relating to (A) 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 (B)
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 shall
not be liable in any such case to the extent that any
such Liability arises out of or is based upon an untrue
statement or omission is made in strict conformity with
information furnished by or on behalf of such
indemnified party in writing specifically for use in
the preparation thereof, provided further that the
Company shall not be liable in any such case to the
extent that any such Liability arises out of or is
based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any
preliminary prospectus if (i) a Selling Shareholder
failed to deliver, to the person asserting such
Liability who purchased such Registrable Securities
which are the subject thereof, a prospectus that would
have completely corrected such untrue statement or
omission; and provided further, that the Company shall
not be liable in any such case to the extent that any
Liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or
alleged omission in the prospectus, if such untrue
statement or alleged untrue statement, omission or
alleged omission is completely corrected in an
amendment or supplement to the prospectus and if having
previously been furnished by or on behalf of the
Company with copies of the prospectuses so amended or
supplemented, the Selling Shareholder thereafter failed
to deliver such prospectus as so amended or
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supplemented, prior to or concurrently with the sale of
Registrable Securities to the person asserting such
Liability who purchased such Registrable Securities
which are the subject thereof from such Selling
Shareholder.
(ii) In the event of any registration under the 1933 Act of
Registrable Securities pursuant to Subsections (b) or
(c), each holder of such Registrable Securities hereby
severally agrees to indemnify, defend and hold harmless
the Company, and its officers, directors, employees,
agents, partners, or controlling persons (within the
meaning of the 0000 Xxx) (each, an "indemnified party")
from and against, and shall reimburse such indemnified
party with respect to, any and all Liabilities in which
such indemnified party may become subject under the
1933 Act or otherwise, arising from or relating to (A)
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, (B) 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 that such holders
will be liable in any such case to the extent, and only
to the extent, that any such Liability arises out of or
is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such
registration statement, prospectus or amendment or
supplement thereto in reliance upon and in conformity
with written information furnished by such holder or
its agent specifically for use in the preparation
thereof, (c) the failure to follow any Plan of
Distribution as set forth in (d), or (D) failure to
deliver an amended or supplemented prospectus prior to
or concurrently with the sale of Registrable Securities
to the person asserting such Liability who purchased
such Registrable Securities which are the subject
thereof from such Selling Shareholder.
(iii) Promptly after receipt by any indemnified party of
notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof
is to be made against another party (the "indemnifying
party") hereunder, notify such party in writing
thereof, but the omission so to notify shall not
relieve the indemnifying party from any Liability which
it may have to the indemnified party other than under
this section and shall only relieve it from any
Liability which it may have to the indemnified party
under this section if and to the extent it is actually
prejudiced by such omission. In case any such action
shall be brought against any indemnified party and such
indemnified party shall notify the indemnifying party
of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent
it shall wish, to assume and undertake the defence
thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the
indemnifying party to the indemnified party of its
election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to
the indemnified party under this section for any legal
expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than
reasonable costs of investigation and of liaison with
counsel so selected, provided however, that if the
defendants in any such action include both the
indemnifying party and such indemnified party and the
indemnified party shall have reasonably concluded that
there may be reasonable defences available to it which
are different from or additional to those available to
the indemnifying party or if the interest of the
indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the
indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate
counsel and other reasonable expenses related to such
participation to be reimbursed by the indemnifying
party as incurred. In clarification of the foregoing,
if the Company is the indemnifying party it shall pay
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the reasonable expenses and fees of one separate
counsel whose selection is approved by the largest
group of similarly situated indemnified parties as
measured by the aggregate par value of such Registrable
Securities owned by such group. Any indemnified party
who chooses not to be represented by the foregoing
separate counsel shall be entitled, at its own expense,
to be represented by counsel of its own selection.
(f) (i) With respect to the inclusion of Registrable Securities
in a registration statement pursuant to Subsections (b)
or (c), all fees, costs and expenses of and incidental
to such registration, inclusion and public offering
shall be borne by the Company (the "COMPANY'S
REGISTRATION EXPENSES"), provided, however, that any
Selling Shareholders participating in such registration
shall bear their pro-rata share of the underwriting
discounts and commissions, if any, incurred by them in
connection with such registration (the "SELLING
SHAREHOLDER'S EXPENSES").
