SUBSCRIPTION AGREEMENT
This
SUBSCRIPTION
AGREEMENT (this
“Agreement”)
is
entered into as of the date of its acceptance by H2Diesel Holdings, Inc.,
a
Florida corporation (the “Company”),
set
forth below (the “Effective
Date”),
by
and between the Company and the subscriber set forth on the signature page
hereto (the “Subscriber”).
RECITALS
WHEREAS,
in
connection with the transactions contemplated by this Agreement, the Company
desires to create a new series of preferred stock designated as Series B
Cumulative Convertible Preferred Stock, par value $.001 per share (the
“Preferred
Stock”),
by
filing Articles of Amendment in the form attached hereto as Exhibit
A
(the
“Articles
of Amendment”)
with
the Secretary of State of the State of Florida;
WHEREAS,
the
Company desires to offer (the “Offering”)
up to
$10,000,000 in shares of Preferred Stock at a purchase price of $100 per
share
and an initial conversion price of $4.25 per share (the “Shares”),
together with warrants in the form attached hereto as Exhibit
B,
exercisable for a number of shares of common stock of
the
Company, $.001 par value per share (the “Common
Stock’)
equal
to 25% of the number of shares of Common Stock that
would be issuable upon initial conversion of the Preferred Stock, (the
“Warrants”,
and
together with the Shares, the “Securities”)
at an
exercise price of $6.25 per share;
WHEREAS,
the
Company desires to issue and sell to the Subscriber the Securities set forth
on
the signature page hereof;
WHEREAS,
in
connection with the Offering the Company or its agents have provided to
Subscriber a copy of the Company’s Confidential Private Offering Memorandum
dated March 26, 2008 (together with the annexes, exhibits and attachments
thereto, the “Memorandum”),
which
provides certain material disclosures in connection with the Offering;
and
WHEREAS,
as
part
of the Offering the Company will agree to register shares of Common Stock
issuable (i) upon the conversion of the Preferred Stock, (ii) upon the payment
of dividends on the Preferred Stock, and (iii) upon the exercise of the
Warrants, under the registration rights agreement in the form attached as
Exhibit
C
(the
“Registration
Rights Agreement”).
AGREEMENT
NOW
THEREFORE, based
upon the premises and mutual promises set forth below, the parties agree
as
follows:
1. Subscription
for Preferred Stock; Terms of the Offering.
1.1. Subscription
and Issuance of the Securities.
Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase the Securities set forth on the signature
page hereof, for an aggregate purchase price equal to $____________ (the
“Purchase
Price”).
The
Company reserves the right in its sole discretion to increase the number
of
Shares in the Offering if sufficient demand exists. The Purchase Price is
payable by wire transfer (in accordance with the wire transfer instructions
set
forth in the Memorandum) of immediately available funds delivered at the
Closing
(as defined below).
1.2. Subscription
Period.
The
Company may, in its sole discretion, continue to accept subscriptions on
or
before the third calendar day following the initial Closing Date (as defined
below).
1.3. Right
to Reject.
The
Company reserves the right to reject this subscription in whole or in part
or
terminate the Offering in its sole and absolute discretion. If Subscriber’s
subscription is rejected in whole, or the Offering is terminated without
a
Closing occurring, all funds received from the Subscriber will be promptly
returned without interest, penalty, expense or deduction, and this Agreement
shall thereafter be of no further force or effect. If Subscriber’s subscription
is rejected in part, the funds for the rejected portion of such subscription
will be promptly returned without interest, penalty, expense or deduction
and
this Agreement will continue in full force and effect to the extent such
subscription was accepted.
2. Closing.
2.1. Closing.
The
Closing of the transactions contemplated hereby (the “Closing”)
shall
take place on the date the Company declares the Closing effective (the
“Closing
Date”).
The
Closing shall occur at such place as determined by the Company.
2.2. Termination
of Offering.
All
payments will be held by the Company until the Company declares the Closing
effective or terminates the Offering. The Offering will be terminated if
either
(i) the Closing does not become effective on or prior to April 15, 2008,
which
date the Company may extend, in its sole discretion, but not beyond May 15,
2008, or (ii) the Company elects to terminate the Offering. If the Offering
is
terminated, the Company will return any payments received, without interest,
to
the Subscribers.
