Exhibit 10.8
SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE 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 OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
To: QUEST NET CORP.
0000 XX 000xx Xxxxxx, Xxxxx XX0
Xxxxx, XX 00000
This Subscription Agreement is made between QUEST NET CORP., ("Company"
or "Seller") a Florida corporation, and the undersigned prospective purchaser
("Purchaser") who is subscribing hereby for the Company's Common Stock, (the
"Shares"), at 80% of the five day average closing bid price of the Company's
Common Stock as reported by Bloomberg, LP for the five trading days immediately
prior to funding (the "Discounted Purchase Price"). The Shares being offered
will be separately transferable, to the extent that any such transfer is
permitted by law. The terms for the issuance of the Shares are set forth in
Section 4. This subscription is submitted to you in accordance with and subject
to the terms and conditions described in this Subscription Agreement together
with any Exhibits thereto, relating to an offering (the "Offering") of up to
$5,000,000 of Shares at the "Discounted Purchase Price". The Offering comprises
(i) an offering of the Shares to accredited investors (the "Regulation D
Offering") in accordance with the exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended (the "Act"), and Rule 506 of
Regulation D promulgated under the Act ("Regulation D").
1. SUBSCRIPTION.
(a) The undersigned hereby irrevocably subscribes for and agrees to
purchase 910,747 Shares ("Total Number of Shares") at a purchase price of $5.49
per Share (the "Purchase Price") for a total of $5,000,000 (the
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QUEST NET CORP.
-------------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE 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 OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Maximum Offering $5,000,000
This offering consists of $5,000,000 of the Company's Common Stock pursuant
to the terms set forth herein.
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SUBSCRIPTION AGREEMENT
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SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BE APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE 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 OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
To: QUEST NET CORP.
0000 XX 000xx Xxxxxx, Xxxxx XX0
Xxxxx, XX 00000
This Subscription Agreement is made between QUEST NET CORP., ("Company"
or "Seller") a Florida corporation, and the undersigned prospective purchaser
("Purchaser") who is subscribing hereby for the Company's Common Stock, (the
"Shares"), at 80% of the five day average closing bid price of the Company's
Common Stock as reported by Bloomberg, LP for the five trading days immediately
prior to funding (the "Discounted Purchase Price"). The Shares being offered
will be separately transferable, to the extent that any such transfer is
permitted by law. The terms for the issuance of the Shares are set forth in
Section 4. This subscription is submitted to you in accordance with and subject
to the terms and conditions described in this Subscription Agreement together
with any Exhibits thereto, relating to an offering (the "Offering") of up to
$5,000,000 of Shares at the "Discounted Purchase Price". The Offering comprises
(i) an offering of the Shares to accredited investors (the "Regulation D
Offering") in accordance with the exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended (the "Act"), and Rule 506 of
Regulation D promulgated under the Act ("Regulation D").
1. SUBSCRIPTION.
(a) The undersigned hereby irrevocably subscribes for and agrees to
purchase _______________ Shares ("Total Number of Shares") at a purchase price
of _________ per Share (the "Purchase Price") for a total of $__________________
(the
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"Aggregate Purchase Price"). The closing shall be deemed to have occurred on
the date agreed upon by the Company and the Purchaser (the "Closing Date").
(b) Upon receipt by the Escrow Agent of the requisite payment for the
Shares being purchased the certificates representing the Shares so purchased
will be forwarded by the Escrow Agent to the Purchaser and the name of such
Purchaser will be registered on the stock and transfer books of the Company as
the record owner of such Shares. The Escrow Agent shall not be liable for any
action taken or omitted by him in good faith and in no event shall the Escrow
Agent be liable or responsible except for the Escrow Agent's own gross
negligence or willful misconduct. The Escrow Agent has made no representations
or warranties in connection with this transaction and has not been involved in
the negotiation of the terms of this Agreement or any matters relative thereto.
Seller and Purchaser each agree to indemnify and hold harmless the Escrow Agent
from and with respect to any suits, claims, actions or liabilities arising in
any way out of this transaction including the obligation to defend any legal
action brought which in any way arises out of or is related to this Agreement.
The Escrow Agent is not rendering securities advice to anyone with respect to
this proposed transaction; nor is the Escrow Agent opining on the compliance of
the proposed transaction under applicable securities law.
2. REPRESENTATIONS AND WARRANTIES.
The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:
(a) The undersigned has been furnished with, and has carefully
read the applicable form of Registration Rights Agreement annexed
hereto as Exhibit A (the "Registration Rights Agreement"), and is
familiar with and understands the terms of the Offering. With respect
to tax and other economic considerations involved in this investment,
the undersigned is not relying on 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 advisors the
suitability of an investment in the Company, by purchasing the Shares,
for the undersigned's particular tax and financial situation and has
determined that the investment being made by the undersigned is a
suitable investment for the undersigned.
(b) 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 or the
undersigned has had access thereto.
(c) The undersigned has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on
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behalf of the Company concerning the Offering and all such
questions have been answered to the full satisfaction of the
undersigned.
(d) The undersigned will not sell or otherwise transfer the
Shares, without registration under the Act or applicable state
securities laws or an exemption therefrom. The Shares have not been
registered under the Act or under the securities laws of certain
states. The Shares shall be registered by the Company pursuant to the
terms of the Registration Rights Agreement attached hereto as Exhibit A
and incorporated herein and made a part hereof. Without limiting the
right to have the Shares registered and sell the Shares pursuant to
this Subscription Agreement, 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. The undersigned does not now have or, in the
future, will not take any short position or hedge position in the
Company's Common Stock that would be in violation of the Act or the
securities laws of certain states, that would have the effect of being
manipulative on the Company's Common Stock price, or that would result
in a short position or hedge position of more than 4.9% of the
Company's issued and outstanding Common Stock. The undersigned has not
offered or sold any portion of the Shares being acquired nor does the
undersigned have any present intention of dividing the Shares with
others or of selling, distributing or otherwise disposing of any
portion of the Shares either currently or after the passage of a fixed
or determinable period of time or upon the occurrence or non-occurrence
of any predetermined event or circumstance in violation of the Act.
