FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SHARES, SUCH OFFER, SALE OR TRANSFER, PLEDGE
OR HYPOTHECATION IS IN COMPLIANCE THEREWITH OR IS OTHERWISE IN COMPLIANCE WITH
THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
Void after August 4, 2010
DETTO TECHNOLOGIES, INC.
WARRANT
THIS CERTIFIES THAT, for value received, XXXXX XXX (the "Holder"), is
entitled to purchase up to one hundred thousand (100,000) shares of Detto
Technologies, Inc. Common Stock. The holder of this Warrant will have the right
to exercise this Warrant for fully paid nonassessable shares of Common Stock of
the Company. The exercise price for the Warrant shall be $1.00 (the "Exercise
Price"). As used herein, (a) the term "Common Stock" shall mean the Company's
presently authorized Common Stock, and any stock into or for which such Common
Stock may hereafter be exchanged, (b) the term "Date of Grant" shall mean August
4, 2005 (c) the term "Shares" shall include any shares of Common Stock issued
upon conversion, and (d) "Warrant Price" exercise price described above.
1. Expiration of Warrant. This Warrant shall expire and shall no longer be
exercisable upon the earlier of: (i) 5:00 p.m., Seattle, Washington local time,
on the void date written above.
2. Method of Exercise; Payment. Subject to Section 1 hereof, the purchase
right represented by this Warrant may be exercised by the holder hereof, in
whole or in part, at any time after the Exercise Date, by either, at the
election of the holder hereof, (a) the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company and by the payment to the Company, by check or
wire transfer to an account designated by the Company, of an amount equal to the
then applicable Exercise Price multiplied by the number of Shares then being
purchased, or (b) pursuant to the provisions of Section 9 hereof. The person in
whose name any certificate representing Shares shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder of record of, and
shall be treated for all purposes as the record holder of, the shares
represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as reasonably practicable and in any
event within thirty (30) days after such exercise.
3. Stock Fully Paid; Registration Rights; Reservation of Shares. All
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance pursuant to the terms and conditions herein, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. All Shares that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance pursuant to the terms
and conditions herein, will contain what is commonly called "piggyback
registration rights" similar to other Common Stock issued by the Company. During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose of
the issue upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. Adjustment of Exercise Price and Number of Shares. Subject to the
provisions of Section 1 hereof, the number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), the
Company shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance reasonably satisfactory to the holder of this
Warrant), so that the holder of this Warrant shall have the right to receive, at
a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Shares theretofore
issuable upon exercise of this Warrant, the kind and amount of Shares stock,
other securities, money and property receivable upon such reclassification or
change by a holder of the number of Shares then purchasable under this Warrant.
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this subparagraph (a) shall similarly apply to successive
reclassifications, changes and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding shares of securities of the class issuable upon exercise of this
Warrant, the Exercise Price shall be proportionately decreased in the case of a
subdivision or increased in the case of a combination, effective at the close of
business on the date the subdivision or combination becomes effective. When any
adjustment is required to be made to the Exercise Price, the number of shares
issuable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares issuable upon
the exercise of this Warrant immediately prior to such adjustment, multiplied by
the Exercise Price in effect immediately prior to such adjustment, by (ii) the
Exercise Price in effect immediately after such adjustment, such that the
aggregate purchase price payable for the total number of shares purchasable
under this Warrant (as adjusted) shall remain the same.
(c) Stock Dividends and Other Distributions. If the Company at any
time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to the securities of the class issuable upon exercise of this
Warrant payable in such securities, or (ii) make any other distribution with
respect to the securities of the class issuable upon exercise of this Warrant
(except any distribution specifically provided for in the foregoing
subparagraphs (a) and (b)) then the Exercise Price shall be adjusted, from and
after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the total number of shares of the securities
of the class issuable upon exercise of this Warrant outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of which shall
be the total number of shares of the securities of the class issuable upon
exercise of this Warrant outstanding immediately after such dividend or
distribution. When any adjustment is required to be made to the Exercise Price,
the number of shares issuable upon the exercise of this Warrant shall be changed
to the number determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Exercise Price in effect immediately prior to such adjustment,
by (ii) the Exercise Price in effect immediately after such adjustment, such
that the aggregate purchase price payable for the total number of shares
purchasable under this Warrant (as adjusted) shall remain the same.
