PRIVATE PLACEMENT OFFERING
SUBSCRIPTION AGREEMENT AND QUESTIONNAIRE
THE SECURITIES, INCLUDING THE UNDERLYING SECURITIES, THAT ARE
THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
LAWS OF ANY STATE OR OTHER JURISDICTION, SUCH SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE,
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT THERETO UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT OR UNLESS THE SALE IS OTHERWISE EXEMPT FROM REGISTRATION. THE
COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR OTHER TRANSFER.
AGREEMENT, effective this 14 day of July , 2000, between Rascals
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International Inc., a corporation under the laws of the State of Delaware (the
"Company"), and SAGE CAPITAL INVESTMENTS LIMITED (the "Subscriber").
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RECITALS
A. The Company through its agents, desire to provide financing for
itself by selling to accredited investors, Company's Common Stock, for an
aggregate purchase price of not more than $1,000,000.00. The Proposed Offering
shall consist of the sale of up to Five Million (5,000,000) shares of Common
Stock of the Corporation at a price per share of Twenty cents ($0.20). The
common stock underlying the Offering shall be registered by an appropriate
registration statement filed no later than ninety (90) days from the final
closing of the Offering contemplated herein.
B. Purchase of the Common Stock involves significant investment risks.
The Common Stock are being offered only to accredited investors as such term is
defined under Regulation D of the Securities and Exchange Commission ("SEC").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
11. Purchase of Common Stock.
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The Company agrees to sell to the Subscriber, and the
Subscriber agrees to purchase from the Company, Common Stock for the aggregate
purchase price set forth in the signature page hereof.
12. Payment of Purchase Price.
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Concurrently with the delivery of this Agreement, the
Subscriber has delivered a check or made a wire transfer in the amount set forth
in the signature page hereof in payment of the purchase price for the Common
Stock. Checks shall be made payable, or wired funds shall be
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sent to< Chase Manhattan Bank, New York, (the "Escrow Agent") AC#910-2-
758829, Escrow Incoming Wire Account, Further Credit: Rascals
International, Inc., Attn: Xxxxx Xxxxxx, such funds, and the disposition
thereof, to be subject to the terms of an Escrow Agreement, by and among
the Escrow Agent, the Company and Alexander, Wescott & Co., Inc. ("AWC").
13. Representations and Warranties of the Company.
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The Company represents and warrants to the Subscriber as
follows:
(a) The common stock will be, when issued, delivered and paid
for in accordance with this Agreement, duly and validly issued, fully paid and
non-assessable; and all corporate action required to be taken by the Company
prior to the issuance and sale of the Common Stock, to qualified subscribers has
been or, prior to the sale thereof, will have been taken.
(b) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $0.01 per share, of which
10,500,000 shares of such Common Stock are issued and outstanding.
(c) The Company is duly incorporated, validly existing and in
good standing as a corporation under the laws of the State of DELAWARE.
(d) The Company is duly qualified to do business and is in
good standing in each jurisdiction in which its activities or its ownership or
leasing of property requires such qualification, other than those jurisdictions
in which the failure to so qualify would not have a material adverse effect on
the business, operations or prospects or conditions, financial or otherwise, of
the Company.
(e) This Agreement has been duly and validly authorized and
executed and delivered by and on behalf of the Company and constitutes a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization fraudulent transfer, moratorium and similar laws of general
applicability relating to or affecting creditor's rights generally and to
general principles of equity.
(f) No consent, approval authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates is required for execution of this Agreement, including,
without limitation, issuance and sale of the Common Stock or the performance of
obligations hereunder.
(g) There are no actions, investigations, statutes, rules or
regulations or other proceedings of any nature in effect or pending or to the
Company's knowledge threatened, as the case may be, which, either in any case or
in the aggregate, if decided adversely, might reasonably be expected to result
in any material adverse change, financial or otherwise, in the assets,
properties, condition, business, earnings or prospects of the Company or which
question the validity of the capital stock of the Company, this Agreement or any
action taken or to be taken by the Company pursuant to or in connection with
this Agreement.