Except as provided in the Registration Rights Agreement, the Company
has no obligation to register the Shares.
(e) The undersigned recognizes that an investment in the Shares
involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has carefully read and considered
the schedule entitled Threatened or Pending Litigation matters attached
hereto as Exhibit B.
(f) The undersigned acknowledges that each certificate
representing the Shares unless registered pursuant to the Registration
Rights Agreement, shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION
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STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (II) TO
THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(III) IF AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
NOTWITHSTANDING THE FOREGOING, THE COMMON STOCK EVIDENCED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO THE REGISTRATION RIGHTS SET FORTH
IN EACH OF THAT CERTAIN SUBSCRIPTION AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY,
A COPY OF EACH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICE.
(g) If this Subscription Agreement is executed and delivered on
behalf of a corporation: (i) such corporation 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 (including, without limitation, the
Registration Rights Agreement) executed and delivered by or on behalf
of such corporation in connection with the purchase of the Shares and
(b) to purchase and hold the Shares: (ii) the signature of the party
signing on behalf of such corporation is binding upon such corporation;
and (iii) such corporation 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 and has submitted information substantiating such
individual qualification.
(h) The undersigned shall indemnify and hold harmless the Company
and each stockholder, executive, employee, representative, affiliate,
officer, director or control person of the Company, who is or may be a
party or is or may be threatened to be made a party to any threatened,
pending or contemplated action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of or arising from
any actual or alleged misrepresentation 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 omitted or alleged to have been
omitted by the undersigned, concerning the undersigned or the
undersigned's subscription for and purchase of the Shares 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 this
Subscription Agreement, the
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Questionnaire or any other document submitted by the undersigned,
against losses, liabilities and expenses for which the Company, or any
stockholder, executive, employee, representative, affiliate, officer,
director or control person of the Company has not otherwise been
reimbursed (including attorneys' fees and disbursements, judgments,
fines and amounts paid in settlement) actually and reasonably incurred
by the Company, or such officer, director stockholder, executive,
employee, representative, affiliate or control person in connection
with such action, suit or proceeding.
(i) The undersigned is not subscribing for the Shares as a result
of, or pursuant 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.
(j) The undersigned or the undersigned's representatives, 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.
(k) The Purchaser and its advisors, if any, have been furnished
with all materials relating to the business, finances, and operations
of the Company and materials relating to the offer and sale of the
Shares. The Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete
and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Purchaser has also had the opportunity
to obtain and to review (1) the Company's Confidential Business Plan
and (2) the Company's audited financials for the calendar year ended
December 31, 1998, (the "Disclosure Documents").
(1) The Purchaser is purchasing the Common Stock for its own
account for investment, and not with a view toward the resale or
distribution thereof. Purchaser is neither an underwriter of, nor a
dealer in, the Common Stock issuable upon conversion thereof and is not
participating in the distribution or resale of the Common Stock
issuable upon conversion thereof.
3. SELLER REPRESENTATIONS.
(a) Concerning the Securities. This Agreement, the Registration Rights
Agreement and the issuance, sale and delivery of the Shares have been duly
authorized by all required corporate action on the part of Seller, and when
issued, sold and delivered in accordance with the terms hereof and thereof for
the
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consideration expressed herein and therein, will be duly and validly issued and
enforceable as binding agreements of the Company in accordance with their terms,
subject to the laws of bankruptcy and creditors' rights generally. A minimum of
2,000,000 shares of Common Stock have been duly and validly reserved for
issuance and, upon issuance shall be duly and validly issued, fully paid, and
nonassessable (the "Reserved Shares"). The Company agrees that it will comply
with all terms of the Registration Rights Agreement attached hereto as Exhibit
A.
Prior to registration of all the Shares, if at anytime the registration
of all the Shares outstanding results in an insufficient number of Reserved
Shares being available to cover all the Shares sold in this Offering, then in
such event, the Company will move to call and hold a shareholder's meeting
within 45 days of such event for the purpose of authorizing additional Shares to
facilitate the registration. In such an event the Company shall recommend to all
shareholders to vote their shares in favor of increasing the authorized number
of shares of Common Stock. Seller represents and warrants that under no
circumstances will it deny or prevent Purchasers right to sell the Shares as
permitted under the terms of this Subscription Agreement or the Registration
Rights Agreement. Nothing in this Section shall limit the obligations of the
Company to make the payments set forth in paragraph 4(h).
(b) Authority to Enter Agreement. This Agreement has been duly
authorized, validly executed and delivered on behalf of Seller and is a valid
and binding agreement in accordance with its terms, subject to general
principals of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
(c) Non-contravention. The execution and delivery of this Agreement and
the Registration Rights Agreement by the Company, the issuance of the Shares,
and the consummation by the Company of the other transactions contemplated by
this Agreement the Registration Rights Agreement and the Shares do not and will
not conflict with or result in a breach by Seller of any of the terms or
provisions of, or constitute a default under, the articles of incorporation or
by-laws of Seller, or any indenture, mortgage, deed of trust, or other material
agreement or instrument to which Seller is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule, or
regulation of the United States or any State thereof or any applicable decree,
judgment, or order of any Federal or State court, Federal or State regulatory
body, administrative agency or other United States governmental body having
jurisdiction over Seller or any of its properties or assets.
