As filed with the Securities and Exchange Commission on June 30, 1997
Commission File No. 33-97770
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 8K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1997
LEVEL BEST GOLF, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-3205644
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
14561 58th Street North, Clearwater, Florida 34620 (813) 535-7770
(Address, including zip code, and telephone number, including area code, or
registrant's principal executive offices)
APPLICABLE
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements-None
(b) Pro forma financial information-None
(c) Exhibits-
10.1 Form of Series A 10% Convertible Debenture due June 1, 2000
10.2 Letter Agreement with Distributors
10.3 Offshore Securities Subscription Agreement
Item 8. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On June 16, 1997, the Registrant sold $250,000 principal amount of Series
A 10% Convertible Debenture due June 1, 2000. The principal amount of this
security plus, at the Registrant's option, accrued and unpaid interest is
convertible into shares of the Registrant's common stock beginning July 31,
1997, forty five days after the date of sale. The number of shares into
which the security is convertible is determined by a formula set forth in
the debenture, at a conversion price, as follows: The lesser of (a) the
market price (as defined) on the date of sale, $2.151 or (b) seventy-five
percent of the market price (as defined) on the date of conversion.
Market price is defined as the average closing bid price of the common
stock on the five trading days immediately preceding the date of sale
or the date of conversion, as applicable. In the event the market
price on the date of sale controls the conversion, the number of
shares of the Registrant's common stock issuable upon conversion of the
principal amount would be 116,225.
Thomson Kernaghan & Co. Inc. of Toronto, Ontario, Canada acted as
distributors for the Registrant in the placement of the securities.
The securities were sold to institutional investors. The securities
were sold for cash at the aggregate face amount, $250,000, and the
Registrant paid the fee of the distributors' counsel in the amount of
$5,000. The distributors were paid a placement fee equal to five percent
of the face amount of the securities. In addition, the distributors
received transferable divisible warrants for shares of the Registrant's
common stock equal to 10% of the number of shares of common stock into which
the Debentures would be convertible as at such Closing Date, 11,623 shares.
<PAGE>
The Warrants have an exercise price per share of common stock equal to 120%
of the Market Price, as defined in the Debentures, on the Closing Date,
$ 2.58and are exercisable for a period of five years and contain
(i) piggy-back registration rights, and (ii) demand registration rights
commencing twenty four months from date of issue. The distributor also has
a right of first refusal covering sales of common stock and securities
convertible into common stock for a period of 1 year following the
closing date of June 16, 1997
The securities were sold in reliance upon Regulation S promulgated pursuant
the Securities Act of 1933. The facts relied upon by the Registrant are set
forth as representations of the Registrant and of the purchaser(s) in the
Offshore Securities Subscription Agreement. See, Exhibit 10.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Level Best Golf, Inc.
/s/ Fred L. Solomon
By: Fred L. Solomon, President
(Chief Executive Officer)
June 25, 1997
Exhibit Index-
10.1 Form of Series A 10% Convertible Debenture due June 1, 2000
10.2 Letter Agreement with Distributors
10.3 Offshore Securities Subscription Agreement
Exhibit 10.1 Form of Series A 10% Convertible Debenture due June 1, 2000
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE RESTRICTED
AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT IN
ACCORDANCE WITH REGULATION S UNDER THE ACT, OR AS PERMITTED UNDER THE ACT
PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE HARBOR THEREFROM.
No.______________ US $250,000.00
LEVEL BEST GOLF, INC.
Series A 10% Convertible Debenture Due June 1, 2000
THIS DEBENTURE is one of a duly authorized issue of $250,,000 in Debentures
of Level Best Golf, Inc., a corporation duly organized and existing under
the laws of the State of Florida (the "Company") designated as its Series A
10% Convertible Debenture Due June 1, 2000.
FOR VALUE RECEIVED, the Company promises to pay to ______________________,
the registered holder hereof (the "Holder"), the principal sum of
_________________________ United States Dollars (US $__________) on June 1,
2000 (the "Maturity Date") and to pay interest on the principal sum
outstanding from time to time in arrears on June 1, 2000 at the rate of 10%
per annum accruing from the date of initial issuance. Accrual of interest
shall commence on the first such business day to occur after the date hereof
until payment in full of the principal sum has been made or duly provided
for. Subject to the provisions of Section 4 below, the principal of and
interest on this Debenture are payable at the option of the Company, in
shares of Common Stock of the Company or in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts, at the address last appearing on the
Debenture Register of the Company as designated in writing by the Holder
<PAGE>
from time to time. The Company will pay the principal of and interest upon
this Debenture on the Maturity Date, less any amounts required by law to be
deducted, to the registered holder of this Debenture as of the tenth day
prior to the Maturity Date and addressed to such holder as the last address
appearing on the Debenture Register. The forwarding of such check shall
constitute a payment of interest hereunder and shall satisfy and discharge
the liability for principal and interest on this Debenture to the extent of
the sum represented by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US $10,000) and integral multiples thereof. The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holders surrendering the same.
No service charge will be made for such registration or transfer or
exchange.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld
under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute
and deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and
other applicable state and foreign securities laws. In the event of any
proposed transfer of this Debenture, the Company may require, prior to
issuance of a new Debenture in the name of such other person, that it
receive reasonable transfer documentation including opinions that the
issuance of the Debenture in such other name does not and will not cause a
violation of the Act or any applicable state or foreign securities laws.
Prior to due presentment for transfer of this Debenture, the Company and any
agent of the Company may treat the person in whose name this Debenture is
duly registered on the Company's Debenture Register as the owner hereof for
the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Debenture be overdue, and neither the Company
nor any such agent shall be affected by notice to the contrary.
4. The Holder of this Debenture is entitled, at its option, to convert at
any time (a) one-half (2) of the principal amount of the Debenture, plus
accrued interest, commencing forty-five (45) days after the closing of sale
of the Debenture (the "Closing"), and (b) all of the principal amount of the
Debenture, plus accrued interest, commencing seventy-five (75) days after
the closing of the sale of the Debenture, provided that the principal amount
is at least US $10,000 (unless if at the time of such election to convert
the aggregate principal amount of all Debentures registered to the Holder is
less than Ten Thousand Dollars [US $10,000], then the whole amount thereof
into shares of Common Stock of the Company at a conversion price for each
share of Common Stock equal to the lesser of (a) the Market Price on the
Closing, or (b) 75% of the Market Price on the Conversion Date.
