1
EXHIBIT 10.27
SUBSCRIPTION AGREEMENT
VSI Enterprises, Inc.
0000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned ("Subscriber") hereby tenders this Subscription
Agreement ("Agreement") in accordance with and subject to the terms and
conditions set forth herein.
1. Subscription.
1.1 The undersigned hereby irrevocably subscribes for and agrees
to purchase the number of shares (the "Shares") of common stock, par value
$.001 per share (the "Common Stock"), of VSI Enterprises, Inc., a Delaware
corporation (the "Company"), indicated on the signature page attached hereto at
the purchase price per Share set forth on such signature page (the "Purchase
Price"). The undersigned has made payment by wire transfer of funds in
accordance with instructions from the Company in the full amount of the
purchase price of the Shares for which the undersigned is subscribing (the
"Payment").
1.2 The undersigned understands that it will not earn interest on
any funds held by the Company prior to the date of closing of the Offering. The
Company may hold an initial closing of the Offering (the "Initial Closing") at
any time. The date of the Initial Closing is hereinafter referred to as the
"Initial Closing Date." The Company may hold additional interim closings after
the Initial Closing. Any such interim closings are each hereinafter referred to
as an "Additional Closing" and shall occur on one or more dates each
hereinafter referred to as an "Additional Closing Date." The Initial Closing
Date and the Additional Closing Dates are each hereinafter sometimes referred
to as a "Closing Date." Upon receipt by the Company of the requisite payment
for all Shares to be purchased by the subscribers whose subscriptions are
accepted (each, a "Subscriber") at the Initial Closing or any Additional
Closing, as applicable, and subject to the satisfaction of certain conditions,
the Shares so purchased will be issued in the name of each such Subscriber, and
the name of such Subscriber will be registered on the stock transfer books of
the Company as the record owner of such Shares. The Company will issue to each
Subscriber a stock certificate for the Shares purchased.
1.3 The undersigned hereby agrees to be bound hereby upon (i)
execution and delivery to the Company, of the signature page to this
Subscription Agreement and (ii) acceptance on the Initial Closing Date or an
Additional Closing Date, as the case may be, by the Company of the
undersigned's subscription (the "Subscription").
1.4 The undersigned agrees that the Company may, in its sole and
absolute discretion, reduce the undersigned's subscription to any number of
shares of Common Stock that in the aggregate does not exceed the number of
Shares of Common Stock hereby applied for without any prior notice to or
further consent by the undersigned. The undersigned hereby irrevocably
constitutes and appoints the Company and each officer of the Company, each of
the foregoing acting singularly, in each case with full power of substitution,
the true and lawful agent and attorney-in-fact of the undersigned, with full
power and authority in the undersigned's name, place and stead to amend this
Subscription Agreement, including, in each case, the undersigned's signature
page thereto, to effect any of the foregoing provisions of this Section 1.4.
2. Offering Material.
2.1 Subscriber represents and warrants that it is in receipt of
and that it has carefully read and understands the following items:
(a) the Confidential Offering Memorandum of the Company,
dated February 24, 2000 (the "Memorandum");
1
2
(b) the Quarterly Report to the Securities and Exchange
Commission (the "SEC") on Form 10-Q of the Company for the quarter
ended September 30, 1999, (the "Form 10-Q");
(c) the Annual Report to the SEC on Form 10-K of the
Company for the fiscal year ended December 31, 1998, (the "Form
10-K"); and
(d) any other information provided by the Company.
The Form 10-Q and the Form 10-K shall be referred to herein as the
"Public Reports."
3. Conditions to Subscriber's Obligations.
3.1 The obligation of the Subscriber to close the transactions
contemplated by this Agreement (the "Transaction") is subject to the
satisfaction on or prior to the date of the Closing (as hereinafter defined) of
the following conditions set forth in Sections 3.2 through 3.3 hereof.
3.2 The representations and warranties made by the Company herein
shall be true in all material respects on and as of the Closing Date with the
same effect as if they had been made on and as of the Closing Date.
3.3 All proceedings to be taken in connection with the
Transaction are to be consummated at or prior to the Closing, and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Subscriber and its counsel, and the Subscriber and its counsel shall have
received copies of all documents and information which it may have reasonably
requested in connection with the Transaction and of all corporate proceedings
in connection therewith, in form and substance reasonably satisfactory to
Subscriber and its counsel.
