Exhibit 99- 6d
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Agency Agreement - Special Warrant Private Placement
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THIS AGREEMENT dated for reference March 3, 2000, is made
BETWEEN
AND SOFTCARE ▇▇.▇▇▇ INC., Suite 107 - ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Issuer");
AND CANACCORD CAPITAL CORPORATION, 2200 - ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
AND RESEARCH CAPITAL CORPORATION, Suite 564 - 1055 Dunsmuir Street,
Vancouver, British Columbia, V7X IL4
AND ▇▇▇▇▇▇▇ SECURITIES INC., 1100 - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(individually, an "Agent" and collectively, the "Agents").
WHEREAS:
A. The Issuer wishes to privately place with purchasers up to 1,495,000 Special
Warrants at a price of $3.75 per Special Warrant;
B. The Issuer wishes to appoint the Agents to distribute the Special Warrants,
and the Agents are willing to accept such appointment on the terms and
conditions of this Agreement;
THE PARTIES to this Agreement therefore agree:
1. DEFINITIONS
In this Agreement and the Recitals hereto:
(a) "Administration Fee" means the fee to be paid to the Lead
Agent by the Issuer in consideration of the Lead Agent's
services in connection with the coordination and review of the
Private Placement and the review of the subsequent
qualification of the distribution of any of the Issuer's
securities resulting from the Private Placement, by way of an
AIF, exchange offering prospectus or prospectus;
(b) "Agents' Fee" means the commission which is set out in this
Agreement and which is payable by the Issuer to the Agents in
consideration of the services performed by the Agents under
this Agreement;
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(c) "Agents' Special Warrants" means the special warrants of the
Issuer to be issued as part of the Agents' Fee as set out in
this Agreement which have the terms provided in this Agreement
and in the certificates representing such special warrants;
(d) "Agents' Warrants' means the share purchase warrants of the
Issuer which will be issued upon the exercise or deemed
exercise of the Agents' Special Warrants and which have the
terms provided in this Agreement and the certificates
representing such share purchase warrants;
(e) "Agents' Warrant Shares" means the previously unissued common
shares in the capital of the Issuer, as presently constituted,
which will be issued upon the exercise of the Agents'
Warrants;
(f) "AIF" has the meaning defined in the B.C. Policy and the
Alberta AIF Rules;
(g) "Alberta Act" means the Securities Act, (Alberta) S.A. 1981,
c. S-6. 1, as amended;
(h) "Alberta AIF Rules" means Alberta Securities Commission Rule
45-501 and Companion Policy) 45-501 CP;
(i) "Alberta Commission" means the Alberta Securities Commission;
(j) "Applicable Legislation" means the B.C. Act and the Alberta
Act, together with the regulations and rules made and
promulgated thereunder and all administrative policy
statements, blanket orders and rulings, notices, and other
administrative directions issued by the Commission,
(k) "B.C. Act" means the Securities Act (British Columbia),
R.S.B.C. 1996, as amended;
(l) "B.C. Blanket Order" means Blanket Order and Ruling #98/7, or
any successor instrument issued by the B.C. Commission;
(m) 'B.C. Commission" means the British Columbia Securities
Commission;
(n) "B.C. Policy. means British Columbia's Local Policy Statement
3-27, or any successor instrument, issued by the B.C.
Commission;
(o) "B.C. Rules" means the rules made under the B.C. Act;
(p) "CDNX Policies" means the rules and policies of the Canadian
Venture Exchange;
(q) "Closing" means a day or days Special Warrants are issued to
the Purchasers;
(r) "Commissions" means the B.C. Commission and the Alberta
Commission;
(s) "Corporate Finance Shares" means the 25,000 common shares in
the capital of the Issuer to be issued to the Lead Agent by
the Issuer upon the exercise of the Corporate Finance Special
Warrants;
(t) "Corporate Finance Special Warrants" means the special
warrants of the Issuer to be issued to the Lead Agent as set
out in this Agreement in consideration of corporate finance
and structuring services provided by the Lead Agent and which
have the terms provided in this Agreement and the certificates
representing such special warrants;
(u) "Current AIF" has the meaning defined in the B.C. Policy;
(v) "Distribution" means the proposed issuance of Shares and
Warrants to the holders of the Special Warrants on the deemed
exercise of the Special Warrants, the proposed issuance of the
Agents' Warrants to holders of the Agents' Special Warrants on
the deemed exercise of the Agents' Special Warrants, and the
proposed issuance of Corporate Finance Shares on the deemed
exercise of the Corporate Finance Special Warrants,
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(w) "Eligibility Date" means the date on which the Issuer receives
confirmation of filing of its AIF from the Alberta Commission
and is in a position to deliver a certificate in the form
contemplated by the Alberta AIF Rules to the Agent, upon the
distribution of the Shares and Warrants which underlie the
Special Warrants;
(x) "Exchange" means the Canadian Venture Exchange;
(y) "Exemptions" means the exemptions from the prospectus
requirements under section 74(2)(4) of the B.C. Act and
sections 107(l)(d) of the Alberta Act;
(z) "Filing Deadline" means the date the Private Placement
documentation is required to be filed with the Exchange, or
any extension thereof;
(aa) "Final Closing" means the last closing under the Private
Placement;
(bb) "First Closing" means the first closing under the Private
Placement;
(cc) "Lead Agent" means Canaccord Capital Corporation;
(dd) "Material Change" has the meaning defined in the Applicable
Legislation;
(ee) "Material Fact" has the meaning defined in the Applicable
Legislation;
(ff) "Private Placement' means the offering of the Special Warrants
on the terms and conditions of this Agreement;
(gg) "Purchasers" means the purchasers of Special Warrants pursuant
to the Private Placement;
(hh) "Qualifying Issuer" has the meaning defined in the B.C.
Blanket Order and the Alberta AIF Rules;
(ii) "Regulation S" means Regulation S promulgated under the
Securities Act of 1933 (United States), as amended;
(jj) "Regulatory Authorities" means the Commissions and the
Exchange;
(kk) "Release Date" means:
(i) if the Purchaser is resident in British Columbia, that
day which falls four months from the Closing;
(ii) if the Purchaser is resident in Alberta, the
Eligibility Date or, if the Eligibility Date has
occurred before that day which falls four months from
the Closing, that day which falls four months from the
Closing;
(ll) "Securities' means the Special Warrants, the Shares, the
Warrants, the Warrant Shares, the Agents' Special Warrants,
the Agents' Warrants, the Agents' Warrant Shares, the
Corporate Finance Special Warrants and the Corporate Finance
Shares;
(mm) "Shares" means the previously unissued common shares in the
capital of the Issuer, as presently constituted, which will be
issued upon the exercise or deemed exercise of the Special
Warrants;
(nn) "Special Warrants" means the special warrants of the Issuer to
be offered by the Issuer pursuant to this Agreement having the
terms provided in this Agreement and the certificates
representing such special warrants and the Special Warrant
Indenture;
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(oo) "Special Warrant Indenture" means an indenture between the
Trustee and the Issuer providing for the issuance of Special
Warrants, satisfactory in form and substance to the Agents;
(pp) "Trustee' means Pacific Corporate Trust Company;
(qq) "Warrants" means the share purchase warrants of the Issuer
which will be issued upon the exercise or deemed exercise of
the Special Warrants and which have the terms provided in this
Agreement and the certificates representing such share
purchase warrants;
(rr) "Warrant Indenture" means an indenture between the Trustee and
the Issuer providing for the issuance of Warrants,
satisfactory in form and substance to the Agents; and
(ss) "Warrant Shares" means the previously unissued common shares
in the capital of the Issuer, as presently constituted, which
will be issued upon the exercise of the Warrants.
2. APPOINTMENT OF AGENTS
The Issuer appoints the Agents as its exclusive agent and the Agents accept the
appointment and agree to act as the exclusive agents of the Issuer to use their
commercially reasonable efforts to find and introduce to the Issuer potential
purchasers to purchase up to 1,495,000 Special Warrants, at a price of $3.75 per
Special Warrant, by way of private placement under the Exemptions.
2.2 The rights and obligations of the Agents under this Agreement, including but
not limited to the right and obligation to offer the Special Warrants and the
entitlement to the Agents' Fee, will be several (as distinguished from joint)
rights and obligations for each Agent.
2.3 Except as otherwise specifically provided in this Agreement, the rights and
obligations of the Agents will be divided in the proportions in which the Agents
participate in the Private Placement.
2.4 The Agents will participate in the Private Placement as follows:
Canaccord Capital Corporation 739,000 Special Warrants
Research Capital Corporation 426,000 Special Warrants
▇▇▇▇▇▇▇ Securities Inc. 330,000 Special Warrants
2.5 This Agreement will be construed in relation to each Agent as if separate
agreements had been made between the Issuer and each Agent.
3. SPECIAL WARRANTS
3.1 The Special Warrants will be issued and registered in the names of the
Purchasers or their nominees.
3.2 Each Special Warrant will entitle the holder to acquire one Share and one
half of one Warrant, without further payment, on the exercise or deemed exercise
of the Special Warrant.
3.3 Each Special Warrant may be exercised by the holder in whole or in part at
any time after the Closing on which the Special Warrant was issued. All
unexercised Special Warrants will be deemed to be exercised on that day which is
the earlier of:
(a) 330 days from the Closing on which such Special Warrants were
issued; and
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(b) the fifth business day after the Release Date.
3.5 Upon exercise or deemed exercise, the Special Warrants will be automatically
cancelled and will have no further force or effect.
3.6 The Special Warrants will be non-transferable.
3.7 The Special Warrant Indenture will contain, among other things, provisions
for the appropriate adjustment in the class and number of Shares and Warrants
and the exercise price of Warrants issued upon exercise or deemed exercise of
the Special Warrants upon the occurrence of certain events, including any
subdivision, consolidation or reclassification of the Issuer's common shares,
the payment of stock dividends and the amalgamation of the Issuer.
3.8 The issuance of the Special Warrants will not restrict or prevent the Issuer
from obtaining any other financing, or from issuing additional securities or
rights prior to the deemed exercise of the Special Warrants.
4. WARRANTS
4.1 The Warrants will be issued under the Warrant Indenture and registered
in the name of the Purchasers or their nominees.
4.2 The right to purchase a Warrant Share under a Warrant may be exercised at
any time until the close of business on the day which is 12 months from the date
of issue of the Special Warrant under which such Warrant was issued to the
holder.
4.3 One whole Warrant will entitle the holder, on exercise, to purchase one
Warrant Share at a price of $4.25 per Warrant Share.
