SUBSCRIPTIONAGREEMENT

 

 

This Subscription Agreement sets forth the terms under which the undersigned ("Subscriber") will invest in Custom Q, Inc. (the "Corporation”), a Nevada corporation.  This Subscription is one of a limited number of subscriptions for up to 400,000 shares of common stock, subject to increase at our option, at a price of $0.10 per share (the “Shares” or the “Securities”).  This is a “best efforts/no minimum” offering.

The Shares are being offered to a limited number of Subscribers on behalf of the Corporation.  All subscribers must be accredited investors as defined in Rule 501 of SEC Regulation D or persons who are not citizens or residents of the United States.

Execution of this Subscription Agreement by the Subscriber shall constitute an offer by the Subscriber to subscribe for the Shares set forth in this Agreement on the terms and conditions specified herein.  The Corporation reserves the right to reject such subscription offer, or, by executing a copy of this Subscription Agreement, to accept such offer.  If the Subscriber's offer is accepted, the Corporation will execute this Subscription Agreement and return an executed copy of the Subscription Agreement to the Subscriber.  If the Subscriber's offer is rejected, the payment accompanying this Subscription Agreement will be returned, with the notice of rejection.

 

WE SHALL HAVE THE FOLLOWING AVAILABLE FOR REVIEW FOR EACH INVESTOR OR HIS AGENT, DURING THIS PRIVATE PLACEMENT AND PRIOR TO THE SALE OF SHARES UPON REQUEST:  (1) ACCESS TO ALL BOOKS AND RECORDS OF THE CORPORATION; (2) ACCESS TO ALL MATERIAL CONTRACTS AND DOCUMENTS RELATING TO THE TRANSACTIONS DESCRIBED HEREIN AND THE CORPORATION'S OPERATIONS; AND (3) THE OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, ANY PERSON AUTHORIZED TO ACT ON BEHALF OF THE CORPORATION CONCERNING ANY ASPECT OF THE INVESTMENT, AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THE CORPORATION POSSESSES SUCH INFORMATION OR CAN DEVELOP IT WITHOUT UNREASONABLE EFFORT OR EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN THIS AGREEMENT.

 

EACH INVESTOR AND HIS ADVISOR(S) IS INVITED TO COMMUNICATE WITH:

 

Cindy Kostoff, President

1133 Old Bridge Place

Fort Wayne, IN  46825

Tel: 260 ###-###-####

The offering will terminate on September 30, 2008, unless extended by the corporation until December 31, 2008, or sooner terminated at the Corporation’s sole discretion.  There is a minimum purchase requirement of 5,000 shares or $500, with no arrangements to place the funds in an escrow, trust or similar account. All cleared funds will be available to us following deposit into our bank account.  

It is understood and agreed by the undersigned that the Corporation will have the unconditional right to reject this Subscription, in whole or in part, if it believes that the undersigned is not a qualified purchaser under Regulation D promulgated under the Securities Act of 1933, as amended, or for any other reason.

The Corporation will exercise its best judgment in the conduct of all matters arising under this Agreement.  The undersigned acknowledges that he understands the meaning and legal consequences of the representations and warranties contained herein, and he hereby agrees to indemnify and hold harmless the Corporation, the Corporation, their partners and employees, and any of their affiliates and their officers, directors, shareholders and employees, or any professional advisor or entity thereto, from and against any and all loss, damage, liability or expense, including costs and reasonable attorney's fees, to which said entities and persons may be put or which they may incur by reason of, or in connection with, any misrepresentation made by the Investor, any breach of any of his warranties, or his failure to fulfil any of his covenants or agreements under this Agreement.

The representations, warranties, covenants and agreements contained herein shall survive the delivery of, and the payment for, the Shares.

a.

Please check the appropriate line below in order that the Corporation may determine if you are an Accredited Investor.  IF YOU ARE A UNITED STATES CITIZEN OR RESIDENT:  YOU MAY ONLY INVEST IN THIS OFFERING IF YOU ARE AN ACCREDITED INVESTOR.