4. Representations and Warranties; Covenants; Survival.
4.1 The Company represents and warrants that, at the date of this
Agreement:
(a) The Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Delaware, entitled to own its property of a material nature and to
carry on its business of a material nature as and in places where such
property is now owned or operated and such business is conducted;
(b) Each of the subsidiaries of the Company is a
corporation duly organized and validly existing and in good standing
under the laws of the jurisdiction of their respective incorporation,
entitled to own their respective properties of a material nature and
to carry on their respective businesses of a material nature in places
where such properties are now owned or operated and such businesses
are conducted, and, except as disclosed in the Public Reports, there
is no action or proceeding pending or, to the Company's best knowledge
threatened, brought by or before any federal or state agency having
jurisdiction over the operations of a material nature of the Company
which threatens in any material respect the continued operation of any
material phase of the Company's business now conducted by it or its
subsidiaries;
(c) The Company's certified consolidated financial
statements as of December 31, 1998, contained in the Form 10-K, and
its unaudited financial statements as of September 30, 1999, contained
in the Form 10-Q, including the notes contained therein, fairly
present the consolidated financial position of the Company at the
respective dates thereof and the results of its consolidated
operations for the periods purported to be covered thereby. Such
financial statements have been prepared in conformity with generally
accepted accounting principles consistently applied with prior periods
subject to any comments and notes contained therein. Since September
30, 1999, there has been no material adverse change in the financial
condition of the Company from the financial condition stated in such
financial statements subject to changes occurring in the ordinary
course of its business;
(d) The Company, by appropriate and required corporate
action, has, or will have prior to the Initial Closing, duly
authorized the execution of this Agreement, and the issuance and
delivery of the
2
3
Common Stock. The shares of Common Stock are not subject to preemptive
or other rights of any stockholders and when issued in accordance with
the terms of this Agreement, the shares of Common Stock will be
validly issued, fully paid and nonassessable; and
(e) Performance of this Agreement and compliance with
the provisions hereof will not violate any provision of any applicable
law or of the Certificate of Incorporation or Bylaws of the Company,
or of any of its subsidiaries, and, will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon, any of the properties or assets
of a material nature of the Company, or of any of its subsidiaries,
pursuant to the terms of any indenture, mortgage, deed of trust or
other agreement or instrument binding upon the Company, or any of its
subsidiaries, other than such breaches, defaults or liens which would
not have a material adverse effect on the Company and its subsidiaries
taken as a whole.
5. Transfer and Registration Rights
5.1 Subscriber acknowledges that it is acquiring the Shares for
its own account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act of
1933, as amended (the "Act"), and any applicable state or other securities laws
("State Acts"). Subscriber further agrees that it will not sell, assign or
transfer the Shares in violation of the Act or State Acts and acknowledges
that, in taking unregistered securities, it must continue to bear the economic
risk of its investment for an indefinite period of time because of the fact
that the Shares have not been registered under the Act or State Acts, and
further realizes that the Shares cannot be sold unless subsequently registered
under the Act and State Acts or an exemption from such registration is
available. The Subscriber further recognizes that the Company is not assuming
any obligation to register the Shares except as expressly set forth herein.
Subscriber also acknowledges that appropriate legends reflecting the status of
the Shares under the Act and State Acts may be placed on the face of the
certificates for such Shares at the time of their transfer and delivery to the
holder thereof.
5.2 The Shares issued pursuant to this Agreement may not be
transferred except in a transaction which is in compliance with the Act and
State Acts. Except as provided hereafter with respect to registration of the
Shares, it shall be a condition to any such transfer that the Company shall be
furnished with an opinion of counsel to the holder of such Common Stock,
reasonably satisfactory to the Company, to the effect that the proposed
transfer would be in compliance with the Act and State Acts.
