EXHIBIT 6.5
________________________________________
Name of Investor
(please print)
SUBSCRIPTION AGREEMENT
Xxxxxx Capital Corp.
c/o Morse, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Gentlemen:
1. Subscription. Pursuant to the Confidential Offering Memorandum dated
September, 2002 (the "Offering Memorandum"), as amended pursuant to the
supplemental memorandum, dated October 1, 2002 (the "Amended Offering
Memorandum"), of Xxxxxx Capital Corp., a Nevada corporation ("the "Company"),
and subject to the terms and conditions hereof, the undersigned (the "Investor")
hereby irrevocably subscribes for and agrees to purchase a secured promissory
note (the "Note"), shares (the "Shares") of the Company's common stock, par
value $.001 per share (the "Common Stock") and a warrant (the "Warrant") to
purchase shares of the Company's Common Stock (the "Warrant Shares"). The
Investor tenders herewith good funds in the amount set forth on the signature
page hereto (the "Subscription Amount"), payable to the Company by certified
check, wire transfer or other method acceptable to the Company. The purchase
price to be paid by the Investor for each Note sold will be $0.999 of each
dollar invested (the "Note Purchase Price") and the purchase price to be paid by
the Investor for each Share subscribed for will be $0.001 per share (the "Share
Purchase Price" and, together with the Note Purchase Price, the "Purchase
Price") at the closing (the "Closing"). The minimum subscription amount is
$25,000.
2. Sale and Issuance of the Note, Shares and Warrant.
(a) Determination and Issuance of the Note, Shares and Warrant
Subscribed For. At the initial Closing of the sale of the Notes and the
Company's Common Stock (the "Initial Closing") or at a subsequent Closing, as
applicable, the Company shall sell and issue to the Investor, and the Investor
shall purchase and acquire from the Company, upon the terms and conditions set
forth herein, a Note in the principal amount of (i) the Subscription Amount
multiplied by (ii) the Note Purchase Price and such number of Shares as equals
(a) the Subscription Amount divided by (b) the Purchase Price. Additionally, the
Company shall sell and issue to the Investor, and the Investor shall purchase
and acquire from the Company, upon the terms and conditions of the Common Stock
Purchase Warrant provided to each Investor, the Warrant.
(b) The Initial Closing and Subsequent Closings. The Initial Closing
shall take place at the offices of Xxxxx, Xxxxxx-Xxxxx & Xxxxxxxxx, P.C.,
Reservoir Place, 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (Fax: (781)
000-0000; Tel: (000) 000-0000) after the receipt by the Company of subscriptions
for Shares with an aggregate Purchase Price of $400,000. Following the Initial
Closing, the Company may at subsequent closings accept additional subscriptions
for Shares from investors until such time as the Company has issued Shares with
an aggregate Purchase Price equal to $2,000,000. No Closing shall take place
after November 30, 2002 (the "Offering Expiration Date"), except that the
Company may, in its sole discretion, extend the Offering Expiration Date an
extra thirty days. At the relevant Closing, the Company shall issue and deliver
to the Investor a Note in the principal amount being purchased by such Investor,
a certificate for the Shares being purchased by such Investor and the Warrant.
(c) Acceptance of Subscription. The Investor understands and agrees
that this subscription is made subject to the unconditional right of the
Company, exercisable in its sole discretion, to reject any subscription, in
whole or in part for any or no reason.
3. Representations and Warranties of the Investor. The Investor represents
and warrants to the Company that:
(a) Investment Intent. The Investor is purchasing the Note, Shares
and Warrant for investment for the account of the Investor and not for the
account of any other person, and not with a view toward resale or other
distribution thereof. The Investor has no contract, undertaking, understanding,
agreement or arrangement, formal or informal, with any person to sell, transfer
or pledge to any person the Note, Shares or Warrant, or any portion thereof, or
any interest therein or any rights thereto. The Investor has no present plans to
enter into any such contract, undertaking, agreement or arrangement. The
Investor understands that the Note, Shares and Warrant have not been and will
not be (other than as set forth in Section 5 below), registered under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws and, therefore, cannot be resold unless they are subsequently
registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration is available. The Investor
understands and agrees that the Company does not have any present intention and
is under no obligation to register any of the Shares or the Warrant Shares
(other than as set forth in Section 5 below), whether upon initial issuance or
upon any transfer thereof under the Securities Act and applicable state
securities laws, and that Rule 144 under the Securities Act may not be available
as a basis for exemption from registration.