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Subscriber that the following
representations and warranties shall be true immediately prior to the
Closing:
3.1. Organization;
Good Standing; Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of Florida and has all requisite corporate power
and
authority to carry on its business as presently conducted and as proposed
to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have
a
material adverse effect on the consolidated financial condition or results
of
operations of the Company.
3.2. Capitalization.
Capitalization.
The
authorized capital stock of the Company immediately prior to the Closing
consists of 100,000,000 shares of Common Stock of which 18,285,964 shares
are
outstanding as of March 10, 2008 and 10,000,000 shares of preferred stock,
par
value $.001 per share, of which 40,050 shares are outstanding as of March
1,
2008. The options to purchase 7,136,000 shares of Common Stock are outstanding
as of March 1, 2008 and warrants to purchase 3,196,565 shares of Common Stock
are outstanding as of March 1, 2008. All of the issued and outstanding capital
stock of H2Diesel, Inc., a Delaware corporation and wholly owned subsidiary
of
the Company (“Subsidiary”)
is
owned by the Company. The Company owns 100% of Subsidiary, and has no direct
or
indirect ownership interest in any entity other than Subsidiary.
2
3.3. Authorization.
All
corporate action required to be taken by the Company’s Board of Directors and
shareholders in order to authorize the Company, as the case may be, to enter
into this Agreement, the Registration Rights Agreement and to issue the
Securities has been taken. Each of this Agreement and the Registration Rights
Agreement when executed and delivered by the Company, shall constitute the
valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws
of
general application relating to or affecting the enforcement of creditors’
rights generally, or (ii) as limited by laws relating to the availability
of
specific performance, injunctive relief, or other equitable remedies and
public
policy limitations on the enforcement of indemnification for violations of
securities laws.
3.4. Valid
Issuance of Securities.
The
Securities, when issued, sold and delivered in accordance with the terms
and for
the consideration set forth in this Agreement, and the shares of Common Stock
issuable (i) upon conversion of the Shares, (ii) upon payment as dividends
on
the Shares and (iii) upon exercise of the Warrants (collectively, the
“Additional
Shares”),
will
be duly authorized, validly issued, fully paid and non-assessable and free
of
restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws.
3.5. SEC
Documents, Financial Statements.
(a) True
and
complete copies of the Incorporated SEC Reports (as defined in the Memorandum)
are publicly available on the Securities and Exchange Commission (“SEC”)
XXXXX
database (xxx.xxx.xxx).
As of
their respective filing dates, the Incorporated SEC Reports complied as to
form
in all material respects with the requirements of the Securities Exchange
Act of
1934, as amended (the “Exchange
Act”)
and
the Securities Act of 1933, as amended, and each of the Incorporated SEC
Reports
was timely filed. To the Company’s knowledge, as of the date hereof, none of the
Incorporated SEC Reports is subject to ongoing SEC review or outstanding
SEC
comment. Each of the Incorporated SEC Reports, as of the date it was filed
with
the SEC, did not contain any untrue statement of material fact or omitted
to
state a material fact required to be stated therein or necessary to make
the
statements made therein, in light of the circumstances in which they were
made,
not misleading, except to the extent corrected, supplemented or superseded
by a
subsequently filed Incorporated SEC Report.
(b) The
financial statements of the Company, including the notes thereto, included
in
the Incorporated SEC Reports (the “Company
Financial Statements”)
(i)
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their respective dates; (ii) have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements, included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC); and (iii) present
fairly in all material respects the consolidated financial condition and
results
of operations of the Company as of the respective dates and for the respective
periods indicated therein (subject, in the case of unaudited statements,
to
normal, recurring year-end adjustments).
3
3.6. Absence
of Undisclosed Liabilities.
The
Company has no material liabilities except (i) liabilities provided for or
reserved against in the Company Financial Statements, (ii) liabilities disclosed
in the Memorandum, and (iii) liabilities arising in the ordinary course of
business consistent with past practice since January 31, 2007.