For purposes of this Section 4, the Market Price shall be the average
closing bid price of the Common Stock on the five (5) trading days
immediately preceding the Closing or Conversion Date, as may be applicable,
as reported by the National Association of Securities Dealers for companies
trading the over-the-counter market or, in the event the Common Stock is
listed on a stock exchange, the Market Price shall be the average closing
<PAGE>
bid price of the Common Stock on such stock exchange on the five (5) trading
days immediately preceding the Closing or Conversion Date, as reported in
the Wall Street Journal. Conversion shall be effectuated by surrendering
the Debentures to be converted to the Company with the form of conversion
notice attached as Exhibit AA, executed by the Holder of the Debenture
evidencing such Holder's intention to convert this Debenture or a specified
portion (as above provided) hereof, and accompanied, if required by the
Company, by proper assignment hereof in blank. Interest accrued or accruing
from the date of issuance to the date of conversion shall, at the option of
the Company, be paid in cash or Common Stock upon conversion. No fraction
of Shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the
nearest whole share. The date on which notice of conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Holder has
delivered this Debenture, with the conversion notice duly executed to the
Company or if earlier, the date set forth in such notice of conversion if
the Debenture is received by the Company within three (3) business days
therefrom. Facsimile delivery of the conversion notice shall be accepted by
the Company at telephone number (813) 535-0077. Certificates representing
Common Stock upon conversion will be delivered within two (2) business days
from the date the notice of conversion is delivered to the Company.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of
and interest on, this Debenture at the time, place and rate, and in the coin
or currency herein prescribed. This Debenture and all other Debentures now
or hereafter issued of similar terms are direct obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, but the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
7. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition
of such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee shall amend this Debenture to provide
that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind an amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture
might have been converted immediately before such merger, consolidation,
sale or transfer, subject to adjustments which shall be a nearly equivalent
as may be practicable. In the event of any proposed merger, consolidation
or sale or transfer of all or substantially all of the assets of the Company
(a "Sale"), the Holder hereof shall have the right to convert by delivering
a Notice of Conversion to the Company within fifteen (15) days of receipt of
notice of such Sale from the Company. In the event the Holder hereof shall
elect not to convert, the Company may prepay all outstanding principal and
accrued interest on this Debenture, less all amounts required by law to be
deducted, upon which tender of payment following such notice, the right of
conversion shall terminate.
<PAGE>
8. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon conversion thereof except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky or
foreign laws or similar laws relating to the sale of securities.
9. This Debenture shall be governed by and construed in accordance with the
laws of Canada; provided however, that if any provision of this Debenture is
unenforceable under the laws of Canada but is enforceable under the laws of
the State of Florida, then that provision shall be governed by and construed
in accordance with the laws of Florida. Any controversy or claim arising
out of or relating to this Debenture (whether in contract or tort, or both)
shall be determined by binding arbitration at Toronto, Canada, in accordance
with the commercial arbitration rules of the International Chamber of
Commerce. The prevailing party in any arbitration proceeding shall be
awarded reasonable attorneys fees and costs of the proceeding.
The arbitration award shall be final, and may be entered in any court having
jurisdiction.
10. The following constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture; or
b. Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by the Company in connection with the execution and
delivery of this debenture or the Subscription Agreement shall
be false or misleading in any material respect at the time made;
or
c. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition, agreement
or obligation of the Company under this Debenture and such failure
shall continue uncured for a period of thirty (30) days after
written notice from the Holder of such failure;
d. The Company shall (1) admit in writing its inability to pay its
debts generally as they mature; (2) make an assignment for the
benefit of creditors or commence proceedings for its dissolution;
or (3) apply for or consent to the appointment of a trustee,
liquidator or receiver for it or a for a substantial part of its
property or business; or
e. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60)
days after such appointment;
f. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within sixty
(60) days thereafter;
g. Any money judgment, writ or warrant of attachment, or similar
process in excess of Two Hundred Thousand Dollars ($200,000) in
the aggregate shall be entered or filed against the Company or any
of its properties or other assets, and shall remain unpaid,
unvacated, unbonded or unstayed for a period of sixty (60) days in
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
<PAGE>
h. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the
Company and, if instituted against the Company, shall not be
dismissed within one hundred twenty (120) days after such
institution or the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the
material allegations of, or default in answering a petition filed
in any such proceeding; or
i. The Company shall have its Common Stock suspended or delisted from
an exchange or over-the-counter market from trading. Then, or at
any time thereafter, and in each and every case, unless such Event
of Default shall have been waived in writing by the Holder (which
waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder's sole
discretion, the Holder may consider this Debenture immediately due
and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately enforce any and all
of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or
any rights whatsoever as a shareholder of the Company, unless and to the
extent converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: __________________
Level Best Golf, Inc.
By: ______________________________
_________________________________
(Print Name)
_________________________________
(Title)
ATTEST:
EXHIBIT AA
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $________________ of
the principal amount of the above Debenture No. ______ into Shares of Common
Stock of Level Best Golf, Inc. (the "Company") according to the conditions
hereof, as of the date written above.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933 and is not
converting the Debentures on behalf o any U.S. Person.
Date of Conversion:________________
Applicable Conversion Price: ____
Signature:__________________________________
(Name)
Address: __________________________________
__________________________________
Exhibit 10.2 Letter Agreement with Distributors
June 13, 1997
Level Best Golf, Inc.
14561 - 58th Street North
Clearwater, Florida 34620
Ladies and gentlemen:
This letter will confirm our mutual agreement with respect to our engagement
as exclusive distributors ("Distributors") to act on behalf of Level Best
Golf, Inc. (the "Company") in connection with the offer and sale on a best
efforts basis of US$250,000 aggregate principal amount of Series A 10%
Convertible Debentures of the Company (the "Debentures") pursuant to
Regulation S promulgated under the Securities Act of 1933, as amended
(the "Act").
1. (a) Our engagement shall be for a period of 60 days. You represent that
no other public or non-public offering under Regulation S is
presently in progress by the Company that has not been disclosed to
us.
(b) You have represented to us that the Company will have no other
indebtedness senior in priority to the Debentures.
2. (a) You agree to pay the Distributors a placement fee of 5% of the
principal amount of the Debentures sold, which you authorize us
to withhold from the proceeds from the sale of the Debentures.
