EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
Agreement made this December 4, 2000, by and between ▇▇▇▇▇▇▇▇.▇▇▇ Inc., a
Colorado corporation (the "Company"), and Clayhill Limited, a British Virgin
Islands corporation (the "Subscriber").
In consideration of the mutual promises and covenants herein contained, the
parties hereto agree as follows:
ARTICLE 1
SUBSCRIPTION
1.1 SUBSCRIPTION OFFER. Subject to the terms and conditions hereof
Subscriber hereby irrevocably offers to purchase 16,000,000 shares of the
Company's common stock representing 40.8% of the issued share capital of the
Company at a price of $0.025 per share, for a total purchase price of US
$400,000. Such shares and any additional shares in the capital stock of the
Company purchased hereunder are collectively referred to herein as the
"Securities". The purchase price for the 16,000,000 shares subscribed for herein
is payable in full on December 15, 2000 or such later date as to which the
parties hereto may mutually agree in writing (the "Closing Date") firstly, by
crediting the sum of US $89,650, which was paid to the Company on December 1,
2000 (the receipt of which is hereby acknowledged by the Company), towards
payment of the purchase price, and secondly, by deposit on the Closing Date of
the Canadian Dollar equivalent of the sum of US $310,350 into the bank account
of the Company at Vancouver B.C., Canada (details of such account to be provided
by the Company by written notice delivered to the Subscriber on or before
December 12, 2000), to the credit of ▇▇▇▇▇▇▇▇.▇▇▇ Inc., OR, at the option of the
Company, exercised by notice in writing delivered to the Subscriber on or before
December 12, 2000, by deposit into the US Dollar account of the Company in
Vancouver, B.C. Canada (details of account to be provided by the Company in such
written notice) of the sum of US $310,350, provided that the Company and the
Subscriber acknowledge and agree that it is their mutual intent that the
Securities shall constitute 40.8% of the total issued and outstanding share
capital of the Company as at the Closing Date. Accordingly:
(a) if, at any time before or after the Closing Date any options,
warrants, pre-emptive rights or other rights to acquire shares
in the capital of the Company which exist on the Closing Date,
including without limitation rights held on the Closing Date
by ▇▇▇▇▇▇▇▇▇ Digital Inc. or any entity related thereto and by
▇▇▇▇▇▇ Private Equity, LLC or any entity related thereto, are
exercised;
(b) if, at any time before or after the Closing Date, any debt or
liability of the Company existing on the Closing Date is
converted or otherwise settled in whole or in part by the
Company issuing equity shares or securities or other
instruments convertible into equity shares in the capital of
the Company, or if equity shares in the capital of the Company
are issued to the Subscriber, or to any other person or entity
to raise equity capital for the purposes of selling in whole
or in part any debt, liability or obligation of the Company
existing on the Closing Date; and
(c) if, at any time before or after the Closing Date the Company
should issue any shares in its capital stock with respect to
any repurchase of rights or shares held by others in, or the
settlement of obligations of, any subsidiary or affiliate of
the Company which exist on the Closing Date, then the Company
shall give written notice of the occurrence of any such event
and upon each issuance of equity shares of the Company
pursuant to the exercise of any such options, warrants,
pre-emptive rights or other rights described in paragraph (a)
above, and upon each issuance of equity shares upon the
conversion or settlement of any such debt, obligation or
liability or the exercise of any such conversion rights
described in paragraph (b) above and upon the issuance of any
shares as contemplated in paragraph (c) above, the Subscriber
shall have the right, exercisable by notice in writing to the
Company, to subscribe for such number of additional equity
shares in the capital of the Company at a price equal to US
$.01 per share such that after such shares have been
subscribed for, allotted and issued the Subscriber shall
continue to hold 40.8% of the issued and outstanding equity
shares in the capital of the Company as if such shares
described in paragraphs (a) and (b) above had been issued and
were, on the Closing Date, outstanding.
1.2 Subscriber's Conditions. The obligations of the Subscriber to complete
the subscription for the 16,000,000 shares subscribed for herein and to pay the
purchase price therefore is subject to the fulfillment to the satisfaction of
the Subscriber in its sole and arbitrary discretion on or before the Closing
Date, of each of the following conditions (all or any of which may be waived in
whole or in part in writing by the Subscriber in its sole and arbitrary
discretion):
(a) the Subscriber having delivered to the Company a notice in
writing stating that the Subscriber has completed a due
diligence investigation with respect to the Company;
(b) the Company having delivered to the Subscriber a Deed of
Termination in form satisfactory to the Subscriber duly
executed by ▇▇▇▇▇▇ Private Equity, LLC wherein it is agreed
that the agreement between ▇▇▇▇▇▇ Private Equity, LLC and the
Company dated November 6, 2000 is terminated;
(c) the Company having delivered to the Subscriber an
Acknowledgement and Waiver in form satisfactory to the
Subscriber duly executed by ▇▇▇▇▇▇▇▇▇ Digital, Inc. wherein
▇▇▇▇▇▇▇▇▇ Digital, Inc. acknowledges the subscription for
shares herein provided for and waives any and all pre-emptive
rights that it may have under and pursuant to Section 6 of the
Securities Purchase Agreement between ▇▇▇▇▇▇▇▇▇ Digital, Inc.