4. Representations
and Warranties of the Subscriber.
The
Subscriber hereby acknowledges, agrees with and represents and warrants to
the
Company as follows:
4.1. Authorization.
The
Subscriber has full power and authority to enter into this Agreement and
the
Registration Rights Agreement, the execution and delivery of which has been
duly
authorized, if applicable, and this Agreement and the Registration Rights
Agreement constitute a valid and legally binding obligation of the
Subscriber.
4.2. Securities
Exemption.
The
Subscriber acknowledges his, her or its understanding that the offering and
sale
of the Securities is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities
Act”),
by
virtue of Section 4(2) of the Securities Act and the provisions of Regulation
D
promulgated thereunder (“Regulation
D”).
In
furtherance thereof, the Subscriber represents and warrants to the Company
as
follows:
(a) The
Subscriber realizes that the basis for the exemption from registration may
not
be available if, notwithstanding the Subscriber’s representations contained
herein, the Subscriber is merely acquiring the Securities for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. The Subscriber does not have any such
intention.
(b) The
Subscriber is acquiring the Securities solely for the Subscriber’s own
beneficial account, for investment purposes, and not with view to, or resale
in
connection with, any distribution of the Securities.
(c) The
Subscriber has the financial ability to bear the economic risk of his, her
or
its investment, has adequate means for providing for their current needs
and
contingencies, and has no need for liquidity with respect to the investment
in
the Company.
(d) The
Subscriber and the Subscriber’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, “Advisors”),
have
received this Agreement, together with the Memorandum, and all other documents
provided by the Company pursuant to the requests of the Subscriber or its
Advisors, if any, and have carefully reviewed them and they understand the
information contained therein, prior to the execution of this
Agreement.
(e) The
Subscriber (together with his, her or its Advisors, if any) has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of the prospective investment in the Securities. If
other
than an individual, the Subscriber also represents it has not been organized
solely for the purpose of acquiring the Securities.
4
4.3. Investor
Questionnaire.
The
information in the Investor Questionnaire completed and executed by the
Subscriber in the form attached as Exhibit
C
hereto
(the “Investor
Questionnaire”)
is
true and accurate in all respects, and the Subscriber is an “accredited
investor,” as that term is defined in Rule 501(a) of Regulation D.
4.4. Restricted
Securities.
The
Subscriber represents, warrants and agrees that he, she or it will not sell
or
otherwise transfer the Shares or any Additional Shares without registration
under the Securities Act or an exemption therefrom, and fully understands
and
agrees that the Subscriber must bear the economic risk of his, her or its
purchase because, among other reasons, the Securities have not been registered
under the Securities Act or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Securities Act and under the
applicable securities laws of such states, or an exemption from such
registration is available. In particular, the Subscriber is aware that the
Securities are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule
144”),
and
they may not be sold pursuant to Rule 144 unless all of the conditions of
Rule
144 are met. The Subscriber also understands that, except as otherwise provided
in the Registration Rights Agreement, the Company is under no obligation
to
register the Securities on his, her or its behalf or to assist them in complying
with any exemption from registration under the Securities Act or applicable
state securities laws. The Subscriber understands that any sales or transfers
of
the Securities are further restricted by state securities laws and the
provisions of this Agreement.
4.5. Reliance
on Representations.
No
representations or warranties have been made to the Subscriber by the Company,
or any of their respective officers, employees, agents, sub-agents, affiliates
or subsidiaries, other than any representations of the Company contained
herein,
and in subscribing for the Securities the Subscriber is not relying upon
any
representations other than those contained herein.
4.6. Investment
Risk.
The
Subscriber understands and acknowledges that his, her or its purchase of
the
Securities is a speculative investment that involves a high degree of risk
and
the potential loss of their entire investment and has carefully read and
considered the matters set forth in the Memorandum and in the Incorporated
SEC
Reports and in particular the matters under the caption “Risk Factors” therein,
and, in particular, acknowledges that the Company has a limited operating
history and is engaged in a highly competitive business.
4.7. Commitment
to Investments.
