EXHIBIT 99.4
PURCHASE AGREEMENT
PURCHASE AGREEMENT ("AGREEMENT") dated as of September 23, 2002 between
CRYSTALLEX INTERNATIONAL Corporation, a corporation continued under the Canada
Business Corporations Act (the "COMPANY"), and the purchasers listed on Schedule
"A" hereto (collectively, the "Purchasers"). Undefined terms contained herein
shall have the meaning ascribed to them in the Debentures.
W I T N E S S E T H:
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WHEREAS, the Company desires to issue and sell to the Purchaser, and
the Purchaser wishes to purchase from the Company, 5 1/2% Convertible Debentures
due September __, 2005 (the "DEBENTURES"), in the aggregate principal amount of
US$__________ at an aggregate purchase price of US$__________ (the "PURCHASE
PRICE"), having the rights and privileges set forth in the Debentures in the
form of EXHIBIT 1A attached hereto, on the terms and conditions set forth
herein;
WHEREAS, pursuant to the terms of the Debentures, the Debentures will
be convertible into common shares ("DEBENTURE SHARES"), no par, of the Company
("COMMON SHARES");
WHEREAS, to induce the Purchasers to purchase the Debentures, the
Company has agreed to issue to the Purchasers warrants (the "WARRANTS")
exercisable for ____ COMMON SHARES ("WARRANT SHARES") in the form attached as
EXHIBIT 1B; and
WHEREAS, the Purchaser will have registration rights with respect to
such Common Shares and the Warrant Shares pursuant to the terms of that certain
Registration Rights Agreement to be entered into between the Company and the
Purchaser substantially in the form of EXHIBIT 4.2(E) hereto ("REGISTRATION
RIGHTS AGREEMENT");
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF DEBENTURES AND WARRANTS, ETC.
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Section 1.1 Issuance of Debentures and Warrants.
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(a) Issuance. Upon the following terms and conditions, the
Company shall issue and sell to the Purchasers and the Purchasers shall purchase
from the Company, US$__________ principal amount of Debentures and the Warrants
to purchase [______] Common Shares for the Purchase Price in the respective
amounts set forth on Schedule A hereto.
(b) The Closing.
(i) The closing of the purchase and sale of the
Debentures and the Warrants (the "CLOSING") shall take place at
the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
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or at such other place as is mutually agreeable, at 10:00 am.,
local time on: (x) the date on which the last to be fulfilled
or waived of the conditions set forth in Article 4 hereof and
applicable to the Closing shall be fulfilled or waived in
accordance herewith, or (y) such other time and place and/or on
such other date as the Purchasers and the Company may agree.
The date on which the Closing occurs is referred to herein as
the "CLOSING DATE".
(ii) On the Closing Date, the Company shall deliver to
each Purchaser (x) one or more Debentures (with the number of
and outstanding principal amount of each debenture to be as
reasonably requested by such Purchaser not less than two
business days prior to the Closing Date) representing the
aggregate Debentures purchased hereunder by such Purchaser at
the Closing registered in the name of such Purchaser or its
nominee and (y) the Warrants registered in the name of such
Purchaser or its nominee in such denominations as reasonably
requested by such Purchaser, and such Purchaser shall deliver
to the Company its portion of the Purchase Price for the
Debentures and Warrants by wire transfer in immediately
available funds to an account designated in writing by the
Company. In addition, each party shall deliver all documents,
instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
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Section 2.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the each Purchaser
as of the date hereof and on the Closing Date:
(a) Organization and Qualification; Material Adverse Effect.
The Company is a corporation duly continued and subsisting under the Canada
Business Corporation Act and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company does
not have any direct or indirect subsidiaries (defined as any entity of which the
Company owns, directly or indirectly, 50% or more of the equity or voting power)
other than the subsidiaries listed in its SEC Documents or on SCHEDULE 2.1(A)
attached hereto. Except where specifically indicated to the contrary, all
references in this Agreement to subsidiaries shall be deemed to refer to all
direct and indirect subsidiaries of the Company. Except where specifically
indicated to the contrary, all references in this Article 2 to the Company shall
be deemed to refer to the Company and its consolidated subsidiaries, taken
together as a whole. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary other than those in which the failure so
to qualify would not have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, operations, properties or
financial condition of the Company, and any material adverse effect on the
transactions contemplated under this Agreement, the Debentures, the Warrants,
the Registration Rights Agreement or any other agreement or document
contemplated hereby or thereby.
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(b) Authorization; Enforcement. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Debentures, the Warrants and the Registration Rights Agreement
(the "TRANSACTION DOCUMENTS") and to issue the Debentures and the Warrants in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the issuance of the
Common Shares and the Warrant Shares, have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors (or any committee or subcommittee thereof) or shareholders is
required, (iii) the Transaction Documents have been duly executed and delivered
by the Company and (iv) the Transaction Documents constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of creditors' rights and
remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company
consists of an unlimited number of COMMON SHARES, an unlimited number of Class A
preference shares, par value Cdn $50 and Class B preference shares, par value
Cdn $250; as of September ____, 2002, there were __________ Common Shares and no
shares of preferred stock issued and outstanding; and, except as disclosed in
its SEC Documents or as set forth on SCHEDULE 2.1(C), COMMON SHARES and no
shares of preferred stock were reserved for issuance to persons other than the
Purchasers. All of the outstanding shares of the Company's COMMON SHARES and
preferred stock have been validly issued and are fully paid and nonassessable.
No shares of capital stock are entitled to preemptive rights and, except as
disclosed in its SEC Documents or as set forth on SCHEDULE 2.1(C), there are no
outstanding options and outstanding warrants for shares of COMMON SHARES
(excluding the Warrants). Except as disclosed in its SEC Documents or as set
forth on SCHEDULE 2.1(C)(I), there are no other scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights exchangeable for or convertible into, any shares of capital stock of the
Company, or contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of capital stock of
the Company or options, warrants, scrip, rights to subscribe to, or commitments
to purchase or acquire, any shares, or securities or rights convertible or
exchangeable into shares, of capital stock of the Company. Attached hereto as
EXHIBIT 2.1(C)(I) is a true and correct copy of the Company's Certificate of
Continuance (the "CHARTER"), as in effect on the date hereof, and attached
hereto as EXHIBIT 2.1(C)(II) is a true and correct copy of the Company's
By-Laws, as in effect on the date hereof (the "BY-LAWS").
(d) Issuance of Common Shares. The Debenture Shares and the
Warrant Shares are duly authorized and reserved for issuance and, upon such
conversion in accordance with the Debentures and/or exercise in accordance with
the Warrants such Debenture Shares and Warrant Shares, as the case may be, will
be validly issued, fully paid and non-assessable, free and clear of any and all
liens, claims and encumbrances, and (subject to the registration of such shares
in accordance with the applicable provisions of the Securities Act of 1933, as
amended (the "SECURITIES ACT" or the "ACT") and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")) entitled to be traded on the American
Stock Exchange (or the New York Stock Exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market, collectively with
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the American Stock Exchange, the "APPROVED MARKETS"), and the holders of such
Debenture Shares and Warrant Shares shall be entitled to all rights and
preferences accorded to a holder of COMMON SHARES. The outstanding Common Shares
are currently listed on the American Stock Exchange and the Toronto Stock
Exchange ("TSX").
