SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED PURSUANT TO THE CONFIDENTIAL TERM SHEET DATED
SEPTEMBER 1, 1998 AND THE EXHIBITS ATTACHED THERETO (COLLECTIVELY, THE "OFFERING
MATERIALS") HAVE NOT BEEN FILED OR REGISTERED WITH OR APPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION"), NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS. NO STATE SECURITIES LAW
ADMINISTRATOR HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY OR THE ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THE SECURITIES OFFERED HEREBY ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS FOR NON-PUBLIC OFFERINGS.
SUCH EXEMPTIONS LIMIT THE TYPES OF INVESTORS TO WHICH THE OFFERING WILL BE MADE
AND RESTRICT SUBSEQUENT TRANSFER OF THE UNITS AND SECURITIES UNDERLYING THE
UNITS.
THE SECURITIES OFFERED HEREBY SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD TO SUSTAIN A LOSS OF THEIR ENTIRE INVESTMENT. INVESTORS WILL BE REQUIRED
TO REPRESENT THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS OF THIS
OFFERING.
NO SECURITIES MAY BE RESOLD OR OTHERWISE DISPOSED OF BY AN INVESTOR
UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, REGISTRATION
UNDER THE APPLICABLE FEDERAL OR STATE SECURITIES LAW IS NOT REQUIRED OR
COMPLIANCE IS MADE WITH SUCH REGISTRATION REQUIREMENTS.
THE OFFEREE, BY ACCEPTING DELIVERY OF THE OFFERING MATERIALS, AGREES TO
RETURN THE OFFERING MATERIALS AND ALL ACCOMPANYING OR RELATED DOCUMENTS TO THE
COMPANY UPON REQUEST IF THE OFFEREE DOES NOT AGREE TO PURCHASE ANY OF THE
SECURITIES OFFERED HEREBY.
THE OFFERING MATERIALS ARE SUBMITTED IN CONNECTION WITH THE PRIVATE
PLACEMENT OF THE SECURITIES AND DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT
AUTHORIZED. IN ADDITION, THE OFFERING MATERIALS CONSTITUTE AN OFFER ONLY IF A
NAME AND IDENTIFICATION NUMBER APPEAR IN THE APPROPRIATE SPACES PROVIDED ON THE
COVER PAGE OF THE CONFIDENTIAL TERM SHEET AND CONSTITUTE AN OFFER ONLY TO THE
PERSON WHOSE NAME APPEARS THEREON. ANY REPRODUCTION OR DISTRIBUTION OF THE
OFFERING MATERIALS IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF THEIR
CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, IS PROHIBITED. ANY
PERSON ACTING CONTRARY TO THE
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FOREGOING RESTRICTIONS MAY PLACE HIMSELF AND THE COMPANY IN VIOLATION OF FEDERAL
OR STATE SECURITIES LAWS.
BLUE SKY LEGENDS
NOTICE TO PRESIDENTS OF ALL STATES
THE UNITS AND SECURITIES UNDERLYING THE UNITS ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE 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.
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. THE UNITS 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.
FOR NEW YORK RESIDENTS
THIS OFFERING MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY
GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW
YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL
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Re: Private placement of Units, each Unit consisting of a 12.5%
$100,000 Promissory Note and Warrant to purchase _______
shares of Common Stock
Dear Subscriber:
TTR Inc., a Delaware corporation (the "Company"), is offering a
minimum of five (5) units up to a maximum of 5 units (the "Units"), each Unit
consisting of (i) a 12.5% $100,000 Promissory Note and (ii) Warrants to purchase
_____ shares of Company Common Stock, par value $0.001 (the "Common Stock) at a
price per share equal to 120% of the Public Offering Price (as defined in the
Memorandum referred to below) of the Common Stock or, 120% of the price per
share of the Common Stock on the date of the issuance of the Warrants if no
Public Offering is completed by January 30, 1998, all as described more
particularly in the Private Placement Memorandum, dated September 1, 1998,
accompanying this Subscription Agreement (the "Memorandum").
