CONFIDENTIAL PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (Accredited Investors)

 

 

 

 

 

 

 

 

 

 

 

(a)

that all of the representations and warranties of the Purchaser made in this Subscription Agreement are accurate in all material respects when made and on the Closing Date;

 

(b)

that all of the obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

(c)

that the Company’s agent shall have received the Subscription Proceeds for the First Tranche.

 

(a)

that all of the representations and warranties of the Company made in this Subscription Agreement are accurate in all material respects when made and on the Closing Date; and

 

(b)

that all of the obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed.

 

(a)

that all of the acknowledgements, representations and warranties of the Purchaser made in this Subscription Agreement are accurate in all material respects when made and on the Second Closing Date (and the delivery of a certificate from Purchaser or an authorized person at Purchaser to this effect);

 

(b)

that all of the obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed (and the delivery of a certificate from Purchaser or an authorized person at Purchaser to this effect); and

 

(c)

that the Company’s agent shall have received the Subscription Proceeds for the Second Tranche.

 

(a)

that all of the representations and warranties of the Company made in this Subscription Agreement are accurate in all material respects when made and on the Second Closing Date; and

 

(b)

that all of the obligations, covenants and agreements of the Company required to be performed at or prior to the Second Closing Date shall have been performed.

 

(a)

that all of the acknowledgements, representations and warranties of the Purchaser made in this Subscription Agreement are accurate in all material respects when made and on the Third Closing Date (and the delivery of a certificate from Purchaser or an authorized person at Purchaser to this effect);

 

(b)

that all of the obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed (and the delivery of a certificate from Purchaser or an authorized person at Purchaser to this effect); and

 

(c)

that the Company’s agent shall have received the Subscription Proceeds for the Third Tranche.

 

(a)

that all of the representations and warranties of the Company made in this Subscription Agreement are accurate in all material respects when made and on the Third Closing Date; and

 

(b)

that all of the obligations, covenants and agreements of the Company required to be performed at or prior to the Third Closing Date shall have been performed.

 

(a)

none of the Shares has been registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States;

 

(b)

only Accredited Investors (as defined pursuant to Rule 501 promulgated under the Securities Act of 1933) shall be eligible to purchase Shares;

 

(c)

the Purchaser acknowledges that the Company has not undertaken, and will have no obligation, to register any of the Shares under the 1933 Act;

 

(d)

the Company may be obligated to pay a finder’s fee or placement fee to a placement agent pursuant to a separate agreement between such placement agent and the Company, which shall include an amount not to exceed ten percent (10%) of the proceeds of the cash proceeds of the Offering;

 

(e)

the decision to execute this Subscription Agreement and acquire the Shares hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of the information contained in this Subscription Agreement (the receipt of which is hereby acknowledged) and such other information as the Purchaser may have heretofore requested of, and received from, the Company;

 

(f)

neither the US Securities and Exchange Commission (“SEC”) nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Shares;

 

(g)

there is no government or other insurance covering any of the Shares;

 

(h)

there are risks associated with an investment in the Shares and Purchaser is able to lose its entire investment in the Shares without suffering a material adverse effect;

 

(i)

each Purchaser believes it has received all the information it considers necessary or appropriate for purposes of deciding whether to purchase the Shares (including a copy of the Company’s filings with the SEC).  Each Purchaser further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Shares and regarding the business, properties, prospects and financial condition of the Company, and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access;

 

(j)

the Purchaser will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Purchaser contained herein or in any document furnished by the Purchaser to the Company in connection herewith being untrue in any material respect or any breach or failure by the Purchaser to comply with any covenant or agreement made by the Purchaser to the Company in connection therewith;

 

(k)

the Company will refuse to register any transfer of the Shares (i) pursuant to Section 22 hereof and (ii) that is not made pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act (the availability of which must be established to the reasonable satisfaction of the Company) and otherwise in accordance with applicable state and federal securities laws;

 

(l)

each Purchaser has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Shares and with respect to applicable resale restrictions;

 

(m)

this Subscription Agreement is not enforceable by the Purchaser unless it has been accepted by the Company, and the Purchaser acknowledges and agrees that the Company reserves the right to reject any subscription for any reason;

 

(n)

the Company is currently a “shell company” (as defined in rule 12b-2 of the Exchange Act) and Purchaser is aware that such status restricts the availability of Rule 144 for the resale of the Shares until one-year has passed from the date the Company ceases to be a “shell company” and files the required Form 10 information on Form 8-K;

 

(o)

the power-of-attorney granted in Section 21 below is coupled with an interest and, as such, such power-of-attorney is irrevocable; and

 

(p)

if the Purchaser is an individual, Purchaser has not executed this Agreement (and the power-of-attorney contained herein) in the State of New York.

 

(a)

it has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required hereby and, if the Purchaser is a corporation, it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on its behalf;

 

(b)

the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law or regulation applicable to the Purchaser or of any agreement, written or oral, to which the Purchaser may be a party or by which the Purchaser is or may be bound;

 

(c)

the Purchaser has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms;

 

(d)

the Purchaser is an accredited investor, as defined in Rule 501 of Regulation D promulgated by the SEC under the Securities Act of 1933;

 

(e)

the Purchaser is resident in the jurisdiction set out under the heading "Name and Address of Purchaser" on the signature page of this Subscription Agreement;

 

(f)

the Purchaser (i) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Shares; and (ii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;

 

(g)

the Purchaser is not aware of any advertisement of any of the Shares and is not acquiring the Shares as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

 

(h)

no person has made any written or oral representations to the Purchaser:

 

(i)

that any person will resell or repurchase any of the Shares;

 

(ii)

that any person will refund the purchase price of any of the Shares; or

 

(iii)

as to the future price or value of any of the Shares.

 

(i)

the Purchaser has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no arrangement or understanding with any other persons regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law.  The Purchaser is acquiring the Shares hereunder in the ordinary course of its business and does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

 

(a)

The Company is duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

 

(b)

The Company has the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.

 

(c)

The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Subscription Agreement and to carry out its obligations hereunder.  The execution and delivery of this Subscription Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further corporate authorization is required by the Company in connection therewith.

 

(d)

Upon delivery, this Subscription Agreement will have been duly executed by the Company and will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(e)

The execution and delivery of this Subscription Agreement and the performance by the Company of the obligations imposed on it in this Subscription Agreement, including the issuance and sale of the Shares, do not and will not (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other agreement to which the Company is a party or by which any material property or material asset of the Company, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject, or by which any material property or material asset of the Company is bound, except, in each case, as could not reasonably be expected to result in a Material Adverse Effect.

 

(f)

The Shares are duly authorized and, when issued and paid for in accordance with this Subscription Agreement, will be validly issued as fully paid and non-assessable, free and clear of all liens and encumbrances other than restrictions provided for in this Subscription Agreement and applicable law.  .

 

(g)

The issue and sale of the Shares will not obligate the Company to issue shares of its common stock or other securities to any person (other than the Purchasers and their designees) and will not result in a right of any holder of the Company’s securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

(h)

There is no action, suit, notice of violation, proceeding or investigation pending against the Company or its property before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of this Subscription Agreement or the Shares or (ii) would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.

 

(i)

Except for potential payments to a placement agent as described in paragraph  6.1(d) hereof,  no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person with respect to the transactions contemplated by this Agreement.  The Purchasers shall have no direct obligation with respect to any fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Subscription Agreement.

 

(j)

The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Shares and the transactions contemplated hereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers’ purchase of the Shares.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT.    THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.