(ii) The fees, costs and expenses of registration to be
borne by the Company as provided in this Subsection (f)
shall include, without limitation, all registration,
filing and exchange fees, printing expenses, fees and
disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other
expenses of complying with applicable state securities
or Blue Sky laws of any jurisdiction or jurisdictions
in the United States in which securities to be offered
are to be registered and qualified. Subject to
appropriate agreements as to confidentiality, the
Company shall make available to counsel for the holders
of Registrable Securities its documents and personnel
for due diligence purposes. Except as otherwise
provided herein, fees and disbursements of counsel and
accountants for the Selling Shareholders shall be borne
by the respective Selling Shareholders. The Company
shall pay the reasonable fees and expenses of one
counsel for the Investor in connection with
registration of the Registrable Securities.
(g) From and after the date of this Agreement, the Company shall
not agree to allow the holders of any securities of the
Company to include any of their securities in any registration
statement filed by the Company pursuant to Subsection (b)
unless such inclusion will not reduce the amount of the
Registrable Securities included therein.
(h) If at any time after the date hereof but before the filing of
the registration statement required to be filed pursuant to
Section 11(b) above, the Company proposes to register any of
its securities under the Securities Act (other than by a
registration in connection with an acquisition in a manner
which would not permit registration of Registrable Securities
for sale to the public, on Form S-8, or any successor form
thereto, on Form S-4, or any successor form thereto and other
than pursuant to Section 11(b), on an underwritten basis
(either best-efforts or firm-commitment), then the Company
will each such time give prompt written notice to all holders
of Registrable Securities of its intention to do so and of
such holders' rights under this Section 11(h). Upon the
written request of any such holder made within twenty (20)
days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of
by such holder and the intended method of disposition
thereof), the Company will, subject to the terms of this
Agreement, use its commercially reasonable best efforts to
effect the registration under the 1933 Act of the Registrable
Securities, to the extent requisite to permit the disposition
(in accordance with the intended methods thereof as aforesaid)
of such Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration
statement which covers the securities which the Company
proposes to register, provided that if, at any time after
written notice of its intention to register any securities and
prior to the effective date of the registration statement
filed in connection with such registration, the Company shall
determine for any reason either not to register or to delay
registration of such securities, the Company may, at its
election, give written notice of such determination to each
holder and, thereupon, (i) in the case of a determination not
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to register, shall be relieved of this obligation to register
any Registrable Securities in connection with such
registration (but not from its obligation to pay the Company's
Registration Expenses in connection therewith), and (ii) in
the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for
the same period as the delay in registering such other
securities. No registration effected under this paragraph
shall relieve the Company of its obligation to effect any
registration otherwise required pursuant to this Agreement.
The Company will pay all Company's Registration Expenses in
connection with each registration of Registrable Securities
requested pursuant to this Section 11(h), and the holder of
Registrable Securities electing to sell their Registrable
Securities under this Section 11(h) shall pay all Selling
Shareholder's Expenses. The right provided the holders of the
Registrable Securities pursuant to this Section 11(h) shall be
exercisable at their sole discretion. If the managing
underwriter of any underwritten offering by the Company of its
securities advises the holders of the Registrable Securities
requesting such registration by letter of its belief that the
number of securities requested to be included in such
registration exceeds the number which can be sold in such
offering, then the Company will include in such registration,
to the extent of the number which the Company is so advised
can be sold in such offering, (i) first securities proposed by
the Company to be sold for its own account, and (ii) second
Registrable Securities and securities of other selling
securityholders requested to be included in such registration
pro rata on the basis of the number of shares of such
securities so proposed to be sold and so requested to be
included; provided, however, the holders of Registrable
Securities shall have priority to all shares sought to be
included by officers and directors of the Company as well as
holders of ten percent (10%) or more of the Company's Common
Shares. Notwithstanding the foregoing, the incidental
registration rights provided under this paragraph shall not
apply to any underwritten offering to be registered
exclusively outside of the United States, nor shall they apply
in the event that the Company has filed the registration
statement contemplated in Section 11(b).
