EXHIBIT A
HOME DIRECTOR, INC.
SUBSCRIPTION AGREEMENT
Home Director, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxx, Chief Executive Officer
Ladies and Gentlemen:
1. Subscription. The undersigned (the "Purchaser"), intending
to be legally bound, hereby agrees to purchase from Home Director, Inc. (the
"Company") investment units (the "Units") in the amount set forth on the
signature page hereof. Each Unit consists of (i) one (1) share (the "Shares") of
common stock, par value $0.01 per share, of the Company (the "Common Stock") and
(ii) a three (3)-year warrant to purchase one share of Common Stock (the
"Warrants," and together with the Shares, the "Securities"). The minimum
subscription for Units shall be $25,000, however, the Company may, in its
discretion, accept less than the minimum subscription amount. This subscription
is submitted to you in accordance with and subject to the terms and conditions
described in this Subscription Agreement and the Private Placement Memorandum of
the Company, dated November 10, 2003, as amended or supplemented from time to
time, including all attachments, schedules and exhibits thereto (the
"Memorandum"), relating to the offering (the "Offering") by the Company of a
minimum of $1,000,000 (the "Minimum Amount") and a maximum of $2,500,000 (the
"Maximum Amount") in aggregate purchase price of Units. In addition, for the
purpose of covering overallotments in the sale of the Units, the Company and
Xxxxxxx Xxxxx Ventures, Inc., the placement agent in the Offering, may agree to
sell additional Units with total gross proceeds equal to up to thirty percent
(30%) of the Maximum Amount. The purchase price per Unit shall be equal to
eighty percent (80%) of the average of the closing bid prices of the Common
Stock on the OTC Bulletin Board during the ten (10) trading days immediately
preceding each closing of the sale of Units (a "Closing").
The terms of the Offering are more completely described in the
Memorandum and such terms are incorporated herein in their entirety. Certain
terms used but not otherwise defined herein shall have the respective meanings
provided in the Memorandum.
2. Payment. The Purchaser encloses herewith a check payable
to, or will immediately make a wire transfer payment to "American Stock Transfer
& Trust Company as Escrow Agent for Home Director, Inc." in the full amount of
the purchase price of the Units being subscribed for. Such funds will be held
for the Purchaser's benefit, and will be returned promptly, without interest,
penalty, expense or deduction if this Subscription Agreement is not accepted by
the Company, the Offering is terminated pursuant to its terms or by the Company,
or the Minimum Amount of Units is not sold. Together with the check for, or wire
transfer of, the full purchase price, the Purchaser is delivering a completed
and executed signature page of this Subscription Agreement.
3. Acceptance of Subscription. The Purchaser understands and
agrees that the Company reserves the right to accept or reject this or any other
subscription for Units, in whole or in part, and in any order, notwithstanding
prior receipt by the Purchaser of notice of acceptance of this subscription. The
Company shall have no obligation hereunder until the Company shall execute and
deliver to the Purchaser an executed copy of this Subscription Agreement. If
this subscription is rejected in whole or the Offering is terminated or the
Minimum Amount is not raised, all funds received from the Purchaser will be
returned without interest, penalty, expense or deduction, and this Subscription
Agreement shall thereafter be of no further force or effect. If this
subscription is rejected in part, and in any order, the funds for the rejected
portion of this subscription will
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be returned without interest, penalty, expense or deduction, and this
Subscription Agreement will continue in full force and effect with respect to
the subscription that was accepted.