(e) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby and the issuance of the
Debentures and the Warrants (collectively, the "SECURITIES") do not and will not
(i) result in a violation of the Company's Charter or By-Laws or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its subsidiaries is
a party (collectively, "COMPANY AGREEMENTS"), including, without limitation, any
provision of the Company's loan agreement with Standard Bank London Limited (the
"Standard Bank Agreement") or (iii) result in a violation of any US or Canadian
federal, state, provincial, local or foreign law, rule, regulation, order,
judgment or decree (including US and Canadian federal, provincial and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected, except (other than in the case of clause (i)
above) where such violation would not reasonably be expected to have a Material
Adverse Effect. The business of the Company and its direct and indirect
subsidiaries is being conducted in compliance with (i) its Charter and By-Laws,
(ii) all Company Agreements and (iii) all applicable laws, ordinances or
regulations of any governmental entity, except (other than in the case of clause
(i) above) where such violation would not reasonably be expected to have a
Material Adverse Effect. Except for filings, consents and approvals required
under applicable provincial, state and federal securities laws or the rules and
regulations of the applicable Approved Markets and the TSX and covered by the
Registration Rights Agreement, the Company is not required under US or Canadian
federal, provincial, state, local or foreign law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Registration Rights Agreement,
the Debentures and the Warrants or to issue and sell the Debentures, Warrants or
the Debenture Shares and Warrants Shares issuable upon conversion or exercise
thereof except for the registration provisions provided in the Registration
Rights Agreement.
(f) SEC Documents; No Non-Public Information. The COMMON SHARES
of the Company are registered pursuant to Section 12(b) of the Exchange Act and
the Company and its subsidiaries have filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission ("SEC") pursuant to the reporting requirements of the
Exchange Act, including all solicitation statements and registration statements,
and any amendments thereto required to have been filed (all of the foregoing
including filings incorporated by reference therein being referred to herein as
the "SEC DOCUMENTS"). The Company has not directly or indirectly provided, and
will not directly or indirectly provide, to the Purchaser any material
non-public information or any information which, according to applicable law,
rule or regulation, should have been disclosed publicly by the Company but which
has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the
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rules and regulations of the SEC promulgated thereunder and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
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. The SEC Documents contain all material information concerning
the Company and its subsidiaries, and no event or circumstance has occurred
prior to the date hereof or will have occurred on the Closing Date which would
require the Company to disclose such event or circumstance in order to make the
statements in the SEC Documents not misleading but which has not, or will have
not, been so disclosed.
(g) Financial Statements. The financial statements of the
Company and its subsidiaries included in the SEC Documents and filings made
under applicable federal and provincial Canadian securities laws ("CANADIAN
SECURITIES LAWS") comply as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC and Canadian securities regulators, respectively or other applicable
rules and regulations with respect thereto. Such financial statements have been
prepared in accordance with Canadian generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes, may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company and its subsidiaries as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). The audited financial statements of each of the
Company and its subsidiaries for the fiscal year ending December 31, 2001 have
been prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be otherwise indicated in such financial statements or the notes thereto)
and fairly present in all material respects the financial position of the
Company and its subsidiaries, as the case may be, as of the dates thereof and
the results of operations and cash flows for the periods then ended. The
auditors who audited such financial statements were independent of the Company,
as such term is defined and interpreted under Rule 2-01 of Regulation S-X.
(h) Principal Exchange. The principal market on which the
Common Shares are traded currently traded is the American Stock Exchange.
(i) No Material Adverse Change. Since December 31, 2001, no
Material Adverse Effect has occurred or exists, and no event or circumstance has
occurred that with notice or the passage of time or both is reasonably likely to
result in a Material Adverse Effect with respect to the Company.
(j) No Undisclosed Liabilities. The Company and its
subsidiaries have no liabilities or obligations not disclosed in the
Pre-Agreement SEC Documents (as defined in Section 2.1(q) below), other than
those liabilities incurred in the ordinary course of the Company's or its
subsidiaries' respective businesses since December 31, 2001, which liabilities,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company.
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(k) No Undisclosed Events or Circumstances. To the best
knowledge of the Company, no material event or circumstance has occurred or
exists with respect to the Company or its direct or indirect subsidiaries or
their respective businesses, properties, prospects, operations or financial
condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.
(l) No General Solicitation. Neither the Company, nor any of
its affiliates, or, to its knowledge, any person acting on its or their behalf
has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the Securities Act) in connection with the
offer or sale of the Debentures, the Warrants, Debenture Shares or the Warrant
Shares; provided that the Company is making no representation as to whether the
existence of any securities, the resale of which the Company has registered
under Forms F-2 or F-3 under the Securities Act, would be deemed to be a general
solicitation in connection with the offer and sale of the Debentures, the
Warrants, the Common Shares or Warrant Shares.
(m) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor to its knowledge any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Debentures, the Warrants, the Debenture Shares or Warrant
Shares under the Securities Act or the issuance of a prospectus under Canadian
Securities Laws; provided that the Company is making no representation as to
whether the offer and sale of the Debentures, the Warrants, the Common Shares or
Warrant Shares would be integrated with any securities, the resale of which the
Company has registered under Forms F-2 or F-3 under the Securities Act.
The issuance of the Debentures, Warrants, Debenture Shares or Warrant
Shares to the Purchaser will not be integrated with any other issuance of the
Company's securities (past, current or future) which requires stockholder
approval under the rules of the American Stock Exchange or TSX.
(n) Form F-3. The Company is eligible to file the Registration
Statement (as defined in the Registration Rights Agreement) on Form F-3 under
the Securities Act and rules promulgated thereunder, and Form F-3 is permitted
to be used for the resale of the Debenture Shares and Warrant Shares hereby
under the Securities Act and rules promulgated thereunder. The Company hereby
represents that it is a "foreign private issuer" within the meaning of Rule 3b-4
under the Exchange Act ("Foreign Private Issuer").
(o) Intellectual Property. The Company and/or its wholly-owned
subsidiaries owns or has licenses to use certain patents, copyrights and
trademarks ("INTELLECTUAL PROPERTY") associated with its business. The Company
and its subsidiaries have all intellectual property rights which are needed to
conduct the business of the Company and its subsidiaries as it is now being
conducted or as proposed to be conducted as disclosed in the SEC Documents. The
Company and its subsidiaries have no reason to believe that the material
intellectual property rights which it owns are invalid or unenforceable or that
the use of such intellectual property by the Company or its subsidiaries
infringes upon or conflicts with any right of any third party, and neither the
Company nor any of its subsidiaries has received notice of any such infringement
or
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conflict, which individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect. The Company and its subsidiaries have no
knowledge of any infringement of its intellectual property by any third party.
(p) Poison Pill Provisions; Anti-Takeover Protections. Provided
that the 20% Cap is not exceeded, none of the acquisition of Debentures,
Warrants, Debenture Shares or Warrant Shares nor the deemed beneficial ownership
of Common Shares prior to, or the acquisition of such shares pursuant to, the
conversion of Debentures or the exercise of the Warrants will in any event under
any circumstance trigger the poison pill provisions of any other or subsequently
adopted plan or agreement, or a substantially similar occurrence under any
successor or similar plan.
There are no anti-takeover provisions contained in the
Company's Certificate of Continuance or otherwise which will or could be
triggered as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Debenture Shares
and Warrant Shares and the Purchasers' ownership of the Debenture Shares and
Warrant Shares.
(q) No Litigation. Except as set forth in the reports or
documents filed with or submitted to the SEC at least 5 Trading Days prior to
the Closing Date by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act (the "PRE-AGREEMENT SEC DOCUMENTS"), no litigation or claim
(including those for unpaid taxes) against the Company or any of its
subsidiaries is pending or, to the Company's knowledge, threatened, and no other
event has occurred, which if determined adversely could reasonably be expected
to have a Material Adverse Effect on the Company or could reasonably be expected
to materially and adversely affect the transactions contemplated hereby. There
is no legal proceeding described in the Pre-Agreement SEC Documents that could
reasonably be expected to have a Material Adverse Effect on the Company.