 

(i)

An individual who either (1) has a net worth or, together with his spouse, a joint net worth (i.e., in total assets in excess of total liabilities) in excess of $1,000,000  __________

(ii)

An individual who has had in each of the two most recent years, and reasonably expects to have during the current year an individual income [for this purpose, a person's income is the amount of his individual adjusted gross income (as reported on a federal income tax return) increased by the following amounts:  (1) any deduction for a portion of long term capital gains (Code Section 1202); (2) any deduction for depletion (Section 611 et seq. of the Code); (3) any exclusion for interest on tax-exempt municipal obligations (Section 103 of the Code); and (4) any losses of a partnership allocated to the individual limited partner (as reported on Schedule E of Form 1040)] in excess of $200,000, or a joint income with spouse in excess of $300,000. __________

(iii)

Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii).  _________

(iv)

A corporation, partnership, or other organization [if the Subscriber is a trust, only a revocable grantor trust may qualify] (an "entity"), and either (i) each shareholder, partner, or equity owner (as appropriate) individually satisfies the net worth or income standards set forth in the foregoing clause 7(a)(i) or (ii), or (ii) the organization is (A) an institutional investor as defined in Rule501 (a)(1) of the Securities and Exchange Commission, (B) a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, or (C) an organization described in Section 501(c)(3) of the Code with assets in excess of $5,000,000.  ___________

(v)

Any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.  ______________

 

NOTE:  If you are an individual, you may only be an Accredited Investor if you meet the standards set forth in 7(a)(i) or 7(a)(ii) above.  If you are a non-individual, you may only qualify under the standards set forth in 7(a)(iii), 7(a)(iv), or 7(a)(v) above.

All Accredited Investors must initial the following:

                      I understand that the representations contained in this section 7(a) are made for the purpose of qualifying me as an Accredited Investor as that term is defined pursuant to Regulation D under the Securities Act of 1933, as amended, for the purpose of inducing a sale of securities to me.  I hereby represent that the statement or statements initialled above are true and correct in all respects.  I understand that a false representation may constitute a violation of law, and that any person who suffers damage as a result of a false representation may have a claim against me for damages.

All Accredited Investors must complete the following:

In order to verify my Accredited Investor status, you may contact the following individual who has the following relationship with me:

Name:                      _______________

 

Telephone Number:  _____________________

 

Relationship: _______________________

(such as attorney, banker or accountant)

 

The Subscriber acknowledges that the Subscriber is purchasing the Shares on a private basis and the Subscriber represents that the Subscriber has the following relationship with a director, officer, or promoter of the Corporation (check one)

 

Friend  _____

 

Relative _____

 

Business associate ______

 

The Subscriber represents and warrants that the undersigned understands that:

 

·

Neither the sale of the securities which the undersigned is acquiring nor the securities themselves has been registered under the 1933 act or any foreign or state securities laws, and the securities must be held indefinitely unless subsequently registered under the act or an exemption from such registration is available.

 

·

The certificate representing the securities will be stamped with the following legend (or substantially equivalent language) restricting transfer; "The securities represented by this certificate have not been registered under the securities act of 1933 or the laws of any state and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation by the security holder named hereon that said securities have been acquired for purpose of investment and not for purpose of distribution. These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, or the availability of an exemption from which such registration. No hedging transactions are permitted with respect to the securities.  Furthermore, no offer, sale, transfer, pledge or hypothecation is to take place without the prior written approval of counsel to the Corporation being affixed to this certificate. The stock transfer agent has been ordered to effect transfers of or transactions concerning this certificate only in accordance with the above instructions.”

 

The subscriber represents and warrants that the undersigned understands that:

 

·

The Securities are restricted within the meaning of rule 144 promulgated under the 1933 Act.

 

·

That the exemption from registration under rule 144 will not be available in any event for at least one year from the date of purchase and payment of the securities by the undersigned, and even then will not be available unless:

 

o

A public trading market then exists for the common stock of the corporation;

 

o

Adequate information concerning the corporation is then available to the public;

 

o

Other terms and conditions of rule 144 are compiled with; and

 

o

Any sale of the securities may be made by the undersigned only in limited amounts in accordance with such terms and conditions.

