EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT ("Subscription Agreement") made as of this __ day of
____________, 2007, by and between Profile Technologies, Inc., a Delaware
corporation (the "Company") and the undersigned (the "Subscriber").
WHEREAS, the Company intends to issue, in a private placement transaction
(the "Offering") pursuant to Regulation D promulgated under the Securities Act
of 1933, as amended (the "Act"), Units consisting of one (1) share of the
Company's common stock, par value $0.001 per share (the "Common Stock") on the
terms and conditions hereinafter set forth, and the Subscriber desires to
acquire that number of Units set forth on the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. Subscription Procedure
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units as is set forth upon the signature page hereof at a price of
$[______] per share (the "Purchase Price"). The Company agrees to sell such
Units to the Subscriber for the Purchase Price.
1.2 The subscription period will begin as of [_________] and will terminate
at 5:00 PM Eastern Standard Time on [____________], unless extended by the
Company for a reasonable time period thereafter (the "Termination Date"). The
Units will be offered and sold as more particularly set forth in the
Confidential Offering Memorandum dated [___________] and any supplements thereto
(the "Offering Memorandum"). The minimum dollar amount of Units that may be
purchased by the Subscriber is $50,000 unless the Company waives the minimum
purchase requirement.
1.3 The certificates for the Common Stock bearing the name of the
Subscriber will be delivered by the Company to the Subscriber no later than
fifteen (15) days following the acceptance by the Company of this Subscription
Agreement. The Subscriber hereby authorizes and directs the Company to deliver
the securities to be issued to such Subscriber pursuant to this Subscription
Agreement to the address furnished by the Subscriber at the end of the
Subscription Agreement.
1.4 The Purchase Price for the Units purchased hereunder shall be paid by
certified check or money order payable to the Company.
1.5 The Company may, in its sole discretion, reject any subscription, in
whole or in part, or terminate or withdraw the Offering in its entirety at any
time prior to a closing thereof. The Company shall not be required to allocate
the Units among investors on a pro rata, or any other, basis in the event of
over-subscription therefore.
2. Representations and Covenants of Subscriber
2.1 The Subscriber recognizes that the purchase of Units involves a high
degree of risk in that (i) the Company will need additional capital but has no
assurance of obtaining such additional necessary capital; (ii) an investment in
the Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the Units;
(iii) an investor may not be able to liquidate his investment; (iv)
transferability of the Units and the Common Stock is extremely limited; and (v)
an investor could sustain the loss of his entire investment, as well as other
risk factors, as more fully set forth herein and in the Offering Memorandum.
2.2 The Subscriber represents that he is an "accredited investor" as such
term is defined in Rule 501 of Regulation D promulgated under the Act, as
indicated by his responses to the Investor Questionnaire, and that he or it is
able to bear the economic risk of an investment in the Units. The Subscriber
must complete the Investor Questionnaire to enable the Company to access the
Subscriber's eligibility for the Offering.
2.3 The Subscriber acknowledges that he has prior investment experience,
including investment in non-listed and non-registered securities, or he has
employed the services of an investment advisor, attorney or accountant to read
all of the documents furnished or made available by the Company both to him and
to all other prospective investors in the Units and to evaluate the merits and
risks of such an investment on his behalf, and that he recognizes the highly
speculative nature of this investment.
2.4 The Subscriber acknowledges receipt and careful review of the Offering
Memorandum, this Subscription Agreement, and the attachments hereto and thereto
(collectively, the "Offering Documents") and hereby represents that he has been
furnished or given access by the Company during the course of this Offering with
or to all information regarding the Company and its financial condition and
results of operations which he had requested or desired to know; that all
documents which could be reasonably provided have been made available for his
inspection and review; that he has been afforded the opportunity to ask
questions of and receive answers from duly authorized representatives of the
Company concerning the terms and conditions of the Offering, and any additional
information which he had requested.
2.5 The Subscriber acknowledges that this Offering of Units may involve tax
consequences, and that the contents of the Offering Documents do not contain tax
advice or information. The Subscriber acknowledges that he must retain his own
professional advisors to evaluate the tax and other consequences of an
investment in the Units.
2.6 The Subscriber acknowledges that this Offering of Units has not been
reviewed or approved by the United States Securities and Exchange Commission
("SEC") because the Offering is intended to be a nonpublic offering pursuant to
Regulation D as promulgated under Section 4(2) of the Act. The Subscriber
represents that the Units are being purchased for his own account, for
investment and not for distribution or resale to others. The Subscriber agrees
that he will not sell or otherwise transfer the Units or the Common Stock unless
registered under the Act or unless an exemption from such registration is
available and, upon the Company's request, the Company receives an opinion of
counsel reasonably satisfactory to the Company confirming that an exemption from
such registration is available for such sale or transfer.
