SUBSCRIPTION AGREEMENT
FOR
AMERICAN CARESOURCE HOLDINGS, INC.
American Caresource Holdings, Inc.
0000 Xxx-Xxxx Xxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
1. Subscription. Investors will purchase (the "Offering") the number of
shares (each a "Share," collectively the "Shares") of common stock. par value
$0.01 (the "Common Stock"), of American Caresource Holdings, Inc. (the
"Company") set forth on the signature page to this Subscription Agreement at a
purchase price of $5.00 per Share.
The subscription for the Shares will be made in accordance with and
subject to the terms and conditions of this Subscription Agreement and the
Company's Confidential Private Placement Memorandum used in the Offering (the
"Memorandum"). The Shares are being offered on a 1,200,000 Share ($6,000,000)
minimum amount (the "Minimum Amount") and a 2,000,000 Share ($10,000,000)
maximum amount (the "Maximum Amount") basis. The minimum investment amount that
may be purchased by an Investor is 20,000 Shares ($100,000) (the "Minimum
Investor Purchase"); provided however, the Company may in its sole discretion
accept an Investor subscription for an amount less than the Minimum Investor
Purchase.
The Shares are entitled to certain registration rights as provided in the
Registration Rights Agreement (the "Registration Rights Agreement"), by and
among the Company, the Placement Agent (defined below) and the Investors in the
Offering.
* ("*" or the "Placement Agent"), is acting as the non-exclusive placement
agent to the Company in connection with the sale of the Shares on a "reasonable
efforts" basis solely to "accredited investors" (as defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act")); provided, however, in the event subscriptions for more than
the Minimum Amount are received, the Company reserves the right to accept
additional subscriptions up to the Maximum Amount.
The Company and the Placement Agent reserve the right (but are not
obligated) to purchase and/or have their respective employees, agents, officers,
directors and affiliates subscribe and purchase Shares in the Offering and all
such purchases will be counted towards the Minimum Amount and Maximum Amount. If
the Company and/or the Placement Agent rejects a subscription, either in whole
or in part (which decision is in their sole discretion), the rejected
subscription funds or the rejected portion thereof will be returned promptly to
such subscriber without interest accrued thereon.
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The terms of the Offering are more completely described in the Memorandum
and such terms are incorporated herein in their entirety. Capitalized terms
used, but not otherwise defined herein, will have the respective meanings
provided in the Memorandum.
2. Payment. The Subscriber encloses herewith a check payable to, or will
immediately make a wire transfer payment to, "Signature Bank, Escrow Agent for
American Caresource Holdings, Inc.," in the full amount of the purchase price of
the Shares being subscribed for. Together with the check for, or wire transfer
of, the full purchase price, the Subscriber is delivering a completed and
executed Omnibus Signature Page to this Subscription Agreement and the
Registration Rights Agreement.
3. Deposit of Funds. All payments made as provided in Section 2 hereof
will be deposited by the Company as soon as practicable with Signature Bank, as
escrow agent (the "Escrow Agent") or such other escrow agent appointed by * and
the Company, in a non-interest bearing escrow account (the "Escrow Account"). In
the event that the Company does not effect a Closing on or before February 15,
2006 (the "Initial Offering Period"), which period may be extended by the
Company and the Placement Agent, in their sole discretions to a date no later
than April 15, 2006 (this additional period and together with the Initial
Offering Period will be referred to as the "Offering Period"), the Escrow Agent
will refund all subscription funds, without deduction and/or interest accrued
thereon, and will return the subscription documents to each subscriber. If the
Company and/or the Placement Agent rejects a subscription, either in whole or in
part (which decision is in their sole discretion), the rejected subscription
funds or the rejected portion thereof will be returned promptly to such
subscriber without interest accrued thereon.
4. Acceptance of Subscription. The Subscriber understands and agrees that
the Company, in its sole discretion, reserves the right to accept or reject this
or any other subscription for the Shares, in whole or in part, notwithstanding
prior receipt by the Subscriber of notice of acceptance of this or any other
subscription. The Company will have no obligation hereunder until the Company
executes and delivers to the Subscriber an executed copy of this Subscription
Agreement. If Subscriber's subscription is rejected in whole or the Offering is
terminated, all funds received from the Subscriber will be returned without
interest, penalty, expense or deduction, and this Subscription Agreement will
thereafter be of no further force or effect. If Subscriber's subscription is
rejected in part, the funds for the rejected portion of such subscription will
be returned without interest, penalty, expense or deduction, and this
Subscription Agreement will continue in full force and effect to the extent such
subscription was accepted.