(b) Restrictive Legend. The Investor understands and agrees that,
until registered under the Securities Act or transferred pursuant to the
provisions of Rule 144, all certificates evidencing any of the Shares and
Warrant Shares, whether upon initial issuance or upon any transfer thereof,
shall bear a legend, prominently stamped or printed thereon, reading
substantially as follows:
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These securities have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or applicable state securities
laws. These securities have been acquired for investment and not with a
view to their distribution or resale, and may not be sold, pledged, or
otherwise transferred without an effective registration statement for such
securities under the Securities Act and applicable state securities laws,
or an opinion of counsel satisfactory to the Company to the effect that
such registration is not required.
(c) Access to Information. The Investor or the Investor's
representative, during the course of this transaction and prior to the purchase
of the Note, Shares and the Warrant, has received and read or reviewed, and is
familiar with, (i) the Offering Memorandum and Amended Offering Memorandum,
including all exhibits and attachments thereto, and (ii) this Agreement. The
Investor has not relied on any representations, warranties or statements by or
on behalf of the Company other than as set forth in writing in the Offering
Memorandum and Amended Offering Memorandum, including all exhibits and
attachments thereto, or in this Agreement.
(d) Knowledge and Experience. The Investor or the Investor's
representative is capable of evaluating the merits and risks of the purchase of
the Note, Shares and the Warrant. The Investor has the capacity to protect his
or her own interests in connection with the purchase of the Note, Shares and the
Warrant by reason of the Investor's business or financial experience or the
business or financial experience of such representative (who is unaffiliated
with and who is not compensated by the Company or any affiliate, directly or
indirectly).
(e) Suitability. The purchase of the Note, Shares and the Warrant by
the Investor is consistent with his or her general investment objectives. The
Investor understands and has fully considered the risks of this investment and
understands that (i) this investment is suitable only for an investor who is
able to bear the economic consequences of losing his or her entire investment,
(ii) the purchase of the Note, Shares and the Warrant is a speculative
investment that involves a high degree of risk and (iii) there are substantial
restrictions on the transferability of, and there will be no immediate public
market for, the Note, Shares or the Warrant Shares, and accordingly, it may not
be possible for the Investor to liquidate his or her investment in the event of
an emergency. The Investor has no present need for liquidity in connection with
the purchase of the Note, Shares and Warrant hereunder. The Investor can bear
the economic risks of this investment and can afford a complete loss of such
investment.
(f) Accredited Investor Status. The Investor is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.
(g) Continuing Effect of Representations, Warranties and
Acknowledgments. The representations, warranties and acknowledgments of the
Investor contained in this Section 3, (i) are true and accurate as of the date
of this Agreement, (ii) shall be true and accurate as of the date of delivery of
this subscription to, and acceptance hereof, by the Company and (iii) shall
survive such delivery and acceptance. If such representations, warranties and
acknowledgments shall not be true and accurate in any respect prior to such
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delivery and acceptance, the Investor shall give immediate written notice of
such fact to the Company and to his or her purchaser representative(s), if any,
specifying which representations and warranties and acknowledgments are not true
and accurate and the reasons therefor.
4. Representations and Warranties of Company. The Company represents and
warrants to the Investor that:
(a) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted.
(b) Authority. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of the Company, and
this Agreement, the Note and the Warrant constitute the valid and legally
binding obligation of the Company, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in a
violation, breach or termination of or default under (or would result in a
violation, breach, termination or default with the giving of notice or passage
of time or both) any of the terms, conditions or provisions of the Company's
Certificate of Incorporation or Bylaws, as amended, or of any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Company is a party, or by which the Company or any of its properties
or assets may be bound or affected, except where such conflict, violation,
breach, termination, acceleration or default would not, individually or in the
aggregate, have a material adverse effect on the financial condition, assets,
liabilities, earnings, business or prospects of the Company and its
subsidiaries, taken together as a whole, (ii) result in the violation of any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or its properties or assets or (iii) result in the imposition of any
lien, encumbrance, charge or claim upon any of the Company's assets. Except for
such filings as may be required by applicable federal and state securities laws,
no consent or approval by, or notification to or filing with, any court,
governmental authority or third party is required in connection with the
execution, delivery and performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby.
(c) SEC Documents. The reports filed by the Company with the
Securities and Exchange Commission (the "Commission") since February, 1999, and
which are incorporated by reference with the Offering Memorandum (the "SEC
Documents"), are all of the reports that the Company was required to file with
the Commission since such date. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder applicable to such SEC Documents, and none of the SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to
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be stated therein or necessary to make the statements therein, at the time in
light of the circumstances under which they were made, not misleading.
(d) Authorized Notes, Shares and Warrant Shares. The Note to be
delivered to the Investor pursuant to this Agreement is duly authorized. The
Shares to be delivered to the Investor pursuant to this Agreement and the
Warrant Shares are duly authorized and, upon such delivery in accordance with
the terms of this Agreement and the Warrant, will be validly issued,
outstanding, fully paid and nonassessable.