-2-
5. Notice of Adjustments. Whenever the Exercise Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Exercise Price and the number of Shares
purchasable hereunder after giving effect to such adjustment, which shall be
mailed (without regard to Section 12 hereof, by first class mail, postage
prepaid) to the holder of this Warrant.
6. Fractional Shares. No fractional shares of the securities of the class
issuable upon exercise of this Warrant will be issued in connection with any
exercise hereunder, but in lieu of such fractional shares, the Company shall
make a cash payment therefore based on the fair market value of the securities
of the class issuable upon exercise of this Warrant on the date of exercise as
reasonably determined in good faith by the Company's Board of Directors.
7. Compliance with Securities Act; Disposition of Warrant or Shares.
(a) Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the Shares to be issued upon
exercise hereof are being acquired for investment and that such holder will not
offer, sell or otherwise dispose of this Warrant or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
Shares issued upon exercise of this Warrant (unless registered under the Act)
shall be stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF CORPORATION COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SHARES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."
In addition, in connection with the issuance of this Warrant, the holder
specifically represents to the Company by acceptance of this Warrant as follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant. The
holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Act.
(2) The holder understands that this Warrant and any securities
issuable upon the exercise hereof have not been registered under the Act in
reliance upon a specific exemption there from, which exemption depends upon,
among other things, the bona fide nature of the holder's investment intent as
expressed herein. In this connection, the holder understands that, in the view
of the Securities and Exchange Commission (the "SEC"), the statutory basis for
such exemption may be unavailable if the holder's representation was predicated
solely upon a present intention to hold the Warrant for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Warrant, or for a period of one
year or any other fixed period in the future.
(3) The holder further understands that this Warrant and any
securities issuable upon the exercise hereof must be held indefinitely unless
subsequently registered under the Act and any applicable state securities laws,
or unless exemptions from registration are otherwise available. Moreover, the
holder understands that the Company is under no obligation to register this
Warrant and any securities issuable upon the exercise hereof.
-3-
(4) The holder is aware of the provisions of Rule 144, promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one (1) year after the party has purchased and
paid for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein. The holder further
understands that the exemption under Rule 144 is not currently available and may
not be available at the time holder wishes to sell this Warrant and any
securities issuable upon exercise hereof.
(5) The holder further understands that at the time it wishes to
sell this Warrant and any securities issuable upon the exercise hereof there may
be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, the holder may be
precluded from selling this Warrant and any securities issuable upon the
exercise hereof under Rule 144 even if the one-year minimum holding period had
been satisfied.
(b) Disposition of Warrant or Shares. With respect to any offer, sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant, in each case prior to registration of such Warrant or
Shares, the holder hereof and each subsequent holder of this Warrant agrees to
give written notice to the Company prior thereto, describing in sufficient
detail the manner thereof, together with a written opinion of such holder's
counsel, if reasonably requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state law then in effect) of
this Warrant or such Shares and indicating whether or not under the Act
certificates for this Warrant or such Shares to be sold or otherwise disposed of
require any restrictive legend as to applicable restrictions on transferability
in order to ensure compliance with such laws. Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Company, as promptly as practicable, shall notify such holder that such holder
may sell or otherwise dispose of this Warrant or such Shares, all in accordance
with the terms of the notice delivered to the Company. Notwithstanding the
foregoing, at any time that the Shares are publicly traded, such Shares may, as
to such federal laws, be offered, sold or otherwise disposed of in accordance
with Rule 144 under the Act, provided that the Company shall have been furnished
with such information as the Company and its counsel may reasonably request to
provide assurance that the provisions of Rule 144 have been satisfied. Each
certificate representing this Warrant or the Shares transferred shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions.