The Company expects to hold an interim closing of this Offering at
such time as subscriptions for 2 Units have been accepted by the Company. The
final closing of this Offering is expected to occur on or about September 15,
1998, when all 5 Units have been placed, subject to one or more extensions by
the Company. The Company may extend the Offering or may cancel the Offering,
rescind any subscription and return funds received without deductions or
interest. The price for each Unit shall be payable upon execution of the
Subscription Agreement. The Company may accept subscription for fractional
Units.
Pending the initial closing and any interim closings thereafter,
each prospective investor's payment accompanying the investor's Subscription
Agreement will be deposited in a segregated, interest bearing escrow. The terms
of the offering and of an investment in the Company are more fully described in
the Offering Materials. A check made to the order of "TTR Inc., Trust Account"
in the amount equal to the purchase price for the amount hereby subscribed for
should accompany this Subscription Agreement. In lieu of a check, a wire
transfer an be made to the Company's account at -------------.
The Company will advise the Subscriber within 10 days after receipt
of this subscription whether this subscription has been accepted or rejected. If
this subscription is rejected, or if the offering is withdrawn, the Company will
return the amount paid by the Subscriber herewith as promptly as practicable,
without interest or deduction, and this subscription thereby shall be canceled
and of no further force or effect. If this subscription is rejected or if the
offering is withdrawn, the Subscriber agrees to return to the Company the
Offering Materials and all other documents concerning the offering. The
Subscriber may not withdraw this subscription or any amount paid pursuant
thereto except as otherwise provided below.
Neither the Units nor the securities underlying the Units have been
registered under the registration provisions of the Securities Act of 1933, as
amended (the "Act"), and are being offered and sold by the Company in reliance
upon an exemption from registration under Section 4(2) and 4(6) of the Act, and
Regulation D promulgated thereunder.
You have indicated your desire to participate in this private
offering and to subscribe to and agree to purchase Units in the principal amount
of $_________, receipt of which the Company acknowledges.
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As an inducement to the company to accept your subscription, you
represent and warrant as follows:
(A) You acknowledge and understand that the offering and sale of the Units
are intended to be exempt from registration under the Act, by virtue of Sections
4(2) and 4(6) of the Act and Regulation D promulgated thereunder ("Regulation
D") and, in accordance therewith and in furtherance thereof, you represent and
warrant agree with the Company as follows [Please check statements applicable to
you]:
The undersigned is an accredited investor because the undersigned is
(check appropriate item):
|_| (a) A Savings and loan association or other institution specified in
Section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934; a 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 employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan within the
meaning of Title I 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 a savings and loan
association, or if the employee benefit plan has total assets excess
of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors;
|_| (b) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
|_| (c) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, or partnership, not formed for the
specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;
|_| (d) A director or executive officer of TTR Inc.;
|_| (e) A natural person whose net worth, or joint net worth with that
person's spouse, at the time of his or her purchase exceeds
$1,000,000;
|_| (f) A 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 has a reasonable expectation of reaching the same income level
in the current year;
|_| (g) A trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); and
|_| (h) An entity in which all of the equity owners are accredited
investors. (If this alternative is checked, you must identify each
equity owner and provide statements signed by each demonstrating how
each qualifies as an accredited investor.)
In addition to the above criteria, if you are a resident of the State of
California, [Please check each item]:
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|_| You confirm that you have the capacity to protect your own
interests in connection with this transaction by reason of your business
and financial experience.
|_| You are able to bear the financial and economic risk of your
investment and bear the risk of the loss of your entire investment.
|_| Your investment does not exceed 10% of your net worth or joint
net worth with that of your spouse.
In addition to the above criteria, if you are a resident of the
Commonwealth of Pennsylvania, you represent that you will not sell or transfer
the Securities purchased for a period of twelve (12) months after the date of
purchase thereof unless they are subsequently registered under the Pennsylvania
Act of 1972 or under the Act. Moreover, you represent that you have been advised
of your right to withdraw acceptance of our offer to purchase the Units within
two (2) business days of the date receipt by the issuer of my binding contract
of purchase.
