p14
TYPE: EX-99.4
SEQUENCE: 5
DESCRIPTION: SUBSCRIPTION AGREEMENT
Page 56 of 81 Pages
FUTURELINK DISTRIBUTION CORP.
SUBSCRIPTION AGREEMENT made as of this __th day of _____, 1999 between
FutureLink Distribution Corp., a corporation organized under the laws of the
State of Colorado with offices at 300, 250-6 Avenue SW, Calgary, AB Canada T2P
3H7 (the "Company") and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue in a private placement (this
"Offering") a minimum of 20 (the "Minimum Offering") and a maximum of 40 (the
"Maximum Offering") units ("Units") in a private placement in accordance with an
exemption provided by Regulation D from the registration provisions of the
Securities Act of 1933 (the "Act"), each Unit consisting of $250,000 principal
amount of 8% senior subordinated convertible promissory notes (the "Notes") in
the form attached as Exhibit (vi) to the Confidential Term Sheet dated July 1,
1999 (the "Term Sheet") and 37,500 two-year common stock purchase warrants (the
"Warrants") in the form attached as Exhibit (vii) to the Term Sheet on the terms
and conditions hereinafter set forth and the Subscriber desires to acquire the
number of Units set forth on the signature page hereof; and
WHEREAS, subsequent to this Offering the Company expects to undertake a
private placement of equity securities;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units as is set forth upon the signature page hereof at a price equal
to $250,000 per Unit, and the Company agrees to sell such Units to the
Subscriber for said purchase price subject to the Company's right to sell to the
Subscriber such lesser number of Units as the Company may, in its sole
discretion, deem necessary or desirable. The purchase price is payable by
certified or bank check made payable to United States Trust Company of New York,
as Escrow Agent for FutureLink Distribution Corp., or by wire transfer of funds,
contemporaneously with the execution and delivery of this Subscription
Agreement. The Subscriber understands however, that this purchase of Units is
contingent upon the Company having received and accepted subscriptions in the
minimum amount of $5,000,000 prior to the Termination Date as defined in Article
III hereof.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk in that (i) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (ii) he may
not be able to liquidate his investment; (iii) transferability of the securities
comprising the Units is extremely limited; and (iv) an investor could suffer the
loss of his entire investment, as well as other risk factors as more fully set
forth herein and in the Term Sheet and the exhibits thereto.
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1.3 The Subscriber represents and warrants that he is an "accredited
investor" as such term in defined in Rule 501 of Regulation D promulgated under
the United States Securities Act of 1933, as amended (the "Act"), as indicated
by his responses to the Investor Questionnaire, and that he is able to bear the
economic risk of an investment in the Units. The Subscriber further represents
and warrants that the information furnished in the Investor Questionnaire is
accurate and complete in all material respects.
1.4 The Subscriber acknowledges that he has prior investment
experience, including investment in non-listed and non-registered securities and
that he recognizes the highly speculative nature of this investment.
1.5 The Subscriber acknowledges receipt and careful review of the
Term Sheet and all exhibits thereto and other documents furnished in connection
with this transaction (collectively, the "Offering Documents") and hereby
represents that he has been furnished by the Company during the course of this
transaction with all information regarding the Company which he has requested or
desires to know and that he has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of
the Company concerning the terms and conditions of this Offering.
1.6 The Subscriber acknowledges that this Offering may involve tax
consequences (including, but not limited to, the possible need to recognize
interest income relating to the Warrants) and that the contents of the Offering
Documents do not contain tax advice or information. The Subscriber acknowledges
that he must retain his own professional advisors to evaluate the tax and other
consequences of an investment in the Units.
1.7 The Subscriber acknowledges that this Offering has not been
reviewed by the United States Securities and Exchange Commission ("SEC") because
of the Company's representations that this is intended to be a nonpublic
offering pursuant to Sections 4(2) or 3(b) of the Act. The Subscriber represents
that the Notes and Warrants comprising his Units are being purchased for his own
account, for investment and not for distribution or resale to others. The
Subscriber agrees that he will not sell or otherwise transfer the Notes or the
Warrants unless they are registered under the Act or unless an exemption from
such registration is available.
1.8 The Subscriber understands that Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a one year holding
period prior to the resale (in limited amounts) of securities acquired in a
non-public offering without having to satisfy the registration requirements
under the Act. The Subscriber understands that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended, or
its dissemination to the public of any current financial or other information
concerning the Company, as is required by the Rule as one of the conditions of
its availability. The Subscriber understands and hereby acknowledges that the
Company is under no obligation to register the securities comprising the Units
under the Act, with the exception of certain registration rights set forth in
Article IV herein. The Subscriber consents that the Company may, if it desires,
permit the transfer of the Notes, the shares of Common Stock issuable upon
conversion of the Notes (the "Conversion Shares"), the Warrants or the shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") out
of his name only when his request for transfer is accompanied by an opinion of
counsel reasonably satisfactory to the Company that neither the sale
Page 58 of 81 Pages
nor the proposed transfer results in a violation of the Act or any applicable
state "blue sky" laws (collectively "Securities Laws").