5.3 Within 45 days after the last Closing Date of this Offering,
the Company shall use its best efforts to prepare and file with the SEC on one
occasion, a registration statement and such other documents as may be
necessary, in the opinion of counsel for the Company, in order to comply with
the provisions of the Act so as to permit the registered sale of the Shares for
a period of one year from the date of the last Closing Date by each and every
holder of Shares who desires to register the sale of the Shares and will keep
such registration statement effective for such one year period. Within 30 days
after the last Closing Date, the Company shall give each such holder notice at
the address of such holder appearing on the register and transfer records of
Company of the Company's intention to register the sale of the Shares. The
obligations of the Company to give such notice shall be limited to the
Subscriber and any entity which at the time the Shares may have been
transferred was controlled by the Subscriber, in control of the Subscriber, or
otherwise affiliated with the Subscriber which entities, together with the
Subscriber, are hereafter referred to as "Offering Holders."
5.4 The obligations of the Company identified in this Section 5
shall be suspended and tolled for such period of time (the "Registration
Suspension Period") as is necessary so that under no circumstances shall the
registered sale of the Shares by the holders thereof commence within ninety
days after the commencement of an underwritten primary public offering of the
Company's equity securities (a "Public Offering"). Subscriber acknowledges and
agrees that during the Registration Suspension Period it shall not sell any
Shares. Subscriber further agrees that it shall, upon request, enter into an
agreement with the underwriter of a Public Offering, pursuant to which the
Subscriber shall agree not to sell any Shares during the Registration
Suspension Period.
3
4
5.5 If and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect the registration of the Shares
under the Act for the account of an Offering Holder, the Company will, as
promptly as possible:
(a) prepare and file with the SEC a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the requirements of the Act and
the rules and regulations promulgated by the SEC thereunder relating
to the sale or other disposition of the securities covered by such
registration statement;
(c) furnish to each Offering Holder such numbers of
copies of a prospectus, including a preliminary prospectus, complying
with the requirements of the Act and such other documents as such
Offering Holder may reasonably request in order to facilitate the
public sale or other disposition of the underlying shares of Common
Stock owned by such Offering Holder, but such Offering Holder shall
not be entitled to use any selling materials other than a prospectus
and such other materials as may be approved by the Company, which
approval will not be unreasonably withheld; and
(d) use its best efforts to register or qualify the
securities covered by such registration statement under the State Acts
as any Offering Holder shall reasonably request, and do any and all
such other acts and things as may be necessary or advisable to enable
such Offering Holder to consummate the public sale or other
disposition of the Shares owned by such Offering Holder in such
states; provided, however , that the Company shall not be obligated to
register or qualify such securities in any jurisdiction in which such
registration or qualification would require the Company to qualify as
a foreign corporation or file any general consent to service of
process where it is not then so qualified or has not theretofore so
consented.
5.6 Except as provided below in this Section 5, the expenses
incurred by the Company in connection with action taken by the Company to
comply with this Section 5, including, without limitation, all registration and
filing fees, printing and delivery expenses, accounting fees, fees and
disbursements of counsel to the Company, consultant and expert fees, premiums
for liability insurance, if the Company chooses to obtain such insurance,
obtained in connection with a registration statement filed to effect such
compliance and all expenses, including counsel fees, of complying with State
Acts, shall be paid by the Company. All fees and disbursements of any counsel,
experts, or consultants employed by any Offering Holder shall be borne by such
Offering Holder. The Company shall not be obligated in any way in connection
with any registration pursuant to this Section 5 for any selling commissions or
discounts payable by any Offering Holder to any underwriter or broker of
securities to be sold by such Offering Holder. It shall be a condition
precedent to the obligation of the Company to take any action pursuant to this
Section 5 that the Company shall have received an undertaking satisfactory to
it from each Offering Holder to pay all expenses required to be borne by such
Offering Holder and to furnish or cause to be furnished to the Company
specifically for use in the preparation of the registration statement and
prospectus written information concerning the securities held by such Offering
Holder and also concerning any underwriter of such securities and the intended
method of disposition thereof and any additional information or documentation
as the Company shall reasonably request and as may be required by
administrators of the Act or State Acts in connection with the action to be
taken by the Company hereunder pursuant to such registration.