(B) You have such knowledge and experience in financial and business
matters as is required for evaluating the merits and risks of making this
investment., and you or your representatives have received such information
requested by you concerning the business, management and financial affairs of
the Company in order to evaluate the merits and risks of making this investment.
Further, you acknowledge that you, your attorney, accountant or adviser have had
the opportunity to ask questions of, and receive answers from, the officers of
the Company concerning the terms and conditions of this investment and to obtain
information relating to the organization, operation and business of the Company
and of the Company's contracts, agreements and obligations. Except as
specifically set forth herein, no representation of warranty is made by the
Company to induce you to make this investment, and any representation or
warranty not made herein is specifically disclaimed.
(C) You are making this investment for your own account and are purchasing
the Units for investment purposes only and not with a present view to the resale
or other distribution thereof:
(D) You are making the foregoing representations and warranties with the
intent that they may be relied upon by the Company in determining the
suitability of the sale Units to you for purposes of federal and state
securities laws.
(E) You further acknowledge that you have been advised that the Units or
the securities underlying the Units have not been registered under the
provisions of the Act and that the Company has represented to you that the Units
have been offered and sold by the Company in reliance upon an exemption from
registration provided in Section 4(2) and 4(6) of the Act and Section 25102 (f)
of the Code.
(F) In entering into this Agreement and in purchasing the Units, you
further acknowledge that:
(i) The Company has informed you that the Units have not been
offered for sale by means of general advertising or solicitation.
(ii) the Units may not be resold by you in absence of registration
under the Act or an available exemption from registration.
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(iii) The following legend shall be placed on the Certificate(s)
evidencing the securities underlying the Units:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTION TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED."
(iv) The Company may place a stop transfer order on its transfer
books against the transfer of the securities underlying the Units. Such stop
order will be removed, and further transfer of the Units or securities
underlying the Units will be permitted upon an effective registration of the
Units (as to the Company has no obligation to file), or the receipt by the
Company of an opinion of counsel that such further transfer may be effected
pursuant to an applicable exemption from registration.
(v) The purchase of the Units involves risks which you have
evaluated, and you are able to bear the economic risk of the purchase of the
Units. You have been advised of the current financial condition of the Company
and of the possible adverse effects of such financial condition on the Company's
general business.
(G) The undersigned has completed the accompanying Investor Questionnaire
and has delivered it herewith and represents and warrants that it accurately
sets forth the financial condition on the date hereof. The undersigned has no
reason to expect there will be any material adverse change in his or her
financial condition and will advise the Company of any such changes occurring
prior to acceptance of my subscription.
(H) The undersigned is a resident of the State of __________ and a citizen
of the Country of the United States.
(I) The undersigned has relied only on the information otherwise provided
to him or her in writing by the Company relating to this investment.
(J) The undersigned understands that all documents, records, and books
pertaining to this investment have been made available for inspection by him or
her, his or her attorney and/or his or her accountant.
(K) The undersigned has had a reasonable opportunity to ask questions of
and receive answers from a person acting on behalf of the Company concerning the
offering of the Units and all such questions have been answered to the full
satisfaction of the undersigned.
(L) The undersigned is not purchasing the Units 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, any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the undersigned in connection
with investments in securities generally.
(M) The undersigned has reached the age of majority in the state in which
the undersigned resides, has adequate means of providing for the undersigned's
current needs and personal contingencies, is able to bear the substantial
economic risks of an investment in the
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Units for an indefinite period of time, has no need for liquidity in such
investment, and the undersigned is prepared to lose his or her entire investment
in the Units.
(N) The undersigned's overall investments that are not readily marketable
is not, and his acquisition of the Units will not count such overall commitment
to become, disproportionate to his or her net worth.
You acknowledge that you have made your own investigation concerning the
business and affairs of the Company and in that connection, you acknowledge the
previous receipt of the Offering Materials.
(O) The undersigned agrees to indemnify and hold harmless the Company, the
officers, directors, and affiliates of the Company, and each other person, if
any, who controls the Company, within the meaning of Section 15 of the Act,
against any and all loss, liability, claim, damage and all expenses 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 or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.