(r) [INTENTIONALLY OMITTED]
(s) Other Purchasers. Other than the Securities and except as
set forth on SCHEDULE 2.1(S)(I), there are no outstanding securities issued by
the Company that are entitled to registration rights under the Securities Act.
Other than the Securities and except as disclosed in its SEC Documents or as set
forth on SCHEDULE 2.1(S)(II), there are no outstanding securities issued by the
Company that are directly or indirectly convertible into, exercisable into, or
exchangeable for, shares of COMMON STOCK, or that have anti-dilution or similar
rights that would be affected by the issuance of the Debentures, the Common
Shares, the Warrants or the Warrant Shares.
(t) Certain Transactions. Except as disclosed in the
Pre-Agreement SEC Documents or on SCHEDULE 2.1(T), , none of the officers,
directors, or key employees of the Company is presently a party to any
transaction with the Company or any of its subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or
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other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(u) Permits; Compliance. The Company and each of its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), except where failure to possess such Company Permits would not have a
Material Adverse Effect on the Company and there is no action pending or, to the
knowledge of the Company, threatened regarding suspension or cancellation of any
of the Company Permits except for such Company Permits the failure of which to
possess, or the cancellation or suspension of which, would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. To the best of
its knowledge, neither the Company nor any of its subsidiaries is in material
conflict with, or in default or violation of, any of the Company Permits where
such default or violation could reasonably be expected to have a Material
Adverse Effect. Since December 31, 2001, neither the Company nor any of its
subsidiaries has received any notification with respect to possible material
conflicts, material defaults or material violations of applicable laws.
(v) Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its direct and
indirect subsidiaries are engaged. Neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(w) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's management, to provide reasonable assurance 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 generally accepted
accounting principles 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 for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) Environmental Matters. Except as otherwise disclosed in the
Pre-Agreement SEC Documents, the Company and each of its subsidiaries is in
compliance in all respects with all applicable foreign, local, state, provincial
and US and Canadian federal environmental laws except where any such
non-compliance would not reasonably be expected to have a Material Adverse
Effect on the Company and no event or condition has occurred that may interfere
with the compliance by the Company or any of its subsidiaries with any
environmental law or that may give rise to any liability under any environmental
law that, individually or in the aggregate, would have a Material Adverse Effect
on the Company.
(y) Solvency.
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(i) Based on the financial condition of the Company as of
the Closing Date, the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on
or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they
mature.
(ii) Based on the financial condition of the Company as
of the Closing Date, the Company's assets do not constitute
unreasonably small capital to carry out its business for the
year 2002 as now conducted and as proposed to be conducted
including the Company's year 2002 capital needs taking into
account the particular capital requirements of the business
conducted by the Company, and projected capital requirements
and capital availability thereof.
(iii) The Company does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). Based on the financial condition of the
Company as of the Closing Date, the current cash flow of the
Company, together with the proceeds the Company would receive,
were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its debt when such
amounts are required to be paid.
(iv) Neither the Company nor any of its subsidiaries is
subject to any bankruptcy, insolvency or similar proceeding.
(z) Taxes. All foreign, US and Canadian federal, provincial,
state, city and other tax returns, reports and declarations required to be filed
or extended by or on behalf of the Company and each of its subsidiaries have
been filed or extended and all such filed returns are complete and accurate and
disclose all taxes (whether based upon income, operations, purchases, sales,
payroll, licenses, compensation, business, capital, properties or assets or
otherwise) required to be paid in the periods covered thereby. All taxes
required to be withheld by or on behalf of the Company or any such subsidiary in
connection with amounts paid or owing to any employees, independent contractor,
creditor or other party have been withheld, and such withheld taxes have either
been duly and timely paid to the proper governmental authorities or set aside in
accounts for such purposes.
(aa) Title to Properties; Encumbrances. Other than as disclosed
in the SEC Documents, each of the Company and its subsidiaries is the absolute
legal and beneficial owner of all of the material property and assets thereof as
described in the SEC Documents, free of all mortgages, liens, charges, pledges,
security interests, encumbrances, claims or demands whatsoever, other than those
described in the SEC Documents and those given in the ordinary course of
business to support the Company's project finance, hedge facilities and lateral
credit facilities, and no other property rights are necessary for the conduct of
the business of the Company or any subsidiary, as currently conducted or
contemplated to be conducted, none of the Company or any subsidiary knows of any
claim or the basis for a claim that could reasonably be expected to materially
adversely affect their respective rights to use, transfer or otherwise exploit
such property rights and, except as disclosed in the SEC Documents, none of the
Company or any subsidiary has any
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responsibility or obligation to pay any material commission, royalty, license
fee or similar payment to any person with respect to the property rights
thereof.
(bb) No Reliance on Purchaser. The Company acknowledges and
agrees that each Purchaser is acting solely in the capacity of an arm's length
purchaser with respect to this Agreement and the Registration Rights Agreement
and the performance under the Debentures and the Warrants and the transactions
contemplated hereby and thereby. The Company further acknowledges that such
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the Registration
Rights Agreement and the performance under the Debentures and the Warrants and
the transactions contemplated hereby and thereby. The Company further represents
to each Purchaser that the Company's decision to enter into this Agreement and
the Registration Rights Agreement and the performance under the Debentures and
the Warrants has been based solely on the independent evaluation by the Company
and its representatives.
(cc) Foreign Corrupt Practices Act. Neither the Company, nor
any director, officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of acting for, or on behalf of, the
Company, directly or indirectly used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; directly or indirectly made any direct or indirect unlawful
payment to any foreign or domestic government or party official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or any similar treaties of
the United States; or directly or indirectly made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government or party official or employee.
(dd) MFN and Variable Rate Transactions. Except as set forth on
SCHEDULE 2.1(DD), the Company has not entered into any MFN Transaction or
Variable Rate Transaction (other than transactions entered into with the
Purchasers), pursuant to which: (1) securities or potential obligations to issue
securities are still outstanding or (2) the issuance conversion, or exercise, as
the case may be, of the Debentures or the Warrants trigger, or may in the future
trigger, an adjustment.
The term "MFN TRANSACTION" shall mean a transaction in which
the Company issues or sells any securities in a capital raising transaction or
series of related transactions (the "MFN Offering") which grants to a purchaser
(the "MFN Purchaser") the right to receive additional shares (including without
limitation as a result of a lower conversion, exchange or exercise price but
excluding customary antidilution protections) based upon subsequent transactions
of the Company on terms more favorable than those granted to such MFN Purchaser
in such MFN Offering. As used herein, term "VARIABLE RATE TRANSACTION" shall
mean a transaction in which the Company issues or sells (i) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional Common Shares either (x) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Shares at any
time after the initial issuance of such debt or equity securities, or (y) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or
-11-
indirectly related to the business of the Company or the market for the Common
Shares (but excluding standard stock split anti-dilution provisions), or
(ii) any securities of the Company pursuant to an "equity line" structure which
provides for the sale, from time to time, of securities of the Company which are
registered for resale under the Securities Act.
(ee) Canadian Resale Rules. The Company is a "qualifying
issuer" as defined in Multilateral Instrument 45-102 Resale of Securities (the
"Canadian Resale Rule").