Other than this placement fee, and the warrant described in
paragraph 11 below, the Distributors shall not be entitled to any
additional compensation from the Company. The Company shall pay the
legal fees of the Distributors' legal counsel in the amount of
US$5,000, payable upon funding the Debentures.
(b) Each purchaser of Debentures ( a "Purchaser") will, simultaneously
with the execution of an Offshore Securities Subscription Agreement
(the "Agreement") in the form annexed hereto as Exhibit A, pay the
purchase price for the Debentures to the Distributors, as Escrow
Agent. The Distributors, as Escrow Agent, are authorized to release
the funds of each Purchaser after both (i) the Company approves
such purchase and subscription documents (in the form of an exhibit
hereto) that have been submitted and signed by the purchaser, and
(ii) the Company has caused to be delivered to the Distributors or
its designee, the Debenture or Debentures purchased by that
Purchaser, and the opinion of counsel attached as Annex III to the
Agreement.
(c) The restricted period set forth in SEC Rule 903 (the "Restricted
Period") for each Purchaser shall begin on the date (the "Closing
Date") that the purchase funds are delivered to the Company.
(d) The Distributors (i) represent and warrant, and will provide
confirmatory documentation, that each Purchaser is either
purchasing the Debentures for its own account, or is a fiduciary
that has full, exclusive and irrevocable investment discretion with
respect to the Debentures, which investment discretion cannot be
revoked prior to the 180th day after the Closing Date, and
(ii) represent and warrant that no Purchaser is a affiliate of the
Distributors. To the Distributors' knowledge, all representations
and warranties made by Purchasers are true and correct.
(e) The Company shall have the right in its sole discretion to
disapprove any person or entity that is proposed by the
Distributors to be a Purchaser
<PAGE>
3. The Company will cause the Debentures to be delivered to the
Distributors, as Escrow Agent, pursuant to the terms of the Joint Escrow
Instructions attached as Annex II to this Agreement.
4. (a) The Distributors represent, warrant and agree that (i) each
Purchaser will be qualified to purchase the Debentures under the
laws of the jurisdiction in which such Purchaser resides and that
the offer and sale of the Debentures will not violate the
securities or other laws of such jurisdiction, and (ii) each
Purchaser will agree that neither it nor any of its affiliates
presently have or will, directly or indirectly, maintain any short
position in securities of the Company during the Restricted Period.
(b) The Distributors understand that the Debentures have not been
registered under the Act and may not be offered or sold within the
United States or to, or for the account or benefit of, United
States persons, except pursuant to an exemption from the
registration requirements of the Act.
5. (a) The Distributors further agree that (i) no offer or sale of the
Debentures will be made by the Distributors to, or accepted by the
Distributors from, any U.S. person or for the account or benefit of
a U.S. person; (ii) all offers and sales of the Debentures prior to
the expiration of the applicable Restricted Period made by the
Distributors shall be made only in accordance with the provisions
of Rule 903 or 904 of Regulation S, pursuant to registration of the
Debentures under the Act, or pursuant to an available exemption
from the registration requirements of the Act; (iii) all offering
materials and documents used in connection with offers and sales of
the Debentures prior to the expiration of the engagement period
shall be approved in advance by the Company, and shall on the first
page thereof include statements to the effect that the Debentures
have not been registered under the Act but are offered and sold in
reliance on Regulation S under the Securities Act of 1933, and that
neither the Purchaser, nor any direct or indirect purchaser of
Debentures from the Purchaser, may directly or indirectly offer or
sell the Debentures in the United States or to U.S. persons unless
the Debentures are registered under the Act, or an exemption from
the registration requirements of the Act is available; (iv) the
Distributors will not engage in any activity for the purpose of, or
that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the
securities of the Company, and (v) the Distributors will advise
each Purchaser and potential Purchaser of the matters set forth in
this paragraph 6, and that such Purchaser is relying on its own
investigation with respect to all such matters, and that it will be
given reasonable access to any and all material publicly available
documents and Company personnel it may require for such
investigation.
(b) For the purposes of this letter agreement, a U.S. person means a
U.S. Person as that term is defined in Rule 902(o) of Regulation S.
6. The Distributors are independent contractors, and are not the agent of
the Company. The Distributors are not authorized to bind the Company, or to
make any representations or warranties on behalf of the Company.
<PAGE>
7. The Company represents, warrants and agrees that, in addition to the
warranties to be made by the Company to the Purchasers:
(a) The Company is required to file reports pursuant to Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Company has timely filed all the materials required to be
filed for a period of at least 12 months preceding the date of this
letter agreement, and the Company will continue to file all such
materials on a timely basis.
(b) The Company is a reporting issuer as defined by Rule 902 of
Regulation S. The Company is in full compliance, to the extent
applicable, with all reporting obligations under Section 15(d) of
the Exchange Act. The common stock is quoted on the National
Association of Securities Dealers, Inc.'s OTC Bulletin Board, and
the Company has received no notice, either oral or written, with
respect to its continued eligibility for such quoting.
(c) The Company has all requisite corporate power and authority to
execute and perform this letter agreement. All corporate action
necessary for the authorization, execution, delivery and performance
of this letter agreement and the transactions contemplated hereby
have been taken. This agreement constitutes a valid and binding
obligation of the Company.
(d) The execution and performance of this letter agreement by the
Company and the offer and sale of the Debentures will not violate
any provision of the certificate of incorporation or bylaws of the
Company or any material agreement or other instrument to which the
Company is a party or by which it is bound, the violations of which,
in each case or in the aggregate, would have a material adverse
effect on the business or financial condition of the Company. Any
material or necessary approvals, U.S. government and private, will
be obtained by the Company prior to the issuance of the Debentures
(e) The Company makes no other representation or warranty with respect
to the Company, its finances, assets, business or prospects, or
otherwise, except as expressly set forth herein or in the Agreement.
8. The Company will provide the Distributors, as Escrow Agent, with an
opinion of counsel substantially in the form attached as Annex III to the
Agreement.
9. During the time commencing upon completion of this distribution and
ending 120 days thereafter, the Company will not make any further offer or
sale off common stock or securities convertible into common stock in any
non-public offering for cash consideration, without the prior written
approval of the Distributor. Further, during the time period commencing on
the Closing Date of the first tranche and ending one year after the closing
of the second tranche of Debentures hereunder, the Distributors will have
the right of first refusal on any further offer or sale of securities by the
Company in any non-public offering other than offers or sales of securities
to strategic investors or sales pursuant an unsolicited offer to buy
securities. Such right of first refusal must be exercised in writing within
5 days of the date of notice from the Company of its offer to sell
securities, and the sale must be consummated within 10 days thereafter. If
the right of first refusal is not so exercised or the sale is not
consummated, the Company shall be entitled to offer and sell the securities
to third parties.