and the Company dated December
(d) the Company having delivered to the Subscriber an agreement in
form satisfactory to the Subscriber duly executed by DDB World
Wide Communications Group Inc. ("DDB") wherein DDB agrees to
take no further proceedings with respect to Supreme Court of
B.C. Action NO. S006438, to withdraw its Notice of Intention
to Enforce Security dated December 6, 2000 and to waive all of
its rights to require the Company to further pay down its debt
to DDB under and pursuant to the letter agreement between the
Company and DDB dated October 12, 2000;
(e) the Company having delivered to the Subscriber a legal opinion
addressed to the Subscriber and its legal counsel from ▇▇▇▇▇▇
& ▇▇▇▇▇▇ dated and effective as of the Closing Date as to:
(i) the authorized and issued fully diluted capital of
the Company including options, warrants and
convertible securities;
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(ii) the absence of a requirement for shareholder approval
for the subscription for the Securities and the
acceptance by the Company thereof herein provided
for;
(iii) the absence of any restrictions, laws, bylaws,
agreements which such law firm is aware,
shareholders' resolutions or directors' resolutions
which could prohibit, benefit or otherwise encumber,
restrict or limit the Company from allotting and
issuing the Securities or any other shares as
contemplated in this Agreement;
(iv) the due authorization, execution and delivery by the
Company, and the enforceability in accordance with
its terms, of this Agreement.
(v) the due and valid issuance of the Securities;
(vi) the absence of any requirement for further U.S.
regulatory approvals with respect to the execution
and delivery of this Agreement, the acceptance of the
subscription for shares herein provided for by the
Company and the issuance by the Company of the
Securities;
(f) the obtaining of all regulatory and other approvals required
with respect to this Agreement and the transactions
contemplated herein;
(g) the Company having approved, and having agreed in writing to
implement, the Subscriber's proposed plan of reorganization
for the Company and the Company having taken such steps as the
Subscriber shall consider necessary prior to the Closing Date
to commence the implementation thereof;
(h) the Company having delivered to the Subscriber all documents
necessary for the allotment and issuance of the Securities
including without limitation:
(i) a certified copy of an authorizing directors
resolution of the Company approving this Agreement
and the issue and allotment of the Securities to the
Subscriber in accordance with the terms and
conditions herein;
(ii) certificates representing the Securities in the name
of the Subscriber;
(i) the Company having delivered to the Subscriber such other
consents approvals, waivers or other documents or instruments
as the Subscriber shall require to give the Subscriber good
title to the Securities and to enable the Subscriber or its
nominee to become the registered holder thereof.
1.3 The Company agrees that it shall, as soon as possible after execution
of this Agreement by the Subscriber, do all things necessary to convene a
special meeting of shareholders of the Company for the purposes of increasing
the authorized capital of the Company to 200,000,000 shares of common stock.
1.4 ACCEPTANCE OF SUBSCRIPTION. The Company hereby accepts the subscription
for shares provided for herein and agrees to allot and issue the shares
subscribed for herein subject to and in accordance with the provisions of this
Agreement on the Closing Date.
1.5 RESTRICTIONS ON SECURITIES. The Securities have not been registered
under the Shares Act of 1933 (the "Act") or any applicable state securities
laws. The certificates representing the Securities, will bear a restrictive
legend in accordance with the requirements of the Act and rules and regulations
thereto.
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1.6 DUE DILIGENCE. The Company shall, upon execution of this Agreement:
1.6.1 provide the Subscriber and its representatives with full
access to all officers, employees, agents and accountants of
the Company and its subsidiaries and their respective assets
and properties and books and records and accounts and
statements.
1.6.2 furnish the Subscriber and such affiliates and representatives
with all such information and data and all deeds, documents,
files, records and correspondence (including, without
limitation, copies of contracts, benefit plans and other books
and records and portfolio of loans and credit facilities)
concerning the business, affairs and operations of the Company
and its subsidiaries and relating to all borrowings of and all
encumbrances and charges created by the Company and its
subsidiaries as the Subscriber, such affiliates or any of such
other representatives reasonably may request in connection
with such investigation;
1.6.3 permit the Subscriber and its representatives to inspect all
documents of title relating to all and any material property
of the Company and its subsidiaries, including without
limitation, intellectual property rights;
1.6.4 furnish all such statements, information, explanations and
data from solicitors, bankers and auditors of the Company as
the Subscriber may reasonably require regarding the affairs,
operations, administration and financial or other whatsoever
state or condition of the Company and its subsidiaries; and
1.6.5 provide the Subscriber and its affiliates and each of their
respective representatives such signed consents as may be
requested by the Subscriber or its affiliates or their
respective representatives in order for the Subscriber to
conduct due diligence searches at the relevant regulatory or
statutory offices.