4. Representations and Warranties.
(A) The Purchaser hereby represents, warrants, acknowledges
and agrees as follows:
(a) Neither the Securities, nor the shares of the
Common Stock issuable upon conversion or exercise of the Securities and offered
pursuant to the Memorandum, are registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws. The Purchaser
understands that the offering and sale of the Units is intended to be exempt
from registration under the Securities Act, by virtue of Section 4(2) thereof
and the provisions of Regulation D promulgated thereunder, based, in part, upon
the representations, warranties and agreements of the Purchaser contained in
this Subscription Agreement;
(b) The Purchaser has received the Memorandum and all
other documents requested by the Purchaser, has carefully reviewed them and
understands the information contained therein, and the Purchaser, prior to the
execution of this Subscription Agreement, has had access to the same kind of
information which would be available in a registration statement filed by the
Company under the Securities Act;
(c) Neither the Securities and Exchange Commission
nor any state securities commission has approved the Units or any of the
Securities included in the Units or the Common Stock issuable upon conversion or
exercise thereof, or passed upon or endorsed the merits of the Offering or
confirmed the accuracy or determined the adequacy of the Memorandum. The
Memorandum has not been reviewed by any Federal, state or other regulatory
authority;
(d) All documents, records and books pertaining to
the investment in the Units (including, without limitation, the Memorandum) have
been made available for inspection by the Purchaser;
(e) The Purchaser has had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the offering of the Units and the business, financial
condition, results of operations and prospects of the Company, and all such
questions have been answered to the full satisfaction of the Purchaser;
(f) In evaluating the suitability of an investment in
the Company, the Purchaser has not relied upon any representation or other
information (oral or written) other than as stated in the Memorandum;
(g) The Purchaser is unaware of, is in no way relying
on, and did not become aware of the offering of the Units through or as a result
of, any form of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, in connection with the offering and sale of the Units and is not
subscribing for Units and did not become aware of the offering of the Units
through or as a result of any seminar or meeting to which the Purchaser was
invited by, or any solicitation of a subscription by, a person not previously
known to the Purchaser in connection with investments in securities generally;
(h) The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commissions, finders' fees or
the like relating to this Subscription Agreement or the transactions
contemplated hereby (other than amounts to be paid by the Company to Xxxxxxx
Xxxxx Ventures, Inc.);
(i) The Purchaser has such knowledge and experience
in financial, tax, and business matters, and, in particular, investments in
securities, so as to enable the Purchaser to utilize the
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information made available to it in connection with the offering of the Units to
evaluate the merits and risks of an investment in the Units and the Company and
to make an informed investment decision with respect thereto;
(j) The Purchaser is not relying on the Company or
any of its employees or agents with respect to the legal, tax, economic and
related considerations as to an investment in the Units, and the Purchaser has
relied on the advice of, or has consulted with, only his own advisors;
(k) The Purchaser is acquiring the Units solely for
the Purchaser's own account for investment and not with a view to resale,
assignment or distribution thereof, in whole or in part. The Purchaser has no
agreement or arrangement, formal or informal, with any person to sell or
transfer all or any part of the Units, Securities contained in the Units, or the
Common Stock issuable upon conversion or exercise thereof, and the Purchaser has
no plans to enter into any such agreement or arrangement;
(l) The Purchaser must bear the substantial economic
risks of the investment in the Units indefinitely because none of the securities
included in the Units may be sold, hypothecated or otherwise disposed of unless
subsequently registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available. Legends shall be
placed on the Securities to the effect that they have not been registered under
the Securities Act or applicable state securities laws and appropriate notations
thereof will be made in the Company's stock books. Stop transfer instructions
will be placed with the transfer agent of the Securities. Although the Company
has the obligation to register for resale the shares of Common Stock underlying
the Securities (see Exhibit E to the Memorandum), there can be no assurance that
such registration will be completed within the time frames required by the
Company, or at all. It is not anticipated that there will be any market for
resale of the Units or Securities included in the Units or the capital stock
issuable upon conversion or exercise thereof, and such Units and shares will not
be freely transferable at any time in the foreseeable future;
(m) The Purchaser has adequate means of providing for
such Purchaser's current financial needs and foreseeable contingencies and has