(d) Company Compliance. The Company and its subsidiaries are (i)
validly existing as a corporation in good standing under the laws of the State
of Florida and other jurisdictions of incorporation, and are duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions where the Company owns or leases properties, maintains employees
or conducts
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business, except for jurisdictions in which the failure to so qualify would not
have a material adverse effect on the Company, and have all requisite corporate
power and authority to own its properties and conduct its business; (ii) The
Company and its subsidiaries are not in violation of any term or provision of
its Certificate of Incorporation or by-laws; (iii) not in default in the
performance or observance of any material obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material mortgage, deed of trust, indenture or other instrument or
agreement to which they are a party, either singly or jointly, by which it or
any of their property is bound or subject except as set forth in Exhibit B.
Furthermore, the Company is not aware of any other facts, which it has not
disclosed which could have a material adverse effect on the business, condition,
(financial or otherwise), operations, earnings, performance, properties or
prospects of the Company and its subsidiaries taken as a whole.
(e) Pending Litigation. Except as otherwise disclosed in Exhibit B,
there is (i) no material action, suit or proceeding before or by any court,
arbitrator or governmental body now pending or, to the knowledge of the Company,
threatened or contemplated to which the Company or any of its subsidiaries is or
may be a party or to which the business or property of the Company or any of its
subsidiaries is or may be bound or subject, (ii) no law, statute, rule,
regulation, order or ordinance that has been enacted, adopted or issued by any
Governmental Body or that, to the knowledge of the Company, has been proposed by
any Governmental Body adversely affecting the Company or any of its
subsidiaries, (iii) no injunction, restraining order or order of any nature by a
federal, state or foreign court or Governmental Body of competent jurisdiction
to which the Company or any of its subsidiaries is subject that, in the case of
clauses (i), (ii) and (iii) above, (x) is reasonably likely to, singly or in the
aggregate, result in a material adverse effect on the business, condition,
(financial or otherwise), operations, earnings, performance, properties or
prospects of the Company effect, and its subsidiaries taken as a whole or (y)
would interfere with or materially adversely affect the issuance of the Shares
or would be reasonably likely to render this Subscription Agreement or the
Shares, or any portion thereof, invalid or unenforceable.
(f) Issuance of the Shares. No action has been taken and no law,
statute, rule, regulation, order or ordinance has been enacted, adopted or
issued by any Governmental Body that prevents the issuance of the Shares; no
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction has been issued that prevents the issuance of the
Shares or suspends the sale of the Shares in any jurisdiction; and no action,
suit or proceeding is pending against or, to the best knowledge of the Company,
threatened against or affecting, the Company, any of its subsidiaries or, to the
best knowledge of the Company, before any court or arbitrator or any
Governmental Body that, if adversely determined, would prohibit, interfere with
or adversely affect the issuance or marketability of the Shares or render the
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Subscription Agreement or the Shares, or any portion thereof, invalid or
unenforceable.
(g) The Company shall indemnify and hold harmless the Purchaser and
each stockholder, executive, employee, representative, affiliate, officer,
director or control person of the Purchaser, who is or may be a party or is or
may be threatened to be made a party to any threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of or arising from any actual or alleged
misrepresentation or misstatement of facts or omission to represent or state
facts made or alleged to have been made by the Company to the Purchaser or
omitted or alleged to have been omitted by the Company, concerning the Purchaser
or the Purchaser's subscription for and purchase of the Shares or the
Purchaser's authority to invest or financial position in connection with the
Offering, including, without limitation, any such misrepresentation,
misstatement or omission contained in this Subscription Agreement, the
Questionnaire or any other document submitted by the Company, against losses,
liabilities and expenses for which the Purchaser, or any stockholder, executive,
employee, representative, affiliate, officer, director or control person of the
Purchaser has not otherwise been reimbursed (including reasonable attorneys'
fees and disbursements, judgments, fines and amounts paid in settlement)
actually and reasonably incurred by the Purchaser, or such officer, director
stockholder, executive, employee, representative, affiliate or control person in
connection with such action, suit or proceeding.
(h) No Change. Other than filings required by the Blue Sky or federal
securities law, no consent, approval or authorization of or designation,
declaration or filing with any governmental or other regulatory authority on the
part of the Company is required in connection with the valid execution, delivery
and performance of this Agreement. Any required qualification or notification
under applicable federal securities laws and state Blue Sky laws of the offer,
sale and issuance of the Shares, has been obtained on or before the date hereof
or will have been obtained within the allowable period thereafter and a copy
thereof will be forwarded to Counsel for the Purchaser.
(i) True Statements. Neither this Agreement nor any of the Disclosure
Documents, as defined in Section 2 subsection (k) above, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading in the
light of the circumstances under which such statements are made. There exists no
fact or circumstances which, to the knowledge of the Company, materially and
adversely affects the business, properties or assets, or conditions, financial
or otherwise, of the Company, which has not been set forth in this Agreement or
disclosed in such documents,
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(j) The Purchaser has been advised that the Company has not retained
any independent professionals to review or comment on this Offering or otherwise
protect the interests of the Purchaser. Although the Company has retained its
own counsel, neither such counsel nor any other firm, including Xxxxxx X.
XxXxxxx, Esq., has acted on behalf of the Purchaser, and the Purchaser has not
and will not rely on the Company's legal counsel or Xxxxxx X. XxXxxxx, Esq. with
respect to any matters herein described.