(e) Absence of Material Adverse Changes. Since March 31, 2002, there
has not been any material adverse change in the Company's financial condition,
business or prospects, or any material damage, deterioration or destruction to
or of any of the Company's assets, which damage, deterioration or destruction is
not covered by insurance.
(f) Continuing Effect of Representations and Warranties. The
representations and warranties of the Company contained in this Section 4, (i)
are true and accurate as of the date of this Agreement, (ii) shall be true and
accurate as of the date of acceptance of the Investor's subscription by the
Company, and (iii) shall survive such acceptance for one year. If such
representations and warranties shall not be true and accurate in any respect
prior to such acceptance, the Company shall give immediate written notice of
such fact to the Investor and to his or her purchaser representative(s), if any,
specifying which representations and warranties are not true and accurate and
the reasons therefor.
5. Registration Rights.
(a) General. For a period of two years from the date of the Initial
Closing, if at any time the Company shall determine to register in a public
offering for its own account (and not the account of selling stockholders) under
the Securities Act any of its Common Stock, the Company shall send to the
Investor written notice of such determination. If, within 15 days after receipt
of such notice, the Investor shall so request in writing, the Company shall use
its best efforts to include in such registration statement all or any part of
the Shares and the Warrant Shares the Investor requests to be registered. This
right shall not apply to a any registration of shares of Common Stock on Form
S-4 or Form S-8 (or their then equivalents) relating to shares of Common Stock
to be issued by the Company in connection with any acquisition of any entity or
business, or shares of Common Stock issuable in connection with any stock option
or other employee benefits plan, respectively.
(b) Underwriting Limitations. In connection with any offering
involving an underwriting of Common Stock to be issued by the Company for the
account of the Company, (i) the Company may condition participation by the
Investor on participation in the underwriting and (ii) if the managing
underwriter shall impose a limitation on the number of shares of such Common
Stock which may be included in any such registration statement because, in its
judgment, such limitation is necessary to effect any orderly public distribution
of the Common Stock and to maintain a stable market for the securities of the
Company, then
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the Company shall be obligated to include in such registration statement only
such limited portion (which may be none) of the Shares and Warrant Shares with
respect to which the Investor and all other selling stockholders have requested
inclusion thereunder.
(c) Market "Stand-off" Agreement. The Investor agrees, if requested
by an underwriter of Common Stock (or other securities) of the Company, not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by such Investor during the 180-day period following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that all officers and directors of the
Company enter into similar agreements requiring a 180-day market stand-off. If
requested by the underwriters, the Investor shall execute a separate agreement
to the foregoing effect. The Company may impose stop-transfer instructions with
respect to the securities subject to the foregoing restriction until the end of
said 180-day period. The provisions of this Section 5(c) shall be binding upon
any transferee who acquires Shares or Warrant Shares.
(d) Expenses. The Company shall bear all costs and expenses of each
registration under this Agreement, including, but not limited to, printing and
accounting expenses and reasonable legal expenses for one special counsel
retained by shareholders (including the Investor) registering Shares, Warrant
Shares or other securities, Commission and National Association of Securities
Dealers, Inc. filing fees and expenses, and "blue sky" fees and expenses;
provided, however, that the Company shall have no obligation to pay or otherwise
bear any portion of the underwriters' commissions or discounts attributable to
the Shares or Warrant Shares.
(e) Expiration of Registration Rights. The obligations of the
Company under this Section 5 to register Shares and Warrant Shares shall expire
and terminate (i) with respect to any Shares or Warrant Shares sold pursuant to
a registration statement under the Securities Act or Rule 144 of the Securities
Act, (ii) with respect to any Shares or Warrant Shares, when such Shares or
Warrant Shares are available for sale and can be sold (whether or not so sold)
in the volume and manner desired by the Investor pursuant to Rule 144 of the
Securities Act, and (iii) with respect to all Shares and Warrant Shares, when
such Shares and Warrant Shares are available for sale and can be sold (whether
or not so sold) pursuant to Rule 144(k) of the Securities Act, or any similar
rule promulgated by the Commission permitting the resale of restricted
securities without the necessity of a registration statement under the
Securities Act.