no need for liquidity of the investment in the Units for an indefinite period of
time;
(n) The Purchaser is aware that an investment in the
Units involves a number of very significant risks and has carefully read and
considered the matters set forth under the caption "Risk Factors" in the
Memorandum;
(o) The Purchaser meets the requirements of at least
one of the suitability standards for an "accredited investor" as set forth on
the Accredited Investor Certification contained herein;
(p) The Purchaser: (i) if a natural person, represents
that the Purchaser has reached the age of 21 and has full power and authority to
execute and deliver this Subscription Agreement and all other related agreements
or certificates and to carry out the provisions hereof and thereof; (ii) if a
corporation, partnership, limited liability company or partnership, association,
joint stock company, trust, unincorporated organization or other entity, (A)
such entity was not formed for the specific purpose of acquiring the Units, (B)
such entity is duly organized, validly existing and in good standing under the
laws of the state of its organization, (C) the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, (D) such entity has
full power and authority to execute and deliver this Subscription Agreement and
all other related agreements or certificates and to carry out the provisions
hereof and thereof and to purchase and hold the securities constituting the
Units, (E) the execution and delivery of this Subscription Agreement has been
duly authorized by all necessary action on behalf of such entity, and (F) this
Subscription Agreement has been duly executed and delivered on behalf of such
entity and is a legal, valid and binding obligation of such entity; and (iii) if
executing this Subscription Agreement in a representative or fiduciary capacity,
such representative has full power and authority to execute and deliver this
Subscription Agreement in such capacity and on behalf of the subscribing
individual, xxxx, partnership, trust, estate, corporation, limited liability
company or limited liability partnership, or other entity for
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whom such representative is executing this Subscription Agreement, and such
individual, xxxx, partnership, trust, estate, corporation, limited liability
company or partnership, or other entity has full right and power to perform this
Subscription Agreement and make an investment in the Company, and that this
Subscription Agreement constitutes a legal, valid and binding obligation of such
Purchaser. The execution and delivery of this Subscription Agreement will not
violate or be in conflict with any order, judgment, injunction, agreement or
controlling document to which the Purchaser is a party or by which it is bound;
(q) The Purchaser had the opportunity to obtain any
additional information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Memorandum and all
documents received or reviewed in connection with the purchase of the Units and
the opportunity to have representatives of the Company provide it with such
additional information regarding the terms and conditions of this particular
investment and the financial condition, results of operations, business and
prospects of the Company deemed relevant by the Purchaser and all such requested
information, to the extent the Company had such information in its possession or
could acquire it without unreasonable effort or expense, has been provided to
Purchaser to its full satisfaction;
(r) The Purchaser represents to the Company that any
information which the undersigned has heretofore furnished or furnishes herewith
to the Company is complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the offering of securities as described
in the Memorandum. The Purchaser further represents and warrants that it will
notify and supply corrective information to the Company immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the securities contained in the Units;
(s) The Purchaser has a sufficient net worth to
sustain a loss of its entire investment in the Company in the event such a loss
should occur. The Purchaser's overall commitment to investments which are not
readily marketable is not excessive in view of its net worth and financial
circumstances and the purchase of the Units will not cause such commitment to
become excessive. The investment is a suitable one for the Purchaser;
(t) No oral or written representations have been
made, or oral or written information furnished, to the Purchaser in connection
with the offering of the Units or as to the Company, which are in any way
inconsistent with the information contained in the Memorandum;
(u) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933 AS AMENDED AND
SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. ALTHOUGH THE COMPANY
HAS AN OBLIGATION TO REGISTER FOR RESALE THE SHARES OF COMMON STOCK UNDERLYING
THE SECURITIES, THERE CAN BE NO ASSURANCE THAT SUCH REGISTRATION WILL BE
COMPLETED WITHIN THE TIME FRAMES REQUIRED, OR AT ALL. THE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY
STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR
THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
(v) If and to the extent that Purchaser subscribes
for Units on or after the date the Company files its quarterly report on Form
10-QSB for its fiscal quarter ended September 30, 2003 (the "Form
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10-QSB"), Purchaser hereby acknowledges that the Company has provided Purchaser
with a true and complete copy of the Form 10-QSB as so filed.