4.4 The Warrants will be non-transferable.
4.5 The Warrant Indenture will, among other things, include provisions for the
appropriate adjustment in the class, number and price of the Warrant Shares
issued upon exercise of the Warrants upon the occurrence of certain events,
including any subdivision, consolidation or reclassification of the Issuer's
common shares, the payment of stock dividends and the amalgamation of the
Issuer.
4.6 The issue of the Warrants will not restrict or prevent the Issuer from
obtaining any other financing, or from issuing additional securities or rights,
during the period within which the Warrants may be exercised.
5. AGENTS' FEE
5.1 In consideration of the services performed by the Agents under this
Agreement, the Issuer agrees to pay to the Agents on each Closing an Agents' Fee
consisting of:
(a) a cash payment equal to 8% of the gross proceeds received by
the Issuer from the sale of the Special Warrants on such
Closing (the "Cash Payment"); and
(b) that number of Agents' Special Warrants which is equal to 10%
of the number of Special Warrants sold on such Closing.
5.2 The gross Cash Payment will be distributed amongst the Agents as
follows:
(a) 6% of the gross Cash Payment will be paid to the Lead Agent;
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(b) the remainder of the gross Cash Payment will be divided
amongst the Agents in the proportions in which the Agents
participate in the Private Placement.
5.3 The Agents' Special Warrants will have the same terms and conditions as the
Special Warrants except that instead of entitling the holder to acquire one
Share and one half of a Warrant, each Agents' Special Warrant will entitle the
holder to acquire one Agents' Warrant, without further payment, on the exercise
or deemed exercise of an Agents' Special Warrant and the Agents' Special
Warrants will be registered in the name of the Agents or such other party or
parties as the Agents may reasonably request.
5.4 The Agents' Warrants will have the same terms and conditions as the
Warrants, except that:
(a) the Agents' Warrants will be non-transferable except as
permitted by the B.C. Act and any order granted by the
Commissions;
(b) the Agents' Warrants will entitle the Agents, on exercise, to
purchase one Agents' Warrant Share at a price of $3.75
per Warrant Share; and
(c) the Agents' Warrants and Agents' Warrant Shares will be
registered in the name of the Agents or such other party or
parties as the Agents may reasonably request.
5.5 The Issuer agrees not to place a U.S. securities law restrictive legend
on the certificates representing the Agents' Special Warrants, the Agents'
Warrants or the Agents' Warrant Shares.
5.6 The Issuer will also pay the Lead Agent, on completion or cancellation of
the Private Placement, the Administration Fee, in an amount to be determined by
the Lead Agent not exceeding $7,000, in the aggregate, plus G.S.T. for the Lead
Agent's services.
5.7 In connection with the Private Placement, the Issuer agrees to issue
Corporate Finance Special Warrants convertible at no cost to 25,000 Corporate
Finance Shares to the Lead Agent on the Final Closing.
6. OFFERING RESTRICTIONS
6.1 The Agents will only sell the Special Warrants to persons who represent
themselves as being persons:
(a) purchasing as principal or persons who are deemed by law or
discretionary order to be purchasing as principal;
(b) qualified to purchase the Special Warrants, the Shares and the
Warrants under the Exemptions; and
(c) who are not U.S. Persons, or in the United States (which terms
herein shall have the meanings defined in Regulation S).
6.2 The Agents agree that at the time any buy order for the Special Warrants is
placed by clients of the Agents, the buyer will be outside the United States, or
the Agents and all persons acting on their behalf will reasonably believe that
the buyer is outside the United States, and neither the Agents nor any person
acting on their behalf will have knowledge that such transaction has been
pre-arranged with a buyer in the United States.
6.3 Neither the Issuer, the Agents, nor any of their respective affiliates, nor
any person acting on behalf of any of the foregoing, will offer or sell any of
the Securities to U.S. Persons or in the United States, or undertake any
activity for the purpose of, or that could reasonably be expected to have the
effect of, conditioning the market for the Securities in the United States.
6.4 The Private Placement has not been and will not be advertised in any way.
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6.5 No selling or promotional expenses will be paid or incurred in connection
Placement, except for professional services or for services performed by a
registered dealer.
7. SUBSCRIPTIONS
The Agents will use their best efforts to obtain from each Purchaser introduced
by the Agents, and deliver to the Issuer, on or before the Filing Deadline duly
completed and signed subscriptions in the form attached as Schedule "A" or in
such other form consented to by the Issuer and the Agents and executed by the
Purchaser.
8. FILINGS WITH THE REGULATORY AUTHORITIES
8.1 The Issuer will forthwith give to the Exchange written notice of the terms
of this Agreement and the proposed Private Placement and all other information
required by the CDNX Policies (the "Notice").
8.2 The Issuer will forthwith provide the Agents and their solicitor with a copy
of the Notice, and, forthwith on receipt, a copy of the preliminary and final
letters of acceptance of the Notice from the Exchange.
8.3 The Issuer will file all required documents, pay all required filing fees
and undertake any other actions required by the CDNX Policies in order to obtain
the approval of the Exchange to the Private Placement.
8.4 Within 10 days of each Closing of the Private Placement, the Issuer will:
(a) file with the Commissions any report required to be filed by
the Applicable Legislation in connection with the
Private Placement, in the required form; and
(b) provide the Agents' solicitor with copies of the report or
reports.
9. CLOSINGS
9.1 In this Section:
(a) "Certificates" means the certificates representing the Special
Warrants sold and the Agents Special Warrants and the
Corporate Finance Special Warrants to be issued on a Closing
in the names and denominations reasonably requested by the
Agents or the Purchasers, as the case may be; and
(b) "Proceeds" means the gross proceeds of the sale of Special
Warrants on a Closing, less:
(i) the Cash Payment;
(ii) the Administration Fee;
(iii) the reasonable expenses of the Agents in connection
with the Private Placement which have not been paid
by the Issuer;
(iv) any amount which has been attached by garnishing
order or other form of attachment; and
(v) any amount paid directly to the Issuer by purchasers
in connection with the Private Placement.
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9.2 The Issuer and the Agents will cause the Closing to take place in one or
more closings however, the Final Closing will occur within five business days
after the date of the final letter of acceptance of the Exchange for the Private
Placement or such longer period as is agreed to by the Issuer and the Agents.
9.3 The Issuer will, on each Closing, issue and deliver the Certificates to the
Agents, or at the Agents' request, to the Purchasers, against payment of:
(a) 40% of the Proceeds (the "Escrowed Funds") to the Trustee to
be held in accordance with the Special Warrant Indenture and
the Trustee shall pay the same and any interest accrued
thereon to the Issuer on the earlier of the Eligibility Date
or 12 months from Closing; and
(b) the balance of the Proceeds to the Issuer.
9.4 If the Issuer has satisfied all of its material obligations under this
Agreement, the Agents will, on each Closing, pay the Proceeds to the Issuer and
the Trustee, as appropriate, against delivery of the Certificates.
9.5 The Issuer will endorse the Certificates, and the certificates representing
any Shares, Warrants, Warrant Shares, Agents' Warrants, Agents' Warrant Shares
and Corporate Finance Shares issued prior to the earlier of the Release Date and
the expiry of the hold period prescribed by the Applicable Legislation, with a
statement that:
(a) the securities represented by the certificate are subject to a
hold period and may not be traded in British Columbia or
Alberta until the expiry of the hold period except as
permitted by the Applicable Legislation; and
(b) specifies the date the hold period expires, being as follows:
(i) in British Columbia, being four months from each Closing;
and
(ii) in Alberta, 12 months from each Closing for the Shares
and Warrant Shares and 18 months from each Closing for the
Special Warrants and Warrants or, if the Eligibility Date has
occurred prior to the exercise of the Special Warrants, four
months from each Closing.
10. CONDITIONS OF CLOSINGS
10.1 The obligations of the Agents on each Closing will be conditional upon
the following:
(a) on each Closing the Issuer will have delivered to the Agents
and their solicitor a favourable opinion of the Issuer's
solicitor dated as of the date of such Closing, in a form
acceptable to the Agents and their solicitor as to all legal
matters reasonably requested by the Agents relating to the
business of the Issuer and the creation, issuance and sale of
the Securities;
(b) on each Closing, the Issuer will have delivered to the Agents
and their solicitor such certificates of its officers and
experts who may have assisted in the preparation of the
Offering Memorandum, if any, comfort letters or opinions of
its auditors, and other documents relating to the Private
Placement or the affairs of the Issuer as the Agents or their
solicitor may reasonably request; and
(c) each representation and warranty of the Issuer which is
contained in this Agreement continues to be true, and the
Issuer has performed or complied with all of its covenants,
agreements and obligations under this Agreement.
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10.2 Each Closing and the obligations of the Issuer and the Agents to
complete the issue and sale of the Securities are subject to:
(a) receipt of all required regulatory approval for or acceptance
of the Private Placement; and
(b) the removal or partial revocation of any cease trading order
or trading suspension made by any competent authority to the
extent necessary to complete the Private Placement.
11. MATERIAL CHANGES
The Issuer agrees that if, between the date of this Agreement and five days
after the Release Date, a Material Change, or a change in a Material Fact
occurs, the Issuer will:
(a) as soon as practicable notify the Agents in writing, setting
forth the particulars of such change;
(b) as soon as practicable, issue and file with the Regulatory
Authorities a press release that is authorized by a senior
officer disclosing the nature and substance of the change;
(c) as soon as practicable file with the Commissions the report
required by the applicable securities legislation and in any
event no later than 10 days after the date on which the change
occurs;
(d) provide copies of that press release, when issued, and that
report, when filed, to the Agents and their solicitor;
(e) amend the Prospectus, if any, to reflect the change, provided
it has first obtained the approval of the Agents to the form
and substance of the amendment, such approval not to be
unreasonably withheld, and
(f) if an amendment is prepared to the Prospectus, if any, file
such amendment with each of the Commissions in the time
limited by the Applicable Legislation, and provide the Agents
without charge with as many commercial copies of such
amendment as it may reasonably require.
12. ANNUAL INFORMATION FORM
12.1 The Issuer has filed a Current AIF in British Columbia and therefore,
as long as the requirements of the B.C. Blanket Order are met, Purchasers who
are resident in British Columbia will have the shortened hold period provided in
the B.C. Policy.
12.2 The Issuer will use its best efforts to fide an AIF in Alberta and to have
the Eligibility Date occur within 120 days immediately following the date of
Closing and to otherwise comply with the Alberta AIF Rules in order to permit
Purchasers who are resident in Alberta to have the shortened hold period
provided therein.