5. Representations and Warranties of the Subscriber. The Subscriber hereby
acknowledges, represents, warrants, and agrees as follows:
(a) The Shares offered pursuant to the Memorandum are not registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities laws. The Subscriber understands that the offering and sale of
the Shares are intended to be exempt from registration under the Securities Act,
by virtue of Section 4(2) thereof and the provisions of Regulation D promulgated
thereunder, based, in part, upon the representations, warranties and agreements
of the Subscriber contained in this Subscription Agreement;
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(b) The Subscriber and the Subscriber's attorney, accountant,
purchaser representative and/or tax advisor, if any (collectively, "Advisors"),
have received the Memorandum and all other documents requested by the Subscriber
or its Advisors, if any, have carefully reviewed them and understand the
information contained therein, prior to the execution of this Subscription
Agreement;
(c) Neither the Securities and Exchange Commission (the
"Commission") nor any state securities commission has approved the Shares, or
passed upon or endorsed the merits of the Offering or confirmed the accuracy or
determined the adequacy of the Memorandum. The Memorandum has not been reviewed
by any federal, state or other regulatory authority. Any representation to the
contrary is a criminal offense. The Shares are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Securities Act, 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;
(d) All documents, records, and books pertaining to the investment
in the Shares (including, without limitation, the Memorandum) have been made
available for inspection by the Subscriber and its Advisors, if any;
(e) The Subscriber and its Advisors, if any, have had a reasonable
opportunity to ask questions of and receive answers from a person or persons
acting on behalf of the Company concerning the offering of the Shares and the
business, financial condition, results of operations and prospects of the
Company, and all such questions have been answered by the Company to the full
satisfaction of the Subscriber and its Advisors, if any;
(f) In evaluating the suitability of an investment in the Company,
the Subscriber has not relied upon any representation or other information (oral
or written) other than as stated in the Memorandum or as contained in documents
so furnished to the Subscriber or its Advisors, if any, by the Company;
(g) The subscriber is unaware of, is in no way relying on, and did
not become aware of the offering directly and/or indirectly through or as a
result of, any form of general solicitation or general advertising including,
without limitation, any press release, filing by the company with the
commission, article, notice, advertisement or other communication published in
any newspaper, magazine or similar media or broadcast over television, radio or
over the internet, in connection with the offering and sale of the securities
and is not subscribing for securities and did not become aware of the offering
through or as a result of any seminar or meeting to which the subscriber was
invited by, or any solicitation of a subscription by, a person not previously
known to the subscriber in connection with investments in securities generally;
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(h) The Subscriber has taken no action which would give rise to any
claim by any person for brokerage commissions, finders' fees or the like
relating to this Subscription Agreement or the transactions contemplated hereby
(other than commissions to be paid by the Company to the Placement Agent as
described in the Memorandum);
(i) The Subscriber, either alone or together with its Advisors, if
any, have such knowledge and experience in financial, tax, and business matters,
and, in particular, investments in securities, so as to enable them to utilize
the information made available to them in connection with the offering of the
Shares to evaluate the merits and risks of an investment in the Shares and the
Company and to make an informed investment decision with respect thereto;
(j) The Subscriber is not relying on the Company, the Placement
Agent or any of their respective employees or agents with respect to the legal,
tax, economic and related considerations of an investment in the Shares, and the
Subscriber has relied on the advice of, or has consulted with, only its own
Advisors;
(k) The Subscriber is acquiring the Shares solely for such
Subscriber's own account for investment and not with a view to resale or
distribution thereof, in whole or in part. The Subscriber has no agreement or
arrangement, formal or informal, with any person to sell or transfer all or any
of the Shares and the Subscriber has no plans to enter into any such agreement
or arrangement;
(l) The purchase of the Shares represents high risk capital and the
Subscriber is able to afford an investment in a speculative venture having the
risks and objectives of the Company. The Subscriber must bear the substantial
economic risks of the investment in the Shares indefinitely because none of the
Shares may be sold, hypothecated or otherwise disposed of unless subsequently
registered under the Securities Act and applicable state securities laws or an
exemption from such registration is available. Legends will be placed on the
Shares to the effect that they have not been registered under the Securities Act