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(h) The financial position of the Company as of the
respective dates thereof and the results of operations and cash flows for the
respective periods covered thereby and are in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved. Since December 31, 1999, there has been no material adverse change,
financial or otherwise, in the assets, properties, condition, business, earnings
or prospects of the Company.
(i) The Company has filed each tax return which is required
to be filed, or has requested an extension therefor and has paid or otherwise
provided for all taxes shown on such return and all related assessments to the
extent that the same have become due.
(j) All information from the Company which is included in
this Subscription Agreement is accurate and complete to the best knowledge of
the Company and does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
14. Representations and Warranties of the Subscriber.
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The Subscriber hereby represents, warrants and acknowledges to
the Company as follows:
(a) Each of the Subscribers and its advisors has received
from the Company such other information concerning its operations, financial
condition and other matters as the Subscriber has requested, and considered all
factors each of the Subscriber and its advisors deems material in deciding on
the advisability of investing in the Securities (such information in writing is,
collectively, the "Other Written Information"). Each of the Subscribers and its
advisors, if any, has been afforded the opportunity to ask questions of the
Company and have received satisfactory answers to any such inquiries. Neither
such inquiries nor any other due diligence investigation conducted by the
Subscriber and its advisors shall modify, amend or affect the Subscriber's right
to rely on the Company's representations and warranties contained in Section 3
above. The Subscriber acknowledges that, in making the decision to purchase the
Common Stock, it has relied solely upon independent investigations made by it
and not upon any representations made by the Company with respect to the Company
or the Common Stock, other than those representations set forth in Section 3
hereof.
(b) This Agreement has been executed and delivered by the
Subscriber and is a valid and binding agreement enforceable against the
Subscriber in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally; and the
Subscriber has full power and authority necessary to enter into this Agreement
and to perform its obligations hereunder.
(c) No consent, approval, authorization, or order of any
court,
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governmental agency or body, or arbitrator having jurisdiction over the
Subscriber is required for execution of this Agreement including, without
limitation, the purchase of the Common Stock or the performance of the
Subscriber's obligations hereunder.
(d) The Subscriber understands that no United States or other
governmental agency has passed on or made any recommendation or endorsement of
the Offering.
(e) The Subscriber understands that the Common Stock are
being offered and sold in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Subscriber's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Subscriber set forth herein in order to determine the
availability of such exemptions and the eligibility of the Subscriber to acquire
the Common Stock.
(f) The Subscriber is acquiring the Common Stock pursuant to
this Agreement for investment for its own account and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act") thereof.
(g) The Subscriber realizes that the Common Stock are
speculative, illiquid and involve a high degree of risk, including the risks of
receiving no return on the investment and of losing the Subscriber's entire
investment in the Company.
(h) The Subscriber is able to bear the economic risk of
investment in the Common Stock including the total loss of such investment.
(i) The Subscriber believes that subscribing for the Common
Stock pursuant to the terms of this Agreement is an appropriate and suitable
investment for the Subscriber.
(j) The Subscriber is experienced and knowledgeable in
financial and business matters, and is capable of evaluating the merits and
risks of purchasing securities of the Company.
(k) The Subscriber is a resident of the County of The
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Bahamas.
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(l) The Subscriber is an "accredited investor" as defined in
Rule 501 of Regulation D under the Securities Act and (check all that apply):
___ (i) A natural person whose individual net worth (assets
less liabilities), or joint net worth with his or her spouse, at
the time of purchase, exceeds $1,000,000.
___ (ii) A natural person whose individual income was in
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excess of $200,000, or whose joint income with his or her spouse
was in excess of $300,000, each of the two most recent years, and
who has a reasonable expectation of reaching the same income
level for the current year.
___ (iii) A bank, insurance company, registered investment
company, business development company, small business investment
company or employee benefit plan, as such terms are defined in
the Securities Act.
___ (iv) A savings and loan association, credit union, or
similar financial institution or a registered broker or dealer,
as such terms are defined in the Securities Act.