(B) The Company hereby represents, warrants, acknowledges and
agrees as follows:
(a) Subsidiaries. The Company has no direct or indirect
subsidiaries (each a "Subsidiary," and collectively, "Subsidiaries") except as
described in the SEC Reports (as defined below). All of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights, and
the Company owns all of the issued and outstanding shares of capital stock of
each Subsidiary, except as described in the SEC Reports or the Memorandum.
(b) Organization and Qualification. Each of the Company
and the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
(c) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
Offering. The execution and delivery of this Subscription Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further consent or action is required by the Company, other than the Required
Approvals (as defined below). This Subscription Agreement, when executed and
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity.
(d) No Conflicts. The execution, delivery and
performance of this Subscription Agreement by the Company and the consummation
by the Company of the Offering do not and will not: (i) conflict with or violate
any provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
subject to obtaining the Required Approvals (as defined below), conflict with,
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority as currently in effect
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate (a)
adversely affect the legality, validity or enforceability of the Offering, (b)
have or result in or be reasonably likely to have or result in a material
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (c) adversely impair the Company's ability to perform fully on a
timely basis its obligations under this Subscription Agreement (any of (a), (b)
or (c), a "Material Adverse Effect").
(e) Filings, Consents and Approvals. Neither the Company
nor any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by the Company of
this Subscription Agreement, other than (i) the filing with the Commission of
the Registration Statement, (ii) the filing with the Commission of a
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Form D pursuant to Regulation D under the Securities Act, and (iii) applicable
Blue Sky filings (collectively, the "Required Approvals").
(f) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with this Subscription
Agreement, will be duly and validly issued, fully paid and nonassessable, free
and clear of all liens. Subject to authorization by the Company's stockholders
of additional capital stock if and to the extent necessary, the Company has
reserved from its duly authorized capital stock a number of shares of Common
Stock for issuance upon purchase of the Common Stock and of the shares of Common
Stock underlying the Warrant. The Securities conform to the description
contained in the Memorandum. Assuming the accuracy of the Purchaser's
representations and warranties set forth in Section 4(A), no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchaser as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
trading market for the Common Stock and no shareholder approval is required for
the Company to fulfill its obligations pursuant to this Offering.
(g) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is as set forth
in the SEC Reports. No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the Offering.
Except as a result of the purchase and sale of the Securities which may be
issued in connection with this Offering, shares of capital stock issued or
issuable under outstanding warrants and except for options and shares of capital
stock issued or issuable under the Company's stock option plan, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Except for certain outstanding warrants to purchase shares of Common Stock
(which warrants are fully described in the Memorandum), the issuance and sale of
the Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchaser and other purchasers in
the Offering) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities.
(h) SEC Reports; Financial Statements. The Company has
filed all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC Reports") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. The Company has made
available to the Purchaser a copy of all SEC Reports filed within the 10 days
preceding the date hereof. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. If and to the extent that Purchaser subscribes for
Units on or after the date the Company files the Form 10-QSB, the Company hereby
acknowledges that it has provided Purchaser with a true and complete copy of the
Form 10-QSB as so filed.
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(i) Material Changes. Except for the proposed Offering,
since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in the SEC Reports: (i) there has
been no event, occurrence or development that has had a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice, (B) liabilities not required
to be reflected in the Company's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission and (C) net bank
borrowings in the amount of $300,000 (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders except in the ordinary course of business consistent with prior
practice, or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock except consistent with prior practice or
pursuant to existing Company stock option or similar plans, and (v) the Company
has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option or similar plans.
(j) Litigation. Except as set forth in the SEC Reports,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an "Action") which: (i) adversely affects or challenges the legality, validity
or enforceability of this Subscription Agreement or the Offering or (ii) would,
if there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. Except as
disclosed in the SEC Reports, neither the Company nor any Subsidiary is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(k) Compliance. Except as disclosed in the Memorandum,
neither the Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any material
indenture, loan or credit agreement or any other material agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), which default
or violation would have or result in a Material Adverse Effect, (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, except in each case as would not, individually or in the
aggregate, have or result in a Material Adverse Effect.