12.3 In the event that an AIF is filed in Alberta, the Issuer will promptly
notify the Agents of the receipt of the confirmation of filing its AIF issued by
the Alberta Commission and will provide the Agents with:
(a) a copy of the AIF which has been filed with the Alberta
Commission; and
(b) a copy of the certificate required by the Alberta AIF Rules.
12.4 If the Eligibility Date does not occur by the first business day 120 days
immediately following the Closing, then the Issuer will continue to use its best
efforts to have the Release Date for Securities held by Purchasers resident in
Alberta occur prior to the date which is 330 days after the Closing.
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13. TERMINATION
13.1 The Agents may terminate their obligations under this Agreement by
notice in writing to the Issuer at any time before the Final Closing if;
(a) an adverse Material Change, or an adverse change in a Material
Fact relating to any of the Securities, occurs or is
announced by the Issuer;
(b) there is an event, accident, governmental law or regulation or
other occurrence of any nature which, in the opinion of the
Agents, seriously affects or will seriously affect the
financial markets, or the business of the Issuer or its
subsidiaries, if any, or the ability of the Agents to perform
its obligations under this Agreement, or a Purchaser's
decision to purchase the Special Warrants;
(c) following a consideration of the history, business, products,
property or affairs of the Issuer or its principals and
promoters, or of the state of the financial markets in
general, or the state of the market for the Issuer's
securities in particular, the Agents determine, in their sole
discretion, that it is not in the interest of the Purchasers
to complete the purchase and sale of the Special Warrants,
(d) the Securities cannot, in the opinion of the Agents, be
marketed due to the state of the financial markets, or the
market for the Special Warrants in particular;
(e) an enquiry or investigation (whether formal or informal) in
relation to the Issuer, or the Issuer's directors, officers or
promoters, is commenced or threatened by an officer or
official of any competent authority;
(f) any order to cease, halt or suspend trading (including an
order prohibiting communications with persons in order to
obtain expressions of interest) in the securities of the
Issuer prohibiting or restricting the Private Placement or the
Distribution is made by a competent regulatory authority and
that order is still in effect;
(g) the Issuer is in breach of any material term of this
Agreement; or
(h) the Agents determine that any of the representations or
warranties made by the Issuer in this Agreement is false or
has become false.
13.2 The Agents' obligations hereunder will terminate if the Exchange does not
issue its final letter of acceptance, subject only to usual post-Closing filings
with the Exchange, of the Private Placement within 90 days of the reference date
of this Agreement, unless otherwise agreed in writing by the Agents.
13.3 In addition to the other termination rights of the Agents, the Agents may
terminate their obligations under this Agreement with respect to the
Distribution at anytime prior to the Release Date if:
(a) an adverse Material Change, or an adverse change in a Material
Fact relating to any of the Securities, occurs or is
announced by the Issuer,
(b) an enquiry or investigation (whether formal or informal) in
relation to the Issuer, or the Issuer's directors, officers or
promoters, is commenced or threatened by an officer or
official of any competent authority,
(c) any order to cease trading (including an order prohibiting
communications with persons in order to obtain expressions of
interest) in the securities of the Issuer is made by a
competent regulatory authority and that order is still in
effect;
(d) the Issuer is in breach of any material term of this
Agreement; or
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(e) the Agents determine that any of the representations or
warranties made by the Issuer in this Agreement is false or
has become false.
14. WARRANTIES, REPRESENTATIONS AND COVENANTS
14.1 The Issuer warrants and represents to and covenants with the Agents
that:
(a) the Issuer and its subsidiaries, if any, are valid and
subsisting corporations duly incorporated and in good standing
under the laws of the jurisdiction in which they are
incorporated, continued or amalgamated;
(b) the Issuer and its subsidiaries, if any, are duly registered
and licenced to carry on business in the jurisdictions in
which they carry on business or own property where so required
by the laws of that jurisdiction;
(c) the authorized and issued capital of the Issuer are as dis-
closed to the Exchange and the outstanding shares of the
Issuer are fully paid and non-assessable;
(d) the Issuer will reserve or set aside sufficient shares in its
treasury to issue the Shares, the Warrant Shares, the Agent's
Warrant Shares and the Corporate Finance Shares and all such
shares will be duly and validly issued as fully paid and
non-assessable;
(e) except as qualified by the disclosure in all prospectuses,
filing statements, annual information forms, including the
Issuer's Current AIF, and press releases filed with the
Commissions or the Exchange, or the Offering Memorandum, if
any, (the "Disclosure Record") the Issuer is the beneficial
owner of the properties, business and assets or the interests
in the properties, business or assets referred to in the
Disclosure Record, all agreements by which the Issuer holds an
interest in a property, business or assets are in good
standing according to their terms and the properties are in
good standing under the applicable laws of the jurisdictions
in which they are situated;
(f) the Disclosure Record, subscription form and all other written
or oral representations made by the Issuer to a Purchaser or
potential Purchaser in connection with the Private Placement
will be accurate in all material respects and will omit no
fact, the omission of which will make such representations
misleading or incorrect;
(g) the financial statements contained in the Offering Memorandum,
if any, filed with the Commissions or supplied by the Issuer
to the Agents in connection with the Private Placement have
been prepared in accordance with Canadian generally accepted
accounting principles, accurately reflect the financial
position and all material liabilities (accrued, absolute,
contingent or otherwise) of the Issuer, and its subsidiaries,
if any, as of the date thereof, and no adverse material
changes in the financial position of the Issuer have taken
place since the date thereof, save in the ordinary course of
the Issuer's business;
(h) the Issuer has complied and will comply fully with the
requirements of all applicable corporate and securities laws
and administrative policies and directions, including, without
limitation, the Applicable Legislation in relation to the
issue and trading of its securities and in all matters
relating to the Private Placement and the Distribution;
(i) there is not presently, and will not be until the closing of
the Distribution, any Material Change or change in any
Material Fact relating to the Issuer which has not been or
will not be fully disclosed to the Agents;
(j) the issue and sale of the Securities by the Issuer and the
Agents does not and will not conflict with, and does not and
will not result in a breach of, any of the terms of its
incorporating documents or any agreement or instrument to
which the Issuer is a party;
-12-
(k) neither the Issuer nor any of its subsidiaries is a party to
any actions, suits or proceedings which could materially
affect its business or financial condition, and to the best of
the Issuer's knowledge no such actions, suits or proceedings
are contemplated or have been threatened which are not
disclosed in the Disclosure Record;
(l) there are no judgments against the Issuer or any of its
subsidiaries, if any, which are unsatisfied, nor are there any
consent decrees or injunctions to which the Issuer or any of
its subsidiaries, if any, is subject;
(m) this Agreement has been or will be by the First Closing, duly
authorized by all necessary corporate action on the part of
the Issuer, and the Issuer has full corporate power and
authority to undertake the Private Placement, qualify the
Prospectus, if any, and undertake the Distribution and file an
AIF;
(n) the Issuer is an "exchange issuer" within the meaning of the
B.C. Act and a "reporting issuer" in British Columbia and
Alberta and is not in default of any of the requirements of
the Applicable Legislation or any of the administrative
policies or notices of the Regulatory Authorities;
(o) no order ceasing, halting or suspending trading in securities
of the Issuer nor prohibiting the sale of such securities has
been issued to and is outstanding against the Issuer or its
directors, officers or promoters or against any other
companies that have common directors, officers or promoters
and no investigations or proceedings for such purposes are
pending or threatened;
(p) the Issuer satisfies and will satisfy all necessary
requirements under the Exemptions in order to permit the sale
of the Special Warrants to Purchasers who are qualified to
purchase the Special Warrants under the Exemptions, pursuant
to this Private Placement;
(q) except as disclosed in the Disclosure Record or otherwise to
the Regulatory Authorities, no person has any right, agreement
or option, present or future, contingent or absolute, or any
right capable of becoming such a right, agreement or option,
for the issue or allotment of any unissued shares in the
capital of the Issuer or its subsidiaries, if any, or any
other security convertible into or exchangeable for any such
shares, or to require the Issuer or its subsidiaries, if any,
to purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its capital;
(r) the Issuer and its subsidiaries, if any, have filed all
federal, provincial, local and foreign tax returns which are
required to be filed, or have requested extensions thereof,
and have paid all taxes required to be paid by them and any
other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except
for such assessments, fines and penalties which are currently
being contested in good faith,
(s) the Issuer and its subsidiaries, if any, have established on
their books and records reserves which are adequate for the
payment of all taxes not yet due and payable and there are no
liens for taxes on the assets of the Issuer or its
subsidiaries, if any, except for taxes not yet due, and there
are no audits of any of the tax returns of the Issuer or its
subsidiaries, if any, which are known by the Issuer's
management to be pending, and there are no claims which have
been or may be asserted relating to any such returns which, if
determined adversely, would result in the assertion by any
governmental agency of any deficiency which would have a
material adverse effect on the properties, business or assets
of the Issuer or its subsidiaries, if any;
(t) the Issuer owns or possesses adequate rights to use all
material patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and
other intellectual property necessary for the business of the
Issuer now conducted and proposed to be conducted, without any
conflict with or infringement of the rights of others. The
Issuer has received no communication alleging that the Issuer
has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade
names,
-13-
copyrights or trade secrets or other proprietary rights of any
other person or entity. Neither the execution or delivery of
this Agreement nor the carrying on of the business of the
Issuer by the employees of the Issuer, nor the conduct of the
business of the Issuer will conflict with or result in a
breach of the terms, conditions, or provisions of or
constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated,
(u) other than the Agents, no person, firm or corporation acting
or purporting to act at the request of the Issuer is entitled
to any brokerage, agency or finder's fee in connection with
the transactions described herein;
(v) the certifications in Appendix I are true and correct and will
be true and correct as of the date of the Closing;
(w) the Issuer is, and will be at Closing, a Qualifying Issuer;
and
(v) the warranties and representations in this Section are true
and correct and will remain so as of the Final Closing and
upon the completion of the Distribution.
14.2 The Agents warrant and represent to the Issuer that each of the Agents:
(a) is a valid and subsisting corporation under the law of the
jurisdiction in which it was incorporated;
(b) is a broker registered under the Applicable Legislation;
(c) is a member in good standing of the Exchange; and
(d) will sell the Special Warrants in compliance with the
Applicable Legislation.