2.7 The Subscriber understands that the Common Stock have not been
registered under the Act by reason of a claimed exemption under the provisions
of the Act which depends, in part, upon his investment intention. The Subscriber
realizes that, in the view of the SEC, a purchase now with an intent to
distribute would represent a purchase with an intent inconsistent with his
representation to the Company, and the SEC might regard such a distribution as a
deferred sale to which such exemption is not available.
2.8 The Subscriber understands that Rule 144 ("Rule 144") promulgated under
the Act requires, among other conditions, a one year holding period prior to the
resale (in limited amounts) of securities acquired in a non-public offering,
such as the Offering, without having to satisfy the registration requirements
under the Act. The Subscriber understands that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or its dissemination to the public of any current
financial or other information concerning the Company, as is required by Rule
144 as one of the conditions of its availability. The Subscriber consents that
the Company may, if it desires, permit the transfer of the Common Stock out of
his name only when his request for transfer is accompanied by an opinion of
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counsel reasonably satisfactory to the Company that neither the sale nor the
proposed transfer results in a violation of the Act or any applicable state
"blue sky" laws (collectively, "Securities Laws"). The Subscriber agrees to hold
the Company, and its directors, officers and controlling persons and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of any misrepresentation made by him contained herein or in the Investor
Questionnaire or any sale or distribution by the undersigned Subscriber in
violation of any Securities Laws.
2.9 The Subscriber consents to the placement of one or more legends on any
certificate or other document evidencing his Common Stock and the warrants
stating that it has not been registered under the Act and setting forth or
referring to the restrictions on transferability and sale thereof.
2.10 The Subscriber understands that the Company will review this
Subscription Agreement and the Investor Questionnaire and are hereby given
authority by the undersigned to call his bank or place of employment or
otherwise review the financial standing of the Subscriber; and it is further
agreed that the Company reserves the unrestricted right to reject or limit any
subscription and to close the offer at any time.
2.11 The Subscriber hereby represents that the address of Subscriber
furnished by him at the end of this Subscription Agreement and in the Investor
Questionnaire is the undersigned's principal residence if he is an individual or
its principal business address if it is a corporation or other entity.
2.12 The Subscriber acknowledges that if the Subscriber is a Registered
Representative of a National Association of Securities Dealers, Inc. ("NASD")
member firm, he must give such firm the notice required by the NASD Conduct
Rules, or any applicable successor rules of the NASD, receipt of which must be
acknowledged by such firm on the signature page hereof. The Subscriber shall
also notify the Company if the Subscriber or any affiliate of Subscriber is a
registered broker-dealer with the SEC, in which case the Subscriber represents
that the Subscriber is purchasing the Units in the ordinary course of business
and, at the time of purchase of the Units, has no agreements or understandings,
directly or indirectly, with any person to distribute the Units or any portion
thereof.
2.13 The Subscriber hereby represents that, except as set forth in the
Offering Documents, no representations or warranties have been made to the
Subscriber by the Company or its agents, employees or affiliates and in entering
into this transaction, the Subscriber is not relying on any information, other
than that contained in the Offering Documents and the results of independent
investigation by the Subscriber.
2.14 The Subscriber agrees that he will purchase securities in the Offering
only if his intent at such time is to make such purchase for investment purposes
and not with a view toward resale.
2.15 If the undersigned Subscriber is a partnership, corporation, trust or
other entity, such partnership, corporation, trust or other entity further
represents and warrants that: (i) it was not formed for the purpose of investing
in the Company; (ii) it is authorized and otherwise duly qualified to purchase
and hold the Units; and (iii) that this Subscription Agreement has been duly and
validly authorized, executed and delivered and constitutes the legal, binding
and enforceable obligation of the undersigned.
2.16 If the Subscriber is not a United States person, such Subscriber
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Units or any use of this Subscription Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Units, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Units. Such Subscriber's
subscription and payment for, and his or her continued beneficial ownership of
the Units will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
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2.17 The Subscriber agrees to indemnify and hold harmless the Company and
its officers, directors, employees, subsidiaries and affiliates and each other
person, if any, who controls any of the foregoing, against any loss, liability,
claim, damage and expense whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any false representation or warranty by the Subscriber, or
the Subscriber's breach of, or failure to comply with, any covenant or agreement
made by the Subscriber herein or in any other document furnished by the
Subscriber to the Company or its officers, directors, employees or affiliates or
each other person, if any, who controls any of the foregoing in connection with
this transaction.
