EXHIBIT 10.20
SONOMA COLLEGE, INC.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT ("AGREEMENT") made as of this 13 day of July,
2005 between Sonoma College, Inc., a California corporation (the "COMPANY"), and
the undersigned (the "SUBSCRIBER").
WHEREAS, contemporaneously with this Agreement the Company and the
Subscriber are entering into a revolving credit agreement (the "CREDIT
AGREEMENT") pursuant to which the Subscriber is providing the Company with a
loan facility; and
WHEREAS, the Company desires to issue shares of the Company's common
stock, par value $0.0001 per share (the "Shares") to the Subscriber as
additional consideration for entering into the Credit Agreement, on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. SUBSCRIPTION. Subject to the terms and conditions herein, the
Company hereby agrees to issue to the Subscriber Three Hundred and Seventy Five
Thousand (375,000) shares of the Company's fully-paid non-assessable restricted
common stock.
2. ACCEPTANCE OF SUBSCRIPTION. Subscriber acknowledges: (i) this
Agreement shall not be deemed to have been accepted by the Company until the
Company indicates its acceptance by returning to Subscriber a copy of this
Agreement executed by the Company; and (ii) acceptance by the Company of this
Agreement is conditioned upon the information and representations and warranties
of Subscriber contained herein being complete, true and correct as of the date
of Subscriber's execution and the date of Closing (as hereinafter defined).
3. CLOSING. The closing of the issue of the Shares (the "CLOSING")
shall be within seven (7) days of the date hereof. The date of the Closing
hereunder shall be called the "CLOSING DATE". A stock certificate in the
Subscriber's name and representing the number of Shares purchased by Subscriber
pursuant hereto, which certificates shall bear the legend set forth in Section
4(v) hereof, shall be delivered to the Subscriber within thirty (30) business
days following the Closing Date.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SUBSCRIBER. The
Subscriber hereby acknowledges, represents and warrants to the Company, on the
date hereof and on the Closing Date, as follows:
a. The Subscriber understands that the offering and sale of the
Shares is intended to be exempt from registration under the Securities Act of
1933, as amended (the "ACT") by virtue of Section 4(2) of the Act and the
provisions of Regulation D promulgated thereunder, and in accordance therewith
and in furtherance thereof, the Subscriber represents and warrants and agrees as
follows:
b. The Subscriber acknowledges that the Subscriber, or the
Subscriber's attorney, accountant, or adviser(s), has/have had a reasonable
opportunity to inspect all documents and records pertaining to this investment.
c. The Subscriber and/or the Subscriber's adviser(s) has/have had a
reasonable opportunity to ask questions and receive answers from a person or
persons acting on behalf of the Company concerning the offering of the Shares
and all such questions have been answered to the full satisfaction of the
Subscriber.
d. In making a decision to invest in the Shares, the Subscriber has
not relied on any information other than information contained in this
Agreement.
e. The Subscriber is not subscribing for the Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a representative of the Company.
f. If the Subscriber is a natural person, the Subscriber has reached
the age of majority in the jurisdiction in which the Subscriber resides; the
Subscriber has adequate means of providing for the Subscriber's current
financial needs and contingencies, is able to bear the substantial economic
risks of an investment in the Shares for an indefinite period of time, has no
need for liquidity in such investment, and, at the present time, could afford a
complete loss of such investment.
g. The Subscriber has such knowledge and experience in financial, tax
and business matters so as to enable the Subscriber to utilize the information
made available to the Subscriber to evaluate the merits and risks of an
investment in the Shares, and to make an informed investment decision with
respect thereto.
h. The Subscriber is not relying on the Company or any agent of the
Company with respect to any legal, tax or economic advice related to an
investment in the Shares.
i. The Subscriber will not sell or otherwise transfer the Shares
without registration under the Act and applicable state securities law, or
pursuant to an exemption therefrom. The Shares have not been registered under
the Act or under the securities laws of any state and the Company will be under
no obligation to so register the Shares. The Subscriber represents that the
Subscriber is purchasing the Shares for the Subscriber's own account, for
investment and not with a view to resale or distribution except in compliance
with the Act and applicable state securities laws. The Subscriber has no present
intention to sell the Shares and the Subscriber has no present arrangement
(whether or not legally binding) to sell the Shares to or through any person or
entity; provided, however, that by making the representations herein, the
Subscriber does not agree to hold the Shares for any minimum or other specific
term and reserves the right to dispose of the Shares at any time in accordance
with Federal and state securities law applicable to such disposition.