___ (v) A private business development company, as defined
in the Investment Advisors Act of 1980.
___ (vi) An organization described in Section 501(c)(3)of
the Internal Revenue Code with assets in excess of $5,000,000.
___ (vii) A corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000.
___ (viii) A trust, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of
$5,000,000.
___ (ix) A director or an executive officer of the Company.
___ (x) An entity in which all of the equity owners are
accredited investors.
___ (xi) A self-directed XXX, Xxxxx, or similar plan of
which the individual directing the investments qualifies as an
"accredited investor" under one or more of items (I)-(x), above.
Also check the items(s) [(I)-(x)] that applies.
The Company reserves the right to request additional
information from the Subscriber to verify the information represented by the
Subscriber herein.
15. Investment Purpose in Acquiring the Common Stock.
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The Subscriber and the Company acknowledge that the securities
comprising and/or underlying the Offering have not been registered under
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the Securities Act, or applicable state securities laws, and that such
securities will be issued to Subscriber in reliance on exemptions from the
registration requirements of the Securities Act and applicable state securities
laws, based in part on Subscriber's representations and undertakings contained
herein, including Subscriber's investment intent.
16. Compliance with Securities Act.
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The Subscriber agrees that if the Common Stock or any part
thereof are to be sold or transferred by the Subscriber in the future, the
Subscriber will sell or distribute them pursuant to the requirements of the
Securities Act and applicable state securities laws. The Subscriber agrees that
the Subscriber will not transfer any part of the Common Stock without (I)
obtaining an opinion of counsel satisfactory in form and substance to the
counsel for the Company to the effect that such transfer is exempt from the
registration requirements under the Securities Act and applicable state
securities laws or (ii) effecting such transfer under the required registration
requirements of applicable securities law.
17. Restrictive Legend.
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Subscriber agrees that the Company may place a restrictive
legend on the documents representing the securities comprising and/or underlying
the Offering containing substantially the following language:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT THERETO UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT OR UNLESS THE SALE IS OTHERWISE EXEMPT FROM REGISTRATION. THE
COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR OTHER TRANSFER. THIS
CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER
AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE HYPOTHECATION OR ANY
OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER CONTAINED IN AN AGREEMENT BETWEEN THE COMPANY
AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
18. Stop Transfer Order.
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The Subscriber and Company agree that the Company may not
place a stop transfer order with its registrar and stock transfer agent (if any)
covering all certificates representing the securities comprising and/or
underlying the Offering.
19. Knowledge of Restrictions Upon Transfer of the Common Stock.
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The Subscriber understands that the securities comprising the
Offering are not freely transferable and may in fact be prohibited from sale for
an extended period of time and that, as a consequence thereof, the undersigned
must bear the economic risk of investment in the Common Stock for an indefinite
period of time and may have extremely limited opportunities to dispose of the
Common Stock.
20. Registration and Other Rights with regard to the Common Stock.
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Subscriber understands that the common stock comprising this
offering currently trades on the National Quotation Board "Pink Sheets" and that
the company intends to file Form 10 SB, as required by the Eligibility Rule 6530
to become a reporting company, within two weeks, in order to trade on the Nasdaq
Over the Counter Bulletin Board.
The Company shall file a registration statement covering the
resale of all shares underlying the Offering, and any shares
of Common Stock paid the Placement Agent as compensation, in
a registration statement filed no later than ninety (90)
days after the final closing of this offering contemplated
herein. If the registration statement is not filed as
required by this Agreement and AWC has given notice to the
Company of the final closing or end of the Offering period,
the Company shall pay to the Holder, a one (1%) percent fee,
payable in cash or common stock at the discretion of the
Company, over and above the face amount of the gross
investment as liquidated damages for each calendar month
delayed (if less than one full calendar month then the
liquidated damages shall be prorated over the number of days
delayed in the less than complete calendar month).