8. No Rights as a Shareholder. No holder of this Warrant, as such, shall
be entitled to vote or receive dividends or be deemed the holder of Shares or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
-4-
9. Conversion Right.
(a) Right to Convert Warrant; Net Issuance. In addition to and
without limiting the rights of the holder under the terms of this Warrant, but
only to the extent this Warrant has not otherwise been exercised, the holder
shall have the right to convert this Warrant or any portion thereof (the
"Conversion Right") into Shares as provided in this Section 9 at any time or
from time to time during the term of this Warrant. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this
Warrant (the "Converted Warrant Shares"), the Company shall deliver to the
holder (without payment by the holder of any exercise price or any cash or other
consideration) (X) that number of Shares equal to the quotient obtained by
dividing the value of this Warrant (or the specified portion hereof) on the
Conversion Date (as defined in subsection (b) hereof), which value shall be
determined by subtracting (A) the aggregate Exercise Price of the Converted
Warrant Shares immediately prior to the exercise of the Conversion Right from
(B) the aggregate fair market value of the Converted Warrant Shares issuable
upon exercise of this Warrant (or the specified portion hereof) on the
Conversion Date (as hereinafter defined) by (Y) the fair market value of one
Share on the Conversion Date (as hereinafter defined).
Expressed as a formula, such conversion shall be computed as follows:
X = B - A
--------
Y
Where: X = the number of Shares
that may be issued to holder
Y = the fair market value (FMV) of one Share
A = the aggregate Exercise Price (i.e., Converted
Warrant Shares x Exercise Price)
B = the aggregate FMV (i.e., FMV x Converted
Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined).
(b) Method of Exercise. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a written statement specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in subsection (a) hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement (the "Conversion Date").
Certificates for the shares issuable upon exercise of the Conversion Right shall
be issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.
-5-
(c) Determination of Fair Market Value. For purposes of this Section
9, "fair market value" shall mean the fair market value of such share as
determined in good faith by the Company's Board of Directors.
10. Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for issuance
by the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable;
(c) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Articles of
Incorporation or bylaws, do not and will not contravene any material law,
governmental rule or regulation, judgment or order applicable to the Company,
and do not and will not conflict with or contravene any provision of, or
constitute a default under, any material indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby.
11. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the registered holder of this Warrant.
12. Notices. Any notice, request, communication or other document required
or permitted to be given or delivered to the holder hereof or the Company shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to the holder at its address as shown on the books of the Company or to the
Company at the address indicated therefore on the signature page of this
Warrant.
13. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company and its transfer agent, or in the case of
any such mutilation upon surrender and cancellation of such Warrant, the Company
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
14. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
15. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Washington.
[Remainder of page intentionally left blank]
-6-
This Warrant was issued by the Company and the terms hereof were accepted
by the holder of this Warrant on the date below.
DETTO TECHNOLOGIES, INC.
By:
------------------------------------
Title:
---------------------------------
Address: 00000 X.X. 21st St., Suite 16
-------------------------------
Bellevue, WA 98007
-------------------------------
WARRANT HOLDER
(Print Name)
By:
-------------------------------------
Title:
----------------------------------
Address:
-------------------------------
-------------------------------
Date
------------------------------------
-7-
EXHIBIT A
-8-
NOTICE OF EXERCISE
To: Detto Corporation
Attn: Chief Financial Officer
00000 X.X. 21st Xx., Xxxxx 00
Xxxxxxxx, XX 00000
1. The undersigned hereby elects to exercise this Warrant as to _________
Shares pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full. The purchase price is
being paid by (check one):
___ (i) check;
___ (ii) wire transfer;
___ (iii) exercise of the Conversion Right (as defined in
Section 9 of the Warrant).
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned.
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares. The undersigned
further represents that the representations and warranties contained in the
Warrant are true in all material respects as if made as of today's date.
-----------------------------------
(Signature)
-----------------------------------
(Date)
DETTO TECHNOLOGIES, INC.
SUBSCRIPTION BOOKLET
Detto Technologies, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx 00
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
xxxx://xxx.xxxxx.xxx
For questions call Xxxxx Xxxx'x (CEO) 000 000-0000
or
Xxxx Xxxxx (CFO) 000 000-0000
SUBSCRIPTION BOOKLET
INSTRUCTIONS
This Subscription Booklet contains all of the documents necessary for your
purchase of the common stock (the "Shares") of Detto Technologies, Inc., a
Delaware corporation (the "Company").