<PAGE>
10. The Company will not, for a period of 180 days from the date hereof,
list is shares on any additional securities market (other than the NASDAQ
National Market) without the written consent of the Distributors.
11. The Company agrees to issue the Distributor, within 10 days after the
Closing Date, transferable divisible warrants (the "Warrants") under
Regulation S for shares of the Company's common stock equal to 10% of the
number of shares of common stock into which the Debentures would be
convertible as at such Closing Date. The Warrants shall bear an exercise
price per share of common stock equal to 120% of the Market Price, as
defined in the Debentures, on the Closing Date, and shall be exercisable for
a period of 5 years thereafter. The form of the Warrants shall be reasonably
satisfactory to the Distributor and its legal counsel, and shall contain (i)
piggy-back registration rights, and (ii) demand registration rights
commencing 24 months from date of issue.
12. As more fully described in Exhibit B hereto, which is incorporated
herein by reference, the Company will indemnify and hold the Distributor
(including its partners, agents, employees, and controlling persons within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
harmless from and against certain claims, liabilities, losses, damages and
expenses incurred, including fees and disbursements of counsel, related to
arising out of this engagement. Exhibit B will be executed and delivered
simultaneously with this letter agreement.
13. This letter agreement will be governed and construed under the laws of
Canada. Any controversy or claim arising out of or relating to this letter
agreement (whether in contract or tort, or both) shall be determined by
binding arbitration at Toronto, Canada, in accordance with the commercial
arbitration rules of the International Chamber of Commerce. The prevailing
party in any arbitration proceeding shall be awarded reasonable attorneys
fees and costs of the proceeding. The arbitration award shall be final, and
may be entered in any court having jurisdiction.
14. A facsimile transmission of this signed agreement shall be legal and
binding on the parties hereto. Terms otherwise not defined herein shall have
the meaning ascribed to them in the Agreement.
Very truly yours,
THOMSON KERNAGHAN & CO. INC.
By /s/ Mark E. Valentine
Mark E. Valentine, Vice President
Accepted and agreed.
LEVEL BEST GOLF, INC.
By /s/ Fred L. Solomon
Fred L. Solomon, President
Date signed June 6, 1997
Exhibit 10.3 Form Of Offshore Securities Subscription Agreement
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement ("Agreement") is executed in
reliance upon the transaction exemption afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC"), under the Securities Act of 1933, as amended ("1933 Act").
This Agreement has been executed by the undersigned in connection with the
private placement of up to $250,000 Series A 10% Convertible Debentures
(hereinafter referred to as the "Debentures") of Level Best Golf, Inc., a
corporation organized and existing under the laws of the State of Florida,
U.S.A., trading symbol "LBGF" (hereinafter referred to as the COMPANY). The
Debentures being sold pursuant to this Agreement, and the Shares (as defined
below), have not been registered under the 1933 Act and may not be offered
or sold in the United States or to U.S. Persons, other than distributors (as
such terms are defined in Regulation S), unless the Debentures or the
Shares, as the case may be, are registered under the 1933 Act, or an
exemption from the registration provisions of the 1933 Act is available.
The terms on which the Debentures may be converted into common stock (the
"Shares") and the other terms of the Debentures are set forth in the pro
forma Debenture in Annex I annexed hereto. This subscription and, if
accepted by the COMPANY, the offer and sale of Debentures and the Shares
issuable upon conversion thereof (collectively the "Securities"), are being
made in reliance upon the provisions of Regulation S under the 1933 Act.
The undersigned
NAME: _____________________________
ADDRESS: __________________________
__________________________
if applicable, a [Corporation] [Partnership] [Trust] organized under the
laws of Ireland, a non USA jurisdiction (hereinafter referred to as the
"PURCHASER") hereby represents and warrants to, and agrees with, the COMPANY
as follows:
1. Agreement to Subscribe.
a. Subscription Amount. The undersigned hereby subscribes for
$_____________ in principal amount of Series A 10% Debentures.
b. Form of Payment. The PURCHASER shall pay the purchase price for the
Debentures by delivering immediately available funds in United States
Dollars to the escrow agent identified in the Joint Escrow Instructions
attached hereto as Annex II (the "Escrow Agent"). Deliver of such funds to
the COMPANY by the Escrow Agent shall be made against delivery by the
COMPANY of one or more Debentures in accordance with this Agreement. By
signing this Agreement, the PURCHASER and the COMPANY each agrees to all of
the terms and conditions of, and becomes a party to, the Joint Escrow
Instructions attached hereto as Annex II, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
c. Method of Payment. Payment of the purchase price for the Debentures
shall be made by wire transfer of funds to:
_____________________________
_____________________________
For credit to the account of Thomson Kernaghan & Co. Ltd.
Account No. ________________________
Not later than three (3) business days after the acceptance and execution of
this Agreement by the COMPANY, the PURCHASER shall deposit with the Escrow
Agent the aggregate subscription price for the Debentures.
<PAGE>
2. Subscriber Representations and Covenants; Access to Information;
Independent Investigation.
a. Offshore Transaction. PURCHASER represents, warrants and covenants to
COMPANY as follows:
i. PURCHASER was at the time of the offer and is not a U.S. Person as that
term is defined under Regulation S.
ii. PURCHASER was at the time of the offer and is outside the United States
as of the date of the execution and delivery of this Agreement.
iii. PURCHASER is purchasing the Debentures for its own account and not on
behalf of any U.S. Person, and PURCHASER is the sole beneficial owner of the
Debentures, and has not pre-arranged any sale with any purchaser or
purchasers in the United States.
iv. PURCHASER represents and warrants and hereby agrees that all offers and
sales of the Debentures prior to the expiration of a period commencing on
the date of the receipt of funds by the COMPANY and ending 40 days
thereafter (the "Restricted Period") shall only be made in compliance with
the safe harbor contained in Regulation S, pursuant to the registration
provisions under the 1933 Act or pursuant to an exemption from registration,
and all offers and sales after the expiration of the 40-day period shall be
made only pursuant to such registration or to an exemption from
registration.