2.18 The Subscriber understands and acknowledges that (i) the Units are
being offered and sold to Subscriber without registration under the Act in a
private placement that is exempt from the registration provisions of the Act
under Section 4(2) of the Act and (ii) the availability of such exemption
depends in part on, and that the Company will rely upon the accuracy and
truthfulness of, the foregoing representations, and such Subscriber hereby
consents to such reliance.
3. Representations by the Company
Except as set forth in the reports filed by the Company pursuant to the
Exchange Act (the "SEC Reports"), the Company warrants to the Subscriber that:
3.1 Organization and Authority. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted, and (iii) has all requisite corporate power and
authority to execute, deliver and perform their obligations under this
Subscription Agreement and the Offering Documents being executed and delivered
by it in connection herewith, and to consummate the transactions contemplated
hereby and thereby.
3.2 Qualifications. The Company is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions where such
qualification is necessary and where failure so to qualify could have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company.
3.3 Capitalization of the Company. The capitalization of the Company as of
[_____________], is as described in the Company's Form 10-QSB for the period
ended March 31, 2007. The Company has not issued any capital stock since such
date other than pursuant to the conversion or exercise of outstanding common
stock equivalents or pursuant to consultant and loan agreements. No person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Offering
Documents. Except as a result of the purchase and sale of the Units or as
disclosed in the SEC Reports, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire
from the Company, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issuance and sale
of the Units will not obligate the Company to issue shares of Common Stock or
other securities to any person (other than the Subscribers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. The outstanding
shares of capital stock of the Company have been duly authorized and validly
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issued and are fully paid and nonassessable. None of the outstanding shares of
Common Stock or options, warrants, or rights or other securities entitling the
holders to acquire Common Stock has been issued in violation of the preemptive
rights of any security holder of the Company. The Common Stock to be issued to
the Subscriber has been duly authorized, and when issued and paid for in
accordance with this Subscription Agreement will be duly and validly issued,
fully paid and non-assessable. The Common Stock is eligible for quotation on the
OTC Bulletin Board, the Company and the Common Stock meet the criteria for
continued quotation and trading on the OTC Bulletin Board, and no suspension of
trading in the Common Stock is in effect.
3.4 Corporate Authorization. The Offering Documents have been duly and
validly authorized by the Company. This Subscription Agreement, assuming due
execution and delivery by the Subscriber, when executed and delivered by the
Company, will be, valid and binding obligations of the Company enforceable in
accordance with their respective terms, except as the enforceability hereof and
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law.
3.5 Non-Contravention. The execution and delivery of the Offering Documents
by the Company, the issuance of the Common Stock as contemplated by the Offering
Documents and the completion by the Company of the other transactions
contemplated by the Offering Documents do not and will not, with or without the
giving of notice or the lapse of time, or both, (i) result in any violation of
any provision of the articles of incorporation or by-laws or similar instruments
of the Company, (ii) conflict with or result in a breach by the Company or their
respective subsidiaries of any of the terms or provisions of, or constitute a
default under, or result in the modification of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company pursuant to, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company is a party or by
which the Company or any of its properties or assets are bound or affected, in
any such case which would have a material adverse effect on the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company, or the validity or enforceability of, or the ability
of the Company to perform its obligations under, the Offering Documents, (iii)
violate or contravene any applicable law, rule or regulation or any applicable
decree, judgment or order of any court, United States federal or state
regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets which would
have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company, or the validity or enforceability of, or the ability of the Company to
perform its obligations under, the Offering Documents, or (iv) have any material
adverse effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company to own or lease and operate any
of its properties and to conduct any of its business or the ability of the
Company to make use thereof.
3.6 Information Provided. The Company hereby represents and warrants to the
Subscriber that the Offering Memorandum, the SEC Reports and any other
information provided by or on behalf of the Company to the Subscriber in
connection with the transactions contemplated by this Subscription Agreement,
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading, it being understood
that for purposes of this Section 3.6, any statement contained in such
information shall be deemed to be modified or superseded for purposes of this
Section 3.6 to the extent that a statement in any document included in such
information which was prepared and furnished to the Subscriber on a later date
or filed with the SEC on a later date modifies or replaces such statement,
whether or not such later prepared and furnished or filed statement so states.