(ff) Short Sales. The Company acknowledges that a Purchaser
may, subject to applicable law, effect "short sales" (as defined by Rule 3b-3
under the Exchange Act) of Common Shares. The Company acknowledges that a
decline in the price of the Common Shares following any short sales by a
Purchaser shall not necessarily be considered evidence of an intent to
manipulate the price of the Common Shares.
(gg) Dilutive Effect; Obligations Absolute. Subject to the 20%
Cap, the Company understands and acknowledges that the number of Common Share
issuable upon conversion of Debentures and the Warrants purchased pursuant to
this Agreement will increase in certain circumstances. The Company further
acknowledges that, subject to such limitations as are expressly set forth in the
Transaction Documents, its obligation to issue Debenture Shares upon conversion
of Debentures and exercise of the Warrants pursuant to this Agreement is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other shareholders of the Company and are
not subject to any right of set-off, counterclaim, delay or reduction.
(hh) Cash on Hand; Cash Flow. As of June 30, 2002 and as of the
date hereof, the Company had and has available cash on hand of at least US$5
million. As determined in accordance with Canadian generally accepted accounting
principles and applicable SEC regulations, the operations and capital
expenditures of the Company for three months preceding the date hereof have been
conducted on a cash-flow neutral basis.
(ii) Compliance with Bank Loan Agreement. As of June 30, 2002
the Company is and shall be, in compliance with all provisions, including
without limitation, financial covenants, contained in the Standard Bank
Agreement, and any other agreement or arrangement with Standard Bank London
Limited.
Section 2.2 Representations and Warranties of the Purchasers. Each
Purchaser hereby makes the following representations and warranties to the
Company as of the date hereof and on the Closing Date:
(a) Organization and Qualification. The Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification necessary except where the failure to be so
qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect on the Purchaser.
(b) Authorization; Enforcement. (i) The Purchaser has the
requisite power and authority to enter into and perform this Agreement and the
Registration Rights Agreement to
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purchase the Debentures and to acquire the Warrants being sold to it hereunder
and to acquire the Debenture Shares and the Warrant Shares, (ii) the execution
and delivery of this Agreement and the Registration Rights Agreement by the
Purchaser and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary limited liability company
action, and (iii) this Agreement and the Registration Rights Agreement
constitute valid and binding obligations of the Purchaser enforceable against
the Purchaser in accordance with their terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(c) No Conflicts. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement and the performance under
the Debentures and Warrants and the consummation by the Purchaser of the
transactions contemplated hereby and thereby do not and will not (i) result in a
violation of the Purchaser's organizational documents, (ii) conflict with any
agreement, indenture or instrument to which the Purchaser is a party, or (iii)
result in a material violation of any law, rule, or regulation, or any order,
judgment or decree of any court or governmental agency applicable to the
Purchaser. The Purchaser is not required to obtain any consent or authorization
of any governmental agency in order for it to perform its obligations under this
Agreement and the Registration Rights Agreement.
(d) Purchase Representations.
(i) Access to Other Information. The Purchaser
acknowledges that the Company has made available to the
Purchaser the opportunity to examine such additional documents
from the Company and to ask questions of, and receive full
answers from, the Company concerning, among other things, the
Company, its financial condition, its management, its prior
activities and any other information which the Purchaser
considers relevant or appropriate in connection with entering
into this Agreement.
(ii) Risks of Purchase. The Purchaser acknowledges that
the Securities and the Debenture Shares and Warrant Shares
issuable upon conversion and/or exercise of the Securities have
not been registered under the Securities Act. The Purchaser is
familiar with the provisions of Rule 144 and understands that
in the event all of the applicable requirements of Rule 144 are
not satisfied, registration under the Securities Act or some
other exemption from the registration requirements of the
Securities Act will be required in order to dispose of the
Securities and the Debenture Shares and Warrant Shares issuable
upon conversion and/or exercise of the rights granted in the
Securities, and that the Purchaser may be required to hold the
Securities and the Debenture Shares and Warrant Shares issuable
upon conversion and/or exercise of the Securities received
under this Agreement for a significant period of time prior to
reselling them, subject to the Company successfully registering
the Debenture Shares and Warrant Shares pursuant to the
Registration Rights Agreement. The Purchaser is capable of
assessing the risks of an investment in the Securities and is
fully aware of the economic risks thereof.
-13-
(iii) Purchase Representation. The Purchaser is
purchasing the Debentures and Warrants and may purchase the
Debenture Shares and Warrants Shares in each case, for its own
account and not with a view to distribution in violation of any
securities laws. The Purchaser has no present intention to sell
the Debentures, Warrants, Debenture Shares or Warrant Shares in
violation of US or Canadian federal, provincial or state
securities laws and the Purchaser has no present arrangement
(whether or not legally binding) to sell the Debentures,
Warrants, Debenture Shares or Warrant Shares to or through any
person or entity; provided, however, that by making the
representations herein, the Purchaser does not agree to hold
the Debentures, Warrants, Debenture Shares or Warrant Shares
for any minimum or other specific term and reserves the right
to dispose of the Debentures, Warrants, Debenture Shares or
Warrant Shares at any time in accordance with US or Canadian
federal, provincial and state securities laws applicable to
such disposition.
(iv) Restriction Upon Conversion of the Debentures and
Exercise of Warrant. It understands that it cannot convert any
Debenture or exercise any Warrant unless such conversion or
exercise, as the case may be, has been registered under the
Securities Act and applicable state securities laws or is
exempt from registration therefrom.
(v) Legend On the Securities. The Purchaser acknowledges
that the certificates representing the Debentures, Warrants,
Common Shares, and Warrant Shares will contain a legend
reflecting their restriction upon conversion, exercise, or
transfer under the Securities Act, state securities law, and
Canadian securities laws, in the form as is set forth in
Article 5 hereof.
(vi) Restricted Securities. (A) It acknowledges and
understands that the terms of issuance have not been reviewed
by the SEC or by any state securities authorities and that the
Securities have been issued in reliance on the certain
exemptions for non-public offerings under the Securities Act,
which exemptions depend upon, among other things, the
representations made and information furnished by the
Purchaser.
B. It further acknowledges that:
(1) no securities commission or similar regulatory
authority in Canada has reviewed or passed on the merits of the
Securities;
(2) there is no government or other insurance in Canada
covering the Securities;
(3) there are risks associated with the purchase of the
Securities;
(4) there are restrictions on the Purchaser's ability to
resell the Securities into Canada and it is the responsibility
of the Purchaser to find out what those restrictions are and to
comply with them before selling the Securities, and the
Purchaser shall not sell the Securities into Canada for a
period of 4 months
-14-
following the Closing Date, unless such sale is exempt from the
prospectus and registration requirements of applicable Canadian
securities laws;
(5) the Company is relying on an exemption from the
legislative requirements in Canada to provide the Purchaser
with a prospectus and to sell securities through a person or
company registered to sell securities under the Securities Act
(British Columbia) and, as a consequence of acquiring the
Securities pursuant to this exemption, certain protections,
rights and remedies provided by the Securities Act (British
Columbia), including statutory rights of rescission or damages,
may not be available to the Purchaser; and
(6) The Purchaser will complete a TSX Private Placement
Questionnaire required by the TSX to be so completed on the
form required therefor and provide such completed Questionnaire
to the Company.
(vii) Non-resident of Canada. The Purchaser hereby
certifies that it is not a resident of Canada.
(viii) Ability to Bear Economic Risk. It is an
"accredited" Purchaser as defined in Rule 501 of Regulation D,
as amended, under the Securities Act, and that it (i) is able
to bear the economic risk of its investment in the Debentures,
(ii) is able to hold the Debentures for an indefinite period of
time, (iii) can afford a complete loss of its investment in the
Debentures and (iv) has adequate means of providing for its
current needs. It is an "institutional investor" for purposes
of Section 359-e of the New York General Business Law, Chapter
20, Article 20, Article 23-A.