15. EXPENSES, OF AGENTS
15.1 The Issuer will pay all of the expenses of the Private Placement, the AIF
and the Distribution and all the expenses reasonably incurred by the Agents in
connection with the Private Placement, the AIF and the Distribution including,
without limitation, the reasonable fees and expenses of the solicitor for the
Agents.
15.2 The Issuer will pay the expenses referred to in the previous Subsection
even if the transactions contemplated by this Agreement are not completed or
this Agreement is terminated, unless the failure of acceptance or completion or
the termination is the result of a breach of this Agreement by the Agents.
15.3 The Agents may, from time to time, render accounts for its expenses in
connection with the Private Placement, the AIF and the Distribution to the
Issuer for payment on or before the dates set out in the accounts.
15.4 The Issuer authorizes the Agents to deduct their reasonable expenses in
connection with the Private Placement from the proceeds of the Private Placement
and any advance payments made by the Issuer, including expenses for which an
account has not yet been rendered.
16. GARNISHING ORDERS
16.1 If at any time, up to and including the Final Closing, the Agents receive a
garnishing order or other form of attachment purporting to attach or garnish a
part or all of the sale price of any of the Securities, the Agents will be free
to pay the amount purportedly attached or garnished into court.
-14-
16.2 Any payment by the Agents into court pursuant to a garnishing order will be
deemed to have been received by the Issuer as payment by the Agents against the
sale price of the Securities to the extent of the amount paid, and the Issuer
will be bound to issue and deliver the Securities proportionately to the amount
paid by the Agents.
16.3 The Agents will not be bound to ascertain the validity of any garnishing
order or attachment, or whether in fact it attaches any moneys held by the
Agents, and the Agents will be free to act with impunity in replying to any
garnishing order or attachment.
16.4 The Issuer will release, indemnify and save harmless the Agents in respect
of all damages, costs, expenses or liability arising from any acts of the Agents
under this Section.
17. INDEMNITY
17.1 The Issuer will indemnify the Agents and each of the Agents' agents,
directors, officers and employees (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties") and save them harmless against all
losses, claims, damages or liabilities:
(a) existing by reason of an untrue statement contained in the
Disclosure Record, subscription agreement or other written or
oral representation made by the Issuer to a Purchaser or
potential Purchaser in connection with the Private Placement,
or in the Prospectus or in the AIF or other written or oral
representation made by the Issuer in connection with the
Distribution, or by reason of the omission to state any fact
necessary to make such statements or representations not
misleading (except for information and statements supplied by
and relating solely to the Agent);
(b) arising directly or indirectly out of any order made by any
regulatory authority, based upon an allegation that any such
untrue statement, representation or omission exists (except
information and statements supplied by and relating solely to
the Agent), that trading in or distribution of any of the
Securities is to cease;
(c) resulting from the failure by the Issuer to obtain the
requisite regulatory approval to the Private Placement or
confirmation of filing the AIF unless the failure to obtain
such approval is the result of a breach of this Agreement by
the Agents;
(d) resulting from any failure by the Issuer to file the Offering
Memorandum, if required by the Applicable Legislation, or
Prospectus, or an amendment or supplement to either of them;
(e) resulting from the breach by the Issuer of any of the terms of
this Agreement;
(f) resulting from any representation or warranty made by the
Issuer herein not being true or ceasing to be true;
(g) if the Issuer fails to issue and deliver the certificates
representing the Securities in the form and denominations
satisfactory to the Agents at the time and place required by
the Agents with the result that any completion of a sale of
the Securities does not take place; or
(h) if, following the completion of a sale of any of the
Securities, a determination is made by any competent authority
setting aside the sale, unless that determination arises out
of an act or omission by the Agents.
17.2 If any action or claim is brought against an Indemnified Party in respect
of which indemnity may be sought from the Issuer pursuant to this Agreement, the
Indemnified Party will promptly notify the Issuer in writing.
-15-
17.3 The Issuer will assume the defence of the action or claim, including the
employment of counsel and the payment of all expenses.
17.4 The Indemnified Party will have the right to employ separate counsel, and
the Issuer will pay the reasonable fees and expenses of such counsel.
17.5 The indemnity provided for in this Section will not be limited or otherwise
affected by any other indemnity obtained by the Indemnified Party from any other
person in respect of any matters specified in this Agreement and will continue
in full force and effect until all possible liability of the Indemnified Parties
arising out of the transactions contemplated by this Agreement has been
extinguished by the operation of law.
17.6 If indemnification under this Agreement is found in a final judgment (not
subject to further appeal) by a court of competent jurisdiction not to be
available for reason of public policy, the Issuer and- the Indemnified Parties
will contribute to the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) for which such indemnification is held unavailable
in such proportion as is appropriate to reflect the relative benefits to and
fault of the Issuer, on the one hand, and the Indemnified Parties on the other
hand, in connection with the matter giving rise to such losses, claims, damages,
liabilities or expenses (or actions in respect thereof). No person found liable
for a fraudulent misrepresentation (within the meaning of applicable securities
laws) will be entitled to contribution from any person who is not found liable
for such fraudulent misrepresentation.
17.7 To the extent that any Indemnified Party is not a party to this Agreement,
the Agents will obtain and hold the right and benefit of this section in trust
for and on behalf of such Indemnified Party.
18. ASSIGNMENT AND SELLING GROUP PARTICIPATION
18.1 The Agents will not assign this Agreement or any of its rights under this
Agreement or, with respect to the Securities, enter in to any agreement in the
nature of an option or a sub-option unless and until, for each intended
transaction, the Agents have obtained the consent of the Issuer, and any
required notice has been given to and accepted by the Regulatory Authorities.
18.2 The Agents may offer selling group participation in the normal course of
the brokerage business to selling groups of other licensed dealers, brokers and
investments dealers, who may or who may not be offered part of the Agents' Fee.
19. NOTICE
19.1 Any notice under this Agreement will be given in writing and must be
delivered, sent by facsimile transmission or mailed by prepaid post and
addressed to the party to which notice is to be given at the address indicated
above, or at another address designated by the party in writing.
19.2 If notice is sent by facsimile transmission or is delivered, it will be
deemed to have been given at the time of transmission or delivery.
19.3 If notice is mailed, it will be deemed to have been received 48 hours
following the date of mailing of the notice.
19.4 If there is an interruption in normal mail service due to strike, labour
unrest or other cause at or prior to the time a notice is mailed the notice will
be sent by facsimile transmission or will be delivered.
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20. TIME
Time is of the essence of this Agreement and will be calculated in accordance
with the provisions of the Interpretation Act (British Columbia).
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations, warranties, covenants and indemnities of the Issuer and the
Agents contained in this Agreement will survive the Final Closing.
22. LANGUAGE
This Agreement is to be read with all changes in gender or number as required by
the context.
23. ENUREMENT
This Agreement enures to the benefit of and is binding on the parties to this
Agreement and their successors and permitted assigns.
24. HEADINGS
The headings in this Agreement are for convenience of reference only and do not
affect the interpretation of this Agreement.
25. COUNTERPARTS
This Agreement may be executed in two or more counterparts and may be delivered
by facsimile transmission, each of which will be deemed to be an original and
all of which will constitute one agreement, effective as of the reference date
given above.
-17-
26. LAW
This Agreement is governed by the law of British Columbia, and the parties
hereto irrevocably attorn and submit to the jurisdiction of the courts of
British Columbia with respect to any dispute related to this Agreement.
This document was executed and delivered as of the date given above:
The common seal of )
SOFTCARE ▇▇.▇▇▇ INC. )
was hereunto affixed in the presence of: )
)
--------------------------------------------)
Authorized Signatory ) c/s
)
--------------------------------------------)
Authorized Signatory )
)
The common seal of )
CANACCORD CAPITAL CORPORATION )
was hereunto affixed in the )
presence of: )
)
--------------------------------------------)
Authorized Signatory ) c/s
)
--------------------------------------------)
Authorized Signatory )
)
The common seal of )
RESEARCH CAPITAL CORPORATION )
was hereunto affixed in the )
presence of: )
)
--------------------------------------------)
Authorized Signatory ) c/s
)
--------------------------------------------)
Authorized Signatory )
)
The common seal of )
▇▇▇▇▇▇▇ SECURITIES INC. )
was hereunto affixed in the )
presence of: )
)
--------------------------------------------)
Authorized Signatory ) c/s
)
--------------------------------------------)
Authorized Signatory )
APPENDIX I - CERTIFICATION BY ISSUER
The Issuer certifies that:
(a) the distribution of Special Warrants to the Purchaser pursuant
to this Private Placement will be made by the Issuer in a
security of its own issue;
(b) the Issuer is and will be at the Closing, a Qualifying Issuer;
(c) the Issuer has filed or prior to Closing will have filed a
Current AIF together with all supporting documents as set out
in the B.C. Policy or its Former Policy (as that term is
defined in the B.C. Blanket Order);
(d) the Issuer has and will have filed all documents that are
required to be filed under the continuous disclosure
provisions of the B.C. Act and the B.C. Rules, including
annual and interim financial information and annual reports,
press releases disclosing material changes and material change
reports;
(e) the Issuer has not and will not have made a substantial
transaction (as that term is used in the B.C. Policy) since
its Current AIF, unless the Issuer has filed a material change
report in compliance with section 5.14 of the B.C. Policy or
an amended AIF in compliance with section 4.12 of the Former
Policy; and
(f) the Executive Director of the B.C. Commission has not advised
the Issuer in writing that its securities are not eligible for
the shorter hold period provided for in the B.C. Blanket
Order.
SCHEDULE "A"
SPECIAL WARRANT
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
THIS AGREEMENT dated for reference March 3, 2000
BETWEEN
-----------------------------------------------------------------------
-----------------------------------------------------------------------
"Purchaser")
AND SOFTCARE ▇▇.▇▇▇ INC., Suite 107 - ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "Issuer").
Subject and pursuant to the terms set out in Appendix III attached hereto, the
Purchaser hereby irrevocably subscribes for, and on Closing will purchase from
the Issuer the following securities at the following price:
Special Warrants;
---------------------------
$3.75 per Special Warrant for a total purchase price of $______________
NUMBER OF SECURITIES IN THE ISSUER HELD EITHER DIRECTLY OR INDIRECTLY:__________
The Purchaser hereby directs the Issuer to issue, register and deliver the
certificates representing the Special Warrants as follows:
Registration Instructions: Delivery Instructions:
------------------------------ ------------------------------
Name to appear on certificate Name and account reference, if applicable
------------------------------ ------------------------------
Account reference, if applicable Contact Name
------------------------------ ------------------------------
Address Address
------------------------------ ------------------------------
Telephone Number)
EXECUTED by the Purchaser this __________day of _________, 2000.