(k) There has never been represented, guaranteed, or warranted to the
undersigned by any broker, the Company, its officers, directors or agents, or
employees or any other person, expressly or by implication (i) the percentage of
profits and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of the Company's operations; and (ii) that the
past performance or experience on the part of the management of the Company, or
of any other person, will in any way result in the overall profitable operations
of the Company.
(l) Prior Shares Issued Under Regulation S or Regulation D. In the past
six months the Company raised $0 in Regulation S offerings for which it issued
no shares of its Common Stock. The Company has raised $1,000,000 in Regulation D
offerings in the past 12 months.
(m) Current Authorized Shares. As of May 3, 1999, there were 50,000,000
authorized shares of Common Stock of which approximately 21,202,383 shares of
Common Stock were deemed issued and outstanding on a fully diluted basis. There
are currently 100,000 shares of convertible preferred stock issued and
outstanding which the Company has the right to redeem at $10.00 per share.
Theses shares are convertible into common stock at a price equal to the average
bid and ask price of the three trading days prior to notice of conversion. Grupo
Internet Latino American currently owns 10,399,278 shares of the Company's
Common Stock.
(n) Disclosure Documents. The Disclosure Documents are all the
documents (other than preliminary materials) that the Company has delivered to
the Purchaser or its advisor. As of their respective dates, none of the
Disclosure Documents 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 Disclosure Documents have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved, except as may be indicated in the notes thereto.
(o) Information Supplied. The information supplied by the Company to
Purchaser in connection with the offering of the Common Stock does not contain
any untrue statement of a material fact or omit to state a material fact
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necessary to make the statements, in the light of the circumstances in which
they were made, not misleading. There exists no fact or circumstances which, to
the knowledge of the Company, materially and adversely affects the business,
properties, assets, or conditions, financial or otherwise, of the Company, which
has not been set forth in this Agreement or disclosed in such documents.
(p) Delivery Instructions. On the Closing Date the Common Stock being
purchased hereunder shall be delivered to Xxxxxx X. XxXxxxx, Esq. as Escrow
Agent, who will simultaneously wire to the Company the funds being held in
escrow, less consulting fees, at which time the Escrow Agent shall then have the
Common Stock delivered to the Purchaser, per the Purchaser's instructions.
Xxxxxx XxXxxxx shall provide the Company with the information needed to complete
a Form 1099 with respect to the Consulting Fees and a receipt that such fees
were paid.
(q) No Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither the execution of, nor the delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement, the
Registration Rights Agreement or the Shares, will conflict with or result in the
breach or violation of any of the terms or provisions of, or constitute a
default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under, (i) any material indenture, mortgage,
deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound, (ii) any
statute applicable to the Company or its property, (iii) the Certificate of
Incorporation or By-Laws of the Company, (iv) any decree, judgment, order, rule
or regulation of any court or governmental agency or body having jurisdiction
over the Company or its properties, or (v) the Company's listing agreement for
its Common Stock, if any.
(r) Use of Proceeds. The Company represents that the proceeds of this
offering will be used during the next twelve months as follows:
Implementation of South Florida Wireless Communication $1,200,000
Acquisition $1,000,000
Consulting and other fees $ 350,000
Internet Exchange Points $1,000,000
Repayment of Debt $ 200,000
Marketing, Promotion, Sales Operational
Expenses and Working Capital $1,230,000
(s) Board Resolution/Opinion Letter. A copy of the Company's Minutes
authorizing this offering shall be attached hereto as Exhibit C and counsel for
the Company shall prepare a pre-closing opinion letter which shall be attached
hereto as Exhibit D.
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(t) The Company will concurrently with the effectiveness of the
Registration Statement file for registration under the Securities and Exchange
Act of 1934 a Form B-A to become a "reporting issuer".
(u) Xxxxxx Xxxxxxx represents that he currently has proxies for at
least 65% of the shares of the outstanding Common Stock of the Company. In the
event the Company is listed on The Nasdaq SmallCap Market and the total number
of Shares plus the Additional Shares (as hereinafter defined) are 20% or greater
than the current number of Shares issued and outstanding, then in such event,
Xxxxxx Xxxxxxx agrees that he shall vote the shares he owns and for which he has
proxies, in favor of issuing such Additional Shares that would be equal to or
greater than said 20%.
4. ISSUANCE OF SHARES AND REGISTRATION.
(a) Legend. Upon registration of the Shares, the Company shall deliver
to the Purchaser, or per the Purchaser's instructions, the shares of Common
Stock, subject to the following restrictive legend:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN INCLUDED IN THE COMPANY'S
REGISTRATION STATEMENT INITIALLY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON __________ 199_, AND MAY BE SOLD IN ACCORDANCE WITH THE
COMPANY'S PROSPECTUS DATED __________ 199_, WHICH FORMS A PART OF SUCH
REGISTRATION STATEMENT, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
(b) Interest. Nothing contained in this Subscription Agreement shall be
deemed to establish or require the payment of interest to the Purchaser at a
rate in excess of the maximum rate permitted by governing law. In the event that
the rate of interest required to be paid exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law and
such excess shall be returned with reasonable promptness by the Purchaser to the
Company.
(c) Opinion Letter. It shall be the Company's responsibility to take
all necessary actions and to bear all such costs to issue the Certificate of
Common Stock as provided herein, including the responsibility and cost for
delivery of an opinion letter to the transfer agent, if so required. The person
in whose name the certificate of Common Stock is to be registered shall be
treated as a shareholder of record on and after the date of issuance. Upon
surrender of
14
any Share certificates that are to be sold in part, the Company shall issue to
the Purchaser new Share Certificates equal to the unsold amount, in
denominations of not less than 50,000 Shares per certificate.