(ix) No Public Solicitation. At no time was the Purchaser
presented with or solicited by any general mailing, leaflet,
public promotional meeting, newspaper or magazine article,
radio or television advertisement, or any other form of general
advertising or general solicitation in connection with the
issuance. Prior to its consideration of the transactions
contemplated hereby, the Purchaser has a pre-existing personal
or business relationship with the Company.
(x) Restriction Upon the Conversion of the Debentures and
Exercise of Warrant. It understands that it cannot convert any
Debenture or exercise any Warrant unless such conversion or
exercise, as the case may be, has been registered under the
Securities Act and applicable state securities laws or is
exempt from registration therefrom.
(xi) Restrictions Upon Resale. The Purchaser acknowledges
that the certificates representing the Debentures, Warrants,
Common Shares, and Warrant Shares will contain a legend
reflecting their restriction upon conversion, exercise, or
transfer under the Securities Act, state securities laws, and
Canadian securities laws, in therefrom as s set forth in
Article 5 hereof.
(xii) Reliance by the Company. The Purchaser understands
that the Debentures and Warrants are being or will be, as the
case may be, offered and
-15-
sold and that the Debenture Shares or Warrant Shares, as the
case may be, will be issued, in reliance on a transactional
exemptions from the registration requirements of federal and
state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such
Purchaser set forth herein in order to determine the
applicability of such exemptions and the suitability of the
Purchaser to acquire the Debentures and Warrants.
(e) Brokers. The Purchaser has taken no written action which
would give rise to any claim by any person for brokerage commissions, finder's
fees or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
ARTICLE 3
COVENANTS
---------
Section 3.1 Registration and Listing; Effective Registration. For so
long as the Securities are outstanding, the Company will cause the Common Shares
issuable upon the exercise or conversion of the Securities to continue at all
times to be registered under Section 12(b) or Section 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such reporting and filing obligations. Until such time as no Securities are
outstanding, the Company shall continue the listing or trading of the Common
Shares on the American Stock Exchange or one of the other Approved Markets and
on the TSX and comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the Approved Market on which the
Common Shares are listed. The Company shall cause the Common Shares to be listed
on the American Stock Exchange no later than the registration of the Common
Shares under the Securities Act, and at all times shall continue such listing(s)
on one of the Approved Markets. As used herein and in the Registration Rights
Agreement, the Debenture and the Warrants, the term "EFFECTIVE REGISTRATION"
shall mean: (i) the Company is in compliance with the Transaction Documents;
(ii) the resale of Registrable Securities (as defined in the Registration Rights
Agreement) is covered by an effective registration statement in the United
States (the "Registration Statement") and such Registration Statement is not
subject to any suspension or stop orders; (iii) the resale of such securities
may be effected pursuant to a current and deliverable prospectus that is not
subject to any blackout or similar circumstance; (iv) the securities are listed
on an Approved Market and are not subject to any trading suspension; (v) no
Interfering Event (as described in the Registration Rights Agreement) then
exists; (vi) none of the Company or any direct or indirect subsidiary of the
Company is subject to any bankruptcy, insolvency or similar proceeding; and
(vii) the Purchaser is not identified as an "underwriter" in the Registration
Statement, except that the Registration Statement stating that the Purchaser may
be deemed to be an underwriter or words of similar effect shall not be deemed to
identify the Purchaser as an underwriter for purposes of this subsection 3.1.
Notwithstanding the foregoing, the fact that the SEC requires that the Purchaser
be named as an underwriter in the Registration Statement shall not be deemed to
be a breach by or default of the Company of this Agreement, the Registration
Rights Agreement, the Debentures, the Warrants, or any other agreement or
document contemplated hereby or thereby. Notwithstanding the foregoing, the
Purchaser has the
-16-
right to redeem at 100% of the principal amount of Debentures or the underlying
Common Shares.
Section 3.2 Debentures on Conversion and Warrants on Exercise.
(a) Upon any conversion by the Purchaser (or then holder of
Debentures) of the Debentures pursuant to the terms thereof, the Company shall
issue and deliver to the Purchaser (or holder) within three (3) Trading Days of
the Conversion Date, a new Debenture for the principal amount of Debentures
which the Purchaser (or holder) has not yet elected to convert but which is
evidenced in part by the Debenture(s) submitted to the Company in connection
with such conversion (with the number of and denomination of such new
Debenture(s) designated by the Purchaser or holder).
(b) Upon any partial exercise by the Purchaser (or then holder
of the Warrants) of the Warrants, the Company shall issue and deliver to the
Purchaser (or holder) within three (3) days of the date on which such Warrants
are exercised, a new Warrant or Warrants representing the number of adjusted
Warrant Shares and/or Common Shares, as the case may be, in accordance with the
terms of such Warrants.
Section 3.3 Replacement Debentures and Warrants.
(a) The Debentures held by the Purchaser (or then holder) may
be exchanged by the Purchaser (or such holder) at any time and from time to time
for Debentures with different denominations of at least $100,000 representing an
equal aggregate number of Debentures or to reflect the actual Conversion Price
pursuant to Section 5(c) of the Debentures, as requested by the Purchaser (or
such holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
(b) The Warrants will be exchangeable at the option of the
Purchaser (or then holder of the Warrants) at the office of the Company for
other Warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of Warrant Shares and/or Common
Shares, as the case may be, as are purchasable under such Warrants. No service
charge will be made for such transfer or exchange.
Section 3.4 [INTENTIONALLY OMITTED]
Section 3.5 Securities Compliance. The Company shall notify the SEC, in
accordance with their requirements, of the transactions contemplated by this
Agreement, the Debentures, the Registration Rights Agreement and the Warrants
shall file a registration statement with the SEC on Form F-3 under the
Securities Act (following receipt of information in writing reasonably requested
from the Purchasers) for the Purchaser's resale of the Shares and the Warrant
Shares, and use its best efforts to have the SEC declare the Registration
Statement effective under the Securities Act, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Debentures hereunder,
the Common Shares issuable upon conversation thereof, the Warrants and the
Warrant Shares issuable upon exercise of the Warrants.
-17-
Section 3.6 Dividends or Distributions; Purchases of Equity Securities.
Except as provided in this Section 3.6 to the contrary, or as contemplates in
its SEC Documents, for so long as any Debentures or Warrants remain outstanding,
the Company agrees that it shall not (a) declare or pay any dividends or make
any distributions to any holder or holders of Common Shares (other than
dividends payable in Common Shares) in their capacity as shareholders, or (b)
purchase or otherwise acquire for value, directly or indirectly, any shares of
Common Shares or other equity security of the Company; provided that the Company
may purchase or acquire Common Shares that are hereafter issued to employees
pursuant to employment, stock repurchase or other similar agreements and further
provided, that distributions may be distributed to Shareholders as set forth in
Note 12 to the Company's June 30 financial statements.
Section 3.7 Notices. The Company agrees to provide all holders of
Debentures and Warrants with copies of all notices and information, including
without limitation notices and proxy statements in connection with any meetings,
that are provided to the holders of Common Shares, contemporaneously with the
delivery of such notices or information to such Common Share holders.
Section 3.8 Use of Proceeds. The Company agrees that the proceeds
received by the Company from the sale of the Debentures and Warrants hereunder
shall be used for working capital purposes.