or applicable state securities laws and appropriate notations thereof will be
made in the Company's stock books. The Company has agreed that purchasers of the
Shares will have, the registration rights described in the Registration Rights
Agreement. Notwithstanding such registration rights, trading volume in the
Common Stock is extremely limited and sporadic and as such, there is currently
limited liquidity in the Common Stock and there can be no assurance when, if
ever, a more liquid market for the Common Stock will develop; or if any
registration statement covering the Shares will be declared effective by the
SEC;
(m) The Subscriber has adequate means of providing for such
Subscriber's current financial needs and foreseeable contingencies and has no
need for liquidity of the investment in the Shares for an indefinite period of
time;
(n) The Subscriber is aware that an investment in the Shares
involves a number of very significant risks and has carefully read and
considered the matters set forth in the Memorandum, including, but not limited
to, the Section entitled "Risk Factors;"
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(o) The Subscriber is an "accredited investor" as that term is
defined in Regulation D under the Securities Act, and has truthfully and
accurately completed the Accredited Investor Certification contained herein;
(p) The Subscriber: (i) if a natural person, represents that the
Subscriber has reached the age of 21 and has full power and authority to execute
and deliver this Subscription Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof; (ii) if a
corporation, partnership, or limited liability company or partnership, or
association, joint stock company, trust, unincorporated organization or other
entity, represents that such entity was not formed for the specific purpose of
acquiring the Shares, such entity is duly organized, validly existing and in
good standing under the laws of the state of its organization, the consummation
of the transactions contemplated hereby is authorized by, and will not result in
a violation of state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this Subscription
Agreement and all other related agreements or certificates and to carry out the
provisions hereof and thereof and to purchase and hold the securities
constituting the Shares, the execution and delivery of this Subscription
Agreement has been duly authorized by all necessary action, this Subscription
Agreement has been duly executed and delivered on behalf of such entity and is a
legal, valid and binding obligation of such entity; or (iii) if executing this
Subscription Agreement in a representative or fiduciary capacity, represents
that it has full power and authority to execute and deliver this Subscription
Agreement in such capacity and on behalf of the subscribing individual, xxxx,
partnership, trust, estate, corporation, or limited liability company or
partnership, or other entity for whom the Subscriber is executing this
Subscription Agreement, and such individual, partnership, xxxx, trust, estate,
corporation, or limited liability company or partnership, or other entity has
full right and power to perform pursuant to this Subscription Agreement and make
an investment in the Company, and represents that this Subscription Agreement
constitutes a legal, valid and binding obligation of such entity. The execution
and delivery of this Subscription Agreement will not violate or be in conflict
with any order, judgment, injunction, agreement or controlling document to which
the Subscriber is a party or by which it is bound;
(q) The Subscriber and its Advisors, if any, have had the
opportunity to obtain any additional information, to the extent the Company had
such information in their possession or could acquire it without unreasonable
effort or expense, necessary to verify the accuracy of the information contained
in the Memorandum and all documents received or reviewed in connection with the
purchase of the Shares and have had the opportunity to have representatives of
the Company provide them with such additional information regarding the terms
and conditions of this particular investment and the financial condition,
results of operations, business and prospects of the Company deemed relevant by
the Subscriber or its Advisors, if any, and all such requested information, to
the extent the Company had such information in its possession or could acquire
it without unreasonable effort or expense, has been provided by the Company to
the full satisfaction of the Subscriber and its Advisors, if any;
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(r) The Subscriber represents to the Company that any information
which the undersigned has heretofore furnished or is furnishing herewith to the
Company or * is complete and accurate and may be relied upon by the Company in
determining the availability of an exemption from registration under Federal and
state securities laws in connection with the Offering as described in the
Memorandum. The Subscriber further represents and warrants that it will notify
and supply corrective information to the Company and * immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the Shares;
(s) The Subscriber has significant prior investment experience,
including investments in restricted securities of entities whose shares of
common stock are illiquid and are quoted on the Bulletin Board (the "BB"). The
Subscriber is knowledgeable about investment considerations in public companies
and, in particular, public companies traded on the BB. The Subscriber has a