The
Subscriber’s overall commitment to investments that are not readily marketable
is not disproportionate to the Subscriber’s net worth, and an investment in the
Securities will not cause such overall commitment to become
excessive.
4.8. Legend.
The
Subscriber understands and agrees that the certificates for the Securities
shall
bear substantially the following legend until (i) such shares shall have
been
registered under the Securities Act and effectively disposed of in accordance
with a registration statement that has been declared effective or (ii) in
the
opinion of counsel for the Company such Securities may be sold without
registration under the Securities Act, as well as any applicable “blue sky” or
state securities laws:
5
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED.
4.10. Status
of Securities.
Neither
the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities
commission has approved the Securities or passed upon or endorsed the merits
of
the Offering or confirmed the accuracy or determined the adequacy of any
information provided by the Company to the Subscriber or its Advisors. Neither
this Agreement nor any of such information has been reviewed by any federal,
state or other regulatory authority.
4.11. Disclosure
of Information.
The
Subscriber and his, her or its Advisors, if any, have had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the offering of the Securities
and
the business, financial condition, results of operations and prospects of
the
Company, and all such questions have been answered to the full satisfaction
of
the Subscriber and his, her or its Advisors, if any. The Subscriber is unaware
of, is in no way relying on, and did not become aware of the offering of
the
Securities through or as a result of, any form of general solicitation or
general advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper, magazine
or
similar media or broadcast over television or radio, or electronic mail over
the
internet, in connection with the offering and sale of the Securities and
is not
subscribing for Securities and did not become aware of the offering of the
Securities through or as a result of any seminar or meeting to which the
Subscriber was invited by, or any solicitation of a subscription by, a person
not previously known to the Subscriber in connection with investments in
securities generally. The Subscriber further acknowledges that the Subscriber
has had the opportunity to request and receive drafts of the Company’s financial
statements for the year ended December 31, 2007 and its annual report on
Form 10-K for the fiscal year ended December 31, 2007 and that such
information is not yet publicly available and accordingly has not been provided
to investors. To the extent that the Subscriber has requested and received
this
material in its current draft form, or any other non-public information which
the Company identifies as likely to be material, the Subscriber acknowledges
that they must keep such information confidential and may not trade in the
Company’s securities until the Company has filed its annual report on
Form 10-K for the fiscal year ended December 31, 2007, expected to be
filed by March 31, 2008.
6
4.12. No
Claim.
The
Subscriber has taken no action which would give rise to any claim by any
person
for brokerage commissions, finders’ fees or the like relating to this Agreement
or the transactions contemplated hereby.
4.13. Forward-Looking
Statements.
The
Subscriber acknowledges that any estimates or forward-looking statements
or
projections included in the information provided by the Company, were prepared
by the management of the Company in good faith, but that the attainment of
any
such projections, estimates or forward-looking statements cannot be guaranteed
by the Company or such management and should not be relied upon.
4.14. No
Inconsistent Information.
No oral
or written representations have been made, or oral or written information
furnished, to the Subscriber or his, her or its Advisors, if any, in connection
with the offering
of the Shares which are in any way inconsistent with the information contained
herein or
in the
Memorandum.
4.15. ERISA.
(For
ERISA plans only) The fiduciary of the Employee Retirement Income Security
Act
of 1974 (“ERISA”)
plan
(the “Plan”)
represents that such fiduciary has been informed of an understands the Company’s
investment objectives, policies and strategies, and that the decision to
invest
“plan assets” (as such term is defined in ERISA) in the Company is consistent
with the provisions of ERISA that require diversification of plan assets
and
impose other fiduciary responsibilities. The Subscriber or Plan fiduciary
(a) is
responsible for the decision to invest in the Company; (b) is independent
of the
Company and any of their respective affiliates; (c) is qualified to make
such
investment decision; and (d) in making such decision, the Subscriber or Plan
fiduciary has not relied primarily on any advice or recommendation of the
Company or any of its affiliates.
5. Xxxxxxx
Xxxxxxx Prohibition; Indemnity.
5.1. Xxxxxxx
Xxxxxxx.