 

Without in any way limiting the representations set forth above, the undersigned further agrees that the undersigned shall in no event make any disposition of all or any portion of the Securities which the undersigned is acquiring unless and until:

 

·

There is then in effect a registration statement under the act covering such proposed disposition is made in accordance with said registration statement.

 

or

 

·

The undersigned shall have notified the Corporation of the proposed disposition and shall have furnished the Corporation with a detailed statement of the circumstances surrounding the proposed disposition,

 

·

The undersigned shall have furnished the Corporation with an opinion of the undersigned's own counsel to the effect that such disposition will not require registration of such shares under the Act

 

·

Such opinion of the undersigned's counsel shall have been concurred in by counsel for the Corporation and the Corporation shall have advised the undersigned of such concurrence.

 

 

 

The Subscriber acknowledges that the funds to be raised from the Shares are to be employed for the business of the Corporation in accordance with management's discretion as to the best use of the same for the Corporation's business plans. The Corporation reserves the right at any time to alter its business plans in accordance with management's appreciation of the market for the goods and services of the Corporation.

A Subscription shall be made by delivering to the Corporation a signed copy of this subscription agreement and the Subscription Price made to the Corporation or such party as the Corporation may direct. The funds will be employed by the Corporation immediately upon acceptance of the subscription, or of the lesser amount if the full subscription is not accepted.

 

The Corporation shall return to the Subscriber the Subscription Price, or such amount as has not been accepted, as to such part of the subscription which the Corporation has not accepted.

 

Subscriber's Acknowledgments. The Subscriber agrees and acknowledges that:

 

·

Further Financing.  The Corporation may sell shares in the future at higher or lower prices or on different terms than this offering. The Corporation may, and will, acquire debt and/or equity financing in the future required or advisable in the course of the Corporation's business development.

 

·

Withdrawal or Revocation.  This Subscription Agreement is given for valuable consideration and shall not be withdrawn or revoked by the Subscriber once tendered to the Corporation with the Subscription Price.

 

·

Agreement to be Bound.  The Subscriber hereby specifically agrees to be bound by the terms of this Subscription Agreement as to all particulars hereof and hereby reaffirms the acknowledgments, representations, and powers set forth in this Subscription Agreement;

 

·

Reliance on Subscriber's Representations.  The Subscriber understands that the Corporation will rely on the acknowledgments, representations, and covenants of the Subscriber herein in determining whether a sale of the Shares to the Subscriber is in compliance with applicable securities laws. The Subscriber warrants that all acknowledgments, representations and covenants are true and accurate.

 

·

Waiver of Preemptive Rights.  The Subscriber hereby grants, conveys, and vests the President of the Corporation as the Subscriber's power of attorney solely for the purpose of waiving any prior or preemptive right which the Subscriber may have under applicable law to further issues of Securities of the Corporation.

 

 

The Subscriber represents and warrants to the Corporation and understands that:

 

·

Principal.  The Subscriber is purchasing the Shares as principal for his own account and not for the benefit of any other person except as otherwise stated herein, and not with a view to the resale or distribution of all or any of the Shares.

 

·

Decision to Purchase.  The decision of the Subscriber to enter into this agreement and to purchase Shares pursuant hereto has been based only on the representations of this agreement and any collateral business plan or offering memorandum provided herewith or based upon the Subscriber's relationship with the foregoing stated person of the Corporation. It is not made on other information relating to the Corporation and not upon any oral representation as to fact or otherwise made by or on behalf of the Corporation or any other person. The Subscriber agrees that the Corporation assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of any business plan information, which has been created based upon the Corporation's management experience. In particular, and without limiting the generality of the foregoing, the decision to subscribe for Shares has not been influenced by:

 

§

Newspaper, magazine or other media articles or reports related to the Corporation or its business; or

 

§

Promotional literature or other materials used by the Corporation for sales or marketing purposes; or

 

§

Any representations, oral or otherwise, that the Corporation will become a listed Corporation, that the Shares will be repurchased or have any guaranteed future realizable value, or that there is any certainty as to the success of the Corporation or liquidity or value of the Shares.