v. PURCHASER acknowledges that the purchase of the Debentures involves a
high degree of risk, is aware of the risks and further acknowledges that it
can bear the economic risk of the purchase of the Debentures, including the
total loss of its investment.
vi. PURCHASER understands that the Debentures are being offered and sold to
it in reliance on specific exemptions from the registration requirements of
U.S. securities laws and that the COMPANY is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of PURCHASER set forth herein in order to determine the
applicability of such exemptions and the suitability of PURCHASER to acquire
the Debentures, and the Shares issuable upon conversion thereof. PURCHASER
represents and warrants that the information contained herein is complete
and accurate. PURCHASER further represents and warrants that it will notify
the COMPANY immediately upon the occurrence of any material change therein
occurring prior to the issuance of Shares upon conversion of the Debenture.
vii. PURCHASER is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of its investments,
and to make an informed decisions relating thereto.
viii. In evaluating its investment, PURCHASER has consulted its own
investment and/or legal and/or tax advisors. PURCHASER is not relying on
the COMPANY respecting the legal, tax and other economic considerations of
an investment in the Debentures.
ix. PURCHASER understands that in view of the SEC the statutory basis for
the exemption claimed for this transaction would not be present if the
offering of Debentures, and the Shares issuable upon conversion thereof,
although in technical compliance with Regulation S, is part of a plan or
scheme to evade the registration provisions of the 1933 Act. PURCHASER is
acquiring the Debentures for investment purposes and has no present
<PAGE>
intention to sell the Debenture, or the Shares issuable upon conversion
thereof, in the United States or to a U.S. Person or for the account or
benefit of a U.S. Person either now or after the expiration of the
Restricted Period.
x. PURCHASER is not an underwriter for, or dealer in, the Securities, and
PURCHASER is not participating, pursuant to a contractual agreement, in the
distribution of the Securities.
xi. PURCHASER represents, warrants and agrees, that PURCHASER will not,
directly or indirectly, or through one or more intermediaries, maintain any
short position in the Shares of the COMPANY during the Restricted Period.
xii. During the period commencing on the Closing Date (as defined herein)
and ending on the 41st day following such date, PURCHASER will not sell,
commit or agree to sell or pledge any shares of Common Stock of the COMPANY
or any other securities convertible into or exercisable for shares of Common
Stock of the COMPANY.
PURCHASER has taken no action which would give rise to any claim by any
person for brokerage commission, finders' fees or the like relating to this
Agreement or the transaction contemplated hereby.
b. Current Public Information. PURCHASER acknowledges that PURCHASER has
been furnished with or has acquired copies of the COMPANY's Form 10-KSB for
year ending September 30, 1996, and Forms 10 and 8-K filed thereafter
(collectively the "SEC Filings"). PURCHASER is not relying upon any
representatives or other information (whether oral or written) other than as
set forth in the SEC Filings or in Annex V.
c. Independent Investigation; Access. PURCHASER acknowledges that
PURCHASER, in making the decision to purchase the Debentures subscribed for,
has relied upon independent investigations made by it and its
representatives, if any, and PURCHASER and such representatives if any,
have, prior to any sale to it, been given access and the opportunity to
examine all material publicly available, books and records of the COMPANY,
all material contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers from the COMPANY or
any person acting on its behalf concerning the terms and conditions of this
offering. PURCHASER and its advisors, if any, have been furnished with
access to all publicly available materials relating to the business,
finances and operation of the COMPANY and materials relating to the offer
and sale of the Debentures which have been requested. PURCHASER and its
advisors, if any, have received complete and satisfactory answers to any
such inquiries.
d. No Government Recommendations or Approval. PURCHASER understands that
no federal or state agency has passed on or made any recommendations or
endorsement of the Securities.
e. Entity Purchasers. If PURCHASER is a partnership, limited liability
company, limited liability partnership, corporation, trust, or similar
entity, the person executing this Agreement on its behalf represents and
warrants that:
i. He or she has made due inquiry to determine the
truthfulness of the representations and warranties
made pursuant to this Agreement.
<PAGE>
ii. He or she is duly authorized to make this investment
and to enter into and execute this Agreement on behalf
of such entity.
f. Individual Purchasers. PURCHASER, if an individual, represents that he
or she has reached the age of 21 and has adequate means for providing for
his or her current and anticipated financial needs and possible
contingencies for emergencies and has no need for liquidity in the proposed
investment.
g. Binding Commitment. This Agreement constitutes a legal, valid and
binding obligation of the PURCHASER. The PURCHASER has full power, right
and authority to enter into and perform this Agreement. The execution and
delivery and performance of this Agreement will not violate or be in
conflict with any order, judgment, injunction, agreement or controlling
document to which the PURCHASER is a party or by which it is bound. If the
PURCHASER is an entity, it was not formed for the specific purpose of
acquiring the Debenture.
h. Foreign Laws. PURCHASER hereby covenants that it will comply with all
laws and regulations in each foreign jurisdiction in which it purchases,
offers, sells or deliver the Securities, or has in its possession or
distributes any offering material.
3. COMPANY Representations.
a. Reporting Company Status. The COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida
and is duly qualified as a foreign corporation in all jurisdictions in which
the failure to so qualify would have a material adverse effect on the
COMPANY and its subsidiaries taken as a whole. The COMPANY is a "Reporting
Issuer" as defined by Rule 902 of Regulation S. The COMPANY is a reporting
issuer under Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Common Stock is quoted on the National
Association of Securities Dealers, Inc.'s OTC Bulletin Board, and the
Company has received no notice, either oral or written, with respect to its
continued eligibility for such quoting. The COMPANY has filed all material
required to be filed pursuant to all reporting obligations under Section
15(d) of the Exchange Act for a period of at least twelve (12) months
immediately preceding the offer or sale of the Debentures, or such shorter
period as may be required by law.
b. Offshore Transaction. The COMPANY has not offered or sold the
Debentures to any person in the United States or, to the best knowledge of
the COMPANY, any identifiable groups of U.S. citizens abroad or any U.S.
person as that term is defined in Regulation S. At the time the offer was
made and the buy order for the Debentures was originated, the COMPANY and/or
its agents reasonably believed PURCHASER was outside the United States and
was not a U.S. Person.
c. No Directed Selling Efforts. In regard to this transaction, the COMPANY
has not conducted any "directed selling efforts" as that term is defined in
Rule 902 of Regulation S nor has the COMPANY conducted any general
solicitation relating to the offer and sale of the within securities to
persons resident with the United States or elsewhere.
d. Terms of Debentures. The COMPANY will issue the Debentures in
accordance with the terms of Annex I attached hereto.