(l) Regulatory Permits. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
(m) Listing and Maintenance Requirements. The Company
has not, in the 12 months preceding the date hereof, received notice from the
principal trading market for the Common Stock to the effect that the Company is
not in compliance with the listing or maintenance requirements of such market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
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(n) Controls and Procedures/Xxxxxxxx-Xxxxx Act of 2002.
The Company is in material compliance with the requirements of the
Xxxxxxxx-Xxxxx Act of 2002 applicable to it as of the date hereof. The Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosures controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
certifying officers by others within those entities. The Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures as of the last day of the reporting period for its most recently
filed periodic report (such date, the "Evaluation Date"). The Company presented
in its most recently filed periodic report the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls over
financial reporting (as such term is defined under the Exchange Act).
(o) Disclosure. The Company confirms that, neither the
Company nor any other person acting on its behalf has provided the Purchaser or
its agents or counsel with any information that constitutes or could reasonably
be deemed to constitute material, non-public information. The Company
understands and confirms that the Purchaser will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. The disclosure provided to the Purchaser regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf of
the Company, including all of the SEC Reports, does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Company acknowledges and agrees that
the Purchaser makes or has made no representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
this Subscription Agreement.
5. Irrevocability; Binding Effect. The Purchaser hereby
acknowledges and agrees that the subscription hereunder is irrevocable by the
Purchaser, except as described in the Memorandum or as required by applicable
law, and that this Subscription Agreement shall survive the death or disability
of the Purchaser and shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and permitted assigns. If the Purchaser is more than one person,
the obligations of the Purchaser hereunder shall be joint and several and the
covenants, agreements, representations, warranties, and acknowledgments herein
shall be deemed to be made by and be binding upon each such person and such
person's heirs, executors, administrators, successors, legal representatives and
permitted assigns.
6. Modification. This Subscription Agreement shall not be
modified or waived except by an instrument in writing signed by the party
against whom any such modification or waiver is sought.
7. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, sent by nationwide overnight courier
or delivered against receipt to the party to whom it is to be given (a) if to
Company, at the address set forth above, or (b) if to the Purchaser, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section). Any notice or other communication given by
certified mail shall be deemed given at the time that it is signed for by the
recipient except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof. Any notice or other communication given by
nationwide overnight courier shall be deemed given the next business day
following being deposited with such courier.
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8. Assignability. This Subscription Agreement and the rights,
interests and obligations hereunder are not transferable or assignable by the
Purchaser and the transfer or assignment of the Units, the components thereof,
or the underlying securities shall be made only in accordance with all
applicable laws.
9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York relating to
contracts entered into and to be performed wholly within such State.
10. Blue Sky Qualification. The purchase of Units under this
Subscription Agreement is expressly conditioned upon the exemption from
qualification of the offer and sale of the Units from applicable Federal and
state securities laws. The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer, and may rescind any sale contracted, in such
jurisdiction.
11. Use of Pronouns. All pronouns and any variations thereof
used herein shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons referred to may
require.
12. Miscellaneous.
(a) This Agreement and its exhibits and schedules
constitutes the entire agreement between the Purchaser and the Company with
respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings, if any, relating to the subject matter hereof.
The terms and provisions of this Agreement may be waived, or consent for the
departure therefrom granted, only by a written document executed by the party
entitled to the benefits of such terms or provisions. The parties acknowledge
that the provisions of the Registration Rights Agreement included in the
Memorandum as Exhibit E are incorporated by reference and made a part hereof.
(b) The Purchaser's and Company's covenants, agreements,
representations and warranties made in this Agreement and the Memorandum shall
survive the execution and delivery hereof and delivery of the Securities
contained in the Units.
(c) Each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
(d) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement shall
be considered separable and, if for any reason any provision or provisions
hereof are determined to be invalid or contrary to applicable law, such
invalidity or illegality shall not impair the operation of or affect the
remaining portions of this Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only
and shall not control or alter the meaning of this Subscription Agreement as set
forth in the text.