In this booklet you will find the following documents:
(1) Subscription Agreement (the "Subscription Agreement") and
(2) Confidential Purchaser Questionnaire (the "Purchaser Questionnaire")
Each of the documents must be fully completed and executed in accordance with
its instructions. You will need to execute the signature page of the
Subscription Agreement (and your spouse must execute the consent to the
Subscription Agreement, if applicable); and you must complete the Purchaser
Questionnaire and execute the signature page (and your spouse must execute the
Purchaser Questionnaire, if applicable).
You must return each of the completed documents to an officer of the Company
together with payment. If you have any questions in connection with the
completion of the documents, please feel free to call at the number listed
below. The Company appreciates your careful attention to the completion of the
enclosed documents.
Detto Technologies, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx 00
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
xxxx://xxx.xxxxx.xxx
DETTO TECHNOLOGIES, INC.
COMMON STOCK
SUBSCRIPTION AGREEMENT
THIS COMMON STOCK SUBSCRIPTION AGREEMENT (this "Agreement") is entered
into by and between DETTO TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and the undersigned purchaser listed on the signature page hereto
("Purchaser").
In consideration of the mutual promises, representations, warranties and
covenants set forth in this Agreement, the parties to this Agreement agree as
follows:
1. Purchase and Sale. Subject to the terms of this Agreement, Xxxxxxxxx
agrees to purchase, and the Company agrees to sell to Purchaser 2,000,000 shares
of common stock at a price of $0.50 per share in the total amount of
$1,000,000.00 and a warrant to purchase an additional 100,000 shares at $1.00
each (form of warrant attached) (the "Shares"). The Common Stock will contain
what is commonly called "Piggyback Registration Rights" which will be subject to
customary market stand-off and underwriter cutback provisions.
2. Preemptive Rights. On any subsequent offering of securities, the
Purchaser of the Shares shall have the first opportunity (a preemptive right) to
purchase 10% of the subsequent security issue on the same terms as the other
investors in such security. If the Purchaser chooses not to exercise its right
to preemptively purchase such new security then its rights for any subsequent
issue shall cease 3. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to, and confirms its agreement with, the Company,
as follows:
(a) Purchaser is acquiring the Shares for Purchaser's own account,
not as nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). By executing
this Agreement, Purchaser further represents that Purchaser does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to any such person or to any third person, with
respect to the Shares.
(b) Purchaser understands that (i) the Shares have not been
registered under either the Securities Act or the securities laws of any state
by reason of specific exemptions therefrom, (ii) the Shares must be held by
Purchaser indefinitely, and, therefore, Purchaser must bear the economic risk of
such investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act and the securities laws of any applicable
state or is exempt from such registrations; (iii) the Shares will be endorsed
with a legend substantially as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED UNLESS A COMPLIANCE WITH
REGISTRATION PROVISIONS OF SUCH ACT HAS BEEN MADE OR UNLESS
AVAILABILTY OF AN EXEMPTION FROM SUCH REGISTRATION PROVISIONS HAS
BEEN ESTABLISHED, OR, UNLESS SOLD PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933.
and (iv) the Company will instruct any transfer agent not to register the
transfer of the Shares unless the conditions specified in the foregoing legend
are satisfied.
(c) Purchaser has been furnished with such materials and has been
given access to such information relating to the Company as Purchaser or
Purchaser's qualified representative has requested and Purchaser has been
afforded the opportunity to ask questions regarding the Company and the Shares,
all as Purchaser has found necessary to make an informed investment decision.
Purchaser has been solely responsible for its own due diligence investigation of
the Company and its proposed business, for its own analysis of the merits and
risks of its investment made pursuant to this Agreement and for its own analysis
of the terms of its investment.
(d) Purchaser is an accredited investor within the meaning of
Regulation D under the Securities Act. Purchaser has tendered to the Company a
completed Purchaser Questionnaire. The information in the Purchaser
Questionnaire is true and correct in all material respects. Purchaser is in a
financial position to hold the Shares and is able to bear the economic risk and
withstand a complete loss of Purchaser's investment in the Shares. Purchaser
recognizes that the Shares as an investment involves a high degree of risk.
Purchaser understands and acknowledges that there can be no assurance that the
Company will be able to meet its projected goals and that the Company will need
significant additional capital to be successful, which capital may not be
available readily.
