FORM OF SUBSCRIPTION AGREEMENT
Exhibit
10.27
FORM
OF
Smart
Online, Inc.
0000
Xxxxxxxx Xxxxxxx
0xx
Xxxxx
Xxxxxx,
Xxxxx Xxxxxxxx 00000
Attention:
Xxxxxxx Xxxxx
Gentlemen:
(1) Pursuant
to prior understandings and discussions, the undersigned (“Subscriber”) hereby
agrees to purchase from Smart Online, a Delaware corporation (the “Company”),
for a purchase price of Five Dollars and Fifty Cents ($5.50) per share
the
number of shares of Common Stock, par value $0.001 per share (“Common Stock”)
set forth on the signature page of this Agreement. (The Common Stock is
sometimes hereinafter referred to collectively as the “Securities.”) Subscriber
hereby acknowledges (i) that this subscription shall not be deemed to have
been
accepted by the Company until the Company indicates its acceptance by returning
to Subscriber an executed copy of this subscription, and (ii) that acceptance
by
the Company of this subscription is conditioned upon the information and
representations of Subscriber hereunder being complete, true and correct
as of
the date of this subscription and as of the date of closing of sale of
the
Securities to Subscriber. As a condition to Subscriber’s purchase of the
Securities pursuant to this Agreement, Subscriber and the Company will
execute
and deliver to one another a copy of the Registration Rights Agreement
in
substantially the form attached hereto as Appendix
A
(the
“Registration Rights Agreement”) and a Dribble Out Agreement in the form
attached hereto as Appendix
B
(the
“Dribble Out Agreement”).
(2) Until
actual delivery of the purchase price to the Company and acceptance by
the
Company of the purchase price and this Subscription Agreement, the Company
shall
have no obligation to Subscriber. The Company may revoke a prior acceptance
of
this Subscription Agreement at any time prior to delivery to and acceptance
by
the Company of the purchase price for the Securities.
(3) Subscriber
hereby represents and warrants to the Company as follows:
(a) Disclosure.
Subscriber has carefully reviewed the Summary Private Placement Memorandum
and
Draft Registration Statement, including financial information, provided
by the
Company, including all risk factors, and fully understands all risks associated
with investment in the Company, including, without limitation, the risks
posed
by prior disclosures made by the company to its shareholders and investors
in
connection with a reorganization and private placement, and the remedies
such
shareholders have, including the company’s planned rescission
offer.
(b) Authorization.
Subscriber has full power and authority to enter into this Agreement. This
Agreement constitutes Subscriber’s valid and legally binding obligation,
enforceable in accordance with its terms except as limited by (i) applicable
bankruptcy, insolvency, receivership, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally, and
(ii) general principals of equity, the application of which may deny the
Company
the right to specific performance, injunctive relief and other equitable
remedies.
(c) Experience.
Subscriber is experienced in evaluating and investing in private placement
transactions of securities of technology companies such as the Company,
has such
knowledge and experience in financial and business matters that Subscriber
is
capable of evaluating the merits and risks of Subscriber’s investment in the
Securities, is able to bear the economic risk of the investment and is
prepared
to hold the shares for an indefinite period of time.
(d) Investment.
Subscriber is acquiring the Securities for investment for Subscriber’s own
account and not with a view to, or for resale in connection with, any
distribution thereof, and Subscriber has no present intention of selling
or
distributing the Securities. Subscriber does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person with respect to any
of the
Securities other than as set forth in this Agreement. Subscriber understands
that the Securities to be purchased by Subscriber have not been registered
under
the Securities Act of 1933, as amended (the “Act”) by reason of a specific
exemption from the registration provisions of the Act which depends upon,
among
other things, the bona fide nature of the investment intent as expressed
herein.
(e) Reliance
Upon Subscriber Representations.
Subscriber understands that the Securities are not registered under the
Act on
the grounds that the sale provided for in this Agreement and the issuance
of
Securities hereunder is being made in reliance upon an exemption from the
registration requirements of the Act pursuant to Section 4(2) thereof as
a
transaction by an issuer of Securities not involving a public offering
or
pursuant to Section 4(6) thereof as a transaction by an issuer of securities
solely to accredited investors, and is similarly exempt under applicable
state
securities laws, and that the Company’s reliance on such exemption is predicated
on Subscriber’s representations as set forth in this Agreement.
(f) Restricted
Securities.