5.7 In the event of any registration of shares of Common Stock
pursuant to this Section 5, the Company will indemnify and hold harmless each
Offering Holder, its officers, directors and each underwriter of such
securities, and any person who controls such Offering Holder or underwriter
within the meaning of Section 15 of the Act, against all claims, actions,
losses, damages, liabilities and expenses, joint or several, to which any of
such persons may become subject under the Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and
4
5
will reimburse such Offering Holder, its officers, directors and each
underwriter of such securities, and each such controlling person or entity for
any legal and any other expenses reasonably incurred by such Offering Holder,
such underwriter, or such controlling person or entity in connection with
investigating or defending any such loss, action, claim, damage, liability, or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or omission made in said registration
statement, said preliminary prospectus or said prospectus, or said amendment of
supplement in reliance upon and in conformity with written information
furnished to the Company by such Offering Holder or such underwriter
specifically for use in the preparation thereof, and provided further however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability or action arises out of or is based upon
an untrue or omission made in any preliminary prospectus or final prospectus if
(i) such Offering Holder failed to send or deliver a copy of the final
prospectus or prospectus supplement with or prior to the delivery of written
confirmation of the sale of the Common Stock, and (ii) the final prospectus or
prospectus supplement would have corrected such untrue statement or omission.
5.8 At any time when a prospectus relating to the Offering is
required to be delivered under the Act, the Company will notify the Offering
Holder of the happening of any event, upon the notification or awareness of
such event by an executive officer of the Company, as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing.
5.9 In the event of any registration of any securities under the
Act pursuant to this Section 5, each Offering Holder will, or will furnish the
written undertaking of such other person or entity as shall be acceptable to
the Company to, indemnify and hold harmless the Company, its officers,
directors and any person who controls such Company within the meaning of
Section 15 of the Act, against any losses, claims, damages, liabilities, or
actions, joint or several, to which the Company, its officers, directors, or
such controlling person or entity may become subject under the Act or
otherwise, insofar as such losses, claims, damages, liabilities, or actions
arise out of or are based upon any untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent and only to the extent that any such loss, claim,
damage, liability, or action arises out of or is based upon an untrue statement
or omission made in said registration statement, said preliminary prospectus or
said prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Offering
Holder or any underwriter of such Offering Holder's securities specifically for
use in the preparation thereof.
5.10 Any party entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (which consent may not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party an conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
6. Closing.
6.1 The Initial Closing Date shall be on or before March 8, 2000,
or such other time as the Company and Subscriber shall mutually agree, and
shall occur at the offices of the Company. Additional Closings may be held at
any time thereafter, provided, however, that in no event shall the Initial
Closing or any Additional Closing occur after April 28, 2000.
5
6
7. Subscriber Representations. The undersigned Subscriber hereby
represents, warrants and acknowledges and agrees with the Company as follows:
7.1 The undersigned has been furnished with and has carefully
read the materials set forth in Section 2.1 hereto and is familiar with and
understands the terms of the offering (the "Offering"). With respect to
individual or partnership tax and other economic considerations involved in
this investment, the undersigned is not relying on the Company (or any agent or
representative of the Company). The undersigned has carefully considered and
has, to the extent the undersigned believes such discussion necessary,
discussed with the undersigned's professional legal, tax, accounting and
financial advisers the suitability of an investment in the Common Stock for the
undersigned's particular tax and financial situation and has determined that
the Shares being subscribed for by the undersigned are a suitable investment
for the undersigned.
7.2 The undersigned acknowledges that all documents, records and
books pertaining to this investment which the undersigned has requested have
been made available for inspection by the undersigned and the undersigned's
attorney, accountant or other adviser(s).
7.3 The undersigned and/or the undersigned's advisor(s) has/have
had a reasonable opportunity to ask questions of and receive answers from a
person or persons acting on behalf of the Company concerning the Offering and
all such questions have been answered to the full satisfaction of the
undersigned.
7.4 The undersigned is not subscribing for shares of Common Stock
as a result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or meeting.
7.5 The undersigned is an "accredited investor," within the
meaning of Rule 501(a) of Regulation D under the Act. The undersigned, by
reason of the undersigned's business or financial experience or the business or
financial experience of the undersigned's professional advisers who are
unaffiliated with and who are not compensated by the Company or any affiliate
of thereof, directly or indirectly, can be reasonably assumed to have the
capacity to protect its interests in connection with an investment in the
Shares.
7.6 If the undersigned is a natural person, the undersigned has
adequate means of providing for the undersigned's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Shares for an indefinite period of time, has no need for liquidity in
such investment and, at the present time, could afford a complete loss of such
investment.
