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AGENCY AGREEMENT

Agency Agreement

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DIGIFONICA INTERNATIONAL CORP

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Title: AGENCY AGREEMENT
Governing Law: Florida     Date: 9/18/2006

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AGENCY AGREEMENT

____________, 2006

Digifonica International Corp. (f/k/a Moliris Corp.)
Suite 1424 — 4710 Kingsway,
Burnaby, BC
V5H 2M2

Attention:     President

Dear Sirs:

Re:     Private Placement of Units

Loewen Ondaatje McCutcheon Limited (the “Agent”) understands that:

 

(a)

 

Digifonica International Corp., a Florida corporation formerly known as Moliris Corp. (the “Corporation”) is authorized to issue, among other things, 50,000,000 Common Shares and 1,000,000 Class B Shares (each as hereinafter defined);

 

 

 

 

 

(b)

 

as at August 1, 2006, 22,548,600 Common Shares and no Class B Shares were outstanding as fully paid and non-assessable shares and as at August 1, 2006, no Common Shares or Class B Shares were reserved for issuance pursuant to outstanding options, warrants, share incentive plans, convertible, exercisable and exchangeable securities and other rights to acquire Common Shares (as hereinafter defined);

 

 

 

 

 

(c)

 

the Corporation is prepared to issue and sell up to 2,500,000 Units (as hereinafter defined), at a price of US$2.00 per Unit, each Unit consisting of one Common Share and one half of one warrant (each whole warrant a “Warrant”), and each Warrant being exercisable to acquire one Common Share at an exercise price of US$2.50 per Common Share for a period of 12 months after the Closing Date (as hereinafter defined), or at an exercise price of US$3.00 per Common Share for a period of 13 to 24 months after the Closing Date for maximum aggregate gross proceeds of US$5,000,000 on the terms and subject to the conditions contained hereinafter. For greater certainty, the Purchase Price of US$2.00 per Unit will be allocated as to US$1.99 to the Common Share and as to US$.01 to the one half of one Warrant; and

 

 

 

 

 

(d)

 

In addition, if a Going Public Transaction (as hereinafter defined) is not completed within 9 months following the Closing Date (the “Penalty Date”) the Corporation shall issue additional Common Shares (“Penalty Shares”) equal to 10% of the dollar value of the Common Shares (with the Common Shares being valued at US$1.99 per Common Share) each Purchaser (as hereinafter defined) initially purchased in the Offering. Such Penalty Shares will be issued as liquidated damages for the delay to complete such listing or quotation and obtain such reporting issuer status.

Based upon the understanding of the Agent set out above and upon the terms and subject to the conditions contained hereinafter, upon the acceptance hereof by the Corporation, the Corporation hereby appoints

 


 

2.

the Agent to act as the sole and exclusive agent of the Corporation to solicit, on a best efforts basis, offers to purchase the Offered Securities (as hereinafter defined), and the Agent hereby agrees to act as such agent. It is understood and agreed that the Agent is under no obligation to purchase any of the Offered Securities, although the Agent may subscribe for and purchase Offered Securities if it so desires.

The terms and conditions of this Agreement are as follows:

1.

 

Definitions, Interpretation and Schedules

 

(a)

 

Definitions: Whenever used in this Agreement:

 

 

(i)

 

1933 Act” means the Securities Act of 1933 (United States), as amended;

 

 

 

 

 

(ii)

 

Agent” means Loewen Ondaatje McCutcheon Limited;

 

 

 

 

 

(iii)

 

Agreement” means the agreement resulting from the acceptance by the Corporation of the offer made by the Agent herein, including the Schedules attached hereto, as amended or supplemented from time to time;

 

 

 

 

 

(iv)

 

Ancillary Documents” means all agreements, certificates (including the Warrant Certificates and the Broker Warrant Certificate) and documents executed and delivered, or to be executed and delivered, by the Corporation in connection with the transactions contemplated by this Agreement or the Subscription Agreements and includes the Subscription Agreements;

 

 

 

 

 

(v)

 

Auditor” means HLB Cinnamon Jang Willoughby, LLP, the auditors of the Corporation;

 

 

 

 

 

(vi)

 

Broker Shares” means the Common Shares which may be issued on the exercise of the Broker Warrant;

 

 

 

 

 

(vii)

 

Broker Warrant” means the non-transferable broker warrant which will entitle the Agent to acquire Common Shares equal in number to 7% of the number of Offered Securities sold at any time commencing on the Closing Date and continuing until the date which is 12 months after the date on which the Common Shares issuable upon the exercise of the Broker Warrant may first be publicly resold by the Agent in Canada or the United States at an exercise price that is equal to the issuance price of each Unit sold under the Offering;

 

 

 

 

 

(viii)

 

Broker Warrant Certificate” means the certificate representing the Broker Warrant;

 

 

 

 

 

(ix)

 

Business Day” means a day which is not a Saturday, Sunday or a statutory or civic holiday in the City of Toronto, Province of Ontario;

 

 

 

 

 

(x)

 

Class B Shares” means the shares of Class B Common Stock, no par value, that the Corporation is authorized to issue as constituted on the date hereof;

 


 

3.