sufficient net worth to sustain a loss of its entire investment in the Company
in the event such a loss should occur. The Subscriber's overall commitment to
investments which are not readily marketable is not excessive in view of the
Subscriber's net worth and financial circumstances and the purchase of the
Shares will not cause such commitment to become excessive. This investment is a
suitable one for the Subscriber;
(t) The Subscriber is satisfied that it has received adequate
information with respect to all matters which it or its Advisors, if any,
consider material to its decision to make this investment;
(u) The Subscriber acknowledges that any estimates or
forward-looking statements or projections included in the Memorandum were
prepared by the Company in good faith, but that the attainment of any such
projections, estimates or forward-looking statements cannot be guaranteed, will
not be updated by the Company and should not be relied upon;
(v) No oral or written representations have been made, or oral or
written information furnished, to the Subscriber or its Advisors, if any, in
connection with the Offering which are in any way inconsistent with the
information contained in the Memorandum;
(w) Within five (5) days after receipt of a request from the Company
or *, the Subscriber will provide such information and deliver such documents as
may reasonably be necessary to comply with any and all laws and ordinances to
which the Company or * is subject;
(x) The Subscriber's substantive relationship with * or other agent
or subagent through which the Subscriber is subscribing for Shares predates * or
such other agent or subagent's contact with the Subscriber regarding an
investment in the Shares;
(y) THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATES AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT
AND SUCH LAWS. THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT
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AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;
(aa) (For ERISA plans only) The fiduciary of the ERISA plan (the "Plan")
represents that such fiduciary has been informed of and understands the
Company's investment objectives, policies and strategies, and that the decision
to invest "plan assets" (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities. The Subscriber or Plan
fiduciary (a) is responsible for the decision to invest in the Company; (b) is
independent of the Company and any of its affiliates; (c) is qualified to make
such investment decision; and (d) in making such decision, the Subscriber or
Plan fiduciary has not relied on any advice or recommendation of the Company or
any of its affiliates.
(bb) The Subscriber hereby represents, warrants, agrees and covenants to
and with the Company that the Subscriber has not, directly and/or indirectly,
previously had and/or maintained and/or currently has, and/or in the future will
not make or maintain a "short" position in the Company's securities and will not
encourage and/or facilitate the same by any third party.
(cc) The Subscriber has read in its entirety the Memorandum including, but
not limited to, the Section therein entitled "Risk Factors," and understands
fully to its full satisfaction all information included in the Memorandum
including, but not limited to, the conflict of interest of the Placement Agent
and the beneficial ownership of securities of the Company by the Placement
Agent.
6. Representations and Warranties of the Company. The Company hereby
acknowledges, represents, warrants, and agrees as follows:
(a) The Company does not own or control, directly or indirectly, any
interest in any other limited liability company, corporation, association or
other business entity.
(b) The Company is an entity duly organized, validly existing and in
good standing under the laws of the state of its incorporation with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted. The Company is not in
violation of any of the provisions of its certificate of formation, by-laws or
other organizational or charter documents (the "Internal Documents"). The
Company is duly qualified to conduct business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
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conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not result in a direct and/or indirect (i) material adverse effect on the
legality, validity or enforceability of any of the Shares and/or this
Subscription Agreement, (ii) material adverse effect on the results of
operations, assets, business or financial condition of the Company, or (iii)
material adverse effect on the Company's ability to perform in any material
respect on a timely basis its obligations under this Subscription Agreement, the
Registration Rights Agreement, the ____________ Articles of Incorporation, and
the Memorandum (collectively the "Transaction Documents") (any of (i), (ii) or
(iii), a "Material Adverse Effect").
(c) The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
corporate action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally.
(d) The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated thereby, do not and will not (i) conflict with or violate any
provision of the Company's Internal Documents, (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other instrument (evidencing a
Company debt or otherwise), or other understanding to which the Company is a
party or by which any property or asset of the Company is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected.