Until
the filing by the Company of a current report on Form 8-K with the SEC
describing the Offering, the Subscriber hereby agrees to (i) refrain from
(A)
engaging in any transactions with respect to the capital stock of the Company
or
securities exercisable or convertible into or exchangeable for any shares
of
capital stock of the Company, and (B) entering into any transaction which
would
have the same effect, or entering into any swap, hedge or other arrangement
that
transfers, in whole or in part, any of the economic consequences of ownership
of
the capital stock of the Company and (ii) indemnify and hold harmless
the Company, and their respective officers and directors, employees,
agents, sub-agents
and affiliates and each other person, if any, who controls any of the foregoing,
against
any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any violation
of this Section 6 by the Subscriber.
7
5.2. Indemnity.
The
Subscriber agrees to indemnify and hold harmless the Company and their
respective officers and directors, employees, agents, sub-agents and affiliates
and each other person, if any, who controls any of the foregoing, against
any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty by the Subscriber, or the Subscriber’s breach of, or
failure to comply with, any covenant or agreement made by the Subscriber
herein
or in any other document furnished by the Subscriber to the Company, the
Finder
and their respective officers and directors, employees, agents, sub-agents
and
affiliates and each other person, if any, who controls any of the foregoing
in
connection with the Offering.
6. Notices
to Subscribers.
(a) THE
SECURITIES HAVE
NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS
OF ANY
STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THIS AGREEMENT OR ANY INFORMATION PROVIDED IN CONNECTION
HEREWITH. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(b) THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
8. Miscellaneous
Provisions.
8.1. Modification.
Neither
this Agreement, nor any provisions hereof, shall be waived, modified, discharged
or terminated except by an instrument in writing signed by the party against
whom any waiver, modification, discharge or termination is sought.
8.2. Survival.
The
Subscriber’s representations and warranties made in this Agreement shall survive
the execution and delivery of this Agreement, the delivery of the Securities
and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of any of the Subscribers, their Advisors
or
the Company, as the case may be.
8.3. Notices.
Any
party may send any notice, request, demand, claim or other communication
hereunder to the Subscriber at the address set forth on the signature page
of
this Agreement or to the Company at H2Diesel Holdings, Inc., 00000 Xxxx Xxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000 (fax: (000) 000-0000), Attention: Chief
Executive Officer, or such other address or facsimile number as shall have
been
furnished to the party giving or making such notice, demand or delivery using
any means (including personal delivery, expedited courier, messenger service,
fax, ordinary mail or electronic mail), but no such notice, request, demand,
claim or other communication will be deemed to have been duly given unless
and
until it actually is received by the intended recipient. Any party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties written notice
in the
manner herein set forth.
8
8.4. Binding
Effect.
Except
as otherwise provided herein, this Agreement shall be binding upon, and inure
to
the benefit of, the parties to this Agreement and their heirs, executors,
administrators, successors, legal representatives and assigns. If the Subscriber
is more than one person or entity, the obligation of the Subscriber shall
be
joint and several and the agreements, representations, warranties and
acknowledgments contained herein shall be deemed to be made by, and be binding
upon, each such person or entity and his or its heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as
to the
subject matter thereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
8.5. Assignability.
This
Agreement is not transferable or assignable by the Subscriber.
8.6. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
8.7. Severability.
Whenever possible, each provision of this Agreement shall be interpreted
in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable
law,
such provision shall be ineffective only to the extent of such prohibition
or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8.8. Interpretation.
The
headings and captions used in this Agreement are for convenience of reference
only and do not constitute a part of this Agreement and shall not be deemed
to
limit, characterize or in any way affect any provision of this Agreement,
and
all provisions of this Agreement shall be enforced and construed as if no
caption or heading had been used herein or therein. Each defined term used
in
this Agreement shall have a comparable meaning when used in its plural or
singular form. The use of the word “including” herein shall mean “including
without limitation.” The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
8.9. No
Third-Party Beneficiaries.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
or
give to any person or entity other than the parties hereto and their respective
permitted successors and assigns any rights or remedies under or by reason
of
this Agreement.