(e) Purchaser acknowledges hereby that Purchaser has been advised to
obtain and has obtained, to the extent Purchaser deems necessary, professional
(including legal) advice with respect to the risks inherent in the investment in
the Shares, the condition of the Company, the suitability of the investment in
the Shares in light of Purchaser's condition and investment needs, and the terms
and conditions of this Agreement and documents relating to the investment in the
Shares. Purchaser, either alone or with the assistance of such professional
advisors, is a sophisticated investor, is able to fend for itself in the
transaction contemplated by this Agreement, and has such knowledge and
experience in financial and business matters that Purchaser is capable of
evaluating the merits and risks of the prospective investment in the Shares.
(f) The investment in the Shares is suitable for Purchaser based
upon Purchaser's investment objectives and financial needs, and Purchaser has
adequate net worth and means for providing for its current financial needs and
contingencies and has no need for liquidity of the investment with respect to
the Shares. Purchaser's overall commitments to investments that are illiquid or
not readily marketable are not disproportionate to Purchaser's net worth, and
investment in the Shares will not cause such overall commitment to become
excessive.
(g) For purposes of the application of state securities laws,
Purchaser represents that Purchaser is a bona fide resident of, and is domiciled
in, the state set forth in Purchaser's address on the signature page hereto.
(h) Purchaser acknowledges that this subscription is subject to
acceptance by the Company, and may be accepted or rejected by the Company,
acting in its sole discretion. Upon acceptance by the Company, this subscription
shall be a binding and irrevocable commitment of Purchaser.
(i) Purchaser agrees that Purchaser will indemnify and hold harmless
the Company and its officers, directors and agents for any costs, liabilities or
losses caused by any misstatement of material fact by Purchaser with respect to
the representations and warranties contained in this Section 2 or any other
written information furnished to the Company by Purchaser in connection with the
investment contemplated by this Agreement.
4. Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser of the Shares as follows:
(a) The Shares have been duly authorized for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(b) The issuance of the Shares in accordance with the terms hereof
will not be, inconsistent with the Company's Articles of Incorporation or
bylaws, do not and will not contravene any material law, governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
material indenture, mortgage, contract or other instrument of which the Company
is a party or by which it is bound or require the consent or approval of, the
giving of notice to, the registration or filing with or the taking of any action
in respect of or by, any Federal, state or local government authority or agency
or other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby.
(c) The attached Schedule A capitalization table accurately
represents the amount of shares outstanding, the total amount of warrants
outstanding, the total amount of stock options outstanding and the number or
shares issuable under the outstanding Convertible Notes.
(d) There has not been a material adverse change in the Company's
affairs including, but not limited to, its financial condition, intellectual
property rights, arrangements with customers and suppliers, legal affairs or
other matters since the Company has made its last public filing.
(e) The Company's filings with the Security Exchange Commission are
true and accurate.
-3-
5. Miscellaneous.
(a) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, first class, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof , or at such other address as such party may designate
by ten days' advance written notice to the other parties given in the foregoing
manner.
(b) Amendments and Waivers. Any term of this Agreement may be
amended or terminated, and the observance of any term of the Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the Purchaser.
(c) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement, and the balance of this Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance with
its terms.
(d) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington, and venue for
any action taken in connection herewith or related hereto shall exclusively
reside in King County, Washington.
(e) 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.
(f) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements with respect to the subject
matter hereof.
-4-
SIGNATURE PAGE - SUBSCRIPTION AGREEMENT
Executed this ____ day of _____________, 2005, at ______________________.
Name of Purchaser
By
-------------------------------------
(Signature)
Title
----------------------------------
Address:
----------------------------
----------------------------
TAX ID No.:
----------------------
Total Principal Amount: $1,000,000.00
Accepted and Agreed this
____ day of ___________, 2005.
DETTO TECHNOLOGIES, INC.
By
--------------------------------------------------
Xxxxx Xxxx'x
Chief Executive Officer
-5-
SPOUSE'S CONSENT TO SUBSCRIPTION FOR
SECURITIES AS SEPARATE PROPERTY (if applicable)
I, __________________________, hereby irrevocably consent to the
acquisition by my spouse, _________________________, of a Common Shares of Detto
Technologies, Inc. in the principal amount of $______________, as my spouse's
separate property.