If an offering in connection with which the Subscriber is
entitled to registration under this paragraph (a) is an underwritten offering,
then the Subscriber shall, unless otherwise agreed by the Company, offer and
sell the underlying Shares included in such Registration Statement in an
underwritten offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as other
Securities; Common Stock or Preferred Stock included in such underwritten
offering provided that if the registration statement pertains to an underwritten
offering, the inclusion of any such shares shall be subject to an underwriter's
cutback if the underwriter determines, in good faith, that the inclusion of such
shares will adversely affect the offering by the Company with such cutback to be
accomplished on a pro-rata basis among all selling shareholders or as shall be
otherwise required by such underwriter.
(e) In connection with the filing of a registration
statement pursuant to this section, the Company shall:
(I) notify the Subscriber as to the filing and status
thereof and of all amendments thereto filed prior
to the effective date of said registration
statement;
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(ii) notify such Subscriber promptly after it shall
have received notice of the time when the
registration statement becomes effective or any
supplement to any prospectus forming a part of the
registration statement has been filed;
(iii) prepare and file without expense to such
Subscriber any necessary amendment or supplement
to such registration statement or prospectus as
may be necessary to comply with the 1933 Act or
advisable in connection with the proposed
distribution of the securities by such Subscriber;
(iv) take all reasonable steps to qualify the Shares
for sale under the securities or blue sky laws of
such state as such Subscriber has designated
herein and to register or obtain the approval of
any federal or state authority which may be
required in connection with the proposed
distribution, except, in each case, in
jurisdictions in which the Company must either
qualify to do business or file a general consent
to service of process as a condition of the
qualification of such securities;
(v) notify such Subscriber of any stop order
suspending the effectiveness of the registration
statement and use its reasonable best efforts to
remove such stop order;
(vi) undertake to keep such registration statement and
prospectus effective for a period of twelve months
after its effective date; and
(vii) furnish to such Subscriber as soon as available,
copies of any such registration statement and each
preliminary or final prospectus and any supplement
or amendment required to be prepared pursuant to
the foregoing provisions of this section, all in
such quantities as such Subscriber may from time
to time reasonable request.
(f) The Company agrees to pay all underwriting discounts and
commissions, transfer taxes, registration fees and his own counsel fees with
respect to the Shares being registered. The Company will pay all other costs and
expenses in connection with a registration statement to be filed pursuant to
this Section 10 including, without limitation, the fees and expenses of counsel
for the Company, the fees and expenses of its accountants, and all other costs
and expenses incident to the preparation, printing and filing under the Act of
any such registration statement, each prospectus and all amendments and
supplements thereto, the costs incurred in connection with the qualification of
such securities for sale in such state as the Subscriber shall have designated,
including fees and disbursements of counsel for the Company, and the costs of
supplying a reasonable number of copies of the registration statement, each
preliminary prospectus, final prospectus and any supplements thereto to such
Subscriber.
(g) The Company agrees to use its reasonable best efforts to
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enter into an appropriate cross-indemnity agreement with any underwriter (as
defined in the Securities Act) for such Subscriber in connection with the filing
of a registration statement pursuant to this section.
(h) If the Company shall file any registration statement
including therein all or any part of the Shares held by the Subscriber, the
Company and each Subscriber shall enter into an appropriate cross- indemnity
agreement whereby the Company shall indemnify and hold harmless the Subscriber
against any losses, claims, damages or liabilities (or actions in respect
thereof) arising out of or based upon any untrue statement of any material fact
contained in such registration statement, or any omission to state therein a
material fact required to be stated therein or necessary to make statements
therein not misleading unless such statement or omission was made in reliance
upon and in conformity with written information furnished or required to be
furnished by any such Subscriber, and each such Subscriber shall indemnify and
hold harmless the Company, each of its directors and officers who have signed
the registration statement and each person, if any, who controls the Company,
within the meaning of the Securities Act against any losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement of any material fact, contained in such registration statement,
or any omission to state therein a material fact required to be stated therein
or necessary to make statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished or required to be furnished by such Subscriber expressly for use in
such registration statement.
(I) For a period of one (1) year after the effective
date of the registration statement filed pursuant
to this Section 10, the Company at its expense
will file such post-effective amendments as may be
necessary to make available for use a prospectus
meeting the requirements of the Securities Act.