(d) Once the Common Stock has been registered, if the Common Stock,
with the legend appearing in Section 4(a), is not delivered per the written
instructions of the Purchaser, within 5 (five) business days after the Company
receives the Share certificates from the Purchaser, then in such event the
Company shall pay to Purchaser one-half of one percent (.50%) in cash, of the
dollar value of the Shares delivered to the Company per each day after the fifth
business day following said receipt by the Company, that the Common Stock is not
delivered.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4 is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 4(d) shall not
apply but instead the provisions of Section 4(e) shall apply.
The Company shall make any payments incurred under this Section 4(d) in
immediately available funds within three (3) business days from the date of
issuance of the applicable Common Stock. Nothing herein shall limit a
Purchaser's right to pursue actual damages for the Company's failure to issue
and deliver Common Stock to the Purchaser within five (5) business days after
registration and after the Company receives the Share certificates from the
Purchaser.
(e) The Company shall at all times reserve and have available all
Common Stock necessary for registration of all the Shares purchased by all
Purchasers of the Shares. If, at any time the Company does not have sufficient
authorized but unissued shares of Common Stock available for registration
("Default", the date of such default being referred to herein as the "Default
Date"), the Company shall issue to the Purchaser all of the shares of Common
Stock which are available. The Company shall provide notice of such Default
("Notice of Default") to all Purchasers, within one (1) business day of such
default (with the original delivered by overnight or two-day courier).
The Company agrees to pay to all Purchasers of outstanding Shares
payments for a Default ("Default Payments") in the amount of (N/365) x (.24) x
the initial issuance price of the outstanding Shares held by each Purchaser
where N = the number of days from the Default Date to the date (the
"Authorization Date") that the Company authorizes a sufficient number of shares
of Common Stock to effect of all remaining Shares. The Company shall send notice
("Authorization Notice") to each Purchaser of outstanding Shares that additional
shares of Common Stock have been authorized, the Authorization Date and the
amount of Purchaser's accrued Default Payments. The accrued Default shall be
paid in cash which payments shall be made to such Purchaser of
15
outstanding Shares by the fifth day of the following calendar month following
registration of all the Shares. Nothing herein shall limit the Purchaser's right
to pursue actual damages for the Company's failure to maintain a sufficient
number of authorized shares of Common Stock.
(f) Issuance Of Additional Shares Based Upon Price Reset:
If the Current Market Price (as defined below) for the sixty (60)
trading day period after the date of effectiveness of a Registration Statement
filed pursuant to the Registration Rights Agreement is less than 125% of the
Purchase Price, then the Company shall issue to the Purchaser, at no cost to the
Purchaser, within 5 business days of receipt of written notice from the
Purchaser, additional shares of Common Stock (the "Additional Shares") equal
to the difference between (i) the Aggregate Purchase Price divided by 80% of the
Current Market Price and (ii) the Total Number of Shares.
The "Current Market Price" per share of Common Stock is the average of
the closing bid prices of the Common Stock as reported by Bloomberg, LP for the
sixty (60) consecutive trading days following but not including the date the
Registration Statement is deemed effective.
Example: Aggregate Purchase Price = $5,000,000
Purchase Price (80% of $7.00) = $5.60
125% of Purchase Price = $7.00
Current Market Price = $6.00
80% of Current Market Price = $4.80
Total Number of Shares = $892,857 (5,000,000 / $5.60)
Additional Shares = ($5,000,000 / $4.80) - 892,857
148,810 = 1,041,667 - 892,857
The Company shall not issue any fractional shares of Common Stock as a
result of this Section 4. In the event Additional Shares are required to issued
hereunder, and the number of shares to be issued is not a whole number, then the
number of shares to be issued will be rounded to the nearest whole number.
The Company shall pay any documentary, stamps, or similar issue or
transfer tax due on the issue of Additional Shares. However, the Purchaser shall
pay any such taxes, which are due because such shares are issued in name other
than its name.
The Company shall reserve out of its authorized but unissued Common
Stock a minimum of 2,000,000 shares of Common Stock to permit the issuance of
all of the Additional Shares required to be issued hereunder, and shall reserve
such Additional Shares as may be needed. All Additional Shares shall be, when
issued in accordance herewith, duly authorized, validly issued, fully paid and
nonassessable.
16
In the event that the re-pricing would make Purchaser a 5% or more
holder of the Company's common stock if all the Additional Shares were issued at
one time, the Company shall only issue 4.9% to the Purchaser at a time and
whenever Purchaser's holdings fall to 4.0% or less, the Company shall issue an
additional 0.9% of Shares. Purchaser hereby agrees that it will vote all shares
of its common stock to retain Xxxxxx Xxxxxxx as Chief Executive Officer and a
Director of the Company and to maintain the Board of Directors serving at the
time that the Purchaser would otherwise become a 5% or more holder, subject only
to termination for cause.