(g) The undersigned understands and acknowledges that
there may be multiple Closings for the Offering and that the purchase price per
Unit (as defined in the Memorandum) will be determined in relation to the
closing bid price of the Common Stock at each Closing.
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Accredited Investor Certification
Initial or Check the appropriate item(s)
The undersigned further represents and warrants as indicated below by the
undersigned's initials:
A. Individual investors: (Please initial one or more of the following,
four statements)
1._______I certify that I am an accredited investor because I have had
individual income (exclusive of any income earned by my spouse) of more
than $200,000 in each of the most recent two years and I reasonably
expect to have an individual income in excess of $200,000 for the
current year.
2._______I certify that I am an accredited investor because I have had joint
income with my spouse in excess of $300,000 in each of the most recent
two years and reasonably expect to have joint income with my spouse in
excess of $300,000 for the current year.
3._______I certify that I am an accredited investor because I have an individual
net worth, or my spouse and I have a joint net worth, in excess of
$1,000,000.
4._______I am a director or executive officer of Home Director, Inc.
5._______I have individual net worth or my spouse and I have joint net worth of
over $ 5,000,000.
B. Partnerships, corporations, trusts or other entities: (Please initial
one of the following seven statements). The undersigned hereby
certifies that it is an accredited investor because it is:
1._______an employee benefit plan whose total assets exceed $5,000,000;
2._______an employee benefit plan whose investments decisions are made by a plan
fiduciary which is either a bank, savings and loan association or an
insurance company (as defined in Section 3(a) of the Securities Act) or
an investment adviser registered as such under the Investment Advisers
Act of 1940;
3._______a self-directed employee benefit plan, including an Individual
Retirement Account, with investment decisions made solely by persons
that are accredited investors;
4._______an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, not formed for the specific purpose of
acquiring the Units, with total assets in excess of $5,000,000;
5._______a corporation, partnership, limited liability company, limited
liability partnership, other entity or similar business trust, not
formed for the specific purpose of acquiring the Units, with total
assets excess of $5,000,000;
6._______a trust, not formed for the specific purpose of acquiring the Units,
with total assets exceed $5,000,000, whose purchase is directed by a
person who has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of an
investment in the Units; or
7._______an entity (including a revocable grantor trust but other than a
conventional trust) in which each of the equity owners qualifies as an
accredited investor under items A(1), (2) or (3) or item B(1) above.
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Home Director, Inc.
SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
EXECUTION OF THIS AGREEMENT BY ANY PURCHASER SHALL BE DEEMED TO CONSTITUTE
EXECUTION BY SUCH PURCHASER OF THE REGISTRATION RIGHTS AGREEMENT ANNEXED TO THE
MEMORANDUM AS EXHIBIT E.
(NOTE: to be completed by Purchaser):
Purchaser hereby elects to subscribe under the Subscription Agreement for a
total of $__________ of Unit(s)
Date: _______________, 2003.
If the purchaser is an INDIVIDUAL, or if the purchasers are INDIVIDUALS who have
purchased as JOINT TENANTS, as JOINT TENANTS with RIGHT OF SURVIVORSHIP, as
TENANTS IN COMMON, or as COMMUNITY PROPERTY:
--------------------------- ---------------------------
Print Names(s) Social Security Number(s)
--------------------------- ---------------------------
Signature(s) of Investor(s) Joint Signature
--------------------------- ---------------------------
Address Date
If the purchaser is a PARTNERSHIP, CORPORATION, TRUST, LIMITED LIABILITY COMPANY
or LIMITED LIABILITY PARTNERSHIP:
___________________________ ___________________________
Name of Partnership, Corporation, Federal Taxpayer
Trust, Limited Liability Company Identification Number
or Limited Liability Partnership
Address:
By:___________________________ ___________________________
Name: ________________________ State of Organization
Title:________________________
SUBSCRIPTION FOR ____ UNITS ACCEPTED AND AGREED TO this _____ day of __________
2003.
HOME DIRECTOR, INC.
By:__________________________________
Name:
Title:
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