Section 3.9 [INTENTIONALLY OMITTED]
Section 3.10 Reservation of Stock Issuable Upon Conversion and Upon
Exercise of the Warrants. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Shares, solely for the
purpose of effecting the conversion of the Debentures and the exercise of the
Warrants, such number of its Common Shares as shall from time to time be
sufficient to effect the conversion of all outstanding Debentures and the full
exercise of the Warrants and if at any time the number of authorized but
unissued Common Shares shall not be sufficient to effect the conversion of all
the then outstanding Debentures and the full exercise of the Warrants, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued Common Shares to such
number of shares as shall be sufficient for such purpose, including without
limitation engaging in best efforts to obtain the requisite shareholder
approval. Without in any way limiting the foregoing, the Company agrees to
reserve and at all times keep available solely for purposes of conversion of
Debentures and the exercise of the Warrants such number of authorized but
unissued Common Shares that is at least equal to the lesser of (i) 200% of the
aggregate shares issuable upon conversion of Debentures or (ii) the maximum
amount allowed by the TSX Rules, and 100% of the aggregate shares issuable on
exercise of the Warrants, which number shall be appropriately adjusted for any
stock split, reverse split, stock dividend or reclassification of the Common
Shares. If the Company falls below the reserves specified in the immediately
preceding sentence and does not cure such non-compliance within 30 days of its
start, then the Purchaser will be entitled to the compensatory payments
specified in Section 2(b)(i)(A) of the Registration Rights Agreement. If at any
time the number of authorized but unissued Common Shares is not sufficient to
effect the conversion of all the then outstanding Debentures or the full
exercise of the Warrants, the Purchaser shall be entitled to, inter alia, the
premium price redemption rights provided in the Registration Rights Agreement.
-18-
Section 3.11 Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Article 4 of this Agreement.
Section 3.12 Withholding. All payments made by the Company under or
with respect to the Securities, including under this Agreement or the
Registration Rights Agreement, will be made free and clear of and without
withholding or deduction for or on account of any present or future tax, duty,
levy, impost, assessment or other governmental charge (including penalties,
interest and other liabilities related thereto) imposed or levied by or on
behalf of the Government of Canada or of any province or territory thereof or by
any authority or agency therein or thereof having power to tax (hereinafter
"Canadian Taxes"), unless the Company is required to withhold or deduct Canadian
Taxes by law or by the interpretation or administration thereof. If the Company
is so required to withhold or deduct any amount for or on account of Canadian
Taxes from any payment made under or with respect to the Securities, including
under this Agreement or the Registration Rights Agreement, the Company will pay
to each recipient of such payment ("Recipient") such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each Recipient after such withholding or deduction (and after deducting any
Canadian Taxes on such Additional Amounts) will not be less than the amount the
Recipient would have received if such Canadian Taxes had not been withheld or
deducted.
The Company will also make such withholding or deduction, remit the
full amount deducted or withheld to the relevant authority in accordance with
applicable law, and furnish to the Recipient, within 60 days after the date the
payment of any Canadian Taxes is due pursuant to applicable law, certified
copies of tax receipts or other documents evidencing such payment by the
Company.
The Company will indemnify and hold harmless each Recipient and upon
written request reimburse each such Recipient for the amount of:
(a) any Canadian Taxes so levied or imposed and paid by such
Recipient as a result of payments made under or with respect to the Securities,
including under this Agreement or the Registration Rights Agreement;
(b) any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto; and
(c) any Canadian Taxes imposed with respect to any
reimbursement under clause (a) or (b) in this paragraph, but excluding any such
Canadian Taxes on such Recipient's net income.
Section 3.13 Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Debentures, Warrants, Common Shares and Warrant Shares, as
required under Regulation D and to provide a copy thereof to the Purchaser
promptly after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall have reasonably determined is necessary to
qualify the Debentures, Warrants, Common Shares and Warrant Shares for sale to
the Purchaser at the Closing pursuant to this Agreement under applicable
securities or "blue sky" laws of the states of the United States (or to obtain
an
-19-
exemption from such qualification), and shall provide evidence of any such
action so taken to the Purchaser on or prior to the Closing Date.
Section 3.14 20% Cap. The Purchasers shall, in the aggregate, be
entitled to convert Debentures into, and exercise Warrants for, no more than
[____________] Common Shares (19.99% of the Common Shares issued and outstanding
on the date hereof, which number shall be subject to readjustment for any stock
split, stock dividend or reclassification of the Common Shares) (the "20% CAP").
Once the Purchaser has received its total allowable number of shares of Common
Shares upon conversion of its Debentures and exercise of Warrants, it may
request that the Company redeem its remaining Debentures at a price equal to the
Premium Redemption Price (as defined in the Registration Rights Agreement) plus
accrued but unpaid interest and delay payments in effect at that time. The
restrictions and redemption obligations set forth in this Section 3.14
(including, without limitation, the Purchaser's right to redeem Debentures at
the Premium Redemption Price) shall cease to apply if (a) the Company obtains
written shareholder approval to issue COMMON STOCK in excess of the 20% Cap
pursuant to the American Stock Exchange Listing Standards Section 713 and any
similar cap imposed by the TSX or (b) the Company provides the Purchaser with
irrevocable written notice, based upon the advice of its counsel, that any such
issuance of Common Shares upon conversion of the Debentures or exercise of
Warrants is not subject to the 20% Cap pursuant to the American Stock Exchange
Listing Standards Section 713 and any similar cap imposed by the TSX. In the
event that the number of Debentures Shares issued or issuable upon conversion of
the Debentures exceeds 75% of the 20% Cap, the Company will either (i) redeem
the Debentures at the Premium Redemption Price (the "CAP CALL RIGHT"), subject
to the terms and provisions below, or (ii) use its best efforts promptly to
obtain either the shareholder approval or the irrevocable notice described in
the preceding sentence and to provide the Purchaser with a copy of same without
limiting the foregoing, the Company shall solicit the aforementioned shareholder
approval at the next shareholders meeting (for whatever purpose it may be
called) which, in any event, shall not be later than within 90 days of such
event, in which the Company will solicit the aforementioned shareholder
approval, will solicit proxies in favor of issuing Debenture Shares in excess of
the 20% Cap and will use its best efforts to have all affiliates of the Company
which own or control Common Shares to vote their shares in favor of such
resolution. In the event that the Company elects to exercise the Cap Call Right,
then it must deliver to the Purchasers written notice of such exercise ("Cap
Call Notice") at least 20 Trading Days (as defined in the Debentures) prior to
the redemption date (the "Redemption Date"). The Company's right to redeem the
Debentures pursuant to the Cap Call Right shall be conditioned on there being
Effective Registration at all times between the date of the Cap Call Notice and
the Redemption Date. In the event that the Premium Redemption Price is not paid
to the Purchasers on the Redemption Date, then the Company may not exercise the
Cap Call Right thereafter and, at the option of the Purchasers, the Cap Call
Right exercise may be rescinded.
Section 3.15 Transactions With Affiliates. The Company agrees that any
transaction or arrangement between it or any of its subsidiaries and any
affiliate or employee of the Company shall be effected on an arms' length basis
in accordance with customary commercial practice and, except with respect to
grants of options and stock to service providers, including employees, shall be
approved by a majority of the Company's outside directors.
-20-
Section 3.16 Press Release. Immediately following the Closing, the
Company shall issue a press release in the form set forth in SCHEDULE 3.16
hereto subject to compliance with applicable provisions of the Securities Act.
The Purchaser shall have the opportunity to review such press release prior to
its issuance. No press release shall name the Purchasers except as shall be
required by law. If the Company fails to issue a press release within 1 business
day of the Closing, the Purchasers may issue a press release covering the
Closing and complying with any legal requirement applicable to the Purchaser.