(e) The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind (a "Person") in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than the filing with the Commission of a Form D and applicable Blue Sky
filings.
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(f) The Company possesses all licenses, certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such permits would not have or reasonably be
expected to result in a Material Adverse Effect ("Material Permits"), and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted, and the Company has
not received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(g) The Company owns its property and assets free and clear of all
mortgages, liens, loans, pledges, security interests, claims, equitable
interests, charges, and encumbrances, except such encumbrances and liens which
arise in the ordinary course of business and do not materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance in all material
respects with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims, or encumbrances.
(h) The Company owns, or possesses adequate rights or licenses to
use all trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted, the lack of which could
reasonably be expected to have a Material Adverse Effect. The Company does not
have any knowledge of any infringement by the Company of trademarks, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secrets or other similar rights
of others, or of any such development of similar or identical trade secrets or
technical information by others and no claim, action or proceeding has been made
or brought against, or to the Company's knowledge, has been threatened against,
the Company regarding trademarks, trade name rights, patents, patent rights,
inventions, copyrights, licenses, service names, service marks, service xxxx
registrations, trade secrets or other infringement, except where such
infringement, claim, action or proceeding would not reasonably be expected to
have either individually or in the aggregate a Material Adverse Effect. The
Company is not aware that any of its employees, officers, or consultants are
obligated under any contract (including licenses, covenants, or commitments of
any nature) or other agreement, or subject to any judgment, decree, or order of
any court or administrative agency, that would interfere with the use of such
employee's, officer's, or consultant's commercially reasonable efforts to
promote the interests of the Company or that would conflict with the Company's
business as conducted. Neither the execution nor delivery of the Transaction
Documents, nor the carrying on of the Company's business by the employees of the
Company, as is presently conducted, nor the conduct of the Company's business,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such employees, officers or
consultants are now obligated.
(i) The Common Stock has been duly and validly authorized and, when
issued, delivered and sold in accordance with the Subscription Agreement against
full payment therefor, will be duly and validly, issued, fully paid, and
nonassessable, free and clear of all liens, pledges and other encumbrances, and
not subject to any preemptive or other similar rights
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(j) There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
currently threatened against or affecting the Company, or any of its respective
properties before or by any court, arbitrator, governmental or administrative
agency and/or regulatory authority (federal, state, county, local or foreign),
(collectively, an "Action") which does and/or could (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents and/or the Shares, if issued, or to consummate the transactions
contemplated hereby or thereby or (ii) could, if there were an unfavorable
decision, have, either individually or in the aggregate, a Material Adverse
Effect. The foregoing includes, without limitation, actions, pending or
threatened (or any basis therefor known to the Company), involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment, or decree of any court or government agency or
instrumentality.
(k) Except as expressly disclosed in the Memorandum (i) there has
been no event, occurrence or development that has had or that could reasonably
be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any material liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting or the identity of its auditors, (iv) the Company has
not declared or made payment or distribution of any dividend or distribution of
cash or other property to its holders of Common Stock or purchased, redeemed or
made any agreements to purchase or redeem any shares of its capital stock and
(v) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option agreements.
(l) The Company (i) is not in default under, or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company under), nor has the
Company received notice of a claim that it is in default under or that it is in
violation of, any indenture, mortgage, decree, lease, license, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i), (ii) and (iii) as would not result
in a Material Adverse Effect. The Company has not received any written notice of
any violation of or noncompliance with, any federal, state, local or foreign
laws, ordinances, regulations and orders (including, without limitation, those
relating to environmental protection, occupational safety and health, federal
10
securities laws, equal employment opportunity, consumer protection, credit
reporting, "truth-in-lending", and warranties and trade practices) applicable to
its business, the violation of, or noncompliance with, which would have a
Materially Adverse Effect on the Company's business or operations, and the
Company knows of no facts or set of circumstances which would give rise to such
a notice. The execution, delivery, and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby will not result in
any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract, or an event which results
in the creation of any lien, charge, or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations, or any of its assets or properties, except
as would not reasonably be expected to have a Material Adverse Effect.
(m) No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which
could reasonably be expected to result in a Material Adverse Effect.