Subscriber acknowledges that the Securities have not been registered under
the
Act or any applicable state securities law and that the Securities may
not be
sold, assigned, pledged, hypothecated or transferred, unless there exists
an
effective registration statement therefor under the Act and all applicable
state
securities laws or the Company has received an opinion of counsel, reasonably
acceptable to counsel for the Company, or other reasonable assurances,
that such
sale, assignment, pledge, hypothecation or transfer is exempt from registration.
Subscriber understands that in the absence of an effective registration
statement covering the Securities or an exemption therefrom under the Act
and
all applicable state securities laws, the Securities must be held indefinitely.
In particular, Subscriber is aware that the Securities may not be sold
pursuant
to Rule 144 promulgated under the Act, unless all conditions of Rule 144
are
met. Among the conditions for the use of Rule 144 may be the availability
of
current and adequate information to the public about the Company. Such
information is not now available and, except as set forth in the Registration
Rights Agreement, the Company has no obligation to make such information
available. Notwithstanding the foregoing, no opinion of counsel shall be
required by the Company in connection with the transfer of the Securities
to an
entity that is a direct or indirect wholly-owned subsidiary of Subscriber.
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(g) Legends.
(i) Each
certificate representing the Securities shall, in addition to any legends
required elsewhere, bear the following legend as appropriate for stock
certificates and warrant agreements:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW AND
MAY
NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED UNLESS THERE
EXISTS
AN EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER THE SECURITIES ACT OF
1933,
AS AMENDED, AND ALL APPLICABLE STATE SECURITIES LAWS OR THE ISSUER HEREOF
HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL OF THE
ISSUER, THAT SUCH SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR TRANSFER IS
EXEMPT
FROM REGISTRATION.
(ii) Each
certificate representing Securities shall also bear any legend required
by any
applicable state securities law or by any other agreement to which the
holder
thereof is a party or by which the holder thereof is bound.
(h) No
Public Market.
Subscriber understands that no public market now exists for any of the
securities issued by the Company and that it is uncertain whether a public
market will ever exist for the Securities.
(i) Access
to Information.
Subscriber has received all information that Subscriber considers necessary
or
appropriate for deciding whether to purchase Securities. Subscriber has
had an
opportunity to ask questions and receive answers from the Company’s management
regarding the terms and conditions of the offering of the Securities and
the
business, properties, prospects and financial condition of the Company
and to
obtain additional information from the Company (to the extent that the
Company
possessed such information or could acquire it without unreasonable effort
or
expense) necessary to verify the accuracy of any information furnished
to
Subscriber or to which Subscriber had access.
(j) Accredited
Investor.
Subscriber
recognizes it is important under the Act and state securities law that
the
Company determine if potential investors are “accredited investors,” as defined
in Appendix
C
attached
hereto. Subscriber represents that Subscriber is an “accredited investor” by
reason of the following: _________________________________________ (Insert
Item
Number from Appendix C). Subscriber further represents that Subscriber
is a
citizen of the state of _______________. Subscriber is not a resident of
any
other jurisdiction.
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(4) The
representations, warranties, understandings, acknowledgments and agreements
in
this Agreement are true and accurate as of the date hereof, shall be true
and
accurate as of the date of the acceptance hereof by the Company and shall
survive thereafter.
(5) This
Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Delaware, as such laws are applied
by
Delaware courts to agreements entered into and to be performed in Delaware,
and
shall be binding upon Subscriber, the Subscriber’s heirs, estate, legal
representatives, successors and assigns and shall inure to the benefit
of the
Company and its successors and assigns.
(6) Subscriber
agrees not to transfer or assign this Agreement, or any of Subscriber’s interest
herein, without the express written consent of the Company.
(7) This
Agreement constitutes the entire agreement among the parties hereto with
respect
to the subject matter hereof and supersedes any and all prior or contemporaneous
representations, warranties, agreements and understandings in connection
therewith. This Agreement may be amended only by a writing executed by
all
parties hereto. This Agreement may be executed in one or more
counterparts.
(The
remainder of this page is intentionally left blank.)
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IN
WITNESS WHEREOF, Subscriber has executed this Subscription Agreement this
____
day of ___________, 2005.
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SUBSCRIPTION
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Number
of Shares of Common Stock
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Total
payment enclosed
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__________________________________
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By:
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Address:
____________________________
____________________________
_______________________
Social
Security Number
ACCEPTANCE
The
foregoing Subscription Agreement is accepted on this the ____ day of
____________, 2005.
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SMART
ONLINE, INC.
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By:
___________________________
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Xxxxxxx
Xxxxx, President
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