For the purpose of giving effect to this Section, the Company shall cause such
authorizations or other directions to be given to the Subscriber and provide
such reasonable facilities, assistance and access as the Subscriber may
reasonably require.
1.7 UNDERTAKINGS. The Company and the Subscriber hereby agree and undertake
that, each of them shall hold in confidence and not disclose to any person
(other than professional advisors on a basis of confidentiality) any information
whatsoever in relation to this Agreement or other offer made by the Subscriber
or any other confidential information of the Subscriber or the Company which may
come into their possession or control subject to any obligation to disclose the
same to any competent authority.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 STATUS OF SUBSCRIBER. Subscriber, if an individual, is at least 21
years of age, if an entity, each individual member of the entity is at least 21
years of age. Subscriber is not a U.S. person, as such term is defined in
Regulation S of the Act, and is not acquiring these shares for the account or
benefit of any U.S. person. Subscriber's subscription for the Securities
originated outside of the U.S.
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2.2 ACCESS TO INFORMATION. Because of Subscriber's pre-existing business or
personal relationship with the Company or with the officers and directors of the
Company, or by reason of the business or financial experience of Subscriber or
his professional advisors who are unaffiliated with and who are not compensated
by the Company, or any affiliate thereof, Subscriber has the capacity to protect
his own interests in connection with the offer and sale of the Securities.
2.3 UNDERSTANDING OF INVESTMENT RISKS. Subscriber understands that there is
no market for the Securities and no assurance that a market will develop, and
that realization of the objectives of the Company is subject to significant
economic and business risks.
2.4 UNDERSTANDING OF NATURE OF SECURITIES. Subscriber understands that:
(a) the Securities have not been registered under the Act or any
state securities law;
(b) the Securities cannot be sold or transferred for value without
registration under the Act and applicable state laws or
exemption therefrom;
(c) the Company has not made any representations to Subscriber
that the Company will register the Securities under the Act or
any applicable state securities laws or with respect to
compliance with any exemption therefrom;
(d) there may be stringent conditions on the Subscriber's
obtaining an exemption for the resale of the Securities under
the Act and any applicable state securities laws;
(e) since the Securities cannot be readily sold, the Subscriber is
prepared to bear the economic risk of the investment in the
Securities indefinitely;
(f) the Subscriber is aware that stop transfer instructions
against the certificate(s) evidencing the Securities will be
noted in the Company's records; and
(g) the Subscriber acknowledges that a restrictive legend in
compliance with Regulation S of the Act, will be placed upon
the certificate(s) evidencing the Securities reflecting, among
other things, restrictions on transfer.
2.5 INVESTMENT INTENT. Subscriber represents and warrants that:
(a) Subscriber is acquiring the Securities in reliance on
Regulation S of the Act and for the Subscriber's own account
and not for or on behalf of any other person;
(b) Subscriber is acquiring the Securities for investment and not
for distribution or with the intent to divide Subscriber's
participation with others or of reselling or otherwise
distributing the Securities;
(c) neither Subscriber nor anyone acting on Subscriber's behalf
has paid any commission or other remuneration to any person in
connection with the purchase of the Securities;
(d) Subscriber will not sell the Securities without registration
under the Act and any applicable state securities laws or
exemption therefrom;
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(e) Subscriber will sell the Securities in accordance with
Regulation S of the Act; and
(f) Subscriber agrees not to engage in any hedging transactions
with regard to the Securities unless in compliance with the
Act.
2.6 RESIDENCE OF SUBSCRIBER. The residence of Subscriber set forth below is
the true and correct residence of Subscriber and he or she has no present
intention of becoming a resident or domiciliary of any other state, country, or
jurisdiction.
2.7 FURTHER ASSURANCES. Each of the parties will execute and deliver to the
other party any document, or do any other act or thing, which the other party
may reasonably request in connection with the acquisition of the Securities.
2.8 NON-DISCLOSURE. Subscriber has not distributed any written materials
furnished to Subscriber by the Company to anyone other than the Subscriber's
professional advisors.
2.9 ABILITY TO BEAR ECONOMIC RISK. Subscriber is able to bear the economic
risk of an investment in the Securities and to maintain its investment in the
Securities for an indefinite period of time, and, further, could bear a total
loss of the investment.