 

·

Economic Risk.  The Subscriber has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of his investment in the Shares and the Subscriber is able to bear the economic risk of a total loss of the Subscriber's investment in the Shares;

 

·

Speculative Investment.  The Subscriber understands that an investment in the Shares is a speculative investment and that there is no guarantee of success of management's plans. Management's plans are an effort to apply present knowledge and experience to project a future course of action which is hoped will result in financial success and with the present level of management's skills and of those whom the Corporation will need to attract (which cannot be assured). Additionally, all plans are capable of being frustrated by new or unrecognized or unappreciated circumstances which can typically not be accurately, or at all, predicted.

 

·

Address.  The Subscriber is resident as set out on the last page of this Agreement as the "Subscriber's Address" and the address set forth on the last page of this Agreement is the true and correct address of the Subscriber;

 

·

Risk and Resale Restriction.  The Subscriber is aware of the risks and other characteristics of the Securities and of the fact that the Subscriber will not be able to resell the Securities except in accordance with the applicable securities legislation and regulatory policy;

 

·

Receipt of Information.  The Subscriber acknowledges that, to his satisfaction:

 

§

He has either had access to or has been furnished with sufficient information regarding the Corporation and the terms of this investment transaction to his satisfaction;

 

§

He has been provided the opportunity to ask questions concerning this investment transaction and the terms and conditions thereof and all such questions have been answered to his satisfaction; and

 

§

He has been given ready access to and an opportunity to review any information, oral or written, that he has requested, in particular to any offering memorandum or business plan of the Corporation, if available concurrent with or as a part of this subscription.

 

·

No Prospectus filing.  The Subscriber acknowledges that this is an offering made on a private basis without a prospectus and that no foreign, federal, state, provincial or other agency has made any finding or determination as to the merits of the investment nor made any recommendation or endorsement of the Shares.

 

·

Confidentiality.  The Subscriber understands that the Corporation's business plan and this Agreement are confidential. The Subscriber has not distributed such, or divulged the contents thereof, to anyone other than such legal or financial advisors as the Subscriber has deemed desirable for purposes of evaluating an investment in the Shares and the Subscriber has not made any copies thereof except for his own records;

 

·

Age of Majority.  The Subscriber, if an individual, has attained the age of majority and is legally competent to execute this Agreement and to take all actions required pursuant hereto;

 

·

Authorization and Formation of Subscriber.  The Subscriber, if a corporation, partnership, trust or other form of business entity, is authorized and otherwise duly qualified to purchase and hold the Shares and such entity has not been formed for the specific purpose of acquiring Shares in the Offering. If the Subscriber is one of the aforementioned entities, it hereby agrees that upon request of the Corporation it will supply the Corporation with any additional written information that may be requested by the Corporation;

 

·

Legal Obligation.  This Agreement has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Subscriber;

 

·

Compliance With Applicable Laws.  The Subscriber knows of no reason why the delivery of this Agreement, the acceptance of it by the Corporation and the issuance of the Shares or resultant Shares to the Subscriber will not comply with all applicable laws of the Subscriber's jurisdiction of residence or domicile, and all other applicable laws, and the Subscriber has no reason to believe that such will cause the Corporation to become subject to or required to comply with any additional disclosure, prospectus or reporting requirements. The Subscriber will comply with all applicable securities laws and will assist the Corporation in all reasonable manners to comply with all applicable securities laws; and

 

·

Encumbrance or Transfer of Shares.  The Subscriber will not sell, assign, gift, pledge or encumber in any manner whatsoever the Shares herein subscribed without the prior written consent of the Corporation and in accordance with applicable securities laws.

 

The Subscriber agrees that the above representations and warranties of the Subscriber will be true and correct as of the execution of and acceptance of this Agreement and will survive the completion of the issuance of the Shares. The Subscriber understands that the Corporation will rely on the representations and warranties of the Subscriber herein in determining whether a sale of the Shares to the Subscriber is in compliance with federal and applicable provincial securities laws and the Subscriber warrants to indemnify and hold harmless the Corporation from all damages or claims resulting from any misrepresentation by the Subscriber.