9
8.10. Entire
Agreement.
This
Agreement, the Registration Rights Agreement and the documents referred to
herein, together with all the Exhibits hereto, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Agreement, and supersede any and all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect
to the
specific subject matter hereof.
8.11. Further
Assurances.
The
parties agree to execute such further documents and instruments and to take
such
further actions as may be reasonably necessary to carry out the purposes
and
intent of this Agreement.
8.12. Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Florida, without giving effect to any choice of law or conflict
of law
provision or rule that would cause the application of the laws of any
jurisdictions other than the State of Florida.
10
ANTI-MONEY
LAUNDERING REQUIREMENTS
|
The
USA PATRIOT Act
|
What
is money
laundering?
|
How
big is the problem and why is it important?
|
|||
|
The
USA PATRIOT Act is designed to detect, deter, and punish terrorists
in the
United States and abroad. The Act imposes new anti-money laundering
requirements on brokerage firms and financial institutions.
Since April 24,
2002, all brokerage firms have been required to have new, comprehensive
anti-money laundering programs.
To
help you understand these efforts, we want to provide you with
some
information about money laundering
and our steps to
implement the USA PATRIOT Act.
|
Money
laundering is the process of disguising illegally
obtained money so
that the funds appear to come from legitimate sources or
activities.
Money
laundering occurs in
connection with a wide variety
of crimes, including
illegal arms sales, drug trafficking, robbery, fraud, racketeering,
and
terrorism.
|
The
use of the U.S. financial system by criminals to facilitate terrorism
or
other crimes could taint our financial markets. According to the
U.S.
State Department, one recent estimate puts the amount of worldwide
money
laundering activity at $1 trillion a
year.
|
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|
What
are we required to do to eliminate money
laundering?
|
|
Under
new rules required by the USA PATRIOT Act, our anti-money laundering
program must designate a special compliance officer, set up employee
training, conduct independent audits, and establish policies and
procedures to detect and report suspicious transactions and ensure
compliance with the new laws.
|
As
part of our required program, we may ask you to provide various
identification documents or other information. Until you provide
the
information or documents we need, we may not be able to effect
any
transactions for you.
|
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PRIVACY
POLICY
It
is the
policy of the Finder to respect the privacy of customers who subscribe to
transactions underwritten by the Finder.
Whether
its own brokers introduce a Subscriber to the Finder or the introduction
is made
through selling agents, non-public personal information is protected by the
Finder.
11
The
Finder will not disclose any nonpublic personal information about a Subscriber
to anyone, except as required or permitted by law and to effect, administer,
or
enforce transactions requested by a Subscriber in the ordinary processing,
servicing or maintaining their accounts. Furthermore, the Finder does not
reserve the right to disclose a Subscriber’s nonpublic personal information in
the future without first notifying the Subscriber of a change in privacy
policy
and providing a convenient opportunity for the Subscriber to opt out of
information sharing with nonaffiliated third parties.
Under
the
USA PATRIOT Act of 2001 (Public Law 107-56) (together with all rules and
regulations promulgated hereunder, the “Patriot
Act”),
the
Finder and/or the Subscriber’s broker may be required or requested to disclose
to one or more regulatory and/or law enforcement bodies certain information
regarding transactions relating to the Subscriber’s account involving
transactions with foreign entities and individuals, other transactions in
your
account as required in the Patriot Act and other activities described in
the
Patriot Act as “suspicious activities.” Neither the Finder nor the Subscriber’s
broker shall have any obligation to advise the Subscriber of any such
disclosures or reports made in compliance with the Patriot Act.
12
ALL
SUBSCRIBERS MUST COMPLETE THIS PAGE
IN
WITNESS WHEREOF, the
undersigned has executed this Agreement on the ______ day
of
______________ 2008.
_______________________________ x
$100 for each
Share =$______________________.
|
Shares
subscribed for
|
Aggregate
Purchase Price
|
Each
Subscriber shall also receive a number of Warrants initially exercisable
for a
number of shares
of
Common Stock equal to 25% of the number of Shares of Common Stock into which
the
Shares subscribed for under this Agreement are initially convertible.