(g) Redemption Terms. The Company reserves the right, at its sole
option, to repurchase any of the Shares not previously sold by Purchaser at any
time up to one (1) year following the Closing Date. If the Company exercises
such right to repurchase on or before the one (1) year anniversary following the
Closing Date, it shall pay the Purchaser, in U.S. currency One Hundred
Twenty Five Percent (125%) of the amount paid for such repurchased Shares by the
Purchaser pursuant to the terms of this Agreement. The Company may exercise its
repurchase rights hereunder by notifying the Purchaser by facsimile at the
number listed in this Agreement or in accordance with Section 9 of this
Agreement. The Company shall state in such notice the number of Shares it
intends to repurchase, the amount that it will pay to effect such repurchase and
the date by which the Purchaser must deliver the Shares to Xxxxxx X. XxXxxxx,
Escrow Agent (including the Escrow Agent's address) unless the Company is
already in receipt of those Shares to be repurchased. The Purchaser shall be
prohibited from selling or trading the Shares subject to the repurchase notice
after the notice has been received. The Company shall give the Purchaser at
least three (3) business day's notice of the above information and shall only be
permitted to give such notice after Xxxxxxx Del Medico, Esq., or other mutually
acceptable attorney, is in receipt of that amount of funds necessary to effect
the redemption. On or before the date by which the Purchaser is to deliver the
original Shares to the Escrow Agent, the Company shall wire to the Escrow Agent
that amount necessary to pay the Purchaser to effect the repurchase. After the
Escrow Agent is in receipt of the original Shares and those funds necessary to
effectuate the repurchase, the Escrow Agent shall wire those funds to the
Purchaser and deliver to the Company the original Shares via overnight courier.
The Company shall make any payments required under the terms of this
subparagraph 4(g) to the Escrow Agent within five (5) business days following
the date the Company sends the Purchaser a notice to repurchase.
(h) The Company shall furnish to Purchaser such number of prospectuses
and other documents incidental to the registration of the Shares, including any
amendment of or supplements thereto.
17
5. LIMITS ON AMOUNT OF OWNERSHIP.
Notwithstanding the provisions hereof, in no event except if there is
(i) a public announcement that 50% or more of the Company is being acquired,
(ii) a public announcement that the Company is being merged, or (iii) a public
announcement that there is a change in control, shall the Purchaser be entitled
to own more than 4.99% of the outstanding shares of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such proviso.
6. MERGERS AND ADJUSTMENTS
Until such time as the additional shares, if any, are issued:
(a) If the Company merges or consolidates with another corporation
or sells or transfers all or substantially all of its assets to another person
and the Purchaser is entitled to receive stock, securities or property in
respect of or in exchange for Common Stock, then as a condition of such merger,
consolidation, sale or transfer, the Company and any such successor, purchaser
or transferee shall agree that such Additional Shares shall be issued to
Purchaser on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer that the Purchaser would have received
immediately before such merger, consolidation, sale or transfer, subject to
adjustments which shall be as nearly equivalent as may be practicable to
adjustments provided herein.
(b) The Company shall not consolidate or merge into, or transfer
all or substantially all of its assets to, any person, unless such person assume
in writing the obligations of the Company under this Agreement and immediately
after such transaction no defaults exist. Any reference herein to the Company
shall refer to such surviving or transferee corporation and the obligations of
the Company shall terminate upon such written assumption.
(c) Adjustments. The number of Additional Shares issuable pursuant
to the terms of this Agreement shall be subject to adjustments as follows:
(i) In case the Company shall (A) pay a dividend on Common
Stock in Common Stock or securities convertible into, exchangeable for or
otherwise entitling a holder thereof to receive Common Stock, (B) declare a
dividend payable in cash on its Common Stock and at substantially the same time
offer its shareholders a right to purchase new Common Stock (or securities
convertible into, exchangeable for or otherwise entitling a holder thereof to
receive Common Stock) from the proceeds of such dividend (all Common Stock so
issued shall be deemed to have been issued as a stock dividend), (C) subdivide
its outstanding shares of Common Stock into a greater number of shares of Common
Stock, (D) combine its outstanding shares of Common Stock
18
into a smaller number of shares of Common Stock, or (E) issue by
reclassification, reorganization or recapitalization of its Common Stock any
shares of Common Stock or other securities of the Company, the number of
Additional Shares that would have been issuable immediately prior thereto shall
be adjusted so that the Purchaser shall be entitled to receive after the
happening of any of the events described above that number and kind of shares as
the Purchaser would have received prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subdivision shall become effective immediately after the close of business on
the record date in the case of a stock dividend and shall become effective
immediately after the close of business on the effective date in the case of a
stock split, subdivision, combination or reclassification.
(ii) In case the Company shall distribute, without receiving
consideration therefor, to all holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends other than as described in
Section 6(c)(i)), or rights, options or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, then in such case, the number of Additional Shares that would thereafter
have been issuable shall be determined by multiplying the number of Additional
Shares theretofore issuable, by a fraction, of which the numerator shall be the
closing bid price per share of Common Stock on the record date for such
distribution, and of which the denominator shall be the closing bid price of the
Common Stock less the then fair value (as determined by the Board of Directors
of the Company, whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness so distributed or of such subscription
rights, options or warrants, or of such convertible or exchangeable securities
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution.
(iii) Any adjustment in the number of shares of Common Stock
issuable hereunder otherwise required to be made by this Section 6 will not have
to be adjusted if such adjustment would not require an increase or decrease in
one percent (1%) or more in the number of Additional Shares issuable pursuant to
the terms of this Agreement. No adjustment in the number of Additional Shares
issuable pursuant to the terms of this Agreement will be made for the issuance
of shares of capital stock to directors, employees or independent contractors
pursuant to the Company's or any of its subsidiaries' stock option, for the
purpose of the Company's Common Stock warrants issued, issuable or to be issued
for services rendered by others to the Company, stock ownership or other benefit
plans or arrangements or trusts related thereto or for issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under such plan.
19
7. DELIVERY INSTRUCTIONS.
Prior to the Closing Date, the Company shall deliver to the Escrow
Agent a signed Registration Rights Agreement in the form attached hereto as
Exhibit A. The Shares being purchased hereunder shall be delivered to Xxxxxx X.
XxXxxxx, Esq. as Escrow Agent, who will hold them in escrow until funds have
been wired to the Company at which time the Escrow Agent shall then have the
Shares delivered to the Purchaser, per the Purchaser's instructions.