Section 3.17 Form 6-K. Within 5 calendar days of the Closing, the
Company shall submit a Form 6-K to the SEC which discloses the transactions
contemplated hereby and by the Registration Rights Agreement, Warrants and
Debentures; subject to compliance with applicable provisions of the Securities
Act and the Exchange Act. The Purchasers shall have the opportunity to review
such Form 6-K prior to its submission.
Section 3.18 Canadian Resale Certificate. Within 10 days of the Closing
Date and within 10 days of each other distribution of securities under this
Agreement, the Debentures, the Warrants or the Registration Rights Agreement,
the Company will file a Form 45-102F2 under the Canadian Resale Rule.
Section 3.19 Form 20. Within 10 days of the Closing Date, the Company
will file a report of the issue and sale of the Debentures and Warrants on Form
45-902F under the Securities Act (British Columbia).
Section 3.20 Maintain Status as a Qualifying Issuer. For as long as any
securities of the Company may be acquired by the Purchaser under this Agreement,
the Debentures, Warrants or the Registration Rights Agreement, the Company will
use its best efforts to maintain its status as a "Qualifying Issuer" as defined
in the Canadian Resale Rule.
ARTICLE 4
CONDITIONS TO CLOSINGS
----------------------
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Debentures and Warrants. The obligation hereunder of the Company to
issue and/or sell the Debentures and Warrants to the Purchasers at the Closing
(unless otherwise specified) is subject to the satisfaction, at or before the
Closing, of each of the applicable conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
(a) Accuracy of the Purchasers' Representations and Warranties.
The representations and warranties of the Purchaser will be true and correct as
of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties as of an earlier date, which will be
true and correct as of such date).
(b) Performance by the Purchasers. The Purchasers shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Purchasers at or prior to the Closing.
-21-
(c) No Injunction. No statute, rule, regulation, executive,
judicial or administrative order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights Agreement
or the Debentures or the Warrants.
(d) Purchase Price. The Company shall have received the
Purchase Price from the Purchasers.
(e) Approval of TSX. The Company shall have received a
conditional listing approval letter (subject only to payment of fees, and the
filing of requested documents) from the TSX with respect to the Sale of
Debentures and Warrants to the Purchasers and the issuance of the Common Shares
and Warrant Shares upon the conversion and exercise thereof.
Section 4.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Debentures and Warrants. The obligation hereunder of each Purchaser
to acquire and pay for the Debentures and Warrants at the Closing (unless
otherwise specified) is subject to the satisfaction, at or before the Closing,
of each of the applicable conditions set forth below. These conditions are for
each Purchaser's benefit and may be waived by the Purchaser at any time in its
sole discretion.
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be true and correct as
of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties as of an earlier date, which shall be
true and correct as of such date).
(b) Performance by the Company. The Company shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive,
judicial or administrative order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights Agreement
or the Debentures or the Warrants.
(d) Approval of TSX. The Company shall have received a
conditional listing approval letter (subject only to payment of fees, and the
filing of requested documents) from the TSX with respect to the sale of
Debentures and Warrants to the Purchasers and the issuance of the Common Shares
and Warrant Shares upon the conversion and exercise thereof.
(e) Opinion of Counsel. At the Closing, the Purchaser shall
have received an opinion of the outside U.S. counsel of the Company, in the form
attached hereto as EXHIBIT 4.2(D) and an opinion of outside Canadian counsel in
the form attached as EXHIBIT 4.2(F) and such other opinions, certificates and
documents as the Purchaser or its counsel shall reasonably require incident to
the Closing.
-22-
(f) Registration Rights Agreement. The Company and the
Purchaser shall have executed and delivered the Registration Rights Agreement in
the form and substance of EXHIBIT 4.2(E) attached hereto.
(g) Adverse Changes. No event which had or is likely to have,
in the reasonable judgment of the Purchasers, a Material Adverse Effect on the
Company or any of its direct or indirect subsidiaries shall have occurred.
(h) Officer's Certificate. The Company shall have delivered to
the Purchaser a certificate in form and substance of EXHIBIT 4.2(H) attached
hereto, executed by an officer of the Company, certifying as to satisfaction of
closing conditions, incumbency of signing officers, and the true, correct and
complete nature of the Charter, By-Laws, good standing and authorizing
resolutions of the Company.
(i) Debentures and Warrants. The Purchaser shall have received
certificates representing the Debentures and Warrants in the form and substance
of EXHIBIT 1A and EXHIBIT 1B hereto.
(j) No Default of Debt Covenants. The Company shall not be in
default with respect to any payment obligations or other covenants contained in
any agreement or instrument governing indebtedness or any in any equipment
lease.
Section 4.3 ]INTENTIONALLY OMITTED]
Section 4.4 [INTENTIONALLY OMITTED]
Section 4.5 [INTENTIONALLY OMITTED]
Section 4.6 [INTENTIONALLY OMITTED]
ARTICLE 5
LEGEND AND STOCK
----------------
The Company will issue one or more certificates representing the
Debentures and the Warrants in the name of the Purchasers and in such
denominations to be specified by the Purchasers prior to (or from time to time
subsequent to) Closing. Each certificate representing the Debentures and the
Warrants and any Common Shares issued upon conversion or exercise thereof
initially shall be stamped or otherwise imprinted with a legend substantially in
the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE TRANSFERRED,
ASSIGNED, SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
BECAUSE OF AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
-23-
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE [INSERT THE
DATE THAT IS 4 MONTHS AND 1 DAY AFTER THE ISSUE DATE].
The certificates representing the Debentures and Warrants shall contain legends
in substantially the following form:
THESE SECURITIES MAY NOT BE CONVERTED [EXERCISED] UNLESS THE
CONVERSIONS [EXERCISE] HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE CONVERSION
[EXERCISE] IS EXEMPT FROM REGISTRATION THEREUNDER.
The Company agrees to reissue Debentures and reissue or issue Warrants,
as the case may be, without the US legend set forth above at such time as (i)
the holder thereof disposeSof such Debentures and/or Warrants and Common Shares
issuable upon conversion or exercise thereof pursuant to Rule 144 under the
Securities Act, or (ii) such Debentures and/or Warrants are sold to a purchaser
or purchasers who (in the opinion of counsel to the seller or such purchaser(s),
in form and substance reasonably satisfactory to the Company and its counsel)
are able to dispose of such shares publicly pursuant to an Effective
Registration or exemption.
Prior to the Registration Statement (as defined in the Registration
Rights Agreement) being declared effective, any Common Shares issued pursuant to
conversion of Debentures or Warrant Shares or Debenture Shares issued upon
exercise of the Warrants shall bear a US legend in the same form as the legend
indicated above. Upon such Registration Statement becoming effective, the
Company agrees to promptly, but no later than three (3) Trading Days thereafter,
issue new certificates representing such Common Shares and Warrant Shares
without such US legend. Any Debenture Shares issued pursuant to conversion of
Debentures or Common Shares issued upon exercise of the Warrants after the
Registration Statement has become effective shall be free and clear of any
legends, transfer restrictions and stop orders. Notwithstanding the removal of
such legend, the Purchaser agrees to sell the Debenture Shares and Warrant
Shares represented by the new certificates in accordance with the applicable
prospectus delivery requirements (if copies of a current prospectus are provided
to the Purchaser by the Company) or in accordance with an exemption from the
registration requirements of the Securities Act.