<PAGE>
e. Legality. The COMPANY has the requisite corporate power and authority
to enter into this Agreement and to sell and deliver the Debentures; this
Agreement and the issuance of the Debentures have been duly and validly
authorized by all necessary corporate action by the COMPANY; this Agreement
has been duly and validly executed and delivered by and on behalf of the
COMPANY, and is a valid and binding agreement of the COMPANY, enforceable
against it in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other laws affecting creditors
rights generally.
f. Non-Contravention. The execution and delivery of this Agreement and the
consummation of the issuance of the Debentures, other than the conversion
provision thereof, and the transactions contemplated by this Agreement and
the Debentures do not and will not conflict with or result in a breach by
the COMPANY of any of the terms or provisions of, or constitute a default
under, the articles of incorporation or by-laws of the COMPANY, or any
indenture, mortgage, deed of trust, or other material agreement or
instrument to which the COMPANY is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation of the United States of any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental
body having jurisdiction over the COMPANY or any of its properties or
assets.
g. Filings. The COMPANY undertakes and agrees to make all necessary
filings in connection with the sale of the Debentures as required by United
States laws and regulations or any domestic securities exchange or trading
market.
h. Absence of Certain Changes. Since September 30, 1996, there has been no
material adverse development in the assets, liabilities, business,
properties, operations, financial condition or results of operations of the
COMPANY, except as disclosed in the SEC Filings or in Annex V.
i. The COMPANY has legally available sufficient authorized and unissued
Shares as may be reasonably necessary to effect the conversion of the
Debentures.
j. Litigation. There is no action, suit or preceding before or by any
court or governmental agency or body, domestic or foreign, now pending or,
to the knowledge of the COMPANY, threatened against or affecting the
COMPANY, or any of its properties, which might result in any material
adverse change in the condition (financial or otherwise) or in the earnings,
business affairs or business prospects of the COMPANY, or which might
materially and adversely affect the properties or assets thereof.
k. No Default. Except as set forth in Annex V, the COMPANY is not in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed
of trust or other material instrument or agreement to which it is a party or
by which it or its property may be bound, and neither the execution, nor the
delivery by the COMPANY, nor the performance by the COMPANY of its
obligations under this Agreement or the Debentures, other than the
conversion provision thereof, will conflict with or result in the breach or
violation of any of the terms or provision of, or constitute an default or
result in the creation or composition of any lien or charge on any assets or
<PAGE>
properties of the COMPANY under any material indenture, mortgage, deed of
trust or other material agreement or instrument to which the COMPANY is a
party or by which it is bound or any statute or the Certificate of
Incorporation or By-Laws of the COMPANY, or any decree, judgment, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the COMPANY or its properties.
l. SEC Filings. None of the SEC Filings with the Securities and Exchange
Commission contained, at the time they were filed, any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading. The COMPANY has
since before June 1, 1996, timely filed all requisite forms, reports and
exhibits thereto with the Securities and Exchange Commission.
m. Full Disclosure. There is no fact known to the COMPANY (other than
general economic conditions known to the public generally) that has not been
disclosed in writing to the PURCHASER that (i) could reasonably be expected
to have a material adverse effect on the condition (financial or otherwise)
or in the earnings, business affairs, business prospects, properties or
assets of the COMPANY or (ii) could reasonably be expected to materially and
adversely affect the ability of the COMPANY to perform its obligations
pursuant to this Agreement.
n. Prior Issues. During the twelve (12) months preceding the date hereof,
the Company has not issued any securities pursuant to Regulation S or
Regulation D under the Act, except as set forth in Exhibit 3(n). The
presently outstanding principal amount of each such issuance, if any, is
set forth in ANNEX V.
o. Use of Proceeds. The COMPANY will use the proceeds from the sale of the
Debenture (excluding amounts paid by the COMPANY for legal fees and finders'
fees in connection with the sale of the Debenture) as more fully set forth
in ANNEX V.
4. Transfer Agent Instructions.
a. Debentures. The COMPANY shall act as Debenture Registrar and shall
maintain an appropriate ledge containing the necessary information with
respect to each Debenture.
b. Subject to the completeness and accuracy of the PURCHASER's
representations and warranties herein, upon the conversion of any Debenture
by a person who is a non-U.S. Person, the COMPANY shall, at its expense,
take all necessary action (including the issuance of an opinion of counsel)
to assure that the COMPANY's transfer agent shall issue stock certificates
without restrictive legend or stop orders in the name of PURCHASER (or its
nominee [being a non-U.S. Person] or such non-U.S. Persons as may be
designated by PURCHASER) and in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon
such conversion, as applicable. The COMPANY warrants that no instructions
other than these instructions, instructions to impose a "stop transfer"
instruction with respect to the Debenture until the end of the Restricted
Period have been or will be given to the transfer agent and that the Shares
will not be subject to any transfer limitations other than those imposed by
applicable securities law. Nothing in this Section 4, however, shall affect
in any way PURCHASER's or such nominee's obligations and agreement to comply
with all applicable securities laws upon resale of the Securities.
<PAGE>
c. It will permit the PURCHASER to exercise its right to convert the
Debentures by telecopying an executed and completed Notice of Conversion to
the COMPANY and delivering within three business days thereafter, the
original Notice of Conversion and the Debenture representing the Shares to
the COMPANY by express courier. Each date on which a Notice of Conversion
is telecopied to and received by the COMPANY in accordance with the
provisions hereof shall be deemed a Conversion Date. Within three (3)
business days after receipt by the COMPANY of the original Notice of
Conversion and the Debenture representing the Shares to be converted (the
"Notice Date"), the COMPANY will instruct its transfer agent to issue, on
an expedited basis, the certificates representing the Shares of Common Stock
issuable upon conversion of any Debentures and transmit the certificates
(together with the Debenture representing the Shares not so converted) to
the PURCHASER via express courier, by electronic transfer or otherwise.