The Company will cause copies of such prospectus
to be delivered to any person selling the shares
of Common Stock as may be required by the
Securities Act and the rules and regulations of
the SEC.
21. Representations to Survive Delivery
-----------------------------------
.
The representations, warranties and agreements of the Company
and of the Subscriber contained in this Agreement will remain operative and in
full force and effect and will survive the payment of the purchase price
pursuant to Section 2 above and the delivery of certificates representing the
securities comprising the Shares.
22. Miscellaneous.
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(a) Entire Agreement. This Agreement contains the entire agreement
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between the parties hereto with respect to the transactions contemplated by this
Agreement and supersedes all prior arrangements or understandings with respect
thereto.
(b) Binding Effect. The provisions of this Agreement shall be binding
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upon and inure to the benefit of the parties hereto, and their respective heirs,
legal representatives, successors and assigns.
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(c) Third Party Rights. Notwithstanding any other provision of this
------------------
Agreement, this Agreement shall not create benefits on behalf of any third
party, and this Agreement shall be effective only as between the parties hereto
and their respective successors, heirs and permitted assigns.
(d) Descriptive Headings. The descriptive headings of this Agreement
---------------------
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
(e) Notices. Any notice hereunder to or upon either party hereto shall
-------
be deemed to have been duly given for all purposes if (a) in writing and sent by
(I) messenger or an overnight courier service against receipt, or (ii) certified
or registered mail, postage paid, return receipt requested, or (b) sent by
telegram, telecopy, telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage paid first class mail, to such
party at the following address:
To Subscriber: at its address set forth on the
signature page hereof
To the Company at: 000 Xxxxxxxx Xxx.
Xxxxxxxxxxx, XX 00000
or such other address as either party hereto may at any time, or from time to
time, direct be notice given to the other party in accordance with this Section.
(f) Governing Law. This Agreement shall be governed by and construed
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in accordance, with the laws of the State of New York and of the United States
of America, without regard to choice of law provisions.
(g) Remedies. In the event of any actual or prospective breach or
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default by either party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages.
(h) Disputes and Jurisdiction. Disputes arising under this Agreement
--------------------------
shall be resolved in a federal or state court of general jurisdiction sitting in
the State of New York. Each of the parties hereto hereby irrevocably consents
and submits to the jurisdiction of such courts.
(i) Severability. The provisions hereof are severable and in the event
------------
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and
151
effect, and any invalid or unenforceable provision shall be deemed, without
further action on the party of the parties hereto, amended and limited to the
extent necessary to render the same valid and enforceable.
(j) Assignment, Etc. This Agreement may not be assigned without the
----------
prior written consent of the parties, and any purported assignment without such
consent shall be void and without effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. This Agreement is not intended, and shall not be deemed,
to create or confer any right or interest for the benefit of any person not a
party hereto.
(k) Amendment. Except as otherwise provided herein, no amendment of
---------
this Agreement shall be valid or effective, unless in writing and signing by or
on behalf of the parties hereto.
152
(l) of either party hereto in asserting or exercising any right
hereunder shall constitute or operate as a waiver of any such right. No waiver
of any provision hereof shall be effective, unless in writing and signed by or
on behalf of the party to be charged herewith. No waiver shall be deemed a
continuing waiver or waiver in respect of any other of subsequent breach or
default, unless expressly so stated in writing.
(m) Further Assurances. Each party hereto covenants and agrees
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promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
(n) Counterparts. This Agreement may be executed in counterparts, each
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of which will be deemed an original and which together shall constitute one and
the same agreement.
# of Common Shares Purchased
500,000
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Subscriber (Signature)
# of Common Shares Purchased
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Subscriber (Signature, if more than one
investor)
Total Dollar Investment
of Subscriber
$ 100,000.00
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Print Name
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Print Name (If more than one investor)
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Address
The Company hereby accepts the subscription evidenced by this
Subscription Agreement and Questionnaire:
By:
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Name:
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Title:
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Date:
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