The Canadian Legend shall remain on certificates for the Securities,
the Debenture Shares and Warrant Shares until the date which is four months and
1 day from the Closing Date. Thereafter, upon request by the Purchaser, such
certificate, shall promptly be reissued without such Canadian legends.
Nothing herein shall limit the right of any holder to pledge these
securities pursuant to a bona fide margin account or lending arrangement;
provided that such pledge is made in compliance with the Securities Act.
-24-
ARTICLE 6
TERMINATION
-----------
Section 6.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Purchasers.
Section 6.2 Other Termination. This Agreement may be terminated by
action of the Board of Directors of the Company or by the Purchasers at any time
if the Closing shall not have been consummated by the third business day
following the date of this Agreement; provided, however, that the party (or
parties) prepared to close shall retain its (or their) right to ▇▇▇ for any
breach by the other party (or parties).
ARTICLE 7
MISCELLANEOUS
-------------
Section 7.1 Stamp Taxes. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Securities and
the Common Shares issued upon conversion or exercise thereof.
Section 7.2 Specific Performance; Consent to Jurisdiction; Jury Trial.
(a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement, the Debentures, the Registration Rights Agreement and the Warrants
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(B) EACH OF THE COMPANY AND THE PURCHASERS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE COMPANY AND THE PURCHASERS CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(C) EACH OF THE COMPANY AND THE PURCHASERS HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.
-25-
Section 7.3 Entire Agreement; Amendment. This Agreement, together with
the Registration Rights Agreement, the Warrants, the Debentures and the
agreements and documents executed in connection herewith and therewith, contains
the entire understanding of the parties with respect to the matters covered
hereby and thereby, supercedes any prior understanding, memoranda or other
written or oral agreements between or among any of them respecting the matters
covered hereby and thereby and, except as specifically set forth herein or
therein, neither the Company nor any of the Purchasers makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended except by a written instrument signed by
both the Company and Purchasers holding at least 2/3 of the outstanding
principal amount of the Debentures.
Section 7.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing by mail, fax or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications are:
to the Company:
Crystallex International Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Attn: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
to the Purchasers, as per the particulars set on Schedule "A" hereto.
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
Section 7.5 Indemnity. Each of the Purchasers on the one hand, and the
Company on the other (collectively, "INDEMNIFYING PARTIES"), shall defend,
protect, indemnify and hold harmless the other party and, in the case of a
Purchaser, all of its partners, managers, employees, and direct or indirect
investors and any of the foregoing persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
-26-
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Indemnifying Party in the Transaction Documents or any other certificate or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Indemnifying Party contained in the Transaction
Documents or any other certificate or document contemplated hereby or thereby,
(c) in the case of the Purchaser Indemnities, any cause of action, suit or claim
brought or made against such Indemnitee by a third party and arising out of or
resulting from (i) the execution, delivery, performance, breach by the Company
or enforcement of the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, (ii) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Securities or (iii) the status of the Purchaser or holder of
the Securities as Purchasers in the Company, and (d) the enforcement of this
Section. Notwithstanding the foregoing, Indemnified Liabilities shall not
include any liability of any Indemnitee to the extent it arises out of such
Indemnitee's willful misconduct, gross negligence, or fraudulent action(s). To
the extent that the foregoing undertaking by an Indemnifying Party may be
unenforceable for any reason, the Indemnifying Party shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 7.5 shall be the same as those set forth in
Section 6 (other than Section 6(b)) of the Registration Rights Agreement,
including, without limitation, those procedures with respect to the settlement
of claims and Company's right to assume the defense of claims.
Section 7.6 Waivers. No waiver by any party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 7.7 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.8 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. Subject to applicable
regulatory requirements, the parties hereto may amend this Agreement without
notice to or the consent of any third party. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Purchaser (which consent may be withheld for any reason in its
sole discretion). The Purchaser may not assign this Agreement (in whole or in
part) or any rights or obligations hereunder without the consent of the Company
(which shall not be unreasonably withheld), except that the Purchaser may assign
its rights hereunder in connection with an assignment of Debentures or Warrants;
provided that any transferee of Debentures or Warrants must agree in writing to
be bound by the applicable terms of the Transaction Documents. Any transfer in
violation of this provision shall be null and void.
-27-
Section 7.9 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 7.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED ENTIRELY THEREIN.
Section 7.11 Survival. The representations, warranties, agreements and
covenants of the Company and the Purchasers contained herein shall survive the
Closing.
Section 7.12 Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
Section 7.13 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser
without the express written agreement of the Purchaser, unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement. The Company agrees that it will deliver a copy of
any public announcement regarding the matters covered by this Agreement or any
agreement and document executed herewith to the Purchaser and any public
announcement including the name of the Purchaser to the Purchaser, reasonably in
advance of the release of such announcements.
Section 7.14 Like Treatment of Holders; Redemption. Neither the Company
nor any of its affiliates shall, directly or indirectly, pay or cause to be paid
any consideration (immediate or contingent), whether by way of interest, fee,
payment for the redemption or conversion of Debentures or exercise of the
Warrants, or otherwise, to any holder of Debentures or Warrants, for or as an
inducement to, or in connection with the solicitation of, any consent, waiver or
amendment of any terms or provisions of the Debenture or this Agreement or the
Registration Rights Agreement or the Warrants, unless such consideration is
required to be paid to all holders of Debentures and Warrants bound by such
consent, waiver or amendment whether or not such holders so consent, waive or
agree to amend and whether or not such holders tender their Debentures or
Warrants for redemption, conversion or exercise. The Company shall not, directly
or indirectly, redeem any Debentures or Warrants unless such offer of redemption
is made pro rata to all holders of Debentures or Warrants, as the case may be,
on identical terms.
Section 7.15 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
either party.
Section 7.16 Rescission and Withdrawal Right. Notwithstanding anything
to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, wherever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, the
Purchaser may rescind or withdraw, in its sole discretion from
-28-
time to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights.
Section 7.17 Obligations Absolute. The Company's obligations under the
Transaction Documents are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction.
[SIGNATURE PAGE FOLLOWS]
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY:
CRYSTALLEX INTERNATIONAL CORPORATION
By:
--------------------------------
Name:
Title:
PURCHASERS:
o
By:
--------------------------------
Name:
Title:
Signature page to Crystallex International Corporation Purchase Agreement
SCHEDULE A
----------
DELIVERY DELIVERY
INSTRUCTIONS FOR INSTRUCTIONS FOR
DEBENTURES, DEBENTURES,
COMMON SHARES COMMON SHARES
PURCHASE WARRANTS, PURCHASE WARRANTS,
NAME AND WARRANT SHARES WARRANT SHARES NUMBER OF
ADDRESS OF AND UNDERLYING AND UNDERLYING PRINCIPAL AMOUNT OF COMMON SHARE
PURCHASER SHARES SHARES DEBENTURES PURCHASE WARRANTS
▇▇▇▇▇ ▇▇▇▇▇ US$450,000
▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
ISO Profit Sharing US$450,000
Plan & Trust, ▇▇▇▇
▇▇▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
ABC Retirement Plan & US$225,000
Trust
▇▇▇▇▇▇ ▇▇▇▇▇▇ US$370,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
#▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇ & Associates US$500,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ US$148,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ US$200,000
▇▇▇▇ Seatiagua US$100,000
▇▇▇▇ ▇▇▇▇▇▇ Lincoln Trust Company US$250,000
Custodian FBO ▇▇▇▇
▇▇▇▇▇▇
P.O. Box 5831
Denver, Colorado
Telephone
#▇▇▇-▇▇▇-▇▇▇▇
Fed Tax ID#▇▇-▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ US$100,000
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