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j. The Subscriber recognizes that investment in the Shares involves
substantial risks, including the risk of loss of the entire amount of such
investment, and has taken full cognizance of and understands all of the risks
related to the purchase of the Shares.
k. The Subscriber's overall commitment to investments that are not
readily marketable is reasonable in relation to the Subscriber's net worth.
l. The Subscriber is an "ACCREDITED INVESTOR" as that term is defined
in Rule 501 (a) of Regulation D under the Act and as described on Appendix 1
attached hereto. The Subscriber further represents and warrants that any
information furnished by the Subscriber to the Company is accurate and complete
in all material respects.
m. The Subscriber understands that the Shares are being offered and
sold in reliance on a transactional exemption from the registration requirements
of Federal and state securities law and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth in this Agreement
in order to determine the applicability of such exemptions and the suitability
of the Subscriber to acquire the Shares.
n. The Subscriber understands that there is no public trading market
for the Shares and none can be expected to develop, and that the securities must
be held indefinitely unless registered under the Act or an exemption from
registration is available. The Subscriber has been advised or is aware of the
provisions of Rule 144 promulgated under the Act.
o. The Subscriber hereby agrees to provide such information and to
execute and deliver such documents, as the Company may deem reasonably
appropriate with regard to the Subscriber's suitability or otherwise in
connection with this Agreement.
p. The execution, delivery and performance of this Agreement by the
Subscriber: (i) will not constitute a default under or conflict with any
agreement or instrument to which the Subscriber is a party or by which it or its
assets are bound, (ii) will not conflict with or violate any order, judgment,
decree, statute, ordinance or regulation applicable to the Subscriber
(including, without limitation, any applicable laws relating to permissible
legal investments) and (iii) does not require the consent of any person or
entity, other than those that will have been obtained prior to the Closing Date.
q. This Agreement has been duly authorized, executed and delivered by
the Subscriber and constitutes the valid and binding agreement of the Subscriber
enforceable against it in accordance with its terms.
r. The Subscriber has not retained, or otherwise entered into any
agreement or understanding with, any broker or finder in connection with the
purchase of the Shares by the Subscriber, and the Company will not incur any
liability for any fee, commission or other compensation on account of any such
retention, agreement or understanding by the Subscriber.
s. The Subscriber understands, acknowledges and agrees that in making
an investment decision, the Subscriber has relied solely on the Subscriber's own
examination of the
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Company, including the merits and risks involved. The Shares have not been
recommended by any federal or state securities commission or regulatory
authority. Furthermore, the foregoing authorities have not confirmed the
accuracy or determined the adequacy of this Agreement.
t. The Subscriber, if executing this Agreement in a representative or
fiduciary capacity, has all requisite power and authority to execute and deliver
this Agreement in such capacity and on behalf of the subscribing individual,
xxxx, partnership, trust, estate, corporation, or other entity for whom the
Subscriber is executing this Agreement, and such individual, xxxx, partnership,
trust, estate, corporation, or other entity has all requisite power and
authority to enter into this Agreement and make an investment in the Shares.
u. The representations, warranties, and agreements of the Subscriber
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date and shall
survive the execution and delivery of this Agreement and the purchase of the
Shares.
v. For as long as is required by applicable laws, the certificates
representing the Shares shall bear a legend in substantially the following form,
together with any legend required by applicable state laws, and the Subscriber
shall not transfer any or all of the Shares or any interests therein, except in
accordance with the terms of such legends:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "ACT")
or applicable state securities laws, and may be offered, sold or
otherwise transferred only if so registered under the Act and
applicable state securities laws or if the holder has delivered to
the Company an opinion of counsel, which counsel and opinion shall be
reasonably satisfactory to the Company, that an exemption from such
registration is available."
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Subscriber as follows:
a. The Company has been duly organized, is validly existing as a
corporation and is in good standing under the laws of the State of California.
The Company is duly qualified and in good standing in each jurisdiction in which
the character or location of its properties or the nature or conduct of its
business makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, in the aggregate, have a material
adverse effect on the financial condition of the Company. The Company has all
requisite power and authority, and all material consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits of
and from all applicable public, regulatory or governmental agencies and bodies,
to own, lease and operate its properties and conduct its business as now being
conducted.
b. The Company has full corporate power and authority to enter into
this Agreement and to issue and sell the Shares on the terms and conditions set
forth herein. The execution and delivery of this Agreement by the Company and
the consummation of the transactions contemplated hereby: (i) have been duly and
validly authorized and approved by all necessary corporate action on the part of
the Company; (ii) will not constitute a default under or conflict
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with (A) the Company's charter or bylaws; or (B) any material agreement or other
instrument to which the Company is a party or by which the Company is bound;
(iii) will not conflict with or violate any order, judgment, decree, statute,
ordinance or regulation applicable to the Company; and (iv) does not require the
consent of any person or entity, other than those that will have been obtained
prior to the Closing Date.
c. This Agreement has been duly authorized, and when executed and
delivered by the Company, will constitute valid and binding obligations of the
Company enforceable against it in accordance with their respective terms.
d. The representations, warranties and agreements of the Company
contained herein shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date and shall survive the
execution and delivery of this Agreement and the sale of the Shares.