1.9 The Subscriber hereby agrees not to sell, transfer or otherwise
dispose of the Warrant Shares or the Conversion Shares for such period of time
(not to exceed one year) after completion by the Company of a public offering of
its securities as the managing underwriter for such offering may request in
writing and Commonwealth Associates L.P. may agree to; provided that in no event
shall the term of such lock-up exceed that agreed to by the officers, directors
and principal stockholders of the Company.
1.10 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Notes, the Warrants, the Warrant
Shares and the Conversion Shares stating that they have not been registered
under the Act and setting forth or referring to the restrictions on
transferability and sale thereof.
1.11 The Subscriber acknowledges that if he is a Registered
Representative of an NASD member firm, he must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.12 If the undersigned Subscriber is a partnership, corporation,
trust or other entity, such partnership, corporation, trust or other entity
further represents and warrants that: (i) it was not formed for the purpose of
investing in the Company; (ii) it is authorized and otherwise duly qualified to
purchase and hold the Units; and (iii) that this Subscription Agreement has been
duly and validly authorized, executed and delivered constitutes the legal,
binding and enforceable obligation of the undersigned.
II. REPRESENTATIONS BY THE COMPANY
2.1 The Company represents and warrants to the Subscriber that prior
to the consummation of this Offering and at the Closing Date:
(a) The Company is a corporation duly organized, existing and
in good standing under the laws of the State of Colorado and has the corporate
power to conduct the business which it conducts and proposes to conduct.
(b) The execution, delivery and performance of this
Subscription Agreement by the Company will have been duly approved by the Board
of Directors of the Company and all other actions required to authorize and
effect the offer and sale of the Units and the securities contained therein will
have been duly taken and approved.
(c) The Notes and Warrants have been duly and validly
authorized and when issued and paid for in accordance with the terms hereof,
will be duly and validly issued and fully paid and non assessable.
(d) The Company will at all times have authorized and reserved
a sufficient number of Conversion Shares and Warrant Shares to provide for
conversion of the Notes and exercise of the Warrants.
Page 59 of 81 Pages
(e) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations necessary
to the conduct of its business; such licenses, permits and other governmental
authorizations obtained are in full force and effect; and the Company is in all
material respects complying therewith.
(f) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company.
(g) The Company is not in violation of or default under, nor
will the execution and delivery of this Subscription Agreement, the issuance of
the Notes or the Warrants, and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions herein or therein
contemplated, result in a violation of, or constitute a default under, the
Company's articles of incorporation or by-laws, any material obligations,
agreement, covenant or condition contained in any bond, debenture, note or other
evidence of indebtedness or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to which the
Company is a party or by which it or any of its properties may be bound or any
material order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality or court, domestic or foreign.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of July 1, 1999 and will
terminate at 11:59 PM Eastern time on July 31, 1999; provided, however, that if
the Minimum Offering is sold by such date, the subscription period will continue
until August 31, 1999, unless extended by the Company and the Placement Agent
for up to an additional 30 days (the "Termination Date"). Such extension may be
effected without notice to the Subscribers. Of the Units, 20 will be offered on
a "best efforts-all or none" basis and the remaining 20 Units will be offered on
a "best-efforts" basis.
3.2 Placement of the Units will be made by the Placement Agent which
will receive (i) a commission equal to 9% of the gross proceeds from the sale of
the Units; (ii) reimbursement of up to $50,000 of accountable expenses
(exclusive of up to $12,000 for blue sky fees and disbursements and $20,000 of
Placement Agent's counsel fees and disbursements which shall also be
reimbursable by the Company); and (iii) warrants to purchase that number of
shares of Common Stock as equals 10% of the Warrant Shares issuable upon
exercise of the Warrants sold in the Offering (the Agent's Warrants). The
Agent's Warrants will be substantially identical to the Warrants included in the
Units except that they will not be subject to redemption by the Company.
3.3 Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow with United States Trust Company of New York.
If the Company shall not have obtained subscriptions (including this
subscription) for purchases of 20 Units for an aggregate purchase price of
$5,000,000 on or before the Termination Date, then this subscription shall be
void and all funds paid hereunder by the Subscriber, without interest, shall be
promptly returned to the Subscriber, subject to paragraph 3.5 hereof. If 20
Units are sold at or prior to the Termination Date, then all subscription
proceeds shall be paid over to the Company within 10 days thereafter at an
initial closing (the "Initial Closing"). In such event, placements of additional
Units may continue until the |