2.10 FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES ONLY. If the
Subscriber is a partnership, corporation, trust, or other entity,
(a) Subscriber has full authority to enter into this subscription
agreement and to make the representations and warranties made
herein;
(b) Subscriber has completed the Entity Subscription Information
portion of this Agreement; and
(c) Subscriber was either not formed for the purpose of investing
in the Securities or has listed the names and address of each
person who owns an equity interest in the subscribing entity
in the Entity Subscription Information portion of this
Agreement.
2.11 INDEMNIFICATION OF COMPANY. Subscriber hereby agrees to indemnify and
hold harmless the Company, its officers, directors, and each other person, if
any, who controls or is controlled by any thereof, within the meaning of Section
15 of the Act, against any and all loss, liability, claim, damage and expense
whatsoever (including any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any other claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the Subscriber in this
Agreement or in any other document furnished by the Subscriber to any of the
foregoing in connection with this transaction.
2.12 REPRESENTATIONS, UNDERTAKINGS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants and covenants with the Subscriber with the
intent that notwithstanding any investigations which Subscriber, or any of its
directors, officers, employees, agents or advisors may have made the Subscriber
is relying upon such representations, warranties and covenants in entering into
this Subscription Agreement:
(a) that the issued share capital, on a fully diluted basis
including pending subscriptions, warrants, options and
convertible securities is as set forth in Schedule "A"
attached hereto;
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(b) Other Rights to Acquire Securities. No Person has any
agreement, right or option, consensual or arising by law,
present or future, contingent or absolute, or capable of
becoming an agreement, right or option:
(i) to require the Company to issue any further or other
shares in its capital or any other security
convertible or exchangeable into shares in its
capital or to convert or exchange any securities into
or for shares in the capital of the Company;
(ii) for the issue or allotment of any of the authorized
but unissued shares in the capital of the Company;
(iii) to require the Company to purchase, redeem or
otherwise acquire any of the issued and outstanding
shares in the capital of the Company; or
(iv) to purchase or otherwise acquire any shares in the
capital of the Company,
except as set forth in Schedule "A" and except for rights of ▇▇▇▇▇▇▇▇▇
Digital Inc. and ▇▇▇▇▇▇ Private Equity, LLC described herein.
The Company undertakes to indemnify and keep fully indemnified the
Subscriber against any costs (including all legal costs), expenses,
loss or liability suffered by the Subscriber as a result of or in
connection with any material inaccuracy or breach of any of the above
representations, warranties and covenants. This indemnity shall be
without prejudice to any other rights and remedies of the Subscriber
and its assigns in relation to any such breach of the representations,
warranties and covenants and such rights and remedies are hereby
expressly reserved.
ARTICLE 3
MISCELLANEOUS PROVISIONS
3.1 CAPTIONS AND HEADINGS. The Article and Section headings throughout this
Agreement are for convenience of reference only and shall in no way be deemed to
define, limit or add to any provision of this Agreement.
3.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement states the entire agreement
and understanding of the parties and shall supersede all prior agreements and
understandings. No amendment of the Agreement shall be made without the express
written consent of the parties.
3.3 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect any other provision hereof, which
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
3.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of Colorado.
3.5 NOTICES. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission against
facsimile confirmation or mailed by prepaid first class certified mail, return
receipt requested, or mailed by overnight courier prepaid, to the parties at the
following addresses or facsimile numbers:
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(a) If to the Subscriber:
CLAYHILL LIMITED
P.O. Box 957
Offshore Incorporations Centre
Road Town, Tortola, British Virgin Islands
Facsimile No.: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
And to:
Alexander, Holburn, ▇▇▇▇▇▇▇ & Lang
P.O. Box 10057
▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
(b) If to the Company:
▇▇▇▇▇▇▇▇.▇▇▇ Inc.
c/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided for in this Section, be deemed given upon facsimile confirmation, (iii)
if delivered by mail in the manner described above to the address as provided in
this Section, be deemed given on the earlier of the fifth day following mailing
or upon receipt and (iv) if delivered by overnight courier to the address as
provided for in this Section, be deemed given on the earlier of the first day
following the date sent by such overnight
3.6 NONTRANSFERRABLE. This Agreement is not transferable or assignable by
the Subscriber.
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3.7 COUNTERPARTS. This Agreement may be executed by facsimile and through
the use of separate signature pages or in any number of counterparts, and each
of such counterparts shall, for all purposes, constitute one agreement binding
on all the parties, notwithstanding that all parties are not signatories to the
same counterpart.
3.8 CURRENCY. In this Agreement, all dollar amounts are expressed in the
lawful currency of the United States of America, unless specifically provided to
the contrary.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
▇▇▇▇▇▇▇▇.▇▇▇ Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
CLAYHILL LIMITED:
By: /s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
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▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
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