d. The Company understands that a delay in notifying the transfer agent to
issue the Shares of Common Stock beyond the Notice Date could result in
economic loss to the PURCHASER. As compensation to the PURCHASER for such
loss, the Company agrees, in the event the Company interferes with or
obstructs, by means of unsupportable objections, threats or otherwise, the
transfer agent's issuance and delivery of the certificates, or raises
unsupportable objections to the issuance and delivery or otherwise causes a
delay in issuance and delivery without justifiable cause, to pay late
payments to the PURCHASER for late notice upon Conversion in accordance with
the following schedule (where "No. Business Days Late" is defined as the
number of business days beyond five (5) business days from the Notice Date:
<TABLE>
Late Payment For Each
$10,000 of Debenture Principal
<S> <S>
No. Business Days Late Amount Being Converted
1 $50
2 $100
3 $150
4 $200
5 $250
6 $300
7 $350
8 $400
9 $450
10 $500
more than 10 $550
plus $100 for each Business
Day Late beyond 10 days
</TABLE>
The Company shall pay any payments incurred under this Section in
immediately available funds upon demand. Nothing herein shall limit
PURCHASER's right to pursue actual damages for the Company's failure to
issue and deliver Common Stock to the PURCHASER, in the event that the
Company fails for any reason to effect delivery of such shares of Common
Stock within five (5) business days after the Delivery Date, the PURCHASER
will be entitled to revoke the relevant Notice of Conversion by delivering a
notice to such effect to the Company whereupon the Company and the PURCHASER
shall each be restored to their respective positions immediately prior to
delivery of such Notice of Conversion.
5. Exemption; Reliance on Representation.
<PAGE>
a. PURCHASER understands that the offer and sale of the Debentures, and the
Shares issuable upon conversion thereof, is not being registered under the
1933 Act. The COMPANY is relying on the rules of governing offers and sales
made outside the United States pursuant to Regulation S Rules 901 through
904 of Regulation S govern this transaction.
b. Notwithstanding the provisions hereof, in no event (except with respect
to an Event of Mandatory Conversion upon the maturity of the Debenture)
shall the holder be entitled to convert any Debenture in excess of the
number of shares upon conversion of which the sum of (1) the number of
shares of Common Stock beneficially owned by the PURCHASER and its
affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the
Debenture) and (2) the number of shares of Common Stock issuable upon the
conversion of the Debenture with respect to which the determination of this
proviso is being made would result in beneficial ownership by the PURCHASER
and its affiliates of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulation 13 D-G
thereunder, except as otherwise provided in clause (1) of such provision.
6. Closing Date and Escrow Agent. The date of the issuance of the
Debentures and the sale of the Debentures as evidenced by receipt of the
COMPANY from the Escrow Agent of Purchaser's purchase funds (the "Closing
Date") shall be no later than two (2) business days after execution hereof
by all parties or such other mutually agreed to time. PURCHASER shall
within three (3) business days after acceptance and execution of this
Agreement by the COMPANY, deliver the necessary funds as indicated in
Paragraph 1 to the Escrow Agent. Debentures will be delivered to the Escrow
Agent at the instructions of the COMPANY. PURCHASER agrees that the Escrow
Agent has no liability as a result of any fraudulent or unlawful conduct of
any other party, and agrees to hold the Escrow Agent harmless.
7. Conditions to the COMPANY's Obligation to Sell. PURCHASER understands
that the COMPANY's obligation to sell the Debentures is conditioned upon:
a. Acceptance by PURCHASER of an Agreement for the sale
of Debentures;
b. Delivery to the Escrow Agent by each PURCHASER of
immediately available funds in United States Dollars
as payment in full for the purchase of the Debentures; and
c. The accuracy on the Closing Date of the representations
and warranties of PURCHASER contained in this Agreement
and the performance by PURCHASER on or before the Closing
Date of all covenants and agreements of PURCHASER required
to be performed on or before the Closing Date.
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated
hereby, or requiring any consent or approval which shall
not have been obtained.
8. Conditions to PURCHASER's Obligation to Purchase. The COMPANY
understands that PURCHASER's obligation to purchase the Debentures is
conditioned upon:
<PAGE>
a. The receipt and acceptance by the COMPANY of this Agreement
as evidenced by execution of this Agreement by the President
or any Vice President of the COMPANY. The acceptance of funds
by the COMPANY shall be deemed to be construction acceptance of
this Agreement;
b. Delivery of Debentures to Escrow Agent as herein set forth;
c. The accuracy on the Closing Date of the representations and
warranties of the COMPANY contained in this Agreement and the
performance by the COMPANY on or before the Closing Date of all
covenants and agreements of the COMPANY required to be performed
on or before the Closing Date; and
d. Delivery to the Escrow Agent of an opinion of counsel for the
COMPANY, dated the Closing Date and addressed to PURCHASER, in
the form attached hereto as Annex II.
e. Delivery to the Escrow Agent of the Irrevocable Instructions
to Transfer Agent in the form attached hereto as Annex IV.
9. Registration of the Securities. After the expiration of the Restricted
Period, if the COMPANY fails to issue to the PURCHASER or the PURCHASER's
transferees certificates for shares of Common Stock issuable upon conversion
of the Debentures bearing no restrictive legend and free of stop transfer
instructions for any reason other than the COMPANY's reasonable good faith
belief that the representations and warranties made by the PURCHASER in this
Agreement were untrue when made, then the COMPANY shall be required, at the
request of the PURCHASER and at the COMPANY's expense, to effect the
registration of such shares of Common Stock under the act, and relevant Blue
Sky laws as promptly as is practicable. The COMPANY and the PURCHASER shall
cooperate in good faith in connection with the furnishing of information
required for such registration and the taking of such other actions as may
be legally or commercially necessary in order to effect such registration.