WITNESS:
------------------------------ ------------------------------
Signature of Witness Signature of individual
(if Purchaser is an individual)
------------------------------ ------------------------------
Name of Witness Authorized Signatory
(if Purchaser is not an individual)
------------------------------ -----------------------------
Address of Witness Name of Purchaser (please print)
------------------------------ -----------------------------
Name of Authorized Signatory
(please print)
------------------------------ ------------------------------
Address of Purchaser
(residence if an individual)
ACCEPTED this ________ day of ___,2000.
------------------------------
SOFTCARE ▇▇.▇▇▇ INC.
Per:
------------------------------
Authorized Signatory
APPENDIX I(A)
CERTIFICATION BY FOREIGN PORTFOLIO MANAGER
The undersigned is purchasing securities of Softcare ▇▇.▇▇▇ Inc. (the "Issuer").
The undersigned hereby certifies that:
(a) it is purchasing securities of the Issuer on behalf of managed
accounts over which it has absolute discretion as to
purchasing and selling, and in respect of which it receives no
instructions from any person beneficially interested in such
accounts or from any other person;
(b) it carries on the business of managing the investment
portfolios of clients through discretionary authority granted
by those clients (a "portfolio manager" business)
in_________________________________ [jurisdiction], and it is
permitted by law to carry on a portfolio manager business in
that jurisdiction;
(c) it was not created solely or primarily for the purpose of
purchasing securities of the Issuer;
(d) the total asset value of the investment portfolios it manages
on behalf of clients is not less than $20,000,000 (Cdn);
(e) it does not believe, and has no reasonable grounds to believe,
that any resident of British Columbia 6i a beneficial interest
in any of the managed accounts for which it is purchasing; and
(f) the Issuer has provided it with a list of the directors,
senior officers and other insiders of the Issuer, and the
persons that carry on investor relations activities for the
Issuer (which list is attached as Schedule 'A" to this
Appendix), and it does not believe, and has no reasonable
grounds to believe, that any of those persons has a beneficial
interest in any of the managed accounts for which it is
purchasing, except as follows:
--------------------------------------------------------------
--------------------------------------------------------------
(name of insider(s) or person(s) carrying on investor
relations activities for the Issuer that have a beneficial
interest in an account)
The undersigned acknowledges that it is bound by the provisions of the British
Columbia Securities Act including, without limitation, sections 87 and 111
concerning the filing of insider reports and reports of acquisitions. Dated at
__________________, this _____________day of ___________, 2000.
-------------------------------
Name of Purchaser - please print)
-------------------------------
Authorized Signature)
-------------------------------
Official Capacity - please print)
------------------------------
please print name of individual
whose signature appears above,
if different from printed above.)
SCHEDULE "A" TO APPENDIX I(A)
The following is a list of the directors, senior officers and other insiders of
the Issuer and persons carrying on investor relations activities for the Issuer:
Name Relation to Issuer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ President and Director
▇▇▇▇▇ ▇. ▇▇▇▇▇ Director
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Director
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Secretary
APPENDIX I(B)
CORPORATE PLACEE REGISTRATION FORM
Where subscribers to a private placement are not individuals, the following
information about the placee be provided.
This Form will remain on file with the Exchange, therefore the corporation or
other entity (the "Company") need only file it once, and it will be referenced
for all subsequent private placements in which it participates. If any of the
information provided in this Form changes, the Company must notify the Exchange
prior to participating in further placements with Exchange listed companies.
1. Name of Company:
------------------------------------------------------------------
2. Address of Company's Head Office:
------------------------------------------------------------------
------------------------------------------------------------------
3. Jurisdiction of Incorporation:
------------------------------------------------------------------
4. (a) If the Company will be purchasing securities as principal,
please check the box and include the names and
addresses of persons having a greater than 10% beneficial
interest in the Company:
------------------------------------------------------------------
5. The undersigned acknowledges that it is bound by the provisions of
the British Columbia Securities Act including, without limitation,
section 87 and 111 concerning the filing of insider reports and
reports of acquisitions.
6. For Companies which are B.C. reporting issuers:
If the Company will be purchasing as a portfolio manager, please
check the [ ] box and complete the Additional Undertaking and
Certification set out below.
Additional Undertaking and Certification - Portfolio Manager
If the undersigned is a portfolio manager purchasing as agent for accounts that
are fully managed by it, the undersigned acknowledges that it is bound by the
provisions of the Securities Act (British Columbia) (the "Act"), and undertakes
to comply with all provisions of the Act relating to ownership of, and trading
in, securities including, without limitation, the filing of insider reports and
reports pursuant to Section 111 of the Act.
If the undersigned carries on business as a portfolio manager in a jurisdiction
outside of Canada, the undersigned certifies that:
-2-
(a) it is purchasing securities of the Issuer on behalf of managed
accounts over which it has absolute discretion as to
purchasing and selling, and in respect of which it receives no
instructions from any person beneficially interested in such
accounts or from any other person;
(b) it carries on the business of managing the investment
portfolios of clients through discretionary authority granted
by those clients (a "portfolio manager" business)
in____________________________ [jurisdiction], and it is
permitted by law to carry on a portfolio manager business in
that jurisdiction;
(c) it was not created solely or primarily for the purpose of
purchasing securities of the Issuer;
(d) the total asset value of the investment portfolios it manages
on behalf of clients is not less than $20,000,000;
(e) it does not believe, and has no reasonable grounds to believe,
that any resident of British Columbia has a beneficial
interest in any of the managed accounts for which it is
purchasing; and
(f) it has no reasonable grounds to believe, that any of the
directors, senior officers and other insiders of the Issuer,
and the persons that carry on investor relations activities
for the Issuer has a beneficial interest in any of the managed
accounts for which it is purchasing.
Dated at _____________________, this ______day of __________________, 2000.
-------------------------------
(Name of Purchaser - please print)
-------------------------------
(Authorized Signature)
-------------------------------
(Official Capacity - please print)
-------------------------------
(please print name of individual
whose signature appears above,
if different from name of purchaser
printed above.)
APPENDIX II(A)
This is the form required under section 135 of the Rules and, if applicable, by
an order issued under section 76 of the Securities Act.
FORM 20A (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from Softcare ▇▇.▇▇▇ Inc. (the "Issuer")
_________________________Special Warrants (the "Securities") of the
Issuer, each Special Warrant is exchangeable at no additional cost for
one common share (a "Share") and one half of one share purchase warrant
(a "Warrant") of the Issuer. One whole Warrant will entitle the holder
to purchase an additional common share of the Issuer at a price of
$4.25 per share for a period of one year. The Issuer will use its best
efforts to file an annual information form in Alberta to qualify the
distribution of the Shares and the Warrants.
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be the beneficial owner of the
Securities.
3. I [circle one] have/have not received an offering memorandum describing
the Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the
Securities, AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities
and it is my responsibility to find out what those
restrictions are and to comply with them before selling the
Securities, AND
(e) I will not receive a prospectus that the British Columbia
Securities Act (the "Act") would otherwise require be given to
me because the Issuer has advised me that it is relying on a
prospectus exemption, AND
(f) because I am not purchasing the Securities under a prospectus,
I will not have the civil remedies that would otherwise be
available to me, AND
(g) the Issuer has advised me that it is using an exemption from
the requirement to sell through a dealer registered under the
Act, except purchases referred to in paragraph 5(g), and as a
result I do not have the benefit of any protection that might
have been available to me by having a dealer act on my behalf.
5. I also acknowledge that: [circle one]
(a) I am purchasing Securities that have an aggregate acquisition
cost of $97,000 or more, OR
(b) my net worth, or my net worth jointly with my spouse at the
date of the agreement of purchase and sale of the security, is
not less than $400,000, OR
-2-
(c) my annual net income before tax is not less than $75,000, or
my annual net income before tax jointly with my spouse is not
less than $125,000, in each of the two most recent calendar
years, and I reasonably expect to have annual net income
before tax of not less than $75,000 or annual net income
before tax jointly with my spouse of not less than $125,000 in
the current calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister or child of a senior
officer or director of the Issuer, or of an affiliate of the
Issuer, OR
(f) I am a close personal friend of a senior officer or director
of the Issuer, or of an affiliate of the Issuer, OR
(g) I am purchasing securities under section 128(c) ($25,000 -
registrant required) of the Rules, and I have spoken to a
person [Name of registered person:
_________________________________(the "Registered Person")]
who has advised me that the Registered Person is registered to
trade or advise in the Securities and that the purchase of the
Securities is a suitable investment for me.
6. If I am an individual referred to in paragraph 5(b), 5(c), or 5(d), I
acknowledge that, on the basis of information about the Securities
furnished by the Issuer, I am able to evaluate the risks and merits of
the Securities because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of adviser:
__________________(the "Adviser")] who has advised me that the Adviser
is:
(i) registered to advise, or exempted from the requirement
to be registered to advise, in respect of the
Securities, and
(ii) not an insider of, or in a special relationship with,
the Issuer.
The statements made in this report are true.
DATED______________________________,2000
-----------------------------------
Signature of Purchaser
-----------------------------------
Name of Purchaser
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Address of Purchaser
APPENDIX III
1. DEFINITIONS
1.1 In this Agreement, which includes the cover page and all of the Appendices,
the following words have the following meanings unless otherwise indicated:
(a) "1933 Act' means the Securities Act of 1933 (United States of
America), as amended;
(b) "Agency Agreement" means the agency agreement between the
Agents and the Issuer dated for reference March 3, 2000;
(c) "Agents" means Canaccord Capital Corporation, Research Capital
Corporation and ▇▇▇▇▇▇▇ Securities Inc. or one of their
sub-agents;
(d) "AIF" has the meaning defined in the B.C. Policy and the
Alberta AIF Rules;
(e) "Alberta Act" means the Securities Act, (Alberta) S.A. 1981,
c. S-6. 1, as amended;
(f) "Alberta AT Rules" means Alberta Securities Commission Rule
45-501 and Companion Policy 45-501 CP;
(g) "Alberta Commission" means the Alberta Securities Commission;
(h) "Applicable Legislation" means the B.C. Act and the Alberta
Act together with the regulations and rules made and
promulgated thereunder and all administrative policy
statements, blanket orders and rulings, notices, and other
administrative directions issued by the Commissions;
(i) "B.C. Act" means the Securities Act, (British Columbia)
R.S.B.C. 1996, as amended,
(j) "B.C. Blanket Order" means Blanket Order and Ruling #98/7, or
any successor instrument, issued by the B.C. Commission;
(k) "B. C. Commission' means the British Columbia Securities
Commission;
(l) "B.C. Policy' means British Columbia's Local Policy Statement
3-27, or any successor instrument, issued by the B.C.