(n) The Company is not required to pay any brokerage or finder's
fees or commissions to any person including, but not limited to, any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other person with respect to the Offering contemplated by this
Agreement, other than the Placement Agent.
(o) Assuming the accuracy of the Subscriber's representations and
warranties set forth in this Subscription Agreement, no registration under the
Securities Act is required for the offer and sale of the Shares by the Company
to the Subscriber as contemplated hereby.
(p) The Company is not, and is not an affiliate of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(q) Neither the Company, nor any of their affiliates nor any person
acting on their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of any of the Shares.
(r) Neither the Company, nor any of their affiliates nor any person
acting on their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would require registration of any of the Shares under the Securities Act or
cause the Offering to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable stockholder approval
provisions, including without limitation, under the rules and regulations of any
exchange or automated quotation system on which any of the securities of the
Company are listed or designated. Neither the Company, nor their affiliates nor
any person acting on their behalf will take any action or steps referred to in
the preceding sentence that would require registration of any of the Shares
under the Securities Act or cause the Offering to be integrated with other
offerings.
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(s) The Company has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, except when the failure to do so would not have a Material
Adverse Effect, and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations otherwise due and payable, except those being
contested in good faith and has set aside on its books reserves in accordance
with GAAP reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim. The Company has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign,
federal, statue or local tax. To the Company's knowledge, none of the Company's
tax returns is presently being audited by any taxing authority. To the Company's
knowledge, (i) none of the tax returns of the Company or any Subsidiary is being
audited by the Internal Revenue Service and (ii) neither the Company nor any
Subsidiary will owe a material tax obligation under any federal or state tax
return to be filed.
(t) The Company is not indebted in excess of $20,000, directly or
indirectly, to any of its employees, officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with accrued but unpaid salary payments, expenses or advances of
expenses incurred in the ordinary course of business or relocation expenses of
employees, officers and directors, nor is the Company contemplating such
indebtedness as of the date of this Agreement, (ii) to the Company's knowledge,
none of said employees, officers or directors, or any member of their immediate
families, is directly or indirectly indebted to the Company (other than in
connection with purchases of the Company's stock) or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship or any firm or
corporation which competes with the Company, nor is the Company contemplating
such indebtedness as of the date of this Agreement, except that employees,
officers, directors and/or shareholders of the Company may own stock in publicly
traded companies (not in excess of 1% of the outstanding capital stock thereof)
which may directly compete with the Company and (iii) to the Company's
knowledge, no employee, shareholder, officer or director, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company, nor does any such person own, directly or indirectly,
in whole or in part, any material tangible or intangible property that the
Company uses or contemplates using in the conduct of its business. The Company
is not a guarantor or indemnitor of any indebtedness of any other Person.
(u) If the Offering is conducted in accordance with the Transaction
Documents and the Memorandum, neither the sale of any of the Shares by the
Company hereunder nor its use of the proceeds thereof will violate the Trading
with the Enemy Act, as amended, or any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto.
Without limiting the foregoing, neither the Company nor any of its Subsidiaries
(a) is a person whose property or interests in property are blocked pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in any dealings or
transactions, or is otherwise associated, with any such person. The Company and
its Subsidiaries are in compliance with the anti-money laundering requirements
of the USA Patriot Act of 2001 (signed into law October 26, 2001).
12
(v) The Company is current in all filings required to be made by it
pursuant to the Securities Act and the Exchange Act and all information
contained therein is true, accurate, complete and does not omit to contain any
material facts.
(w) The Common Stock is eligible for quotation on the BB under the
symbol "ASCH.OB." The Company has no reason to believe the Common Stock will not
continue to be eligible for quotation thereon.
(x) As of the date of the PPM, all prior issuances of securities by
the Company have been duly authorized and validly issued in compliance with all
applicable rules, regulations and laws, including, but not limited to, the
Federal Securities Laws and State Securities Laws and no person has any
rescission rights with respect to any prior issuances of Company securities.
(z) No person has any preemptive and/or any right of first refusal
and/or any similar rights with respect to any securities of the Company.