The COMPANY shall file a registration statement within thirty (30) days of
PURCHASER's written demand therefor and shall use its best efforts to cause
such registration statement to become effective as soon as practicable
thereafter. Such best efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the
Securities and Exchange Commission with respect to such registration
statement and promptly preparing and filing amendments to such registration
statement which are responsive to the comments received from the staff of
the Securities and Exchange Commission. Once declared effective by the
Securities and Exchange Commission, the COMPANY shall cause such
registration statement to remain effective until the earlier of (I) the sale
by the PURCHASER of all shares of Common Stock so registered or (ii) 120
days after the effective date of such registration statement. In the event
that the COMPANY has not effected the registration of such shares of Common
Stock under the Act and relevant Blue Sky laws within 120 days after the
date of the PURCHASER's demand therefor, the COMPANY shall pay to the
PURCHASER by wire transfer, as liquidated damages for such failure and not
as a penalty, an amount in cash equal to $100,000. Such payment shall be
made to the PURCHASER immediately upon expiration of the 120-day period
referenced in the preceding sentence if the registration of such shares of
Common Stock is not effected by such date; provided, however, that the
payment of such liquidated damages shall not relieve the COMPANY from its
obligations to register such shares of Common Stock pursuant to this Section
<PAGE>
10. Certain Agreements. The COMPANY covenants and agrees that it will not
enter into any subsequent or further offer of sale of common stock or
securities convertible into common stock with any third party within a
period of three hundred sixty (360) days from the Closing Date, without
first offering the PURCHASER the opportunity to (which shall remain open for
a period of five business days from the date the PURCHASER receives notice
thereof) to purchase all such additional securities (in the discretion of
the PURCHASER) on the terms and provisions on which the Company proposes to
offer such additional securities to such third party. In the event that the
PURCHASER declines to participate in any such investment, the Company shall
provide the PURCHASER with prompt written notice of the consummating of any
such transaction with a third party, specifying the material terms thereof.
However, this Section 10 will not apply to (x) the issuance of securities
(other than for cash) in connection with a merger, consolidation, sale of
assets, disposition of a business, produce or license by the Company,
strategic alliance, bank loan or agreement, public offering, securities
issued at the then current market price (as determined in good faith by the
Board of Directors), or the exercise of options, or (y) the exchange of the
capital stock of the Company for assets, stock or other joint venture
interests. This Section 10 may be waived by the holders of two-thirds of
the outstanding principal amount of the Debentures (whether or not the
PURCHASER shall consent thereto).
11. Governing Law; Arbitration. This Agreement will be construed and
enforced in accordance with and governed by the laws of the State of Canada,
except for matters arising under the Act, without reference to principles of
conflicts of law. Any controversy or claim arising out of or relating to
this Agreement (whether in contract or tort, or both) shall be determined by
binding arbitration at Toronto, Canada, in accordance with the commercial
arbitration rules of the International Chamber of Commerce. The prevailing
party in any arbitration proceeding shall be awarded reasonable attorneys
fees and costs of the proceeding. The arbitration award shall be final, and
may be entered in any court having jurisdiction.
12. Notices. All notices given under this Agreement shall be in writing,
addressed to the parties as set forth below, and shall be effective on the
earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipient's time,
otherwise it is effective the next day, or (iii) on the second business day
after delivery to a major international air delivery or air courier service
(such as Federal Express or Network Couriers):
COMPANY: Level Best Golf, Inc.
14561 58th Street North
Clearwater, Florida 34620
Attention: Mr. Fred L. Solomon, President
Facsimile No. (813) 535-0077
With a copy (that does not constitute notice) to:
Mr. Jackson L. Morris
Attorney at Law
3116 West North A Street
Tampa, Florida 33609
Facsimile No. (813) 873-9628
PURCHASER: At the address set forth on the first page of this Agreement.
<PAGE>
ESCROW AGENT: Thomson Kernaghan & Co. Ltd.
365 Bay Street
Toronto, Ontario M5H 2V2 Canada
Attention: Mr. Mark E. Valentine, Vice President
Facsimile No. (416) 860-6140
With a copy (that does not constitute notice) to:
Mr. John M. Mann
Attorney at Law
2200 Post Oak Boulevard, Suite 614
Houston, Texas 77056-4706
Facsimile No. (713) 622-7185
13. Survival of Representations and Warranties. PURCHASER's
representations and warranties shall survive the execution and delivery
hereof of this Agreement and the delivery of the Debenture.
14. Confidentiality. Each of the COMPANY and the PURCHASER agrees to keep
confidential and not to disclose to or use for the benefit of any third
party the terms of this Agreement or any other information which at any
times is communicated by the other party as being confidential without the
prior written approval of the other party; provided, however, that this
provision shall not apply to information which at the time of disclosure is
already part of the public domain (except by breach of this Agreement) and
information which is required to be disclosed by law.
15. Indemnification. Each of the Company and the PURCHASER agrees to
indemnify the other and hold the other harmless from and against any and all
losses, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) which the other may sustain or incur in connection with the
breach of the indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
SIGNATURES FOR ENTITY PURCHASERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing statements
are true and correct, and that it has caused this Offshore Securities
Subscription Agreement to be duly executed on its behalf this _____ day of
_______________________, 1997.
Printed Name of Purchaser
By:_____________________________
(Signature of Authorized Person)
________________________________
Printed Name and Title of Authorized Person
SIGNATURE OF INDIVIDUAL PURCHASERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing statements
are true and correct, and that the has duly executed this Offshore
Securities Subscription Agreement this _____ day of _______________________,
1997.
___________________________________
Signature
____________________________________
Printed Name
____________________________________
<PAGE>
Signature
____________________________________
Printed Name
Accepted this ______________ day of the month of ____________________, 1997.
LEVEL BEST GOLF, INC.
By: ________________________________
Name:_______________________________
Title:______________________________
All correspondence and delivery of certificates and confirmation should be
addressed to the above-named person and sent by the COMPANY to his _______
business _______ home address (check one).
Capacity of Subscriber (check one):
Individual ____________
Corporation ____________
Partnership ____________
Other __________________________ (Please specify)
Ownership of Debentures (check one):
Individual ____________
Joint Tenant, with right of survivorship ____________*
Tenants in Common ____________
Tenants in Entirety ____________*
Community Property ____________*
Country of Citizenship:____________
Country of Incorporation or Formation: ___________
* If you are purchasing Debentures with only your spouse as co-owner, both
you and your spouse must sign the signature page. If any co-owner is not
your spouse, all co-owners must sign the signature page.
Name of PURCHASER representative, if any:___________________________
Address ____________________________________________________________
Telephone _____________________
Full Name and Address of PURCHASER for Registration Purposes :
NAME:__________________________
ADDRESS:__________________________________
__________________________________
__________________________________
TEL. NO._______________________
FAX NO. _______________________
CONTACT NAME:__________________
Delivery Instructions (if different from Registration Name:
NAME:___________________________
ADDRESS:____________________________________________________________
TEL. NO.________________________
FAX NO. ________________________
CONTACT NAME:___________________
SPECIAL INSTRUCTIONS:_______________________________________________
____________________________________________________________________