Commission;
(m) "B.C. Rules" means the rules made under the B.C. Act;
(n) "CDNX Policies" means the rules and policies of the Canadian
Venture Exchange;
(o) "Closing" means the day Special Warrants are issued to the
Purchaser;
(p) "Commissions' means the B.C. Commission and the Alberta
Commission;
(q) "Current AIF has the meaning defined in the B.C. Policy;
(r) "Distribution" means the proposed issuance of Shares and
Warrants to the holders of the Special Warrants on the deemed
exercise of the Special Warrants;
(s) "Eligibility Date' means the date on which the Issuer receives
confirmation of filing of its AIF from the Alberta Commission
and is in a position to deliver a certificate in the form
contemplated by the Alberta AIF Rules to the Agent, upon the
distribution of the Shares and Warrants which underlie the
Special Warrants;
(t) "Exchange" means the Canadian Venture Exchange;
(u) "Exemptions" means the exemptions from the prospectus
requirements under section 74(2)(4) of the B.C. Act and
section 107(l)(d) of the Alberta Act;
(v) "Filing Deadline" means the date the Private Placement
documentation is required to be filed with the Exchange, or
any extension thereof;
(w) "Final Closing" means the last closing under the Private
Placement;
(x) "Private Placement" means the offering of the Special Warrants
on the terms and conditions of the Agency Agreement;
(y) "Qualifying Issuer" has the meaning defined in the B.C.
Blanket Order and the Alberta AI Rules;
(z) "Regulation S" means Regulation S promulgated under the 1933
Act;
(aa) "Regulatory Authorities" means the Commissions and the
Exchange;
(bb) "Release Date" means:
(i) if the Purchaser is resident in British Columbia,
that day which falls four months from the Closing;
(ii) if the Purchaser is resident in Alberta, the Eligibility
Date or, if the Eligibility Date has occurred before that day
which falls four months from the Closing, that day which falls
four months from the Closing;
(cc) "Securities" means the Special Warrants, the Shares, the
Warrants and the Warrant Shares;
(dd) "Shares" means the previously unissued common shares in the
capital of the Issuer, as presently constituted, which will be
issued upon the exercise or deemed exercise of the Special
Warrants;
(ee) "Special Warrants" means the special warrants of the Issuer to
be offered by the Issuer pursuant to the Private Placement and
which have the terms provided in this Agreement and in the
certificates representing such special warrants and the
Special Warrant Indenture,
(ff) "Special Warrant Indenture* means the indenture made between
the Trustee and the Issuer providing for the issuance of
Special Warrants, satisfactory in form and substance to the
Agents;
(gg) "Trustee" means Pacific Corporate Trust Company;
(hh) "Warrants" means the share purchase warrants of the Issuer,
which will be issued upon the exercise or deemed exercise of
the Special Warrants and which have the terms provided in this
Agreement and the certificates representing such share
purchase warrants and the Warrant Indenture;
(ii) "Warrant Indenture" means the indenture made between the
Trustee and the Issuer providing for the issuance of Warrants,
satisfactory in form and substance to the Agents; and
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(jj) "Warrant Shares" means the previously unissued common shares
in the capital of the Issuer, as presently constituted, which
will be issued on exercise of the Warrants.
1.2 In this Agreement, the following terms have the meanings defined in
Regulation "S": "Directed Selling Efforts", "Foreign Issuer', "Substantial U.S.
Market Interest", "U.S. Person" and 'United States".
2. PURCHASE AND SALE OF SPECIAL WARRANTS
2.1 The Purchaser was introduced to the Issuer by the Agents under the terms of
the Agency Agreement.
2.2 The Special Warrants will be issued under the Special Warrant Indenture and
registered in the name of the purchasers or their nominees.
2.3 Each Special Warrant will on exercise or deemed exercise entitle the holder
to acquire one Share and one half of one Warrant without further payment or
action on the part of the holder.
2.4 The Special Warrants may be exercised by the holder in whole or in part at
any time after the Closing. Any unexercised Special Warrants will be deemed to
be exercised on that day which is the earlier of:
(a) 330 days from the Closing on which such Special Warrants were
issued; and
(b) the fifth business day after the Release Date.
2.5 Upon exercise or deemed exercise, the Special Warrants will be automatically
cancelled and will have no further force or effect.
2.6 Subject to the Applicable Legislation and the CDNX Policies, the Special
Warrants will be non-transferable.
2.7 The Special Warrant Indenture will contain, among other things, provisions
for the appropriate adjustment in the class and number of the Shares and
Warrants and the exercise price of Warrants issued upon exercise or deemed
exercise of the Special Warrants upon the occurrence of certain events,
including any subdivision, consolidation or reclassification of the common
shares of the Issuer, the payment of stock dividends and the amalgamation of the
Issuer.
2.8 The issue of the Special Warrants will not restrict or prevent the Issuer
from obtaining any other financing, or from issuing additional securities or
rights prior to the deemed exercise of the Special Warrants.
2.9 The Issuer has filed a Current AIF in British Columbia and therefore,
as long as the requirements of the B.C. Blanket Order are met, the Purchaser, if
resident in British Columbia, will have the shortened hold period provided in
the B.C. Policy.
2.10 The Issuer will use its best efforts to fide an AIF in Alberta and to have
the Eligibility Date occur within 120 days immediately following the date of
Closing and to otherwise comply with the Alberta AIF Rules in order to permit
the Purchaser, if resident in Alberta, to have the shortened hold period
provided therein.
2.11 If the Eligibility Date does not occur within the 120 days immediately
following the Closing, the Issuer will continue to use its best efforts to have
the Release Date for Securities held by Purchasers resident in Alberta occur
prior to the date which is 330 days after the Closing.
3. WARRANTS
3.1 The Warrants will be issued under the Warrant Indenture and registered in
the name of the purchasers or their nominees.
3.2 The right to purchase a Warrant Share under a Warrant may be exercised at
any time until the dose of business on the day which is 12 months from the date
of issue of the Special Warrant under which such Warrant was issued to the
holder.
3.3 One whole Warrant will entitle the holder, on exercise, to purchase one
Warrant Share at a price of $4.25 per Warrant Share.
3.4 The Warrants will be non-transferable.
3.5 The certificates representing the Warrants will, among other things, include
provisions for the appropriate adjustment in the class, number and price of the
Warrant Shares issued upon exercise of the Warrants upon the occurrence of
certain events, including any subdivision, consolidation or reclassification of
the Issuer's common shares, the payment of stock dividends and the amalgamation
of the Issuer.
3.6 The issue of the Warrants will not restrict or prevent the Issuer from
obtaining any other financing, or from issuing additional securities or rights,
during the period within which the Warrants may be exercised.
4. WARRANTIES AND DISCLAIMER
4.1 The Purchaser acknowledges, represents, warrants and covenants to and with
the Issuer that, as at the date given above and at the Closing:
(a) no prospectus has been filed by the Issuer with the
Commissions in connection with the issuance of the Special
Warrants, the issuance is exempted from the prospectus
requirements of the Applicable Legislation and that:
(i) the Purchaser is restricted from using most of the
civil remedies available under the Applicable
Legislation;
(ii) the Purchaser may not receive information that would
otherwise be required to be provided to him under the
Applicable Legislation; and
(iii) the Issuer is relieved from certain obligations that
would otherwise apply under the Applicable
Legislation;
(b) the Purchaser, wherever resident, is:
(i) purchasing sufficient Special Warrants so that the
aggregate acquisition cost of the Special Warrants to
the Purchaser is not less than $97,000, the Purchaser
is not a corporation, partnership, trust, fund,
association, or any other organized group of persons
created solely, or used primarily, to permit the
purchase of the Special Warrants (or other similar
purchases) by a group of individuals whose individual
share of the aggregate acquisition cost of the
Special Warrants is less than $97,000, and the
Purchaser is either:
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(A) purchasing the Special Warrants as principal
and no other person, corporation, firm or
other organization will have a beneficial
interest in the Special Warrants; or
(B) if not purchasing the Special Warrants as
principal, is
(I) duly authorized to enter into this
subscription and to execute all
documentation in connection with the
purchase on behalf of each beneficial
purchaser, it being acknowledged that
the Issuer may in the future be required
by law to disclose on a confidential
basis to securities regulatory
authorities the identity of each
beneficial purchaser of Special Warrants
for whom the Purchaser may be acting;
and is
(a) a trust company, insurance
company or financial institution
that has been authorized to do
business under the Financial
Institutions Act (British
Columbia);
(b) an adviser who manages the
investment portfolio of clients
through discretionary authority
granted by one or more clients
and who is registered as a
portfolio manager under the B.C.