Manner
in
which Title is to be held (Please Check One):
|
1.
|
_____
|
Individual
|
7.
|
_____
|
Trust/Estate/Pension
or Profit Sharing
|
|
Plan
Date
Opened:____________
|
|||||
|
2.
|
_____
|
Joint
Tenants with Right of
Survivorship
|
8.
|
_____
|
As
a Custodian for
______________________________
Under
the Uniform Gift to Minors Act
of
the State of
______________________________
|
|
3.
|
_____
|
Community
Property
|
9.
|
_____
|
Married
with Separate Property
|
|
4.
|
_____
|
Tenants
in Common
|
10.
|
_____
|
Xxxxx
|
|
5.
|
Corporation/Partnership/Limited
Liability Company |
11.
|
_____
|
Tenants
by the Entirety
|
|
|
6.
|
_____
|
XXX
|
13
IF
MORE
THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL
SUBSCRIBERS MUST COMPLETE PAGE 15.
SUBSCRIBERS
WHICH ARE ENTITIES MUST COMPLETE PAGE 17.
ALL
SUBSCRIBERS MUST ALSO COMPLETE AND
EXECUTE
THE INVESTOR QUESTIONNAIRE
ATTACHED
AS EXHIBIT C.
14
EXECUTION
BY NATURAL PERSONS
|
Exact
Name in Which Title is to be Held
|
||
|
Name
(Please Print)
|
Name
of Additional Purchaser
|
|
|
Address:
Number and Street
|
Address:
Number and Street
|
|
|
City,
State and Zip Code
|
City,
State and Zip Code
|
|
|
Social
Security Number
|
Social
Security Number
|
|
|
Telephone
Number
|
Telephone
Number
|
|
|
Fax
Number (if available)
|
Fax
Number (if available)
|
|
|
E-Mail
(if available)
|
E-Mail
(if available)
|
|
|
(Signature)
|
(Signature
of Additional Purchaser)
|
|
15
EXECUTION
BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation,
Partnership, LLC, Trust, Etc.)
|
Name
of Entity (Please Print)
|
|
Date
of Incorporation or
Organization:__________________________________________________
|
|
Federal
Taxpayer Identification
Number:________________________________________________
|
|
Office
Address
|
|
|
City,
State and Zip Code
|
|
|
Telephone
Number
|
|
|
Fax
Number (if available)
|
|
|
E-Mail
(if available)
|
Type
of
entity (e.g., corporation, trust, limited partnership, general partnership
XXX
Trust, Pension or Profit Sharing Plan or
Trust):_____________________________________________________
Date
of
formation or
incorporation: ___________________________
Whether
the Subscriber was organized for the specific purpose of acquiring securities
of
H2Diesel Holdings, Inc.:
Yes ______ No______
Each
individual authorized to execute documents on behalf of the Subscriber in
connection with
this
investment:
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
The
Subscribers state of formation or incorporation: ________
The
business of the entity: _____________________________
Certain
Subscribers must provide the following information:
|
(A)
|
Corporations
MUST provide the articles of incorporation, by-laws, good standing
certificate and corporate resolution authorizing the purchase of
shares
and authorizing the person(s) signing the subscription documents
to do so.
All the documents must be certified by the Secretary or Assistant
Secretary of the corporation
as being true and correct copies thereof and in full force and
effect.
|
16
|
(B)
|
Partnerships
MUST provide a copy of the partnership agreement showing the date
of formation and giving evidence of the authority of the person(s)
signing
the subscription documents to do
so.
|
|
(C)
|
Trusts
MUST provide a copy of the trust agreement showing the date of
formation
and giving evidence of the authority of the person(s) signing the
subscription documents to do so.
|
|
(D)
|
Limited
Liability Companies and similar organizations MUST provide their
organizational document, operating agreement, good standing certificate
and evidence of authorization for the purchase of shares the person(s)
signing the subscription documents to do so. All the documents
must be
certified by an appropriate
officer of the organization as being true and correct copies thereof
in
full force and effect.