7. Indemnification. The Subscriber agrees to indemnify and hold harmless
the Company, * and each of their respective officers, directors, employees,
agents, attorneys, control persons and affiliates from and against all losses,
liabilities, claims, damages, costs, fees and expenses whatsoever (including,
but not limited to, any and all expenses incurred in investigating, preparing or
defending against any litigation commenced or threatened) based upon or arising
out of any actual or alleged false acknowledgment, representation or warranty,
or misrepresentation or omission to state a material fact, or breach by the
Subscriber of any covenant or agreement made by the Subscriber herein or in any
other document delivered by or on behalf of the Subscriber in connection with
this Subscription Agreement.
8. Irrevocability; Binding Effect. The Subscriber hereby acknowledges and
agrees that the subscription hereunder is irrevocable by the Subscriber, except
as required by applicable law, and that this Subscription Agreement will survive
the death or disability of the Subscriber and will be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns. If the Subscriber is
more than one person, the obligations of the Subscriber hereunder will be joint
and several and the agreements, representations, warranties and acknowledgments
herein will be deemed to be made by and be binding upon each such person and
such person's heirs, executors, administrators, successors, legal
representatives and permitted assigns.
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9. Modification. This Subscription Agreement will not be modified or
waived except by an instrument in writing signed by the party against whom any
such modification or waiver is sought.
10. Notices. Any notice or other communication required or permitted to be
given hereunder will be in writing and will be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given (a) if to the Company, at the address set forth above or (b) if to the
Subscriber, at the address set forth on the signature page hereof (or, in either
case, to such other address as the party will have furnished in writing in
accordance with the provisions of this Section 10). Any notice or other
communication given by certified mail will be deemed given at the time of
certification thereof, except for a notice changing a party's address which will
be deemed given at the time of receipt thereof.
11. Assignability. This Subscription Agreement and the rights, interests
and obligations hereunder are not transferable or assignable by the Subscriber
and the transfer or assignment of the Shares issued by the Company will be made
only in accordance with all applicable laws.
12. Applicable Law. This Subscription Agreement will be governed by and
construed exclusively under the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely
within New York. Each of the parties hereto (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (2)
waive any objection which the Company may have now or hereafter to the venue of
any such suit, action or proceeding, and (3) irrevocably consent to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. Each of the parties hereto further agrees to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York and agree that service of process upon it mailed by certified mail to its
address will be deemed in every respect effective service of process upon it, in
any such suit, action or proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY.
13. Blue Sky Qualification. The purchase of Shares under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Shares from applicable Federal and state securities laws.
The Company will not be required to qualify this transaction under the
securities laws of any jurisdiction and, should qualification be necessary, the
Company will be released from any and all obligations to maintain its offer, and
may rescind any sale contracted, in the jurisdiction.
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14. Use of Pronouns. All pronouns and any variations thereof used herein
will be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.
15. Confidentiality. The Subscriber acknowledges and agrees that any
information or data the Subscriber has acquired from or about the Company, not
otherwise properly in the public domain, was received in confidence (the
"Confidential Information"). Any distribution of the Confidential Information to
any person other than the Subscriber named above, in whole or in part, or the
reproduction of the Confidential Information, or the divulgence of any of its
contents (other than to the Subscriber's tax and financial advisers, attorneys
and accountants, who will likewise be required to maintain the confidentiality
of the Confidential Information) is unauthorized, except that any Subscriber
(and each employee, representative, or other agent of such Subscriber) may
disclose to any and all persons, without limitations of any kind (except as
provided in the next sentence) the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to the Subscriber relating to such tax treatment and
tax structure. Any such disclosure of the tax treatment, tax structure and other
tax-related materials shall not be made for the purpose of offering to sell the
securities offered hereby or soliciting an offer to purchase any such
securities. Except as provided above with respect to tax matters, the above
named Subscriber, agrees not to divulge, communicate or disclose, except as may
be required by law or for the performance of this Subscription Agreement, or use
to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information of the Company,
including any scientific, technical, trade or business secrets of the Company
and any scientific, technical, trade or business materials that are treated by
the Company as confidential or proprietary, including, but not limited to,
ideas, discoveries, inventions, developments and improvements belonging to the
Company and Confidential Information obtained by or given to the Company about
or belonging to third parties.