Act or is exempt from such
registration;
(c) a trust company or insurer,
authorized under the laws of a
province or territory of Canada
other than British Columbia to
carry on business in such
province or territory;
(d) a portfolio manager registered or
exempt from registration under
the laws of a province or
territory of Canada other than
British Columbia; or
(e) a portfolio manager in a
jurisdiction other than Canada
and has provided the Issuer with
a certification as set out in
Appendix I(A) or if a corporation
Appendix I(B), the certifications
made therein being repeated to
the Issuer and the Agents herein;
and it is purchasing the Special Warrants as
an agent or trustee for accounts that are My
managed by it, and the aggregate acquisition
cost of the Special Warrants purchased for
all the accounts managed by it is not less
than $97,000; or
(II) is acting as agent for one or more
disclosed principals, each of which
principals is purchasing as a
principal for its own account, not
for the benefit of any other person,
and not with a view to the resale or
distribution of all or any of the
Special Warrants and each of which
principals complies with Subsection
4.1(b)(i) hereof;
(c) if resident in Alberta, the Purchaser is:
(i) purchasing sufficient Special Warrants such that the
aggregate acquisition cost of the Special Warrants to
the Purchaser is not less than $97,000, and the
Purchaser is:
(A) an individual;
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(B) a corporation, syndicate, partnership or
other form of unincorporated organization
which pre-existed the offering of the
Special Warrants and has a bona fide purpose
other than investment in the Special
Warrants; or
(C) a corporation, syndicate, partnership or
other form of unincorporated organization
created to permit an investment in the
Special Warrants, where the individual share
of the aggregate acquisition cost for each
participant is not less than $97,000;
AND
(ii) the Purchaser is either
(A) purchasing the Special Warrants as principal
and no other person, corporation, firm or
other organization will have a beneficial
interest in the Special Warrants; or
(B) if not purchasing the Special Warrants as
principal, is:
(I) duly authorized to enter into this
Subscription Agreement and to
execute all documentation in
connection with the purchase on
behalf of each beneficial purchaser,
it acknowledges that the Issuer may
in the future be required by law to
disclose on a confidential basis to
securities regulatory authorities
the identity of each beneficial
purchaser of Special Warrants for
whom it may be acting; and is
(a) trading for accounts My
managed by it and is a
trust corporation trading
as trustee or an agent, a
portfolio manager trading
as an agent, or a person or
company trading as an agent
that, except for an
exemption under the Alberta
Act or the rules
thereunder, is required to
be registered as a
portfolio manager; or
(b) acting as agent for one or
more disclosed principals,
each of which principals is
purchasing as a principal
for its own account, not
for the benefit of any
other person, and not with
a view to the resale or
distribution of all or any
of the Special Warrants and
each of which principals
complies with Subsection
4.1(c)(i) hereof;
(d) to the best of the Purchaser's knowledge, the Special Warrants
were not advertised;
(e) no person has made to the Purchaser any written or oral
representations:
(i) that any person will resell or repurchase the
Securities;
(ii) that any person will refund the purchase price of the
Special Warrants;
(iii) as to the future price or value of any of the
Securities; or
(iv) that the Securities will be listed and posted for
trading on a stock exchange or that application has
been made to list and post the Securities for trading
on a stock exchange, other than the Exchange;
(f) this subscription has not been solicited in any other manner
contrary to the Applicable Legislation or the 1933 Act;
(g) the Purchaser is not a "control person" of the Issuer as
defined in the Applicable Legislation, will not become a
"control person' by virtue of this purchase of any of the
Securities, and does not intend to act in concert with any
other person to form a control group of the Issuer;
(h) the offer was not made to the Purchaser when he was in the
United States and at the time the Purchaser's buy order was
made to the Agents, the Purchaser was outside the United
States;
(i) the Purchaser is at arm's length (as that term is customarily
defined) with the Issuer;
(j) the Purchaser acknowledges that the Securities have not been
registered under the 1933 Act and may not be offered or sold
in the United States unless registered under the 1933 Act and
the securities laws of all applicable states of the United
States or an exemption from such registration requirements is
available, and that the Issuer has no obligation or present
intention of filing a registration statement under the 1933
Act in respect of the Special Warrants, the Shares or the
Warrants;
(k) the Purchaser is not a U.S. Person;
(l) the Purchaser is not and will not be purchasing Special
Warrants for the account or benefit of any U.S. Person;
(m) the Purchaser (or others for whom it is contracting hereunder)
has been advised to consult its own legal and tax advisors
with respect to applicable resale restrictions and tax
considerations, and it (or others for whom it is contracting
hereunder) is solely responsible for compliance with
applicable resale restrictions and applicable tax legislation;
(n) the Purchaser has no knowledge of a "material fact" or
"material change" (as those terms are defined in the
Applicable Legislation) in the affairs of the Issuer that has
not been generally disclosed to the public, save knowledge of
this particular transaction;
(o) the offer made by this subscription is irrevocable (subject to
the Purchaser's right to withdraw his subscription and to
terminate his obligations as set out in this Agreement) and
requires acceptance by the Issuer and approval of the
Exchange;
(p) the Purchaser has the legal capacity and competence to enter
into and execute this Agreement and to take all actions
required pursuant hereto and, if the Purchaser is a
corporation it is duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation and all
necessary approvals by its directors, shareholders and others
have been given to authorize execution of this Agreement on
behalf of the Purchaser,
(q) the entering into of this Agreement and the transactions
contemplated hereby will not result in the violation of any of
the terms and provisions of any law applicable to, or the
constating documents of, the Purchaser or of any agreement,
written or oral, to which the Purchaser may be a part or by
which he is or may be bound,
(r) this Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding agreement
of the Purchaser enforceable against the Purchaser;
(s) the Purchaser has been independently advised as to the
applicable hold period imposed in respect of the Securities by
securities legislation in the jurisdiction in which the
Purchaser resides and confirms that no representation has been
made respecting the applicable hold
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periods for the Securities and is aware of the risks and other
characteristics of the Securities and of the fact that the
Purchaser may not be able to resell the Securities except in
accordance with the applicable securities legislation and
regulatory policies;
(t) the Purchaser, and any beneficial purchaser for whom the
Purchaser is acting, is resident in the province or
jurisdiction set out on the cover page of this Agreement;
(u) the Purchaser is capable of assessing the proposed investment
as a result of the Purchaser's financial experience or as a
result of advice received from a registered person other than
the Issuer or any affiliates thereof;
(v) if required by applicable securities legislation, policy or
order or by any securities commission, stock exchange or other
regulatory authority, the Purchaser will execute, deliver,
file and otherwise assist the Issuer in filing, such reports,
undertakings and other documents with respect to the issue of
the Securities as may be required;
(w) the Purchaser acknowledges that the Agents will receive a
commission from the Issuer in connection with this Private
Placement;
(x) the Purchaser acknowledges that the offering of securities
under this Private Placement is restricted to purchasers in
Canada that are resident in British Columbia and Alberta only,
and in such other jurisdictions outside of Canada and the
United States, where such securities may be lawfully offered
for sale; and
(y) the Purchaser agrees that the above representations,
warranties and covenants in this subsection will be true and
correct both as of the execution of this subscription and as
of the day of Closing.
4.2 The foregoing representations, warranties and covenants are made by the
Purchaser with the intent that they be relied upon by the Issuer and the Agents
in determining its suitability as a purchaser of Special Warrants, and the
Purchaser hereby agrees to indemnify the Issuer and the Agents against all
losses, claims, costs, expenses and damages or liabilities which any of them may
suffer or incur as a result of reliance thereon. The Purchaser undertakes to
notify the Issuer and the Agents immediately of any change in any
representation, warranty or other information relating to the Purchaser set
forth herein which takes place prior to the Closing.
4.3 The Issuer represents and warrants that, as of the date given above and at
the Closing:
(a) the Issuer and its subsidiaries, if any, are valid and
subsisting corporations duly incorporated and in good standing
under the laws of the jurisdiction in which they are
incorporated, continued or amalgamated,
(b) the Issuer and its subsidiaries, if any, are duly registered
and licenced to carry on business in the jurisdictions in
which they carry on business or own property where required
under the laws of that jurisdiction;
(c) the authorized and issued capital of the Issuer is as
disclosed to the Exchange, and the outstanding shares of the
Issuer are fully paid and non-assessable;
(d) the Issuer will reserve or set aside sufficient shares in its
treasury to issue the Shares on exercise or deemed exercise of
the Special Warrants and the Warrant Shares on exercise of the
Warrants and such common shares, on receipt of full payment
therefor, will be duly and validly issued as fully paid and
non-assessable;
(e) except as qualified by the disclosure in all prospectuses,
filing statements, annual information forms, including the
Issuer's Current AIF, and press releases filed with either of
the Regulatory Authorities or the Offering Memorandum, if any,
(the "Disclosure Record"), the Issuer is the beneficial owner
of the properties, business and assets or the interests in the
properties, business or assets referred to in the Disclosure
Record, all agreements by which the Issuer holds an interest
in a property, business or assets are in good standing
according to their terms, and the properties are in good
standing under the applicable laws of the jurisdictions in
which they are situated;
(f) the Disclosure Record, subscription form and all other written
or oral representations made by the Issuer to the Purchaser in
connection with the Private Placement is and will be accurate
in all material respects and does and will omit no fact, the
omission of which does or will make such representations
misleading or incorrect;
(g) the financial statements contained in the Offering Memorandum,
if any, or most recently filed with the Commissions have been
prepared in accordance with Canadian generally accepted
accounting principles, accurately reflect the financial
position and all material liabilities (accrued, absolute,
contingent or otherwise) of the Issuer as of the date thereof,
and no adverse material changes in the financial position of
the Issuer have taken place since the date thereof, save in
the ordinary course of the Issuer's business;
(h) the Issuer has complied and will comply fully with the
requirements of all applicable corporate and securities laws
and administrative policies and directions, including, without
limitation, the Applicable Legislation in relation to the
issue and trading of its securities and in all matters
relating to the Private Placement and the Distribution;
(i) there is not presently, and will not be until the dosing of
the Distribution, any material change, as defined in the
Applicable Legislation, relating to the Issuer or change in
any material fact, as defined in the Applicable Legislation,
relating to any of the Securities which has not been or will
not be fully disclosed in accordance with the requirements of
the Applicable Legislation and the CDNX Policies;
(j) the issue and sale of the Securities by the Issuer and the
Agents does not and will not conflict with, and does not and
will not result in a breach of, any of the terms of the
Issuer's incorporating documents or any agreement or
instrument to which the Issuer is a party;
(k) neither the Issuer nor any of its subsidiaries is a party to
any actions, suits or proceedings which could materially
affect its business or financial condition, and to the best of
the Issuer's knowledge no such actions, suits or proceedings
are contemplated or have been threatened except as disclosed
in the Disclosure Record;
(l) there are no judgments against the Issuer or any of its
subsidiaries, if any, which are unsatisfied, nor are there any
consent decrees or injunctions to which the Issuer or any of
its subsidiaries, if any, is subject;
(m) this Agreement has been or will be by the Closing, duly
authorized by all necessary corporate action on the part of
the Issuer, and the Issuer has full corporate power and
authority to undertake the Private Placement, and undertake
the Distribution;
(n) the Issuer is not in default of any of the requirements of the
Applicable Legislation or any of the administrative policies
or notices of the Regulatory Authorities
(o) the Issuer is a "reporting issuer" within the meaning of the
B.C. Act and the Alberta Act;
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(p) no order ceasing or suspending trading in securities of the
Issuer nor prohibiting the sale of such securities has been
issued to and is outstanding against the Issuer or its
directors, officers or promoters or against any other
companies that have common directors, officers or promoters
and no investigations or proceedings for such purposes are
pending or threatened;
(q) the Issuer satisfies and will satisfy all necessary
requirements under the Exemptions in order to permit the sale
of the Special Warrants to Purchasers who are qualified to
purchase the Special Warrants under the Exemptions, pursuant
to this Private Placement;
(r) except as disclosed in the Disclosure Record or otherwise to
the Regulatory Authorities no person has any right, agreement
or option, present or future, contingent or absolute, or any
right capable of becoming such a right, agreement or option,
for the issue or allotment of any unissued shares in the
capital of the Issuer or its subsidiaries, if any, or any
other security convertible into or exchangeable for any such
shares, or to require the Issuer or its subsidiaries, if any,
to purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its capital;
(s) the Issuer and its subsidiaries, if any, have filed all
federal, provincial, local and foreign tax returns which are
required to be filed, or have requested extensions thereof,
and have paid all taxes required to be paid by them and any
other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except
for such assessments, fines and penalties which are currently
6eing contested in good faith;
(t) the Issuer and its subsidiaries, if any, have established on
their books and records reserves which are adequate for the
payment of all taxes not yet due and payable and there are no
liens for taxes on the assets of the Issuer or its
subsidiaries, if any, except for taxes not yet due, and there
are no audits of any of the tax returns of the Issuer or its
subsidiaries, if any, which are known by the Issuer's
management to be pending, and there are no claims which have
been or may be asserted relating to any such tax returns
which, if determined adversely, would result in the assertion
by any governmental agency of any deficiency which would have
a material adverse effect on the properties, business or
assets of the Issuer or its subsidiaries, if any;
(u) the Issuer owns or possesses adequate rights to use all
material patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and
other intellectual property necessary for the business of the
Issuer now conducted and proposed to be conducted, without any
conflict with or infringement of the rights of others. The
Issuer has received no communication alleging that the Issuer
has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights
of any other person or entity. Neither the execution or
delivery of this Agreement nor the carrying on of the business
of the Issuer by the employees of the Issuer, nor the conduct
of the business of the Issuer will conflict with or result in
a breach of the terms, conditions, or provisions of or
constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated;
(v) other than the Agents, no person, firm or corporation acting
or purporting to act at the request of the Issuer is entitled
to any brokerage, agency or finder's fee in connection with
the transactions described herein;
(w) the certifications in Appendix IV are true and correct and
will be true and correct as of the date of the Closing; and
(x) the Issuer is, and will be at Closing, a Qualifying Issuer.