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3.7 Absence of Certain Proceedings. Except as disclosed in the SEC Reports,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body, or governmental agency pending or, to the knowledge
of the Company, threatened against or affecting the Company, in any such case
wherein an unfavorable decision, ruling or finding would have a material adverse
effect on the business, properties, operations, condition (financial or other),
results of operations or prospects of the Company, or the transactions
contemplated by the Offering Documents or which could adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, the Offering Documents; and to the best of the
Company's knowledge there is not pending or contemplated any, and there has been
no, investigation by the SEC involving the Company or any of their current or
former directors or officers.
3.8 Compliance with Law. The Company is not in violation of nor has any
liability under any statute, law, rule, regulation, ordinance, decision or order
of any governmental agency or body or any court, domestic or foreign, except
where such violation or liability would not individually or in the aggregate
have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company; and to the knowledge of the Company there is no pending investigation
which would reasonably be expected to lead to such a claim.
3.9 Tax Matters. The Company has filed all federal, state and local income
and franchise tax returns required to be filed and has paid all taxes shown by
such returns to be due, and no tax deficiency has been determined adversely to
the Company which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company might have) a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations, or prospects of the Company.
4. Miscellaneous
4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at Profile Technologies, Inc. at 0
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000 Attention: Xxxxx Xxxxxx, with
a copy to (which copy shall not be deemed to provide notice) McGuireWoods LLP at
00 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000 Attention: Xxxx X. Xxxxxx, and
to the Subscriber at his address indicated on the signature page of this
Subscription Agreement. Notices shall be deemed to have been given three (3)
business days after the date of mailing, except notices of change of address,
which shall be deemed to have been given when received.
4.2 This Subscription Agreement may be amended through a written instrument
signed by the Subscriber and the Company; provided, however, that the terms of
Section 4 of this Subscription Agreement may be amended without the consent or
approval of the Subscriber so long as such amendment applies in the same fashion
to the subscription agreements of all of the other subscribers for Units in the
Offering and at least holders of a majority of the Units sold in the Offering
have given their approval of such amendment, which approval shall be binding on
all holders of Units.
4.3 This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
4.4 Notwithstanding the place where this Subscription Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of New York.
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4.5 This Subscription Agreement may be executed in counterparts. It shall
not be binding upon the Company unless and until it is accepted by the Company.
Upon the execution and delivery of this Subscription Agreement by the
Subscriber, this Subscription Agreement shall become a binding obligation of the
Subscriber with respect to the purchase of Units as herein provided; subject,
however, to the right hereby reserved to the Company to enter into the same
agreements with other subscribers and to add or to delete other persons as
subscribers.
4.6 The holding of any provision of this Subscription Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
4.7 It is agreed that a waiver by either party of a breach of any provision
of this Subscription Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
4.8 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
4.9 The Company agrees not to disclose the names, addresses or any other
information about the Subscribers, except as required by law, provided that the
Company may provide information relating to the Subscriber as required in any
registration statement under the Act that may be filed by the Company pursuant
to the requirements of this Subscription Agreement.
4.10 The obligation of the Subscriber hereunder is several and not joint
with the obligations of any other subscribers for the purchase of Units in the
Offering (the "Other Subscribers"), and the Subscriber shall not be responsible
in any way for the performance of the obligations of any Other Subscribers.
Nothing contained herein or in any other agreement or document delivered at the
closing, and no action taken by the Subscriber pursuant hereto, shall be deemed
to constitute the Subscriber and the Other Subscribers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Subscriber and the Other Subscribers are in any way acting
in concert with respect to such obligations or the transactions contemplated by
this Subscription Agreement. The Subscriber shall be entitled to protect and
enforce the Subscriber's rights, including without limitation the rights arising
out of this Subscription Agreement, and it shall not be necessary for any Other
Subscriber to be joined as an additional party in any proceeding for such
purpose. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. The Subscriber is not acting as
part of a "group" (as that term is used in Section 13(d) of the 0000 Xxx) in
negotiating and entering into this Subscription Agreement or purchasing the
Units or acquiring, disposing of or voting any of the underlying shares of
Common Stock. The Company hereby confirms that it understands and agrees that
the Subscriber is not acting as part of any such group.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the day and year first written above.
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Signature of Subscriber Signature of Co-Subscriber
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Name of Subscriber Name of Co-Subscriber
[please print] [please print]
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Xxxxxx Xxxxxxx xx Xxxxxxxxxx Xxxxxx Xxxxxxx of Co-Subscriber
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City, State and Zip Code of Subscriber City, State and Zip Code of
Co-Subscriber
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Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification Number of
Co-Subscriber
------------------------------
Number Units Subscribed For
Subscription Agreed to and Accepted by
PROFILE TECHNOLOGIES, INC.
By:
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Name:
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Title:
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Date:
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