 

(xi)

 

Closing” means the purchase and sale of the Offered Securities subscribed for by the Purchasers pursuant to the Subscription Agreements;

 

 

 

 

 

(xii)

 

Closing Date” means August 9, 2006 or such other date as the Corporation and the Agent may mutually agree upon in writing;

 

 

 

 

 

(xiii)

 

Closing Time” means 2:00 p.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Corporation and the Agent may mutually agree upon in writing;

 

 

 

 

 

(xiv)

 

Common Shares” means the shares of Class A Common Stock, par value $0.001 per share, that the Corporation is authorized to issue as constituted on the date hereof;

 

 

 

 

 

(xv)

 

Corporation” means Digifonica International Corp., a corporation incorporated under the laws of the State of Florida, and includes any successor corporation thereto;

 

 

 

 

 

(xvi)

 

Directed Selling Efforts” means “directed selling efforts” as defined in Regulation S;

 

 

 

 

 

(xvii)

 

Exchange Act” means the Securities Exchange Act of 1934 (United States), as amended.

 

 

 

 

 

(xviii)

 

General Solicitation or General Advertising” means “general solicitation or general advertising” as used in Rule 502(c) of Regulation D;

 

 

 

 

 

(xix)

 

Going Public Transaction” means a public offering of Common Shares pursuant to a prospectus filed and receipted under the Ontario Act or similar document filed under applicable securities laws in one or more of the provinces in Canada which results in the Corporation becoming a reporting issuer in a province of Canada and an effective registration statement filed with the SEC, and which results in the Common Shares of the Corporation (or the securities of a successor issuer) being listed and posted for trading on the Toronto Stock Exchange, Tier 1 or Tier 2 of the TSX Venture Exchange, NASDAQ or American Stock Exchange;

 

 

 

 

 

(xx)

 

Material Adverse Effect” means any adverse change or effect that, individually or when taken together with all other such changes or effects, would be materially adverse to the condition (financial or otherwise), results of operations, business, properties, prospects, assets or liabilities (contingent or otherwise) of the Corporation or any Subsidiary.

 

 

 

 

 

(xxi)

 

Offered Securities” means up to 2,500,000 Units to be issued and sold at the Purchase Price under the Offering;

 

 

 

 

 

(xxii)

 

Offering” means the offering for sale by the Corporation on a private placement basis of the Offered Securities;

 


 

4.

 

(xxiii)

 

Offering Jurisdictions” means the Provinces of British Columbia, Alberta, Ontario, the United States and the states and territories thereof and such other provinces and territories of Canada and other jurisdictions as may be mutually agreed upon by the Agent and the Corporation where the Offered Securities are offered to prospective purchasers or those provinces, territories or other jurisdictions where Purchasers reside, as the context permits or requires;

 

 

 

 

 

(xxiv)

 

Ontario Act” means the Securities Act (Ontario) and the regulations thereunder, together with the instruments, policies, rules, orders, codes, notices and interpretation notes of the Ontario Securities Commission, as amended, supplemented or replaced from time to time;

 

 

 

 

 

(xxv)

 

Penalty Date” has the meaning ascribed thereto in paragraph (d) of the first page of this Agreement;

 

 

 

 

 

(xxvi)

 

Penalty Shares” has the meaning ascribed thereto in paragraph (d) of the first page of this Agreement;

 

 

 

 

 

(xxvii)

 

Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;

 

 

 

 

 

(xxviii)

 

Purchase Price” means the price to be paid by the Purchasers for each Offered Security under the Offering, being US$2.00 per Unit;

 

 

 

 

 

(xxix)

 

Purchasers” means the purchasers of the Offered Securities collectively;

 

 

 

 

 

(xxx)

 

"Regulation D” means Regulation D promulgated under the 1933 Act;

 

 

 

 

 

(xxxi)

 

"Regulation S” means Regulation S promulgated under the 1933 Act;

 

 

 

 

 

(xxxii)

 

"SEC” means the United States Securities and Exchange Commission.