4.4 The representations and warranties contained in this Section will
survive the Closing.
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4.5 Both the Issuer and the Purchaser acknowledge that the Agents is acting as
agent in this transaction and the Purchaser hereby acknowledges that all
warranties, conditions, representations or stipulations, whether express or
implied and whether arising hereunder or under prior agreement or statement or
by statute or at common law are expressly those of the Issuer, other than those
relating solely to the Agents. The Purchaser acknowledges that no information or
representation concerning the Issuer has been provided to the Purchaser by the
Issuer or the Agents other than those contained in this Agreement and the
Disclosure Record and that the Purchaser is relying entirely upon this Agreement
and the Disclosure Record. Any information given or statement made is given or
made without liability or responsibility howsoever arising on the part of the
Agents. No person in the employment of, or acting as agent of, the Agents has
any authority to make or give any representation or warranty whatsoever in
relation to the Issuer or the Special Warrants. Any information given or
statement made is given or made without liability or responsibility howsoever
arising on the part of the Agents, and the Issuer and the Purchaser hereby
release the Agents from any claims that may arise in respect thereof.
5. WITHDRAWAL OF SUBSCRIPTION AND CONTRACTUAL RIGHTS
The Purchaser reserves the right to withdraw this subscription and to terminate
its obligations hereunder at any, time before Closing if the Agents terminates
its obligations with respect to the Private Placement under the Agency Agreement
and hereby appoints the Agents as its agent for the purpose of notifying the
Issuer of the withdrawal or termination of this subscription.
6. CLOSING
6.1 The Closing will take place within five business days of approval of the
Private Placement by the Exchange, unless otherwise agreed between the Issuer
and the Agents. The Purchaser acknowledges that, although Special Warrants may
be issued to other purchasers under the Private Placement concurrently with the
Closing, there may be other sales of Special Warrants under the Private
Placement, some or all of which may close after the Closing. The Purchaser
further acknowledges that there is a risk that insufficient funds may be raised
on the Closing to fund the Issuer's objectives described in the Offering
Memorandum, if any, and that further closings may not take place after the
Closing.
6.2 On or before the Filing Deadline, the Purchaser will deliver to the Issuer
or the Agents this subscription form, duly executed, and payment in full for the
total price of the Special Warrants to be purchased by the Purchaser.
6.3 At Closing, the Issuer will deliver to the Agents the certificates
representing the Special Warrants purchased by the Purchaser registered in the
name of the Purchaser or its nominee against payment of:
(a) 40% of the Proceeds (the "Escrowed Funds") to the Trustee to
be held in accordance with the Special Warrant Indenture and
the Trustee shall pay the same and any interest accrued
thereon to the Issuer on the earlier of the Eligibility Date
or 12 months from Closing; and
(b) the balance of the Proceeds to the Issuer.
6.4 Prior to the Filing Deadline, the Purchaser will deliver to the Issuer:
(a) a fully executed Form 20A (IP) in the form set out in Appendix
II(A), if required under the applicable Exemption;
(b) if the Purchaser is a "portfolio manager" in a jurisdiction
other than Canada, a fully executed certification in the form
set out in Appendix I(A) or Appendix I(B), as appropriate; and
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(c) if the Purchaser is not an individual, a Corporate Placee
Registration Form (the "Form") as set out in Appendix I(B),
unless the' Form is already on file with the Exchange and the
Exchange has been advised of any changes in the information
provided in the Form, prior to the Purchaser participating in
the Private Placement.
6.5 The Closing is subject to the Issuer having filed an AIF in British Columbia
and having obtained and delivered a copy of the confirmation of filing the AIF
from the B.C. Commission to the Agents.
7. HOLD PERIOD
7.1 The Purchaser acknowledges that the Securities will be subject to
restrictions on resale until such time as:
(a) the appropriate "hold periods' have been satisfied, which:
(i) for residents of British Columbia, is at least four
months from the date of issue of the Special Warrants;
and
(ii) for residents of Alberta, is:
(A) with respect to the Shares and Warrant Shares at
least 12 months from the date of issue of the
Special Warrants; and
(B) with respect to the Special Warrants and the
Warrants at least 18 months from the date of
issue of the Special Warrants;
or, if the Eligibility Date has occurred prior to the
exercise of the Special Warrants, four months from the
date of issue of the Special Warrants;
(b) a further statutory exemption is available to the investor
and, if such trade takes place within one year of Closing, the
prior consent of the Exchange is obtained (unless the Release
Date has occurred); or
(c) an appropriate discretionary order is obtained pursuant to
applicable securities laws.
7.3 The certificates representing the Securities will bear a legend denoting the
restrictions on transfer imposed by the Applicable Legislation. The Purchaser
agrees to sell, assign or transfer the Securities only in accordance with the
requirements of applicable securities laws and such legends.
7.4 If resident in Alberta, the Purchaser acknowledges that they are required to
file a first trade report prepared in accordance with Form 21 within 10 days of
the first trade in any of the Securities with the Alberta Commission.
8. MISCELLANEOUS
8.1 The Purchaser hereby irrevocably authorizes the Agents, in their sole
discretion:
(a) to act as the Purchaser's representative at the Closing, to
receive certificates for Special Warrants subscribed for, the
certifications in Appendix IV and the certificate required by
the Alberta AIF Rules and to execute in its name and on its
behalf all closing receipts and documents required; and
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(b) to waive, in whole or in part, any representations,
warranties, covenants or conditions for the benefit of the
Purchaser contained herein or in any agreement or document
ancillary or related thereto.
8.2 The Purchaser hereby authorizes the Issuer to correct any minor errors in,
or complete any minor information missing from the Certification by Foreign
Portfolio Manager (Appendix I(A)), Corporate Placees Registration Form (Appendix
I(B)) or the Form 20A (1P) (Appendix II(A)) which has been executed by the
Purchaser and delivered to the Issuer.
8.3 The Issuer and the Agents will be entitled to rely on delivery by facsimile
machine of an executed copy of this subscription, and acceptance by the Issuer
of such facsimile copy will be equally effective to create a valid and binding
agreement between the Purchaser and the Issuer in accordance with the terms
hereof
8.4 Without limitation, this subscription and the transactions contemplated
hereby are conditional upon and subject to the Issuer receiving the Exchange's
approval of this subscription and the transactions contemplated hereby.
8.5 This agreement is not assignable or transferable by the parties hereto
without the express written consent of the other party hereto.
8.6 Time is of the essence of this Agreement and will be calculated in
accordance with the provisions of the Interpretation Act (British Columbia).
8.7 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
Securities and there are no other terms, conditions, representations or
warranties whether expressed, implied, oral or written, by statute, by common
law, by the Issuer, by the Agents, or by anyone else.
8.8 The parties to this Agreement may amend this Agreement only in writing.
8.9 This Agreement enures to the benefit of and is binding upon the parties to
this Agreement and their successors and permitted assigns.
8.10 A party to this Agreement will give all notices to or other written
communications with the other party to this Agreement concerning this Agreement
by hand or by registered mail addressed to the address given above.
8.11 This Agreement is to be read with all changes in gender or number as
required by the context.
8.12 This Agreement will be governed by and construed in accordance with the
laws of British Columbia, and the parties hereto irrevocably attorn and submit
to the jurisdiction of the courts of British Columbia with respect to any
dispute related to this Agreement.
END OF APPENDIX III
APPENDIX IV - CERTIFICATION BY ISSUER
The Issuer certifies that:
(a) the distribution of Special Warrants to the Purchaser pursuant
to this Private Placement will be made by the Issuer in a
security of its own issue;
(b) the Issuer is and will be at the Closing, a Qualifying Issuer;
(c) the Issuer has filed or prior to Closing will have filed a
Current AIF together with all supporting documents as set out
in the B.C. Policy or its Former Policy (as that term is
defined in the B.C. Blanket Order);
(d) the Issuer has and will have filed all documents that are
required to be filed under the continuous disclosure
provisions of the B.C. Act and the B.C. Rules, including
annual and interim financial information and annual reports,
press releases disclosing material changes and material change
reports;
(e) the Issuer has not and will not have made a substantial
transaction (as that term is used in the B.C. Policy) since
its Current AIF, unless the Issuer has filed a material change
report in compliance with section 5.14 of the B.C. Policy or
an amended AIF in compliance with section 4.12 of the Former
Policy; and
(f) the Executive Director of the B.C. Commission has not advised
the Issuer in writing that its securities are not eligible for
the shorter hold period provided for in the B.C. Blanket
Order.