Dated as of this ______ day of _____________________, 2005.
_______________________________________
Spouse
Xxxxxx in Which Title Is to Be Held. (Check one.)
|_| Individual Ownership (if married, spouse must consent in writing to
acquisition as separate property)
|_| Community Property
|_| Joint Tenant with Right of Survivorship (both parties must sign)
|_| Tenants in Common (both parties must sign) Partnership, Trust or
|_| Corporation (authorized representative must sign)
|_| Other (explain)
CONFIDENTIAL PURCHASER QUESTIONNAIRE
STATEMENT OF POTENTIAL INVESTOR SUITABILITY
FOR INVESTMENT IN
DETTO TECHNOLOGIES, INC.
Investors in Detto Technologies, Inc., a Delaware corporation ("Company"),
must meet certain requirements in order to comply with the offering exemption
from registration under the federal Securities Act of 1933, as amended, and
applicable state securities laws. Before any sale of securities is consummated,
the Company must be reasonably satisfied that the purchaser is an "accredited
investor" or that you, either alone or with your investment advisors, has
sufficient financial expertise to be able to evaluate the merits and risks of
your proposed investment. You are requested to submit the following information
in connection with the Company's consideration of selling securities to you.
By signing this Questionnaire you also confirm your understanding that the
Company will be relying on the accuracy and completeness of your responses to
establish the Company's legal right to sell securities to you without
registration under the federal securities laws and applicable state securities
laws. YOUR ANSWERS WILL AT ALL TIMES BE KEPT STRICTLY CONFIDENTIAL. However, you
agree by signing this Questionnaire that the Company may present this
Questionnaire to such parties as it deems appropriate if called upon to
establish the legality of your participation in the offering.
If there is any change in the information you provide in this
Questionnaire, please contact the Company immediately.
Please answer or initial all questions which are applicable to you.
A. THIS SECTION A IS TO BE COMPLETED BY INDIVIDUAL INVESTORS.
1. Name: ________________________________ Age: _____________
2. I am a resident of the State of _________________________.
2.1 My principal residence address is at:
------------------------------------
-------------------------------------
I have lived there __________ years.
3. Business Address: _____________________________________________________
4. Telephone No.: Residence: __________________ Business: ___________________
5. Accredited Investor Status: (Please check appropriate box.)
|_| 5.1 The undersigned has a net worth (assets minus liabilities),
individually or jointly with spouse, and inclusive of the value of home,
furnishings and automobiles, of at least $1,000,000; or
|_| 5.2 The undersigned has an individual income(1) in excess of $200,000, or
joint income with spouse in excess of $300,000, in each of the two
preceding years and reasonably expects to reach the same income level in
the current year; or
|_| 5.3 The undersigned is a director or executive officer of the Company; or
The undersigned hereby represents and warrants to the Company that (a) the
information contained herein is complete and accurate and may be relied upon by
the Company, (b) the undersigned, together with his or her investment advisors,
has such knowledge and experience in financial matters that he, she or they are
capable of evaluating the merits and risks of the investment, and (c) the
undersigned will notify the Company immediately of any material change in such
information occurring prior to the acceptance or rejection of his subscription.
The undersigned has executed this Confidential Purchaser Questionnaire
this ____ day of ____________________, 2005.
------------------------------ ------------------------------
Print Name of Investor Signature of Investor
(1)For this purpose, a person's income is the amount of that person's individual
adjusted gross income (as reported on a federal income tax return), increased by
the following amounts: (a) any deduction for a portion of a long-term capital
gains (Section 1202 of the Internal Revenue Code of 1986, as amended (the
Code)); (b) any deduction for depletion (Section 611 et seq. of the Code); (c)
any exclusion for interest on tax-exempt municipal obligations (Section 103 of
the Code); and (d) any losses of a partnership allocated to the person (as
reported on Schedule E of Form 1040).
Schedule A
Detto Cap Table as of 8-2-05
8/2/2005 Shares Outstanding 17,367,209
Total Warrants 27,500 at $0.58
50,000 at $0.68
50,000 At $1.24
50,000 at $1.50
177,500
Stock Options 765,000 at $1.56
5,000 at $0.70
Shares issuable under 517,000 at $0.58
Convertible Notes