16. Miscellaneous.
(a) This Subscription Agreement, together with the Registration
Rights Agreement, constitute the entire agreement between the Subscriber and the
Company with respect to the subject matter hereof and supersede all prior oral
or written agreements and understandings, if any, relating to the subject matter
hereof. The terms and provisions of this Subscription Agreement may be waived,
or consent for the departure therefrom granted, only by a written document
executed by the party entitled to the benefits of such terms or provisions.
(b) Each of the Subscriber's representations and warranties made in
this Subscription Agreement will survive the execution and delivery hereof and
delivery of the Shares for a period of twelve (12) months from the date of
issuance.
(c) Each of the parties hereto will pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such party) in connection with this Subscription Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
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(d) This Subscription Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which will
together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement will be considered
separable and, if for any reason any provision or provisions hereof are
determined to be invalid or contrary to applicable law, such invalidity or
illegality will not impair the operation of or affect the remaining portions of
this Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and will not
control or alter the meaning of this Subscription Agreement as set forth in the
text.
17. Omnibus Signature Page. This Subscription Agreement is intended to be
read and construed in conjunction with the Registration Rights Agreement.
Accordingly, pursuant to the terms and conditions of this Subscription Agreement
and such related agreements it is hereby agreed that the execution by the
Subscriber of this Subscription Agreement, in the place set forth herein, will
constitute agreement to be bound by the terms and conditions hereof and the
terms and conditions of the Registration Rights Agreement, with the same effect
as if each of such separate, but related agreement, were separately signed.
- the remainder of the page was intentionally left blank -
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ANTI-MONEY LAUNDERING REQUIREMENTS
How big is the problem and why is
The USA PATRIOT Act What is money laundering? it important?
-----------------------------------------------------------------------------------------------------------
The USA PATRIOT Act is designed to Money laundering is the process The use of the U.S. financial
detect, deter, and punish of disguising illegally obtained system by criminals to facilitate
terrorists in the United States and money so that the funds appear to terrorism or other crimes could
abroad. The Act imposes new come from legitimate sources or well taint our financial
anti-money laundering requirements activities. Money laundering markets. According to the U.S.
on brokerage firms and financial occurs in connection with a wide State Department, one recent
institutions. Since April 24, 2002 variety of crimes, including estimate puts the amount of
all brokerage firms have been illegal arms sales, drug worldwide money laundering
required to have new, comprehensive trafficking, robbery, fraud, activity at $1 trillion a year.
anti-money laundering programs. racketeering, and terrorism.
To help you understand theses
efforts, we want to provide you
with some information about money
laundering and our steps to
implement the USA PATRIOT Act.
What the Placement Agent is required to do to eliminate money laundering?
Under new rules required by the USA PATRIOT Act, the Placement Agent's
anti-money laundering program must designate a special compliance officer, set
up employee training, conduct independent audits, and establish policies and
procedures to detect and report suspicious transaction and ensure compliance
with the new laws.
As part of the Placement Agent's required program, it may ask you to provide
various identification documents or other information. Until you provide the
information or documents required, the Placement Agent may not be able to effect
any transactions for you.
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AMERICAN CARESOURCE HOLDINGS, INC.
OMNIBUS SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
Subscriber hereby elects to purchase a total of ______ Shares at a price of
$5.00 per Share for a total cost of $__________ (NOTE: to be completed by the
Subscriber) and agrees to all of the terms and conditions of this Agreement and
the Registration Rights Agreement referred to herein.
Date (NOTE: To be completed by the Subscriber): __________________, 2006
--------------------------------------------------------------------------------
If the Subscriber is an INDIVIDUAL, and if purchased as JOINT TENANTS, as
TENANTS IN COMMON, or as COMMUNITY PROPERTY:
____________________________ ______________________________
Print Name(s) Social Security Number(s)
___________________________ ______________________________
Signature(s) of Subscriber(s) Signature
____________________________ ______________________________
Date Address
If the Subscriber is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY or TRUST:
____________________________ ______________________________
Name of Partnership, Federal Taxpayer
Corporation, Limited Identification Number
Liability Company or Trust
By:_________________________ ______________________________
Name: State of Organization
Title:
____________________________ ______________________________
Date Address
AMERICAN CARESOURCE HOLDINGS, INC.
By: __________________________
Authorized Officer
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