 

 

 

 

 

(xxxiii)

 

SEC Filings” means all filings of the Corporation with the SEC pursuant to United States Securities Laws, including without limitation any registration statements, proxy or information statements, annual reports on Form 10-KSB, quarterly reports on Form 10-QSB and current reports on Form 8-K.

 

 

 

 

 

(xxxiv)

 

Securities Commissions” means the securities regulatory authorities of the Offering Jurisdictions collectively, as the case may be;

 

 

 

 

 

(xxxv)

 

Securities Laws” means the securities legislation and regulations of, and the instruments, policies, rules, orders, codes, notices and interpretation notes of the securities regulatory authorities of, the applicable jurisdiction or jurisdictions collectively;

 


 

5.

 

(xxxvi)

 

Subject Shares” means the Unit Shares, the Warrant Shares, the Broker Shares and the Penalty Shares collectively;

 

 

 

 

 

(xxxvii)

 

Subscription Agreements” means the subscription agreements to be entered into between the Corporation and Purchasers with respect to the purchase of the Units;

 

 

 

 

 

(xxxviii)

 

Subsidiaries” means, collectively, Digifonica (International) Limited, a corporation organized under the laws of Gibraltar; Digifonica Intellectual Properties Limited, a corporation organized under the laws of Gibraltar; Digifonica Canada Limited, a corporation organized under the laws of Canada; Shenzen Sino-Can Inter-Communication Technology Limited, a corporation organized under the laws of the Peoples Republic of China; Moliris Corp., a Texas corporation; and Moliris Packaging Corp., a Texas corporation;

 

 

 

 

 

(xxxix)

 

Unit Shares” means the Common Shares comprising part of the Units;

 

 

 

 

 

(xl)

 

United States” means the “United States” as defined in Regulation S;

 

 

 

 

 

(xli)

 

Units” means the units of the Corporation being offered for sale by the Agent under the Offering, each Unit being comprised of one Unit Share and one-half of one Warrant;

 

 

 

 

 

(xlii)

 

U.S. Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of Regulation D;

 

 

 

 

 

(xliii)

 

"U.S. Person” means a “U.S. person” as defined in Regulation S;

 

 

 

 

 

(xliv)

 

"Warrant Certificates” means the certificates representing the Warrants;

 

 

 

 

 

(xlv)

 

Warrant Shares” means the Common Shares which may be issued upon the exercise of the Warrants; and

 

 

 

 

 

(xlvi)

 

Warrants” means the warrants of the Corporation, one-half of one Warrant comprising part of each Unit, with each whole Warrant to entitle the holder thereof to acquire one Warrant Share at any time from the date of issuance of the Warrants until 5:00 p.m. (Toronto time) on the date which is 24 months after the Closing Date, at an exercise price of US$2.50 per Warrant Share for 12 months from the Closing Date and $3.00 for a period of 13 to 24 months after the Closing Date.

 

 

 

 

 

(xlvii)

 

Other Defined Terms: Whenever used in this Agreement, the words and terms “affiliate”, “associate”, “material fact”, “material change”, “misrepresentation”, “senior officer” and “subsidiary” shall have the meaning given to such word or term in the Ontario Act unless specifically provided otherwise herein.

 


 

6.

 

(b)

 

Headings: The section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.

 

 

 

 

 

(c)

 

Usage: The term “or” will not be interpreted as excluding any of the items described. The term “include” or any derivative of such term does not mean that the items following such term are the only types of such items.

 

 

 

 

 

(d)

 

Plural and Gender: Whenever used in this Agreement, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and neuter.

 

 

 

 

 

(e)

 

Drafting: The language in all parts of this Agreement shall be interpreted, in all cases, according to its fair meaning.

 

 

 

 

 

(f)

 

Currency: All references to monetary amounts in this Agreement are to United States dollars.

 

 

 

 

 

(g)

 

Schedules: The following Schedules are attached to this Agreement and are hereby incorporated by reference into and made a part of this Agreement for all purposes:

 

 

 

Schedule

 

Title

A

 

Officers’ Certificate

B

 

Agent’s Certificate

 

2.

 

The Offered Securities

 

(a)

 

Offered Securities: The Offered Securities are up to 2,500,000 Units, each Unit comprised of one Common Share and one-half of one Warrant.