6. TERMINATION. This Agreement may be terminated by the Company or
the Subscriber, after 5 days' prior written notice to the other party, if the
Closing has not occurred by the Termination Date, provided that the failure to
so close was not the result of actions of the party seeking termination. In the
event of termination of this Agreement, the Purchase Price, together with any
accrued interest thereon, if any, shall be returned to Subscriber within five
(5) business days after receipt of such written notice.
7. NASAA UNIFORM LEGEND.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER-ABILITY AND RESALE AND MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, 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.
8. MISCELLANEOUS.
a. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to principles of
conflicts of law.
b. In the event any provision of this Agreement is invalid or
unenforceable under any applicable law, statute, rule or regulation, then such
provision shall be deemed inoperative to the extent it may conflict therewith
and shall be deemed modified to conform with such law,
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statute, rule or regulation. Any provision hereof which may prove invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
c. Each party shall indemnify each other party against any loss,
expense or damages (including reasonable attorney's fees but excluding
consequential damages) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.
d. This Agreement may be executed in counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
e. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. Only a writing
executed by the Company and the Subscriber may amend any provision of this
Agreement.
f. 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 Sonoma College, Inc., 0000 Xxxxx Xxxxx Xxxx.,
Xxxxx 000, Xxxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxx, Chief Executive
Officer, and to the Subscriber at the address indicated on the last page of this
Subscription Agreement. Notices shall be deemed to have been given on the date
of mailing, except notices of change of address, which shall be deemed to have
been given when received.
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IN WITNESS WHEREOF, Subscriber and the Company have executed and
dated this Subscription Agreement as of the dates below.
ENTITY SUBSCRIPTION INDIVIDUAL SUBSCRIPTION
Name of Entity:WISSE ENTERPRISES LLC -----------------------------------
Signature of Subscriber
By:/S/
----------------------------------- -----------------------------------
Signature of Co-Subscriber (if any)
Name of Signatory: Name(s) of Individual: Xxxxxx Xxxxx
--------------------
Taxpayer Identification No.: Social Security No(s):
---------- -------------
Address: Address:
------------------------------ ---------------------------
------------------------------ ---------------------------
NUMBER OF SHARES SUBSCRIBED FOR: 375,000
SUBSCRIPTION ACCEPTED:
SONOMA COLLEGE, INC.
BY:/S/
---------------------
NAME: XXXXXXX XXXXXX
TITLE: CEO
DATE: JULY 13, 2005
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APPENDIX I
Pursuant to Rule 501 of Regulation D promulgated under the Securities
Act, an "accredited investor" means:
(a) A bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of
1934; any insurance company as defined in Section 2(13) of
the Securities Act, any investment company registered
under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that
act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its
employees if such plan has total assets in excess of
$5,000,000; any employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974 if
the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a
bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decision made solely
by persons that are accredited investors;
(b) Any private business development company as defined in
Section 202 (a)(22) of the Investment Advisers Act of
1940;
(c) Any organization described in Section 501(c)(3) of the
Internal Revenue Code (the "CODE"), corporation,
Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of
$5,000,000;
(d) Any director or executive officer of the Company;
(e) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of such
person's purchase exceeds $1,000,000;
(f) Any natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and who reasonably expects to reach
the same income level in the current year;
(g) Any trust, with assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities
offered, whose purchase is directed by a person having
such
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knowledge and experience in financial and business matters
so such person is capable of evaluating the merits and
risks of the investment to be made; or
(h) Any entity in which all of the equity owners are
accredited investors.
In addition, a participant in a defined contribution or profit
sharing plan qualified under Section 401 of the Code may be deemed the purchaser
of the Securities for the purpose of determining whether the plan is an
Accredited Investor if the following conditions are satisfied: (x) the plan
trust must provide for segregated accounts for each plan participant, (y) the
plan document must provide the participant with the power to direct the trustee
to make each particular investment to the extent of the participant's voluntary
contributions plus that portion of employer contributions that have vested to
the participant's benefit, and (z) the investment in the Securities must have
been made pursuant to an exercise by the participant of the power to direct the
investment of his or her account in the plan trust.
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