12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS
The Company agrees that any legal suit, action or proceeding
brought by any party to enforce any rights under or with respect to this
agreement or the Indentures or the Convertible Notes or Warrants may be
instituted in any state or federal court in New York City and waives to the
fullest extent permitted by law any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and irrevocably
submits to the non-exclusive jurisdiction of any such court in any such suit,
action or proceeding. The Company hereby irrevocably designates and appoints
Prentice Hall Corporate Service ("PH") as the Company's authorized agents to
receive and forward on its behalf service of any and all process which may be
served in any such suit, action or proceeding in any such court and agrees that
service of process upon PH (or any successor) at its office at 00 Xxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other address in the Borough of
Manhattan, New York City, as the Company may designate by written notice to the
trustee under the Indentures) and written notice of such service to the Company
marked or delivered to PH at its address set forth herein shall be deemed in
every respect effective service of process upon the Company in any such suit,
action or proceeding and shall be taken and held to be valid personal service
upon the Company. Nothing in this Section 12 shall affect the right of any party
hereto to serve process in any manner permitted by law or limit the right of any
party hereto to bring proceedings against the Company in the courts of any
jurisdiction or jurisdictions. The Company further agrees to take any and all
action, including the execution and filing of any and all such documents and
instruments as may be necessary to continue such designation and appointment of
PH in full force and effect so long as this agreement or any of the Convertible
Notes or Warrants shall be outstanding. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, executor or otherwise) with respect to itself or
its property, the Company hereby irrevocably waives such immunity in respect of
its obligations under this agreement and the Convertible Notes and Warrants, to
the extent permitted by law. The Company covenants to forthwith make all
appropriate arrangements to appoint PH for the purposes of the foregoing. If the
Company and PH are unable to agree on terms for the appointment of PH in such
capacity within thirty (30) days, the Company shall forthwith make arrangements
for the appointment of another agent reasonably acceptable to the Investor for
such purposes.
-17-
13. CONVERSION OF CURRENCY
(a) The Company shall indemnify the Investor against, and the
Investor shall have an additional legal claim for, any loss or
damage which, consequent upon any judgment being obtained or
enforced in respect of the non-payment by the Company of any
amount due under or pursuant to this agreement or the
Indentures arises from any variation in rates of exchange
between United States dollars and the currency in which
judgment is obtained or enforced between the date such amount
became due (or the date of the said judgment being obtained as
the case may be) and the date of actual payment of such
amount. The indemnity shall apply irrespective of any
indulgence granted to the Company from time to time and shall
continue in full force and effect notwithstanding any payment
by or on behalf of the Company and any amount due from the
Company under this Section 13 will be due as a separate
payment and shall not be affected by any judgment being
obtained for any other sums due under or in respect of this
agreement.
(b) The term "rate(s) of exchange" shall mean the rate, quoted at
noon for transactions in excess of $1,000,000, at which the
Investor is able or would have been able on the relevant date
to purchase at Xxxxxx Guaranty Trust Company of New York at
its main branch in New York City, United States dollars with
the judgment currency other than United States dollars
referred to in subsection (a) above and includes any premiums
and costs of exchange payable.
14. GOVERNING LAW
This agreement (together with the Schedules and attachments
hereto which are incorporated herein by reference) is governed by the laws of
the Province of Ontario and the laws of Canada applicable therein. By your
acceptance of this subscription agreement, you irrevocably attorn to the
jurisdiction of the courts of the Province of Ontario.
If the foregoing is in accordance with your understanding,
please sign and return to the undersigned the enclosed copy of this subscription
agreement.
Yours very truly,
CRYSTALLEX INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx
Executive Vice President
TO: CRYSTALLEX INTERNATIONAL CORPORATION
We accept the foregoing and agree to be bound by the terms set forth
herein.
DATED this 27th day of August, 2003.
Purchase price per U.S. $1,000 principal
amount of Convertible Notes U.S. $ 1,000
----------------
Total purchase price: U.S. $ 3,000,000
----------------
-18-
Name and Address of Investor: GCA Strategic Investment Fund Limited
-------------------------------------
(full legal name of Investor)
c/o Prime Management Limited
Mechanics Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00
Xxxxxxx
-------------------------------------
(address)
000-000-0000
-------------------------------------
(facsimile number)
Bermuda
-------------------------------------
Jurisdiction of Incorporation/Formation
By: /s/Xxxxx X. Xxxxxx
-----------------------------------
(signature/position)
Xxxxx X. Xxxxxx, Director