B. UNDERSTANDINGS.
The undersigned understands, acknowledges and agrees with the Company
as follows:
FOR ALL SUBSCRIBERS:
(a) This Subscription may be rejected, in whole or in part, by the
Company in its sole and absolute discretion at any time before the date set for
closing unless the Company has given notice of acceptance of the undersigned's
subscription by signing this Subscription Agreement.
(b) No U.S. federal or state agency or any agency of any other
jurisdiction has made any finding or determination as to the fairness of the
terms of the Offering for investment nor any recommendation or endorsement of
the Shares.
(c) The representations, warranties and agreements of the undersigned
and the Company contained herein and in any other writing delivered in
connection with the transactions contemplated hereby shall be true and correct
in all material 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.
(d) 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 OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
MEMORANDUM OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(e) The Regulation D Offering is intended to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act
20
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 Questionnaire.
(f) it is understood that in order not to jeopardize the Offering's
exempt status under Section 4(2) of the Securities Act and Regulation D, any
transferee may, at a minimum, be required to fulfill the investor suitability
requirements thereunder.
(g) THE SHARES MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE DISPOSED OF
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE
AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
(h) NASAA UNIFORM LEGEND
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THESE 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 AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
(i) The undersigned acknowledges and is aware that except for the three
day rescission rights provided under Florida law, the undersigned is entitled to
cancel, terminate or revoke this subscription, and any agreements made in
connection herewith shall survive my death or disability.
(j) The undersigned has had the opportunity to ask questions of, and
receive answers from management of the Company regarding the terms and
conditions of this Subscription Agreement, and the transactions contemplated
thereby, as well as the affairs of the Company and related matters.
21
(k) The undersigned understands that he may have access to whatever
additional information concerning the Company, its financial condition, its
business, its prospects, its management, its capitalization, and other similar
matters that he may desire, provided that the Company can acquire such
information without unreasonable effort or expense. In addition, as required by
ss.517.061(11)(a)(3), Florida Statutes, and Rule 3E-500.05(a) thereunder, the
undersigned understands that he may have, at the offices of the Company, at any
reasonable hour, after reasonable prior notice, access to the materials set
forth in the Rule which the Company can obtain without unreasonable effort or
expense.
(l) The undersigned has had the opportunity to obtain additional
information.
9. LITIGATION.
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or
actions of the Company or Purchaser shall be brought and maintained exclusively
in the Federal courts of the state of New York. The Company hereby expressly and
irrevocably submits to the jurisdiction of the federal courts of the State of
New York for the purpose of any such litigation as set forth above and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Company further irrevocably consents to the
service of process by registered mail, postage prepaid, or by personal service
within or without the State of New York. The Company hereby expressly and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to itself
or its property. The Company hereby irrevocably waives such immunity in respect
of its obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Purchaser and the Company hereby
knowingly, voluntarily and intentionally waive any rights they may have to a
trial by jury in respect of any litigation based hereon, or arising out of,
under, or in connection with, this agreement, or any course of conduct, course
of dealing, statements (whether oral or written) or actions of the Purchaser or
the Company. The Company acknowledges and agrees that it has received full and
sufficient consideration for this provision and that this provision is a
material inducement for the Purchaser entering into this agreement.
22
(c) Submission To Jurisdiction. Any legal action or proceeding in
connection with this Agreement or the performance hereof may be brought
exclusively in the federal courts located in New York, and the parties hereby
irrevocably submit to the non-exclusive jurisdiction of such courts for the
purpose of any such action or proceeding.
10. NOTICE.
All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given, delivered and received (a) when
delivered, if delivered personally, (b) four days after mailing. when sent by
registered or certified mail, return receipt requested and postage prepaid, (c)
the next business day after delivery to a private courier service, and (d) on
the date of delivery by telecopy, receipt confirmed, provided that a
confirmation copy is sent on the next business day by registered or certified
mail, return receipt requested and postage prepaid, in each case addressed as
follows:
If to Company, to:
QUEST NET CORP.
0000 XX 000xx Xxxxxx, Xxxxx XX0
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Phone: 000-000-0000
Fax:
If to Investor, to:
_____________________________
_____________________________
_____________________________
Phone: ______________________
Fax: ________________________
or to such other address as the recipient party may indicate by a notice
delivered to the sending party (such change of address notice to be deemed
given, delivered and received only upon actual receipt thereof by the recipient
of such notice).
11. MISCELLANEOUS.
(a) All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, impersonal, singular, or plural, as the
identity of the person or persons may require.
23
(b) Neither this Subscription Agreement nor any provision hereof shall
be waived, modified, changed, discharged, terminated, revoked or canceled,
except by an instrument in writing signed by the party effecting the same
against whom any change, discharge or termination is sought.
(c) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed: (i) if to the
Company, QUEST NET CORP., 0000 XX 000xx Xxxxxx, Xxxxx XX0, Xxxxx, XX 00000 or
(ii) if to the undersigned, at the address for correspondence set forth in the
Questionnaire, or at such other address as may have been specified by written
notice given in accordance with this paragraph 11(c).
(d) This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of Florida,
as such laws are applied by Florida courts to agreements entered into, and to be
performed in, Florida by and between residents of Florida, 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, its
successors and assigns. If any provision of this Subscription Agreement is
invalid or unenforceable under any applicable statue or rule of law, then such
provisions shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed 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.
(e) This Subscription Agreement, together with Exhibits A, B, C and D
attached hereto and made a part hereof, constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties hereto. This Subscription Agreement
may be executed in counterparts. A facsimile transmission of an executed
counterpart of this Subscription Agreement shall be effective as an original.