|
|
By:
|
||
|
Name:
|
||
|
Title:
|
17
ACCEPTED
this _____ day of ________________ 2008 on behalf of the
Company.
|
By:
|
||
|
Name:
|
||
|
Title:
|
Company
Signature Page
18
Exhibit
A
ARTICLES
OF AMENDMENT
A-1
Exhibit
B
FORM
OF WARRANT
B-1
Exhibit
C
INVESTOR
QUESTIONNAIRE
Instructions:
Check all boxes below which correctly describe you and return this Investor
Questionnaire to H2Diesel Holdings, Inc., 00000 Xxxx Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxx X. Xxxxxxxxx, Chief Executive
Officer.
| o |
You
are (i) a bank, as defined in Section 3(a)(2) of the Securities
Act of
1933, as amended (the “Securities
Act”),
(ii) a savings and loan association or other institution, as defined
in
Section 3(a)(5)(A) of the Securities Act, whether acting in an
individual
or fiduciary capacity, (iii) a broker or dealer registered pursuant
to
Section 15 of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”),
(iv) an insurance company as defined in Section 2(13) of the Securities
Act, (v) an investment company registered under the Investment
Company Act
of 1940, as amended (the “Investment
Company Act”),
(vi) a business development company as defined in Section 2(a)(48)
of the
Investment Company Act, (vii)
a
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301 (c) or (d) of the Small Business
Investment Act of 1958, as amended, (viii)
a
plan established and maintained by a state, its political subdivisions,
or
an agency or instrumentality of a state or its political subdivisions,
for
the benefit of its employees and you have total assets in excess
of
$5,000,000, or (ix) an employee benefit plan within the meaning
of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
and (1) the decision that you shall subscribe for and purchase
Securities,
is made by a plan fiduciary, as defined in Section 3(2 1) of ERISA,
which
is either a bank, savings and loan association, insurance company,
or
registered investment adviser, (2) you have total assets in excess
of
$5,000,000 and the decision that you shall subscribe for and purchase
the
Securities is made solely by persons or entities that are accredited
investors, as defined in Rule 501 of Regulation D promulgated under
the
Securities Act (“Regulation
D”)
or (3) you are a self-directed plan and the decision that you shall
subscribe for and purchase the Securities is made solely by persons
or
entities that are accredited
investors.
|
| o |
You
are a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as
amended.
|
| o |
You
are an organization described in Section 501(c)(3) of the Internal
Revenue
Code of 1986, as amended (the “Code”), a corporation, Massachusetts or
similar business trust or a partnership, in each case not formed
for the
specific purpose of making an investment in the Securities and
with total
assets in excess of $5,000,000.
|
| o |
You
are a director or executive officer of H2Diesel Holdings
Inc.
|
| o |
You
are a natural person whose individual net worth, or joint net worth
with
your spouse, exceeds $1,000,000 at the time of your subscription
for and
purchase of the Securities.
|
C-1
| o |
You
are a natural person who had an individual income in excess of
$200,000 in
each of the two most recent years or joint income with your spouse
in
excess of $300,000 in each of the two most recent years, and who
has a
reasonable expectation of reaching the same income level in the
current
year.
|
| o |
You
are a trust, with total assets in excess of $5,000,000, not formed
for the
specific purpose of acquiring the Shares, whose subscription for
and
purchase of the Shares is directed by a sophisticated person as
described
in Rule 506(b)(2)(ii) of Regulation
D.
|
| o |
You
are an entity in which all of the equity owners are persons or
entities
described in one of the preceding
paragraphs.
|
The
undersigned hereby represents and warrants that all of its answers to this
Investor Questionnaire are true as of the date of its execution of the
Subscription Agreement pursuant to which it purchased Shares of the
Company.
|
Name
of Purchaser [please print]
|
Name
of Co-Purchaser [please print]
|
|
|
Signature
of Purchaser (Entities please
|
Signature
of Co-Purchaser
|
|
|
provide
signature of Purchaser’s duly
|
||
|
authorized
signatory.)
|
||
|
Name
of Signatory (Entities only)
|
||
|
Title
of Signatory (Entities only)
|
C-2