 

 

The Subscriber undertakes to notify the Corporation immediately should there be any material change in the foregoing warranties and representations and provide the Corporation with the revised or corrected information. The Subscriber hereby agrees to indemnify and hold the Corporation and its affiliates harmless from and against any and all liability, damage, cost or expense (including reasonable attorneys' fees) incurred on account of or arising out of:

 

·

Any inaccuracy in the Subscriber's acknowledgments, representations or warranties set forth in this Agreement;

 

·

The Subscriber's disposition of any of the Shares contrary to the Subscriber's acknowledgments, representations or warranties in this Agreement;

 

·

Any suit or proceeding based upon a claim that said acknowledgments, representations or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress form the Corporation or its affiliates or the disposition of all or any part of the Subscriber's Shares; or

 

·

The Subscriber's failure to fulfill any or all of the Subscriber's obligations herein.

 

 

Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by delivery (electronic or otherwise) or prepaid registered mail deposited in a post office addressed to the Subscriber or the Corporation at the address specified in this Agreement. The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the fifth day after the same shall have been so mailed, except in the case of interruption of postal services for any reason whatsoever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.

 

 

Either party may at any time, and from time to time, notify the other party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

 

 

Each Section, sub-section, paragraph, sub- paragraph, term and provision of this Agreement, and any portion thereof, shall be considered severable, and if, for any reason, any portion of this Agreement is determined to be invalid, contrary to or in conflict with any applicable present or future law, rule or regulation, that ruling shall not impair the operation of, or have any other effect upon, such other portions of this Agreement as may remain otherwise intelligible (all of which shall remain binding on the parties and continue to be given full force and agreement as of the date upon which the ruling becomes final). The word "he" in this Agreement shall also mean “she” or “it” relative to the identity of the Subscriber.

 

This Agreement shall be governed by and construed and accordance with the laws of the State of Nevada, both substantive and remedial.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.  This Agreement shall be enforceable in accordance with its terms and be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, executors and administrators, but this Agreement and the respective rights and obligations of the parties hereunder shall not be assignable by any party hereto without the prior written consent of the other.  This Agreement represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof; supersedes all prior negotiations, letters and understandings relating to the subject matter hereof; and cannot be amended, supplemented or modified except by an instrument in writing signed by the party against whom enforcement of any such amendment, supplement or modification is sought.  In the event of any litigation between the parties to this Agreement relating to, or arising out of, this Agreement, the prevailing party shall be entitled to an award of reasonable attorney's fees and costs, trial and appellate levels.  The failure or finding of invalidity of any provision of this Agreement shall in no manner affect the right to enforce the other provisions of same, and the waiver by any party of any breach of any provision of this Agreement shall not be construed to be a waiver by such party of any subsequent breach of any other provision.

 

 

The covenants, representations and warranties contained herein shall survive the closing of the transactions contemplated hereby.

 

This Agreement may be signed by the parties hereto in as many counterparts as may be necessary, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument and notwithstanding the date of execution will be deemed to bear the execution date as set forth in this Agreement. This Agreement may be executed and exchanged by facsimile and such facsimile copies shall be valid and enforceable agreements.

 

Investor hereby subscribes for _________ (Number) of Shares for a total purchase price of $___________________  (Number of Shares x $.10 per Share) and hereby submits a check in the amount of $__________________  (Number of Shares x $.10 per Share) made payable to Custom Q, Inc.

This Agreement shall take effect upon the date of acceptance by the Corporation.

DATED at _________________, ________________   on this ____ day of ________________, 2008.

 

Name of Subscriber -please print:

 

_____________________________

 

Subscriber's Address:

 

__________________________________

 

__________________________________

 

__________________________________

 

e-mail address:  __________________________________

 

Telephone Number:

 

_________________________________

 

 Authorized Signature:

 

_________________________________

 

Official Capacity or Title -please print: _________________________________

 

ACCEPTANCE

 

The Corporation hereby accepts the above subscription as of this ___ day of ________________, 2008.

Custom Q, Inc.