6. Lock-Up Agreement. The Investor agrees not to sell, pledge,
hypothecate, transfer or otherwise dispose of, by operation of law or otherwise,
or grant any option or purchase right with respect to, any Shares or Warrant
Shares or engage in any short sale, hedging transaction or other derivative
security transaction involving the Shares or Warrant Shares, for a period of one
year after the date of the Initial Closing. Any sale or other transfer in
violation of this Section 6 shall be null and void. The Company shall not be
required (i) to transfer on its books any of the Shares or Warrant Shares which
shall have been sold or transferred in violation of this Section 6 or (ii) to
treat as owner of such Shares or Warrant
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Shares or to pay dividends to any transferee to whom any such Shares or Warrant
Shares shall have been so sold or transferred. The Investor understands and
agrees that all certificates evidencing any of the Shares and Warrant Shares
shall bear a legend, prominently stamped or printed thereon, reading
substantially as follows:
These securities may not sold, pledged, hypothecated, transferred or
otherwise disposed of, by operation of law or otherwise (and no option or
purchase right may be granted with respect thereto) prior to November 26,
2003.
7. Adjustments for Stock Splits, Stock Dividends, Etc. If from time to
time while this Agreement shall remain in force and effect there is any stock
split-up, stock dividend, stock distribution or other reclassification of the
capital stock of the Company, any and all new, substituted or additional
securities to which the Investor is entitled by reason of his or her ownership
of Shares and Warrant Shares shall be immediately subject to the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as such Shares and Warrant Shares.
8. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall bind and inure to the benefit of the Company and the
Investor and their respective successors and assigns. Notwithstanding the
foregoing, the registration rights provided in Section 5 are personal to the
Investor and are not transferable without the prior consent of the Company. Any
transfer of such rights without the consent of the Company shall be void.
9. Entire Agreement. This Agreement and the other writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or understandings, whether
written or oral, with respect thereto.
10. Notices. All notices provided for in this Agreement shall be given in
writing and shall be effective when either served by personal delivery, express
overnight courier service, electronic facsimile transmission, or by first class
mail, postage prepaid, addressed to the parties at their respective addresses
herein set forth, or to such other address or addresses as either party may
later specify by written notice to the other.
11. Changes. The terms and provisions of this Agreement may not be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, except pursuant to a writing executed by duly authorized
representatives of the Company and the Investor.
12. Counterparts. This Agreement may be executed by the parties on
separate counterparts, each of which, when so executed and delivered, shall be
an original but all of which together shall constitute one and the same
instrument.
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13. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Governing Law; Waiver of Jury Trial. This Agreement shall be governed
by and construed in accordance with the laws of the State of Nevada. The Company
and the Investor hereby irrevocably waive any right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this Agreement.
15. Nouns and Pronouns. Whenever the context may require, the singular
form of names and pronouns shall include the plural and visa-versa.
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SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
By execution of this Signature Page, the undersigned Investor does hereby become
a party to and agrees to be bound by the provisions of the Subscription
Agreement (the "Subscription Agreement") to which this Signature Page is
appended, a counterpart of which has been furnished to the undersigned, and the
undersigned hereby authorizes the Company to append this Signature Page to a
counterpart of the Subscription Agreement as evidence thereof. The undersigned
hereby subscribes for the purchase of a Note and Shares having an aggregate
Purchase Price (as such terms are defined in the Subscription Agreement)
specified below and the Warrant. Pursuant to Section 3(f) hereof, the
undersigned represents are warrants that the undersigned is an Accredited
Investor by reason of the qualifications described opposite the checked box.
A. Individual Investors.
|_| Any natural person whose net worth, or joint net worth with that person's
spouse at the time of the purchase exceeds $1,000,000.
|_| Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
|_| Any executive officer of the Company.
B. Investor Entities.
|_| Any trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase of the Shares is
directed by a person who has such knowledge and experience in financial
and business matters that such person is capable of evaluating the merits
and risks of the prospective investment in the Shares. Note: If this
qualification is selected, the representative of the trust must deliver to
the Company a written summary of his or her knowledge and experience in
financial and business matters on a separate form to be provided by the
Company.
|_| Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940.
|_| Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Shares,
with total assets in excess of $5,000,000.
The undersigned is a ____________________________ meeting the foregoing
description. (Insert Type of Entity)
|_| Any entity in which all of the equity owners are Accredited Investors.
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[Signature Block For Individuals] [Signature Block For Entities]
________________________________ __________________________________
(Signature) (Name of Entity)
By: ______________________________
(Printed Name)
Title:________________________
________________________________ __________________________________
(Street Address of Residence) (Street Address of Principal Office)
________________________________ __________________________________
(City or Town) (State) (Zip Code) (City or Town) (State) (Zip Code)
________________________________ __________________________________
(Daytime Telephone Number) (Daytime Telephone Number)
Each Investor must include the aggregate
Subscription Amount of the Note and Shares
subscribed for here: $______________
* * * * * * *
The Company hereby accepts the foregoing Subscription Agreement, subject
to the terms and conditions set forth herein, as of this _____ day of
_______________, 2002.
XXXXXX CAPITAL CORP.
By:_________________________________
Title: _____________________________
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