 

 

 

 

 

(b)

 

The Warrants: The terms and conditions, and the material attributes and characteristics, of the Warrants shall be satisfactory to the Corporation and the Agent and consistent with the provisions of this Agreement. Such terms and conditions, and material attributes and characteristics, will be contained in the Warrant Certificates, which will contain, among other things, anti-dilution provisions and provisions for the appropriate adjustment in the class and number of Warrant Shares or other securities to be received on the exercise of Warrants upon the occurrence of any subdivision, consolidation or reclassification of the Common Shares or any payment of dividends or the amalgamation of, or other reorganization involving, the Corporation. Subject to adjustment in accordance with the provisions of the Warrant Certificates, each whole Warrant shall entitle the holder thereof to purchase one Warrant Share at any time commencing on the Closing Date and prior to 5:00 p.m. (Toronto time) on the date which is 12 months after the Closing Date at an exercise price of US$2.50 per Warrant Share, or on the date which is 13 to 24 months after the Closing Date, at an exercise price of US$3.00 per Warrant Share.

 


 

7.

3.

 

The Offering

 

(a)

 

Sale on Exempt Basis: The Agent will use its best efforts to arrange for Purchasers in the Offering Jurisdictions. The Agent shall offer for sale on behalf of the Corporation the Offered Securities in the Offering Jurisdictions in compliance with the Securities Laws of the Offering Jurisdictions and only to such Persons and in such manner so that, pursuant to the provisions of the Securities Laws of the Offering Jurisdictions, no prospectus, registration statement or offering memorandum or other similar document need be filed with, or delivered to, any Securities Commission in any Offering Jurisdiction in connection therewith. The Agent shall offer the Units for sale on behalf of the Corporation in the United States only through the Agent, pursuant to an exemption from the registration requirements of the 1933 Act, in compliance with applicable state Securities Laws and in accordance with section 10 hereof.

 

 

 

 

 

(b)

 

Agency Group: The Corporation agrees that, subject to the consent of the Corporation, such consent not to be unreasonably withheld, the Agent has the right to invite one or more investment dealers to form an agency group to participate in the soliciting of offers to purchase the Offered Securities. The Agent shall have the exclusive right to control all compensation arrangements between the members of the agency group; provided, however, that the Agent hereby acknowledges and agrees that the Corporation shall be obligated only to the Agent with respect to commissions owed by the Corporation pursuant to this Agreement, and the Agent hereby covenants and agrees to protect, indemnify and save harmless the Corporation and each Subsidiary from and against all claims of any member of the agency group other than the Agent for any fees, commissions or other compensation pursuant to this Agreement. The Corporation grants all of the rights and benefits of this Agreement to any investment dealer who is a member of any agency group formed by the Agent and appoints the Agent as trustee of such rights and benefits for all such investment dealers, and the Agent hereby accepts such trust and agrees to hold such rights and benefits for and on behalf of all such investment dealers. The Agent shall ensure that any investment dealer who is a member of any agency group formed by the Agent pursuant to the provisions of this subsection 3(b) or with whom the Agent has a contractual relationship with respect to the Offering, if any, agrees with the Agent to comply with the covenants and obligations given by the Agent herein.

 

 

 

 

 

(c)

 

Covenants of the Agent: The Agent covenants with the Corporation that (i) it will comply with the Securities Laws of the Offering Jurisdictions in which it solicits or procures subscriptions for Offered Securities in connection with the Offering, (ii) it will not solicit or procure subscriptions for Offered Securities so as to require the registration thereof or the filing of a prospectus with respect thereto under the laws of any jurisdiction, and (iii) it will obtain from each Purchaser an executed subscription agreement in a form acceptable to the Corporation and the Agent, acting reasonably. The Agent represents and warrants that it is, and, to the best of its knowledge, each member of any agency group formed by the Agent is, qualified so to act in the Offering Jurisdictions in which such member solicits or procures subscriptions for the Offered Securities.

 

 

 

 

 

(d)

 

Filings: The Corporation undertakes to file or cause to be filed all forms and undertakings required to be filed by the Corporation in connection with the Offering so

 


 

8.

 

 

 

that the distribution of the Offered Securities may lawfully occur in the Offering Jurisdictions without the necessity of filing a prospectus or an offering memorandum in Canada and the Agent undertakes to use commercially reasonable efforts to cause the Purchasers of the Offered Securities to complete (and it shall be a condition of closing in favour of the Corporation that the Purchasers complete and deliver to the Corporation) any forms and undertakings required by the Securities Laws of the Offering Jurisdictions. All fees payable in connection with such filings shall be at the expense of the Corporation.