[THE BALANCE OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
24
QUEST NET CORP.
CORPORATION QUESTIONNAIRE
Investor Name: XXXXX LLC
The information contained in this Questionnaire is being furnished in
order to determine whether the undersigned CORPORATION'S Subscription to
purchase the Common Stock described in the Subscription Agreement may be
accepted.
ALL INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED
CONFIDENTIALLY. The undersigned CORPORATION understands, however, that the
Company may present this Questionnaire to such parties as it deems appropriate
if called upon to establish that the proposed offer and sale of the Common Stock
is exempt from registration under the Securities Act of 1933, as amended.
Further, the undersigned CORPORATION understands that the offering is required
to be reported to the Securities and Exchange Commission and to various state
securities and "blue sky" regulators.
IN ADDITION TO SIGNING THE SIGNATURE PAGE, THE UNDERSIGNED CORPORATION
MUST COMPLETE FORM W-9 ATTACHED HERETO.
I. PLEASE CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES TO THE
CORPORATION.
| | 1. The undersigned CORPORATION: (a) has total assets in excess of
$5,000,000; (b) was not formed for the specific purpose of acquiring
the Common Stock and (c) has its principal place of business in ______.
| | 2. Each of the shareholders of the undersigned CORPORATION is able to
certify that such shareholder meets at least one of the following three
conditions:
(a) the shareholder is a natural person whose individual net worth*
or joint net worth with his or her spouse exceeds $1,000,000; or
(b) the shareholder is a natural person who had an individual
income* in excess of $200,000 in each of 1997 and 1998 and who
reasonably expects an individual income in excess of $200,000 in
1999; or
25
(c) Each of the shareholders of the undersigned CORPORATION is able
to certify that such shareholder is a natural person who, together
with his or her spouse, has had a joint income in excess of
$300,000 in each of 1997 and 1998 and who reasonably expects a
joint income in excess of $300,000 during 1999; and the undersigned
CORPORATION has its principal place of business in _______________.
For purposes of this Questionnaire, the term "net worth" means the
excess of total assets over total liabilities. In determining income, an
investor should add to his or her adjusted gross income any amounts attributable
to tax-exempt income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion, contributions to XXX or
Xxxxx retirement plan, alimony payments and any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income.
| | 3. The undersigned CORPORATION is:
(a) a bank as defined in Section 3(a)(2) of the Securities Act; or
(b) a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; or
(c) a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; or
(d) an insurance company as defined in Section 2(13) of the
Securities Act; or
(e) an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940.
|X| 4. The undersigned is an entity in which all of the equity owners are
accredited investors,
26
II. OTHER CERTIFICATIONS.
By signing the Signature Page, the undersigned certifies the following:
(a) That the CORPORATION'S purchase of the Common Stock will be solely
for the CORPORATION'S own account and not for the account of any other
person or entity, and
(b) that the CORPORATION'S name, address of principal place of
business, place of incorporation and taxpayer identification number as
set forth in this Questionnaire are true, correct and complete.
Ill. GENERAL INFORMATION
(a) PROSPECTIVE PURCHASER (THE CORPORATION)
Name: XXXXX LLC
Principal Place of Business: x/x Xxxxx Xxxxxxxx (Xxxxxx), Ltd.
---------------------------------
Corporate Centre, West Bay Road, P.O. Box 31106 SMB, Grand Cayman,
--------------------------------------------------------------------------------
Cayman Islands, BWI
--------------------------------------------------------------------------------
Address for Correspondence (if different): As above
------------------
(Number and Street)
--------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: 345 949-3977
-----------------------------------------
(Area Code) (Number)
Jurisdiction of Incorporation: Cayman Islands
-----------------
Date of Formation:
-------------------------------------------------------------
Taxpayer Identification Number:
------------------------------------------------
Number of Shareholders:
--------------------------------------------------------
(b) INDIVIDUAL WHO IS EXECUTING THIS QUESTIONNAIRE ON BEHALF OF THE
CORPORATION.
Name: CTC Corporation LTD
--------------------------------------------------------------------------
Position or Title: Sole Director
--------------------------------------------------------------
27
QUEST NET CORP.
CORPORATION SIGNATURE PAGE
--------------------------
Your signature on this Corporation Signature Page evidences the
agreement by the Purchaser to be bound by the Questionnaire and the Subscription
Agreement.
1. The undersigned hereby represents that (a) the information contained
in the Questionnaire is complete and accurate and (b) the Purchaser will notify
QUEST NET CORP. immediately if any material change in any of the information
occurs prior to the acceptance of the undersigned Purchaser's subscription and
will promptly send QUEST NET CORP. written confirmation of such change.
2. The undersigned officer of the Purchaser hereby certifies that he
has read and understands this Subscription Agreement.
3. The undersigned officer of the Purchaser hereby represents and
warrants that he has been duly authorized by all requisite action on the part of
the Corporation to acquire the Common Stock and sign this Subscription Agreement
on behalf of Quest Net Corp. and further, that XXXXX LLC has all requisite
authority to purchase the Common Stock and enter into this Subscription
Agreement.
910,747 27 May 1999
------------- -----------------------
Amount of Common Stock subscribed for Date
XXXXX LLC
------------------------
(Purchaser)
By: /s/ (illegible)
------------------------
(Signature)
Name:
----------------------
(Please Type or Print)
CTC Corporation Ltd.
Title: Director For: XXXXX LLC
----------------------
(Please Type or Print)
THE COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.
28
COMPANY ACCEPTANCE PAGE
This Subscription Agreement accepted
and agreed to this _________ day of ___________, 1999
QUEST NET CORP.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxx its President and CEO duly
authorized
33