(P) The undersigned hereby acknowledges and agrees, subject to any
applicable state securities law, the subscription and application hereunder are
irrevocable, that the undersigned is not entitled to cancel, terminate or revoke
this Subscription Agreement or any agreements of the undersigned hereunder and
that this Subscription Agreement and such other agreements shall survive the
death or disability of the undersigned and shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and assigns. If the undersigned is more than
one person, the obligations of the undersigned hereunder shall be joint and
several, and the agreements, representations, warranties, and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors, legal
representatives, and assigns.
(Q) The undersigned is not relying on the Company or any agent thereof
with respect to the financial or tax considerations with respect to an
investment in the Securities.
(R) The undersigned shall provide, upon request, such information and
execute and deliver such documents as may be reasonably requested to comply with
all laws to which the Company may be subject, including without limitation, such
additional information as the Company may deem appropriate.
(S) The execution, delivery and performance of this Agreement by the
undersigned (i) will not constitute a default under or conflict with any
agreement or instrument to which the undersigned 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 undersigned
(including, without limitation, any applicable laws relating to permissible
legal investments) and (iii) do not require the consent of any person or entity.
This Agreement has been duly authorized, executed and delivered by the
undersigned and constitutes the valid and binding agreement of the undersigned
enforceable against it in accordance with its terms.
(T) The undersigned has not retained, or otherwise entered into any
agreement or understanding with, any broker or finder in connection with the
purchaser of Securities by the undersigned, and the undersigned acknowledges
that the Company will not incur any liability
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for any fee, commission or other compensation on account of any such retention,
agreement or understanding by the undersigned.
(U) The representations, warranties and agreements of the undersigned
contained herein shall be true and correct in all materials respects on and as
of the Closing Date of the sale of the Securities as if made on and as of such
date and shall survive the execution and delivery of this Agreement and the
purchase of the Securities.
Neither this Subscription Agreement nor any provisions hereof shall
be waived, modified, discharged, or terminated except by an instrument in
writing signed by the party against whom any such waiver, modification,
discharge, or termination is sought.
Any notice, demand or other communication which any party hereto may
be required, or may elect, to give to anyone interested hereunder shall be
sufficiently given if (a) deposited, postage prepaid, in a United States mail
box, stamped, registered or certified mail, return receipt requested, addressed
to such address as may be listed on the books of the Company or (b) delivered
personally at such address.
This Subscription Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, or all purposes, constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart.
This Subscription Agreement contains the entire agreement of the
parties with respect to the subject matter hereof and there are no
representations, covenants or other agreements except as stated or referred to
herein.
Each provision of this Subscription Agreement is intended to be
severable from every other provisions, and the invalidity or illegality of any
portion hereof, shall not affect the validity or legality of the remainder
hereof.
This Subscription Agreement is not transferable or assignable by the
undersigned except as may be provided herein.
This Subscription Agreement shall be governed by and construed in
accordance with the laws of the State of New York as applied to residents of
that state executing contracts wholly to be performed in that state.
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We would appreciate your countersigning and returning two copies of this
Subscription Agreement, together with the completed Investor Questionnaire. A
countersigning copy of this Subscription Agreement will be returned to you,
together with certificates for the securities underlying the Unit purchased. For
the purpose of having the certificates for the securities prepared, please
indicate the exact manner in which the certificates representing the Units is to
be made out in the space provided for below.
Date Executed: ______________, 1998.
Very truly yours,
TTR INC.
By: ____________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
(INDIVIDUAL) (CORP., PRTSHP OR TRUST)
___________________________ ________________________________________
Signature of Subscriber Name of Corp., prtshp or Trust
Certificate for Units to be By: __________________________________
made out as follows Name:
___________________________ Title:
Name
When signing as guardian, executor,
______________ administrator, attorney, trustee,
Address custodian, Or in any other similar
capacity, please give full title. If a
corporation, sign in full corporate name
__________________ by president or other authorized
Social Security No. or officer, giving title, and affix
Ident. No corporate Fed. seal if appropriate. If a
partnership, sign in partnership name by
authorized person. In the case of joint
ownership, each Joint owner must sign.
________________________________________
Address