7.7 The undersigned or the undersigned's purchaser
representative, as the case may be, has such knowledge and experience in
financial, tax and business matters so as to enable the undersigned to utilize
the information made available to the undersigned in connection with the
Offering to evaluate the merits and risks of an investment in the Shares and to
make an informed investment decision with respect thereto.
7.8 The undersigned acknowledges that the shares of Common Stock
herein subscribed for have not been registered under the Act and under the
securities laws of any state. The undersigned will not sell, transfer or
otherwise dispose of the Shares unless they are registered under the Act and
any applicable state securities laws or pursuant to available exemptions from
such registration, provided that the seller delivers to the Company an opinion
of counsel, which counsel and opinion shall be reasonably satisfactory to the
Company, confirming the availability of such exemption. The undersigned
represents that the undersigned is purchasing the Shares for the undersigned's
own account, for investment and not with a view to resale or distribution
except in compliance with the Act and the restrictions contained in the
immediately preceding sentence. The undersigned has not offered or sold any
portion of the Shares being acquired nor does the undersigned have any present
intention of selling, distributing or otherwise disposing of the Shares either
currently or after the passage of a fixed or determinable period of time or
upon the occurrence or nonoccurrence of any predetermined event or circumstance
in violation of the Act.
7.9 The undersigned recognizes that investment in the Shares
involves substantial risks, including loss of the entire amount of such
investment, and has taken full cognizance of and understands all of the risks
related to a purchase of the Shares.
6
7
7.10 The undersigned acknowledges that each certificate
representing the Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "SECURITIES ACT") OR UNDER APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE
EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER
DELIVERS TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
7.11 The undersigned acknowledges and agrees that it shall not be
entitled to seek any remedies with respect to the Offering from any party other
than the Company.
7.12 If this Subscription Agreement is executed and delivered on
behalf of a partnership, corporation, trust or estate: (i) such partnership,
corporation, trust or estate has the full legal right and power and all
authority and approval required (a) to execute and deliver, or authorize
execution and delivery of, this Subscription Agreement and all other
instruments executed and delivered by or on behalf of such partnership,
corporation, trust or estate in connection with the purchase of the Shares, (b)
to delegate authority pursuant to a power of attorney and (c) to purchase and
hold such Shares; (ii) the signature of the party signing on behalf of such
partnership, corporation, trust or estate is binding upon such partnership,
corporation, trust or estate; and (iii) such partnership, corporation or trust
has not been formed for the specific purpose of acquiring the Shares, unless
each beneficial owner of such entity is qualified as an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Act ("Regulation
"D") and has submitted information substantiating such individual
qualification.
7.13 If the undersigned is a retirement plan or is investing on
behalf of a retirement plan, the undersigned acknowledges that investment in
the Shares poses risks in addition to those associated with other investments,
including the inability to use losses generated by an investment in the Shares
to offset taxable income.
7.14 The undersigned shall indemnify and hold harmless the Company
and each officer, director or control person thereof, who is or may be a party
or is or may be threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of or arising from any actual or alleged
misrepresentations or misstatement of facts or omission to represent or state
facts made or alleged to have been made by the undersigned to the Company (or
any agent or representative thereof) or omitted or alleged to have been omitted
by the undersigned, concerning the undersigned or the undersigned's authority
to invest or financial position in connection with the Offering, including,
without limitation, any such misrepresentation, misstatement or omission
contained in the Subscriber Questionnaire or any other document submitted by
the undersigned, against losses, liabilities and expenses actually and
reasonably incurred by the Company, or any officer, director or control person
thereof in connection with such action, suit or proceeding for which the
Company, Subscriber, or such officer, director or control person has not
otherwise been reimbursed (including attorneys' fees, judgments, fines and
amounts paid in settlement).
8. Understandings.
The undersigned Subscriber understands, acknowledges and agrees with
the Company as follows:
8.1 This Subscription may be rejected, in whole or in part, by
the Company, in its sole and absolute discretion, at any time before the
Initial Closing Date or any Additional Closing Dates, as the case may be,
notwithstanding prior receipt by the undersigned of notice of acceptance of the
undersigned's Subscription.
7
8
8.2 Except as set forth in paragraph 8.1 above, the undersigned
hereby acknowledges and agrees that the Subscription hereunder is irrevocable
by the undersigned, that, except as required by law, the undersigned is not
entitled to cancel, terminate or revoke this Subscription Agreement or any
agreements of the undersigned hereunder and that this Subscription Agreement
and such other agreements shall survive the death or disability of the
undersigned 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 undersigned is more than one person, the
obligations of the undersigned hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his/her
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
8.3 No Federal or state agency has made any findings or
determination as to the fairness of the terms of this Offering for investment
nor any recommendations or endorsement of the Shares.
8.4 The Offering is intended to be exempt from registration under
the Act by virtue of Section 4(2) of the Act and the provisions of Regulation D
thereunder, which is in part dependent upon the truth, completeness and
accuracy of the statements made by the undersigned herein and in the Subscriber
Questionnaire.
8.5 There can be no assurance that the undersigned will be able
to sell or dispose of the Shares. It is understood that in order not to
jeopardize the Offering's exempt status under Section 4(2) of the Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the
investor suitability requirements thereunder.
8.6 The undersigned acknowledges that the information furnished
by the Company to the undersigned or its advisers in connection with the
Offering, are confidential and nonpublic and agrees that all such information
shall be kept in confidence by the undersigned and neither used by the
undersigned for the undersigned's personal benefit (other than in connection
with this Subscription), nor disclosed to any third party for any reason;
provided, however, that this obligation shall not apply to any such information
that (i) is part of the public knowledge or literature and readily accessible
at the date hereof, (ii) becomes a part of the public knowledge or literature
and readily accessible by publication (except as a result of a breach of this
provision) or (iii) is received from third parties (except third parties who
disclose such information in violation of any confidentiality agreements or
obligations, including, without limitation, any Subscription Agreement entered
into with the Company).
8.7 The representations, warranties and agreements of the
undersigned contained herein and in any other writing delivered in connection
with the transactions contemplated hereby shall be true and correct in all
respects on and as of the date of the sale of the Shares as if made on and as
of such date and shall survive the execution and delivery of this Subscription
Agreement and the purchase of the Shares.
8.8 IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON
THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION ON REGULATORY AUTHORITY. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
8.9 The offering and sale of the Shares is intended to be exempt
from registration under the securities laws of certain U.S. states. A purchaser
residing in one or more of the following states shall note the language set
forth below, which is required to be included in this Agreement by the
securities laws of those states. The purchaser must note that there are
restrictions on transfer of all Shares.
ALL STATES: THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
8
9
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT,
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
TEXAS: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER APPLICABLE SECURITIES
LAWS OF TEXAS AND THEREFORE CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE
SUBSEQUENTLY REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
9. Miscellaneous.
9.1 Except as set forth elsewhere herein, any notice or demand to
be given or served in connection herewith shall be deemed to be sufficiently
given or served for all purposes by being sent as registered or certified mail,
return receipt requested, postage prepaid, in the case of the Company,
addressed to it at the address set forth above;
Attention: Xxxxx Xxxxxxxx
Chief Financial Officer
and in the case of Subscriber to the address for correspondence set forth on
the Subscriber Questionnaire.
9.2 This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of Delaware,
as such laws are applied by Delaware courts to agreements entered into and to
be performed in Delaware by and between residents of Delaware, and shall be
binding upon the undersigned, the undersigned's heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit of the
Company and its successors and assigns. If any provision of this Subscription
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed to be modified to conform with such
statute or rule of law. Any provision hereof that may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof.
9.3 Except as provided in Section 9.4, this Agreement shall be
binding upon and inure to the benefit of the Company, and Subscriber and their
successors and assigns.
9.4 The rights provided under Section 5 are not assignable except
to a party who is defined in Section 5 as an "Offering Holder."
9.5 In any action, proceeding or counterclaim brought to enforce
any of the provisions of this Agreement or to recover damages, costs and
expenses in connection with any breach of the Agreement, the prevailing party
shall be entitled to be reimbursed by the opposing party for all of the
prevailing party's attorneys' fees, costs and other out-of-pocket expenses
incurred in connection with such action, proceeding or counterclaim.
9.6 This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
herein. This Agreement supercedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
10. Signature. The signature of this Subscription Agreement is
contained as part of the applicable Subscription Package, entitled "Signature
Page."
9
